What is it with high tax preaching rich people? They love to preach how others should pay higher taxes yet they themselves do everything they can to avoid it - such as Warren Buffett's taking advantage of every loophole in the book to avoid paying more taxes than he is required to or Hollywood's moving their business outside of California and sometimes the US to avoid paying high state and federal taxes.
Jim Sinegal is the CEO of Costco and was a big campaigner for Obama and his calls for higher taxes on the rich. Yet the WSJ exposes him and his company for paying an advanced dividend to their clients in order to avoid paying more taxes when the Bush tax cuts expire next year.
One of the biggest dividend winners will be none other than Mr.
Sinegal, who owns about two million shares, while his wife owns another
84,669. At $7 a share, the former CEO will take home roughly $14
million. At a 15% tax rate he'll get to keep nearly $12 million of that
windfall, while at next year's rate of 43.4% he'd take home only about
$8 million. That's a lot of extra cannoli.
This isn't exactly the
tone of, er, shared sacrifice that Mr. Sinegal struck on stage in
Charlotte. He described Mr. Obama as "a President making an economy
built to last," adding that "for companies like Costco to invest, grow,
hire and flourish, the conditions have to be right. That requires
something from all of us." But apparently $4 million less from Mr.
Sinegal.
Tuesday, December 4, 2012
The Lottery and Happiness
The recent news of Missouri grandparents winning a whopping $294 million dollars is hard for us Aussies to understand given we are only used to hearing lottery figures of $40 or $50 million or so. But whilst none of us would knock this money back it is necessary to ask how much happiness it would buy us.
Before asking how do lotto winners fare, the more important question should be; how do lotto ticket purchasers fare? Well its an incredibly lousy bet for starters. In fact you are probably better off playing the roulette tables at a casino. According to this New York Times piece
But it’s not. On the contrary, lotteries may well be the single most insidious way that state governments raise money. Many of the people who buy lottery tickets are poor; lotteries are essentially a form of regressive taxation. The odds against winning a big jackpot are astronomical — far worse than the odds at an Atlantic City slot machine. The get-rich-quick marketing — by government, let’s not forget — is offensive. One New York Powerball ad shows a private jet emblazoned with the words “Kevin’s Airline.” The tag line reads: "Yeah, that kind of rich."
What about those who win?
Before asking how do lotto winners fare, the more important question should be; how do lotto ticket purchasers fare? Well its an incredibly lousy bet for starters. In fact you are probably better off playing the roulette tables at a casino. According to this New York Times piece
But it’s not. On the contrary, lotteries may well be the single most insidious way that state governments raise money. Many of the people who buy lottery tickets are poor; lotteries are essentially a form of regressive taxation. The odds against winning a big jackpot are astronomical — far worse than the odds at an Atlantic City slot machine. The get-rich-quick marketing — by government, let’s not forget — is offensive. One New York Powerball ad shows a private jet emblazoned with the words “Kevin’s Airline.” The tag line reads: "Yeah, that kind of rich."
What about those who win?
Oh, and let’s not forget the fate of the people who win. They may be “that kind of rich” on the day they hit the jackpot, but, more often than not, they don’t stay that way.
People who suddenly fall into extreme wealth — whether because of an
insurance settlement, a professional sports contract, or a lottery win —
rarely know how to handle their new circumstances.
There is, to take one of the most prominent examples, the story of Jack Whittaker,
a West Virginia businessman who won a $315 million Powerball jackpot in
2002. A decade later, his daughter and granddaughter had died of drug
overdoses, his wife had divorced him,
and he had been sued numerous times. Once, when he was at a strip club,
someone drugged his drink and took $545,000 in cash that had been
sitting in his car. He later sobbed to reporters, “I wish I’d torn that
ticket up.”
I read about Whittaker, and a
host of other sad stories about lottery winners, in a recent e-book
written by Don McNay entitled, “Life Lessons From the Lottery.”
McNay is a financial adviser and newspaper columnist, based in
Kentucky, whom I’ve gotten to know over the years. He specializes in
helping people who have come into sudden money. He is convinced that the
vast majority of people who win big-money lotteries, like the recent
Powerball prize, wind up broke within five years. “The money just
overwhelms them,” he told me the other day. “It just causes them to lose
their sense of values.”
Lesson learned? Happiness must be earned. People don't get happy when they are given things on a plate, whether its lottery winning or government handouts. According to some studies many of the things that make us the most happy are the little pleasures in life and times of extreme joy or tragedy in our lives often snaps back to equilibrium after a short while;
In recent years, cognitive scientists have turned in increasing numbers to the study of human happiness, and one of their central findings is that we are not very good at predicting how happy or unhappy something will make us. Given time, survivors of tragedies and traumas report themselves nearly as happy as they were before, and people who win the lottery or achieve lifelong dreams don't see any long-term increase in happiness.
As the great thinker Adam Smith put it;
“the mind of every man, in a longer or shorter time, returns to its natural and usual state of tranquility. In prosperity, after a certain time, it falls back to that state; in adversity, after a certain time, it rises up to it.”
See these brilliant Prager University videos:
In recent years, cognitive scientists have turned in increasing numbers to the study of human happiness, and one of their central findings is that we are not very good at predicting how happy or unhappy something will make us. Given time, survivors of tragedies and traumas report themselves nearly as happy as they were before, and people who win the lottery or achieve lifelong dreams don't see any long-term increase in happiness.
As the great thinker Adam Smith put it;
“the mind of every man, in a longer or shorter time, returns to its natural and usual state of tranquility. In prosperity, after a certain time, it falls back to that state; in adversity, after a certain time, it rises up to it.”
See these brilliant Prager University videos:
Free Speech in the Classroom
George Will on the lack of freedom on college campuses in the US. If you want to see a microcosm of the sought of society the left will run then college/university is the place to look.
Sunday, December 2, 2012
Sexism in the Classroom
Its well known that girls out perform boys at school but could it be because there is a gender bias amongst teachers? I'm guessing this is the kind of sexism that little will be done to correct though.
Female teachers mark male pupils more harshly than they do their female students, research has claimed.
Additionally, girls tend to believe male teachers will look upon them more favourably than female teaching staff, but men treat all students the same, regardless of gender.
The study, released on Thursday, told 1,200 students in 29 schools to place financial bets on who would give them higher grades: external examiners or their teacher.
Conducted by professors Amine Ouazad and Lionel Page, for the London School of Economic's Centre for Economic Performance, the report said:
"Male students tend to bet less [money] when assessed by a female teacher than by an external examiner or by a male teacher. This is consistent with female teachers' grading practices; female teachers give lower grades to male students.
"Female students bet more when assessed by a male teacher than when assessed by an external examiner or a female teacher. Female students' behavior is not consistent with male teachers' grading practices, since male teachers tend to reward male students more than female students."
Additionally, the results showed the students' beliefs tended to increase the gender gap in investment and effort. Having a male teacher increased the efforts of female students whereas a female teacher lowered the efforts of boys.
But, more encouragingly, the study found no significant evidence of ethnic discrimination.
"Our results suggest that students from low-income families and minority ethnic backgrounds do not believe in systematic teacher biases. This result is significant given that in some countries, including the United States, studies have found that minority students state beliefs in detrimental teacher biases."
Hat Tip: Dr Helen
Female teachers mark male pupils more harshly than they do their female students, research has claimed.
Additionally, girls tend to believe male teachers will look upon them more favourably than female teaching staff, but men treat all students the same, regardless of gender.
The study, released on Thursday, told 1,200 students in 29 schools to place financial bets on who would give them higher grades: external examiners or their teacher.
Conducted by professors Amine Ouazad and Lionel Page, for the London School of Economic's Centre for Economic Performance, the report said:
"Male students tend to bet less [money] when assessed by a female teacher than by an external examiner or by a male teacher. This is consistent with female teachers' grading practices; female teachers give lower grades to male students.
"Female students bet more when assessed by a male teacher than when assessed by an external examiner or a female teacher. Female students' behavior is not consistent with male teachers' grading practices, since male teachers tend to reward male students more than female students."
Additionally, the results showed the students' beliefs tended to increase the gender gap in investment and effort. Having a male teacher increased the efforts of female students whereas a female teacher lowered the efforts of boys.
But, more encouragingly, the study found no significant evidence of ethnic discrimination.
"Our results suggest that students from low-income families and minority ethnic backgrounds do not believe in systematic teacher biases. This result is significant given that in some countries, including the United States, studies have found that minority students state beliefs in detrimental teacher biases."
Hat Tip: Dr Helen
Taxes and the Rich
There has been no end to the attacks on the anti-tax activist and founder of Americans for Tax Reform, Grover Norquist. The latest charge is that America once experienced an economic golden age where there was less disparity between rich and poor during the 1950s because at one stage the highest tax rate on the wealthiest income producers was 91%. Leftist columists like Paul Krugman, Ezra Klein, and billionaire Warren Buffett, have all done the rounds making the same charge that we could even up the wealth distribution in the US if only we taxed the wealthy a little more.
First off, Buffett argues as if higher taxes don't impede investment because making some money, even if only 9 cents in the dollar, is better than making nothing at all. But this is disingenuous. It is not as if money investment is a guaranteed earner and it is just a matter of deciding whether to make that money or not as if it were just dropped from the sky as a gift. Surely Buffett must know that there is significant risk in most investments and most people aren't going to take risks when the benefit in return is so lousy, especially when that loss can not be deducted from other income. It is just absurd to think people are going to go to the effort of investing their money and taking risks when the government is going to steal nearly the entire profit.
The most important question, however, is whether anyone actually paid those exorbitant tax rates. Klein admits early in his piece that there weren't that many, but it should be appreciated just how few there were. I'm taking these figures from Peter Schiff on his radio show last Thursday. In 1958, 236 out of 45.6 million tax returns filled payed the 91% tax rate! That's practically zero or 0.0000052% of all people! In fact only 8,549 people paid 35% tax (the current rate) out of 45.6 million. Today the amount of people who actually paid that percentage is around 2.5 million. Because the amount of people who paid the 35% in 1958 was so small, their share of total income tax was only around 3.5% where today those paying the same rate cover around 41.5% of all tax receipts.
This means that the working poor and middle class were paying a far higher percentage of tax in the golden era of the 1950s as compared to today. Of course this was because the rich were able to deduct far more from their taxable income and transfer their wealth into tax shelters, etc. The reason Reagan reduced taxes was to coax those avoiding paying taxes back into the tax paying fold.
What this means, of course, is that it can't be argued by leftist economists and investors that the economic growth was not retarded by high tax rates and that the supposed closer gap between rich and poor was not because of higher taxes because they effectively didn't exist! The de facto tax rate in the 1950s was much less than today, even if it looked a lot more on the books.
The last thing to note is that the 1950s were not such a great era of prosperity for those who actually had to live during that era. The working poor today can purchase more for their money today. Here are some facts and figure;
Lately, I’ve encountered with unusual frequency claims that the 1950s were a glorious economic time for America’s middle-class – a time so glorious, what with strong labor unions and high (above 90%!) marginal income-tax rates and all, that we middle-class Americans of today should look back with longing and envy on those marvelous years of six decades ago.
So on Saturday I bought on eBay this Fall/Winter 1956 Sears catalog. I spent an extra $8-and-change to have it shipped to me overnight – a service that I could not have purchased in 1956. My catalog arrived on my doorstep today. I’m eager to explore it and to report my findings with some thoroughness.
But to give you a taste now, below is a sample of what I plan to do.
Having on hand information on the nominal average hourly earnings of nonsupervisory nonfarm private production workers in the U.S. in 2012 - that figure being $19.79 (as of October 2012) - I searched for the same earnings figure for 1956. Thus far I’ve had no luck finding that number. (Please feel free, I bleg of you, to help me find this figure, if you so desire.) So, for 1956 I instead use average hourly manufacturing earnings of production workers, as reported in Table 1 here. That figure is $1.89.
This nominal wage figure for 1956 isn’t exactly comparable to the nominal wage figure that I use for 2012, but it’s close enough, at least for this first-pass analysis. If the claim of many “Progressives” is true that manufacturing is the most princely sort of work that middle-class Americans can do, then presumably this figure of $1.89 is higher than the hourly earnings of all private, nonfarm nonsupervisory workers in 1956. Anyway….
So let’s ask: how long did a typical American worker have to toil in 1956 to buy a particular sort of good compared to how long a similarly typical American worker today must toil to buy that same (or similar) sort of good? Here are four familiar items: refrigerator-freezers; kitchen ranges; televisions; and automatic washers.
Refrigerator-freezers
Sears’s lowest-priced no-frost refrigerator-freezer in 1956 had 9.6 cubic feet, in total, of space. It sold for $219.95 (in 1956-dollar prices). (You can find a lovely black-and-white photograph of this mid-’50s fridge on page 1036 of the 1956 Sears catalog.) Home Depot today sells a 10 cubic-foot no-frost refrigerator-freezer for $298.00 (in 2012-dollar prices). (You can find it in color on line here.)
Therefore, the typical American worker in 1956 had to work a total of 219.95/1.89 hours to buy that 9.6 cubic-foot fridge – or a total of 116 hours. (I round to the nearest whole number.) Today, to buy a similar no-frost refrigerator-freezer, the typical American worker must work a total of 298.00/19.79 hours – or 15 hours. That is, to buy basic household refrigeration and freezing, today’s worker must spend only 13 percent of the time that his counterpart in 1956 had to spend.
Kitchen ranges
Sears’s lowest-priced 30″ four-burner electric range, with bottom oven, was priced, in 1956, at $129.95. (You can find this range on page 1049 of the 1956 Sears catalog.) Home Depot sells a 30″ four-burner electric range, with bottom oven, today for $348.00.
The typical American manufacturing worker in 1956, therefore, had to work 129.95/1.89 – or 69 hours – to buy an ordinary kitchen range. His or her counterpart today must work 348.00/19.79 – or 18 – hours to buy the same sized ordinary range.
Television sets
Sears’s lowest-priced television in 1956 was a black-and-white (of course) 17″ model. (You can find it on page 1018 of the 1956 catalog.) That t.v. set was priced at $114.95. Sears today sells no 17″ t.v. sets. The closest set I could find at Sears was this 19″ color (of course) model, which is priced at $194.00.
The typical American manufacturing worker in 1956, therefore, had to work 114.95/1.89 – or 61 hours – to buy this tiny black-and-white (with no remote!) television set. His or her counterpart today must work 194.00/19.79 – or 10 – hours to buy a slightly larger, high-def, color (with remote!) television set.
First off, Buffett argues as if higher taxes don't impede investment because making some money, even if only 9 cents in the dollar, is better than making nothing at all. But this is disingenuous. It is not as if money investment is a guaranteed earner and it is just a matter of deciding whether to make that money or not as if it were just dropped from the sky as a gift. Surely Buffett must know that there is significant risk in most investments and most people aren't going to take risks when the benefit in return is so lousy, especially when that loss can not be deducted from other income. It is just absurd to think people are going to go to the effort of investing their money and taking risks when the government is going to steal nearly the entire profit.
The most important question, however, is whether anyone actually paid those exorbitant tax rates. Klein admits early in his piece that there weren't that many, but it should be appreciated just how few there were. I'm taking these figures from Peter Schiff on his radio show last Thursday. In 1958, 236 out of 45.6 million tax returns filled payed the 91% tax rate! That's practically zero or 0.0000052% of all people! In fact only 8,549 people paid 35% tax (the current rate) out of 45.6 million. Today the amount of people who actually paid that percentage is around 2.5 million. Because the amount of people who paid the 35% in 1958 was so small, their share of total income tax was only around 3.5% where today those paying the same rate cover around 41.5% of all tax receipts.
This means that the working poor and middle class were paying a far higher percentage of tax in the golden era of the 1950s as compared to today. Of course this was because the rich were able to deduct far more from their taxable income and transfer their wealth into tax shelters, etc. The reason Reagan reduced taxes was to coax those avoiding paying taxes back into the tax paying fold.
What this means, of course, is that it can't be argued by leftist economists and investors that the economic growth was not retarded by high tax rates and that the supposed closer gap between rich and poor was not because of higher taxes because they effectively didn't exist! The de facto tax rate in the 1950s was much less than today, even if it looked a lot more on the books.
The last thing to note is that the 1950s were not such a great era of prosperity for those who actually had to live during that era. The working poor today can purchase more for their money today. Here are some facts and figure;
Lately, I’ve encountered with unusual frequency claims that the 1950s were a glorious economic time for America’s middle-class – a time so glorious, what with strong labor unions and high (above 90%!) marginal income-tax rates and all, that we middle-class Americans of today should look back with longing and envy on those marvelous years of six decades ago.
So on Saturday I bought on eBay this Fall/Winter 1956 Sears catalog. I spent an extra $8-and-change to have it shipped to me overnight – a service that I could not have purchased in 1956. My catalog arrived on my doorstep today. I’m eager to explore it and to report my findings with some thoroughness.
But to give you a taste now, below is a sample of what I plan to do.
Having on hand information on the nominal average hourly earnings of nonsupervisory nonfarm private production workers in the U.S. in 2012 - that figure being $19.79 (as of October 2012) - I searched for the same earnings figure for 1956. Thus far I’ve had no luck finding that number. (Please feel free, I bleg of you, to help me find this figure, if you so desire.) So, for 1956 I instead use average hourly manufacturing earnings of production workers, as reported in Table 1 here. That figure is $1.89.
This nominal wage figure for 1956 isn’t exactly comparable to the nominal wage figure that I use for 2012, but it’s close enough, at least for this first-pass analysis. If the claim of many “Progressives” is true that manufacturing is the most princely sort of work that middle-class Americans can do, then presumably this figure of $1.89 is higher than the hourly earnings of all private, nonfarm nonsupervisory workers in 1956. Anyway….
So let’s ask: how long did a typical American worker have to toil in 1956 to buy a particular sort of good compared to how long a similarly typical American worker today must toil to buy that same (or similar) sort of good? Here are four familiar items: refrigerator-freezers; kitchen ranges; televisions; and automatic washers.
Refrigerator-freezers
Sears’s lowest-priced no-frost refrigerator-freezer in 1956 had 9.6 cubic feet, in total, of space. It sold for $219.95 (in 1956-dollar prices). (You can find a lovely black-and-white photograph of this mid-’50s fridge on page 1036 of the 1956 Sears catalog.) Home Depot today sells a 10 cubic-foot no-frost refrigerator-freezer for $298.00 (in 2012-dollar prices). (You can find it in color on line here.)
Therefore, the typical American worker in 1956 had to work a total of 219.95/1.89 hours to buy that 9.6 cubic-foot fridge – or a total of 116 hours. (I round to the nearest whole number.) Today, to buy a similar no-frost refrigerator-freezer, the typical American worker must work a total of 298.00/19.79 hours – or 15 hours. That is, to buy basic household refrigeration and freezing, today’s worker must spend only 13 percent of the time that his counterpart in 1956 had to spend.
Kitchen ranges
Sears’s lowest-priced 30″ four-burner electric range, with bottom oven, was priced, in 1956, at $129.95. (You can find this range on page 1049 of the 1956 Sears catalog.) Home Depot sells a 30″ four-burner electric range, with bottom oven, today for $348.00.
The typical American manufacturing worker in 1956, therefore, had to work 129.95/1.89 – or 69 hours – to buy an ordinary kitchen range. His or her counterpart today must work 348.00/19.79 – or 18 – hours to buy the same sized ordinary range.
Television sets
Sears’s lowest-priced television in 1956 was a black-and-white (of course) 17″ model. (You can find it on page 1018 of the 1956 catalog.) That t.v. set was priced at $114.95. Sears today sells no 17″ t.v. sets. The closest set I could find at Sears was this 19″ color (of course) model, which is priced at $194.00.
The typical American manufacturing worker in 1956, therefore, had to work 114.95/1.89 – or 61 hours – to buy this tiny black-and-white (with no remote!) television set. His or her counterpart today must work 194.00/19.79 – or 10 – hours to buy a slightly larger, high-def, color (with remote!) television set.
Saturday, December 1, 2012
Abortion and Rape
Some pro-lifers, like Mitt Romney, make exceptions in cases of rape. The fetus is a permanent reminder of that traumatic event and recognised by some as an extension of the rape action itself - that is, the fetus is part of the rapist's forced intrusion on her body.
Listening to the Peter Schiff show the other day he was speaking about abortion, and being a good libertarian, he is in favour of abortion up until the fetus is viable outside of the womb (an awful argument that I may pursue at some later stage). But here is where I agreed with him. He stated that it is hypocritical to be opposed to abortion but then hold out some special exemption in rape cases.
I couldn't agree more. What about a neonate that is produced as a result of rape? Do we have justified infanticide in these cases? Of course not. How can it be said that a fetus is a full fledged member of the human species with all of the accompanying rights that that entails, and yet deny it the right to life because it was conceived in rape? The pro-abort philosopher, Judith Jarvis Thompson in her famous 1971 piece, "A Defense of Abortion"
"Surely the question of whether you have a right to life at all, or how much of it you have, shouldn't turn on the question of whether or not you are a product of a rape."
Listening to the Peter Schiff show the other day he was speaking about abortion, and being a good libertarian, he is in favour of abortion up until the fetus is viable outside of the womb (an awful argument that I may pursue at some later stage). But here is where I agreed with him. He stated that it is hypocritical to be opposed to abortion but then hold out some special exemption in rape cases.
I couldn't agree more. What about a neonate that is produced as a result of rape? Do we have justified infanticide in these cases? Of course not. How can it be said that a fetus is a full fledged member of the human species with all of the accompanying rights that that entails, and yet deny it the right to life because it was conceived in rape? The pro-abort philosopher, Judith Jarvis Thompson in her famous 1971 piece, "A Defense of Abortion"
"Surely the question of whether you have a right to life at all, or how much of it you have, shouldn't turn on the question of whether or not you are a product of a rape."
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