Tax Policy

[Cranewings]

You are welcome CW.

I see I should add one more key point.  The lower the tax rates, the less sense it makes to invest in tax shelters.

Bortz likes to say, "People smart enough to earn a lot of wealth are smart enough to change their behavior when that wealth is threatened by high tax rates." I guess this is a good example of that.

Thanks for the info. I'll try to get a better handle on it. At least now I know what sorts of things I should look at.

[Crafty_Dog]

CW:

My respect for your response-- it shows search for Truth and this is to what we aspire around here.

[JDN]

"Not once have any of my personal investment decisions been a function of marginal tax rates," Gruener said. "We just don't think about it."


http://money.cnn.com/2011/11/16/news/economy/tax_millionaires/index.htm?hpt=hp_t2

[G M]

"Not once have any of my personal investment decisions been a function of marginal tax rates," Gruener said. "We just don't think about it."


http://money.cnn.com/2011/11/16/news/economy/tax_millionaires/index.htm?hpt=hp_t2

Bull-shiite. They can always write additional checks to Uncle Sugar, yet funny enough, they don't. Also, we have real world example after example where taxes alter behavior, which punishes the people that make/do things for the rich.

[G M]

http://www.msnbc.msn.com/id/38378992/ns/politics/t/sen-kerry-docks-yacht-ri-saves-taxes/


Sen. Kerry docks yacht in R.I., saves on taxes

Lawmaker saves $500k in taxes on $7 million yacht


Stew Milne  /  AP
"Isabel," the 76-foot yacht owned by Democratic Sen. John Kerry of Massachusetts, is undergoing repairs at the Hinckley shipyard in Portsmouth, R.I., Friday, July 23, 2010.




updated 7/23/2010 4:34:00 PM ET


BOSTON — Massachusetts Sen. John Kerry is docking his family's new $7 million yacht in neighboring Rhode Island, allowing him to avoid paying roughly $500,000 in taxes to his cash-strapped home state.

If the Isabel were kept at the 2008 Democratic presidential nominee's summer vacation home on Nantucket or in Boston Harbor near his city residence, he would be liable for $437,500 in one-time sales tax. He would also have to pay $70,000 in annual excise taxes.

Rhode Island repealed those taxes in 1993. That has made the state something of a nautical tax haven.

[G M]

Warren Buffett’s taxing hypocrisy
 



By Bill Wilson — The Obama Administration has turned to billionaire Warren Buffett, chairman and chief executive of financial giant Berkshire Hathaway, to make the case for raising taxes on the rich because, says Buffett, he can afford it.  On Aug. 22, the White House reportedly chatted with Wall Street’s most famous investor to get his thoughts about the sputtering economy.
 
What likely got the Administration’s attention was Buffett’s oped in The New York Times.  Buffett proposed that “It’s time for our government to get serious about shared sacrifice.” He implied he would like to see the capital gains be treated equally as income.
 
To wit, he wrote of the so-called “super-rich,” which he apparently defines as households earning $1 million or more a year: “Most wouldn’t mind being told to pay more in taxes as well, particularly when so many of their fellow citizens are truly suffering.” Isn’t that nice of Mr. Buffett?
 
But if he were truly sincere, perhaps he might simply try paying the taxes the Internal Revenue Service (IRS) says his company owes? According to Berkshire Hathaway’s own annual report — see Note 15 on pp. 54-56 — the company has been in a years-long dispute over its federal tax bills.
 
According to the report, “We anticipate that we will resolve all adjustments proposed by the U.S. Internal Revenue Service (‘IRS’) for the 2002 through 2004 tax years at the IRS Appeals Division within the next 12 months. The IRS has completed its examination of our consolidated U.S. federal income tax returns for the 2005 and 2006 tax years and the proposed adjustments are currently being reviewed by the IRS Appeals Division process. The IRS is currently auditing our consolidated U.S. federal income tax returns for the 2007 through 2009 tax years.”
 
Americans for Limited Government researcher Richard McCarty, who was alerted to the controversy by a federal government lawyer, said, “The company has been short-changing the tax collection agency for much of the past decade.   Mr. Buffett’s company has not fully settled its tax bills from 2002-2009.  Yet he says he’d happily pay more.  Except the IRS has apparently been asking him to pay more going on nine years.”
 
Apparently, not paying taxes in full is an annual occurrence under Buffett’s watch.  Considering the size of the company, the amount of unsettled taxes could total in the tens of millions.
 
McCarty explained, “The rough translation of the report is that Berkshire Hathaway did not pay all the federal taxes that it was required to for 2002 through 2004.  The IRS examination team caught Berkshire Hathaway on at least some issues.  Instead of paying up, Berkshire Hathaway is threatening the IRS with protracted litigation and is in the process of cutting a deal with the IRS Appeals office.”
 
He continued, “For 2005 and 2006, Berkshire Hathaway again did not pay all the federal taxes that it was required to.  Again, the IRS examination team caught Berkshire Hathaway on at least some issues. Now, Berkshire Hathaway is again threatening the IRS with protracted litigation and is trying to cut a deal with the IRS Appeals office.”
 
McCarty concluded, “And, finally, the IRS has opened another examination of Berkshire Hathaway’s tax returns for 2007 through 2009, but has not officially sent Berkshire Hathaway the bill yet for taxes that Berkshire Hathaway failed to pay for those years.  One would expect they will find yet more issues.”
 
Now, most Americans, when they receive a tax bill from the government, they pay it.  They don’t get an attorney.  They don’t appeal the bill.  They pay it — on time and in full.  But not Buffett’s company, which apparently takes years to settle its liabilities.
 
Since this appears to be an ongoing pattern at the company, it becomes reasonable to ask: Is this some sort of internal company policy to delay paying taxes on time? If so, could this be construed as a form of tax evasion?
 
Interesting questions for the man who professes to want to pay more to Uncle Sam, and who sees fit to raise the burden on all job creators — except for perhaps his company — despite the longest period of sustained high unemployment since the Great Depression.
 
As Mr. Buffett has seen fit to enter the political arena, in the interests of full disclosure, the American people should be alerted to his own taxing hypocrisy.  Reporters should ask him, “If you’re so interested in paying more in taxes, why doesn’t your company settle its tax bills from the past decade now?”
 
Then they might ask him about the pot and the kettle as a follow-up.
 
Bill Wilson is the President of Americans for Limited Government. You can follow Bill on Twitter at @BillWilsonALG.
 


Read more at NetRightDaily.com: http://netrightdaily.com/2011/08/warren-buffett%e2%80%99s-taxing-hypocrisy/

[JDN]

"Bull-shiite"?  Somehow I think you always have Islamic issues on your brain.     That's ok; it's a subject that while I don't always agree with you,
I definitely respect your opinion on the subject.

Moving on to taxes...   

Give the money to the government?  I suppose, but then I have potholes on my street.  I complained.  "They will get to it, but money is short".  Now I suppose I could write a check to  LA, but I won't.  It's a bogus, absurd, albeit ingenious argument that they should write a check to the government.  They are saying "all" millionaires should pay more,
and they are saying it's ridiculous that the marginal tax rate affects their personal investment decisions.  Seems reasonable to me.  I few Scrooges object. 
Mind you, I don't know since I don't make a million plus per year. 

As for your sailboat example, I assure you Republicans do the same.  I know some - I used to sail a lot.  What always amused me was I was see 50 foot sailboats
registered in Nevada.  Rather blatant I thought.  CA finally caught on to that one.  Then fancy cars all had Nevada plates.  CA is catching on to that one too.

I think what they are saying is to raise taxes for everyone making more than a million dollars a year, don't create loopholes, or shelters, or increase deductions.
Note, Kerry still bought the boat; it didn't change his decision to buy, merely it changed his decision where to dock his boat since he had a choice. 
A mere inconvenience saving him $500K.

As for your further post from Bill Wilson, companies dispute taxes all the time; so what.  I've been audited and I disputed the IRS's conclusions too.   Further, Berkshire Hathaway is not "his company".  It's a public company.  I don't quite get the relevancy here.  Buffet didn't say companies, or individuals for that matter, should pay higher taxes than what is properly owed.  That's want lawyers and accountants are for.  He is simply saying that all individual millionaires should be required to pay more.

But I give up, I concede, as have others, that I will never be able to keep up with your frequent, albeit irrelevant posts.

[G M]

I try to dumb it down for you. Sorry you can't keep up.

Didn't it recently dawn on you how California's tax and spend model was driving business out of California?

Again, rich people like Kerry, who hypocritically espouse taxes as good yet avoid them when possible are responding to the disincentives created by taxes. When he decides to dock his wife's yacht in RI instead of Taxachusetts, not only is the state of Taxachusetts missing out on the taxes, the small businesses that would tend to the yacht and it's crew miss out to those in RI. Gee, low taxes attract economic activity.

[DougMacG]

Hard to have a serious discussion about tax policy or anything in economics if you deny that incentives and disincentives have an effect on economic behavior.  Why not petition the state government to close all economics departments in public universities.  What is there to study if inputs to a decision do not affect the decision. 

Some opposing opinions stimulate amazing discussion.  Others just bring down the discussion.  The adventure just took two steps backwards.

[Crafty_Dog]

JDN:

Of course there is a de minimis point at which behavior arguably is unaffected and where that point is can reasonably be discussed, but that does not seem to be the point you apparently are trying to present-- you go much broader than that.

GM's posts are EXACTLY on point.  He is backing us his assertions with a number of examples of fact directly contrary to your assertions. 

I gotta say, I find your argument here ultimately it reduce to a disbelief in the law of supply and demand.

This is tedious.

[JDN]

Crafty, I agree GM has posted some interesting posts.  If you look at the CA forum, you will see that I too have posted items that are similar to and agree with
GM's postings.  For example, GM and I have both said that CA's model needs to be changed.

I never said nor did I deny incentives and disincentives have an effect on economic behavior.  I posted an article and quoted one of the (millionaire) participants.

I think some on this forum would prefer that we return to the good old robber baron days.  Opposing that idea, like these millionaires are doing is not "bringing
down the discussion", it is merely disagreeing with your opinion.  Frankly, except for a few millionaires, I doubt if most Americans wish for the good old robber baron days.

I'ld like to think we have progressed since then.

[Crafty_Dog]

In isolation and without comment you posted this:

""Not once have any of my personal investment decisions been a function of marginal tax rates," Gruener said. "We just don't think about it.""

This sure gives the impression that you are agreeing with this denial of the law of supply & demand (price affects supply and vice versa) and this certainly is quite distinct from

Why else bother to post it?

Then, in response to his posts, you said "But I give up, I concede, as have others, that I will never be able to keep up with your frequent, albeit irrelevant posts."

This sure gives the impression that it is a response to his posts in response to your post.  As I have already posted, I found his posts quite responsive to your posting of someone denying the law of supply and demand when it came to tax rates.  To answer this with examples of where the two of you have agreed (and generally it is a good thing to note areas of agreement) is not really taking responsibility for what you have said here.

[JDN]

I quoted the article and the participants therein.  I posted it because it presents a different and credible opinion, more so than my own since
I would not be directly affected by a tax on those earning in excess of $1,000,000.  In the search for truth I think it's good to hear opposing viewpoints.

I criticized GM's post because while they are both fruit, they are apples and oranges.  State versus Federal taxes.  Of course if
I have a choice where I'm going to invest or do something, i.e. shoot my film in AZ or CA, I will consider tax advantages (this specific example
has been posted before).  But as the article pointed out, it's not the overriding issue, just one consideration. 

Concerning Berkshire Hathaway arguing their taxes, well that's what lawyers and accountants do.  Of course within the law Berkshire Hathaway is going
to try to avoid paying taxes.  The post was not relevant.  If the taxes are due, Berkshire Hathaway will pay and will still go on about it's business of making money.  They won't stop doing insurance nor again will it materially affect their business decisions.  And to say Buffet should simply give the money to the government is just plain silly.

The point I am not making very well and I thought the quoted individual made better is that
regardless of tax incentives I am still going to make that film.  And probably regardless of tax advantages, Kerry would have bought
his boat.  If his state doesn't get the business, well nearby RI does.  And Berkshire Hathaway will pay the appropriate tax whatever it is
to the Federal Government. 

If we raised taxes 2% on millionaires I doubt if it will have a negative affect on economic growth or creativity.  Business will go on as before.
2% more or less is not the issue. Many of the truly rich (see article) don't seem to care.  That was the point.

Heck, if I even raised your taxes 2% would you teach less?  I doubt it.  I suggest it wouldn't affect your business plan at all.

[DougMacG]

"The point I am not making very well and I thought the quoted individual made better is that
regardless of tax incentives I am still going to make that film." ... "Heck, if I even raised your taxes 2% would you teach less?  I doubt it.  I suggest it wouldn't affect your business plan at all."  - He already said he would move the business out of the bankrupt overtaxed state, people change their behavior based on incentives and disincentive.  You don't measure that with a poll or a microphone.

A certain percentage quit, leave, relocate, hide income etc.  Even if the majority stay and pay more the results at some point turn downward.  That you go back to the infinitesimal argument is sad.  These taxes and regulations at all levels accumulate!  Your idea is not a 2% tax, it would be 2 more percent in a state collapsing from the asphyxiation that comes from prolonged incrementalism like this.  If it is the last 2% of oxygen in the room, you die.  In the real world like the USA or Greece, you just choose the safety hammock for a while.

Adding a regulation, and another and another, and adding a small tax and a small increase and another and another and another is how we got here.  Family leave law alone didn't end hiring.  A small tax on electricity alone didn't end manufacturing. Plant closing notice laws didn't end all production.  The 60% tax on home telephone service made up of a bunch of 2% this and 2% that fees alone did not end all home telephone service. But how many taxes and regulations are there now?  Have you looked at the economy lately?  Economic behavior turned radically downward with the impending expiration of the Bush tax cuts even without that expiration actually occurring.  Obama's own advisers said you don't raise taxes in a recession?  Why not ? ? ? ? ?  They kill of business investment and hiring AT THE MARGIN.

The discussion here in a short time has included why not go back to the 90% tax rates on the rich and the 9% Cain plan.  That is quite a difference in thinking even if you do it 2% at a time.  Ask the frog in the boiling water.

[JDN]

Actually, if I recollect Crafty said he would consider, I'm not aware that he has decided to move his business out of Bankrupt CA.  For the record, I notice he hasn't moved yet.  And if he likes the weather (it's mid 80's today), the beach near his home, the clean ocean breeze, the international airport near his house, etc. I bet he's still thinking about that move.  Further, I doubt if 2% more in Federal taxes (payable wherever he moves) will influence his decision to teach.  Of course he would like to make more and pay less, but I think he teaches because he loves teaching martial arts.  If money was the only answer he would stayed being a lawyer.  But I can't answer for Crafty.

On another topic I said, "I think there are valid points on both sides of the argument."  That is usually true IMHO.

I agree with your point, taxes and regulations accumulate.  It's now to the point of being onerous in CA.  Something needs to be done.  But while similar, Federal taxes and State taxes are a little different.

On the Federal level, I happen to agree with the millionaire's quote and Buffet's opinion - as you phrase it, the sad infinitesimal argument that they can afford 2% more.  You don't.  I think you and I have agreed to disagree, but I think there are valid points on both sides.

[Crafty_Dog]

For the record, I am nowhere near the level where the higher tax rates would affect me directly!

However, I am still quite opposed to such increases because indirectly I think such increases would be bad for everyone.

[G M]

http://danieljmitchell.wordpress.com/2011/11/17/five-lessons-for-america-from-the-european-fiscal-crisis/



Five Lessons for America from the European Fiscal Crisis

November 17, 2011 by Dan Mitchell


I’ve written about the fiscal implosion in Europe and warned that America faces the same fate if we don’t reform poorly designed entitlement programs such as Medicare and Medicaid.
 
But this new video from the Center for Freedom and Prosperity, narrated by an Italian student and former Cato Institute intern, may be the best explanation of what went wrong in Europe and what should happen in the United States to avoid a similar meltdown.
[youtube]http://www.youtube.com/watch?feature=player_embedded&v=rZzJE7i8JWY[/youtube]
http://www.youtube.com/watch?feature=player_embedded&v=rZzJE7i8JWY
I particularly like the five lessons she identifies.
 
1. Higher taxes lead to higher spending, not lower deficits. Miss Morandotti looks at the evidence from Europe and shows that politicians almost always claim that higher taxes will be used to reduce red ink, but the inevitable result is bigger government. This is a lesson that gullible Republicans need to learn – especially since some of them want to acquiesce to a tax hike as part of the “Supercommitee” negotiations.
 
2. A value-added tax would be a disaster. This was music to my ears since I have repeatedly warned that the statists won’t be able to impose a European-style welfare state in the United States without first imposing this European-style money machine for big government.
 
3. A welfare state cripples the human spirit. This was the point eloquently made by Hadley Heath of the Independent Women’s Forum in a recent video.
 
4. Nations reach a point of no return when the number of people mooching off government exceeds the number of people producing. Indeed, Miss Morandotti drew these two cartoons showing how the welfare state inevitably leads to fiscal collapse.
 
5. Bailouts don’t work. This also was a powerful lesson. Imagine how much better things would be in Europe if Greece never received an initial bailout. Much less money would have been flushed down the toilet and this tough-love approach would have sent a very positive message to nations such as Portugal, Italy, and Spain about the danger of continued excessive spending.
 
If I was doing this video, I would have added one more message. If nations want a return to fiscal sanity, they need to follow “Mitchell’s Golden Rule,” which simply states that the private sector should grow faster than the government.
 
This rule is not overly demanding (spending actually should be substantially cut, including elimination of departments such as HUD, Transportation, Education, Agriculture, etc), but if maintained over a lengthy period will eliminate all red ink. More importantly, it will reduce the burden of government spending relative to the productive sector of the economy.
 
Unfortunately, the politicians have done precisely the wrong thing during the Bush-Obama spending binge. Government has grown faster than the private sector. This is why this new video is so timely. Europe is collapsing before our eyes, yet the political elite in Washington think it’s okay to maintain business-as-usual policies.
 
Please share widely…before it’s too late.

**Hottest economist evah!

[DougMacG]

Regarding the 5 lessons above, really 6... Excellent Post!  If you already read it, read it again and pass it along.
----------------------------

Important point regarding the 2% tax idea on top of all other taxes and on top of all crippling regulations is to note that this is an anti-growth strategy.  For whatever other objectives motivate the advocates have, it is the exact opposite of a pro-growth strategy for the individual and for the country - even if you think it applies only to everyone but you.

A tax on anyone is a tax on the economy and we all share an economy.  Every tax hits everyone at least indirectly.  Taxes are necessary but being overly clever and targeting (that fellow behind the tree) isn't.

Crafty put it extremely well here IMO: "I am still quite opposed to such increases because indirectly I think such increases would be bad for everyone."

In the 5 lesson post and throughout history we learn that this or any other new tax will not close the deficit, only kill growth and increase spending.

The idea that you can't move or change business activities because it is a federal and not a state law has been proven false over and over and over and over and over.  Individuals and businesses change their behavior based on changing circumstances.  The ones that don't perish.  It only takes a 2% change in activities to offset the 'benefit' of a 2% tax.  What retail business, when they desperately need more customers and more cash coming into the cash register, will raise prices by 2%?  None. 

No one has more flexibility to change their economic behavior than the rich.  From a tax efficiency perspective, soaking the rich doesn't work.  From a moral perspective, IMO it doesn't work.  From a fiscal perspective, it doesn't work.  The point of tax policy is to raise the money to pay for the legitimate functions of governing.  Nothing grows revenues like growing the economy.  You can get more money from the rich a number of ways, but not by simply raising the highest marginal rate.  There is nothing the government does that grows the private economy other than loosening the handcuffs.

We need (IMHO) to identify the people and the policies that would move us further in the wrong direction, toward further stagnation and decline, and defeat them.

[G M]

http://dailycaller.com/2011/11/17/patriotic-millionaires-demand-higher-taxes-but-unwilling-to-pay-up-video/

 

[Crafty_Dog]

"Taxes should be continued by annual or biennial reeactments, because a constant hold, by the nation, of the strings of the public purse is a salutary restraint from which an honest government ought not wish, nor a corrupt one to be permitted, to be free." --Thomas Jefferson, letter to John Wayles Eppes, 1813

[bigdog]

The data is a bit dated, but interesting nonetheless.  Which states recieve the most federal subsidies (per dollar contributed)?

http://www.taxfoundation.org/research/show/266.html

[Crafty_Dog]

By DANIEL J. MITCHELL
In a recent interview on these pages, presidential candidate Mitt Romney refused to rule out a value-added tax (VAT). He suggested that this hidden form of a national sales tax—which is embedded in the prices of goods and services during the production process—might be appropriate, particularly as a way of financing other tax cuts.

He's not the only Republican to speak favorably of a VAT. Herman Cain's 9-9-9 tax plan featured a flat tax and national sales tax. Very few people realized, however, that the final 9 was a VAT. And Rep. Paul Ryan, the chairman of the House Budget Committee and a favorite of the tea party thanks to his bold reforms to modernize Medicare and Medicaid, includes a VAT in his "Roadmap" plan, where it helps finance other reforms such as eliminating the corporate income tax.

What's going on here?

Most Republican supporters are drawn to the VAT for relatively benign reasons. It is a single-rate system, like the flat tax, for raising revenue, so it does not raise the possibility of class-warfare demagoguery. The VAT also doesn't hit savings and investment. And there are no distorting and corrupt loopholes. So there's a lot to like about the levy—or would be, if there were some practicable way of substituting a VAT for taxes on income.

Others assume that taxes eventually will be increased and they'd prefer to raise revenue in a less-destructive fashion. Better to impose a small VAT, the arguments go, than allow higher marginal tax rates on personal and corporate income to distort and discourage work effort and growth-enhancing investment.

These are legitimate motives, but it's important to look at what we can actually expect, not what some imagine in theory.

The most important thing to realize is that many people in Washington want bigger government, and a VAT is a necessary condition for that to happen. Simply stated, there is no way to turn America into a European-style welfare state without this new source of revenue.

But what about financing bigger government with higher income taxes, particularly on the wealthy? Though they'd never admit it publicly, smart left-wingers understand that there are two powerful reasons why soak-the-rich tax increases won't raise much revenue.

First, there aren't enough wealthy people to finance big government. According to IRS data from before the recession, when we had the most rich people with the most income, there were about 321,000 households with income greater than $1 million, and they had aggregate taxable income of about $1 trillion. That's a lot of money, but it wouldn't balance the budget even if the government confiscated every penny—and if it did, how much income do you suppose would be available in year two?

Second, higher tax rates don't raise as much revenue as expected. Upper-income individuals are far more likely to rely on interest, dividends and capital gains—and it is much easier to control the timing, level and composition of capital income, so as to avoid exposing it to the tax man.

This doesn't mean that those on the left won't push for class-warfare tax increases—they will. But their main motive will be politics, not raising revenue.

And that's why, looking at the long-run fiscal situation, the left needs a VAT. It's is the only realistic way to collect the huge amount of revenue that will be necessary to finance the mountainous benefits promised by our entitlement programs. Which is exactly what happened in Europe, where welfare-state policies only became feasible after VATs were adopted, beginning in the late 1960s.

In this country, some manufacturers are willing to overlook the VAT's flaws because the tax is "border adjusted." This means that there is no VAT on exports, while the tax is imposed on imports. For mercantilists worried about trade deficits, this is a positive feature that they claim will put America on a "level playing field."

But that misunderstands how a VAT works. Under our current tax system, American goods sold in America don't pay a VAT—but neither do German-produced goods or Japanese-produced goods that are sold in America because their VAT tax is rebated on exports. Meanwhile, any American-produced goods sold in Germany or Japan are hit by a VAT, as are all other goods.

In other words, there already is a level playing field. To be sure, there will also be a level playing field if America adopts a VAT. But it won't make any difference to international trade. All that will happen is that the politicians in Washington will get more money whenever any products are sold.

Unsurprisingly, President Obama is favorably inclined toward a VAT, having recently claimed that it is "something that has worked for other countries." And yet it's unlikely that the president would propose a VAT, in large part because he is fixated on class-warfare tax hikes. If he did, almost every Republican in Congress would be opposed, even if only for partisan reasons.

But what if a VAT sympathizer like Mr. Romney wins next November and decides that his plan for a lower corporate tax rate is only possible if accompanied by a VAT? There will be quite a few Republicans who like that idea because they want to do something nice for their lobbyist friends in the business community. And there will be many Democrats drawn to the plan because they realize that they need this new source of revenue to enable bigger government.

That's a win-win deal for politicians and a terrible deal for taxpayers.

Mr. Mitchell is a senior fellow at the Cato Institute.

[ccp]

Gets it:

http://www.usnews.com/opinion/mzuckerman/articles/2011/12/22/as-obama-fails-to-lead-american-dream-is-called-into-question

[Crafty_Dog]

By ARTHUR B. LAFFER
The political season has barely begun, and yet we already know that class warfare will be President Obama's key issue in the 2012 general election. It's even reared its ugly head in the Republican primaries, with the candidates trying to paint front-runner Mitt Romney as a cold-hearted capitalist and Rick Santorum proposing targeted tax breaks for the "working class" manufacturing sector.

But none in the GOP can compare with the progressive intelligentsia's obsession with tax increases on the rich to raise revenues and achieve social justice. In a New York Times op-ed last August, Berkshire Hathaway CEO Warren Buffett famously asked Congress to "stop coddling the super-rich," complaining that his effective tax rate was half that of the other people in his office. He then instructed Washington to raise tax rates on millionaires and billionaires like him and retain the employee payroll tax cut on those "who need every break they can get."

Waving Mr. Buffett's op-ed for all to see, Mr. Obama wasted no time in proposing a surtax on millionaires called the "Buffett Rule." Putting aside all the oohing and ahhing over Mr. Buffett's selflessness, his effective tax rate on his true income would hardly budge if this "Buffett Rule" were applied. What's worse, raising the highest tax rates would most likely worsen the budget deficit and lead to a further weakening of the economy. Everyone would suffer.

Mr. Buffett stated in his op-ed that he paid $6,938,744 in total income and payroll taxes in 2010, representing 17.4% of his taxable income, which puts his taxable income just under $40 million. Although certainly a fantastic sum, $40 million actually understates Mr. Buffett's income in 2010 by more than 250-fold.

Mr. Buffett's net worth rose by $10 billion in 2010 to $47 billion, according to Forbes Magazine. That increase, an unrealized capital gain, is part of his total income by any standard definition, including the one used by the Congressional Budget Office. After also including a $1.6 billion gift to the Bill and Melinda Gates Foundation, Mr. Buffett's true income in 2010 was much closer to $11.6 billion than the $40 million figure cited in his op-ed. Hence his true effective tax rate was only 6/100ths of 1% as opposed to 17.4%. And these are just the additions to his income that we know about.

Enlarge Image

CloseBloomberg
 
Barack Obama awards the presidential Medal of Freedom to Warren Buffett, February 2011.
.The "Buffett Rule" would not tax the vast majority of his shielded income, including either his unrealized capital gains, which are currently taxed at zero percent, or charitable contributions, which are tax deductible. If the "Buffett Rule" were applied as President Obama proposes, then Mr. Buffett's federal tax bill would have been $14.4 million, rather than the $6.9 million he actually paid. As a fraction of his true income, his effective tax rate would only have risen from 6/100ths of 1% to 12/100ths of 1%.

Mr. Buffett's donation to the Gates Foundation goes to the heart of my critique of his public call for higher tax rates on the rich. Just look at the second contractual condition for his ongoing pledge to the Gates Foundation: "The foundation must continue to satisfy the legal requirements qualifying Warren's gift as charitable, exempt from gift or other taxes."

In other words, if his gift weren't tax sheltered he wouldn't give it. So much for "shared sacrifice."

Incidentally, I'm not the first to question Mr. Buffett's commitment to "shared sacrifice" in balancing the federal budget. In a 2007 CNBC interview, when asked why he shelters his money through tax-free strategies rather than writing big checks to Uncle Sam, Mr. Buffett responded: "I think that on balance the Gates Foundation, my daughter's foundation, my two sons' foundations will do a better job with lower administrative costs and better selection of beneficiaries than the government."

So Mr. Buffett thinks he and his family can put their money to better use than the government can. I guess he's really not so different from the rest of us after all.

Mr. Buffett also stated in his op-ed that in his 60 years working with investors he has yet to see anyone "shy away from a sensible investment . . . even when capital gains rates were 39.9% in 1976-77." Mr. Buffett's choice of 1976-77 is prescient because the economy in 1977 was a basket case. The official Bureau of Labor Statistics unemployment rate was 7.1%, consumer price inflation was 6.7%, and the S&P 500 dropped a whopping 17% after adjusting for inflation. Indeed, 1977 is a good illustration of the type of economy Mr. Buffett's policies would deliver.

He also said in his op-ed that "people invest to make money, and potential taxes have never scared them off." To make his point he compares the 1980-2000 period when 40 million jobs were created to what's happened since 2000 with lower tax rates and fewer jobs created.

Surprisingly, Mr. Buffett is actually trying to cite the phenomenal growth during the Reagan-Clinton period of 1980-2000 as a result of high taxes. But the facts reveal that the 1980s and '90s should be used as Exhibit A for why Mr. Buffett's proposals are dead wrong. Between 1980 and 2000, the top marginal income tax rate was slashed to 39.6% from 70%, and between 1977 and 1997 the capital gains tax rate was cut to 20% from 39.9%.

When it comes to raising tax revenues by raising tax rates on the rich, Mr. Buffett would again appear to be on the wrong side of the argument. Between 1921 and 1928, the top marginal income tax rate fell to 25% from 73%. During this period, tax receipts from the top 1% of income earners rose to 1.1% of GDP from 0.6% of GDP. The top income tax rate dropped to 70% from 91% after the Kennedy tax cuts began in 1964, while tax receipts from the top 1% of earners rose to 1.9% of GDP from 1.3% of GDP in the period 1960 to 1968. By the way, these periods were two of the biggest booms in U.S. history.

Guess what was the third period of boom? Since 1978, the top earned income tax rate fell to 35% from 50%, the top capital gains tax rate fell to 15% from 39.9%, and the highest dividend tax rate fell to 15% from 70%. After taking office in 1993, President Clinton virtually eliminated the capital gains tax from the sale of owner-occupied homes and cut government spending as a share of GDP by the largest amount ever.

Meanwhile, the top 1% of earners saw their tax payments climb to 3.3% of GDP in 2007 from 1.5% of GDP in 1978, while the bottom 95% saw their tax payments drop to 3.2% of GDP in 2007 from 5.4% of GDP in 1978. Why would Mr. Buffett want to reverse these numbers?

Of course, cynics and die-hard progressives might object to the above evidence on the grounds that it was driven by an explosion of income gains. But that's largely the point.

Mr. Laffer, chairman of Laffer Associates and the Laffer Center for Supply-Side Economics, is co-author, with Stephen Moore, of "Return to Prosperity: How America Can Regain Its Economic Superpower Status" (Threshold, 2010).

[DougMacG]

A.  I did not see the previous post in this thread, Laffer v. Buffet, when it went by a week ago.  Very interesting!  One point is that unrealized capital gains don't show up as income, don't show as tax and don't raise any revenues.  The bad part of that is that many of those gains are unrealized because of the tax!  An especially large problem is that states tax capital gains as ordinary income, not at a long term capital gains rate, so unless your gain is in Texas, South Dakota or a few other places, your tax is going to be far above the 15%, not counting the small problem described below.

B.  Why should a capital gain get a preferred tax rate?  Hint below.

C.  What is the tax rate on a capital gain taxed at 15%?  Does anyone know?  I didn't think so...

15%.  Right?  Well no.  Since it is by definition a LONG TERM capital gain, it contains an inflationary component.   Let's take an example:  If you bought an investment in 1971 for $100 and sold it in 2011 for $551.  You just walked away with 5 1/2 times your money over a very long hold - before taxes.  Your federal tax is 15% on 4 1/2 times the amount you invested, but your gain was zero because you only got back the same value in devalued dollars before taxes, so what is your tax rate really?  That is a tough one mathematically because you have a real tax but no real income.

Take any dollar amount in any year, and translate it to equal value in any other year using this online calculator.  The results may surprise you.
http://www.dollartimes.com/calculators/inflation.htm

[Crafty_Dog]

There is also the not-so-minor matter that one can LOSE money in the market, in real estate, etc.  Trust me on this one 

[Crafty_Dog]

Remember the moment in 2008 when Charlie Gibson of ABC News asked Senator Barack Obama why he would support raising the capital gains tax even though "revenues from the tax increased" when the rate fell? Mr. Obama's famous reply: "I would look at raising the capital gains tax for purposes of fairness." Well, we were warned.

Here we are four years later, and President Obama on Tuesday night linked the term "fair" to U.S. tax and economic policy seven times. The U.S. economy is still hobbling out of recession, real family incomes are falling and 14 million Americans are unemployed, but Mr. Obama declared that his top priority is not to reform the tax code to promote growth and job creation. His overriding goal is redistributing income.

Mr. Obama endorsed the political ruse he calls the Buffett rule, which asserts as a matter of moral principle that millionaires should not pay a lower tax rate than middle-class wage earners. Specifically, Mr. Obama is proposing that anyone earning more than $1 million pay at least 30% of that income to Uncle Barack.

The White House says that if a millionaire household's effective tax rate falls below 30%, it would have to pay a surcharge—in essence a new Super Alternative Minimum Tax—to bring the tax liability to 30%. For those facing this new Super AMT, all deductions and exemptions would be eliminated except for charity.

The Buffett rule is rooted in the fairy tale that taxes on the wealthy are lower than on the middle class. In fact, the Congressional Budget Office notes that the effective income tax rate of the richest 1% is about 29.5% when including all federal taxes such as the distribution of corporate taxes, or about twice the 15.1% paid by middle-class families. (See "How Much the Rich Pay," January 23, 2012.)

This is because wealthy tax filers make most of their income from investments. Such income is taxed once at the corporate rate of 35% and again when it is passed through to the individual as a capital gain or dividend at 15%, for a highest marginal tax rate of about 44.75%.

This double taxation is one reason the U.S. has long had a differential tax rate for capital gains. Another reason is because while taxpayers must pay taxes on their gains, they aren't allowed to deduct capital losses (beyond $3,000 a year) except against gains in the current year. Capital gains also aren't indexed for inflation, so a lower rate is intended to offset the effect of inflated gains.

One implication of the Buffett rule is that all millionaire investment income would be taxed at the shareholder level at a minimum rate of 30%, up from 15% today. The tax rate on investment income from corporations would rise to 54.5% from 44.75%, a punitive tax on start-up or expanding businesses.

The new 30% capital gains rate would be the developed world's third highest behind only Denmark and Chile, according to the American Council for Capital Formation. This is on top of the 35% corporate rate that is already the second highest rate in the world after Japan. That giant sucking sound you hear come January 2013 would be hundreds of billions of investment dollars fleeing to China, India, Korea and other U.S. competitors. Lower capital investment in the U.S. means less wage growth, and so the people hurt most by this tax hike would be workers, according to a study by the Institute for Research on the Economics of Taxation.

Enlarge Image

CloseGetty Images
 .Mr. Obama conceded on Tuesday that the high U.S. corporate tax is an economic loser. Yet he misses the crucial point that business owners assess the combined corporate and capital gains tax on those business profits. Lowering the corporate tax rate makes the U.S. more competitive, but the tax change is self-defeating if it is combined with an even larger rise in investment income taxes on capital gains and dividends.

Mr. Obama isn't setting himself apart merely from conservatives with this Buffett ploy. He is rejecting 35 years of bipartisan tax policy that began with the passage of the Steiger Amendment by a Democratic Congress that cut the capital-gains rate to 28% from 35% in 1978.

As the nearby chart shows, the rate has never since risen above 28%, and the last time it moved that high was in 1986 as part of the Reagan-Rostenkowski tax reform that also cut the top marginal income tax rate to 28% from 50%. With income-tax rates so low, a differential was arguably less necessary—though it's worth noting that capital gains revenues fell dramatically after that rate increase.

A decade later Bill Clinton agreed to cut the rate back to 20% as part of the balanced-budget deal with Newt Gingrich. Capital gains revenues soared, helping to balance the federal budget. Nearly every study estimates that the revenue-maximizing tax rate from the capital gains tax is between 15% and 28%. Doug Holtz-Eakin, the former director of the Congressional Budget Office, says that a 30% tax rate "is almost surely above the rate that maximizes tax revenues." So it's likely the Buffett trick would lose revenue for the government.

Yet in a time of the highest deficits since World War II, Mr. Obama wants to double the capital gains tax rate even as he raises the top income-tax rate to 42% or so. Mr. Obama really is taking us back to the worst habits of the 1970s. And not because he thinks higher rates will raise revenue, but merely so he can score points against Mitt Romney and stick it to the successful.

This isn't tax fairness. It's tax folly.

[Crafty_Dog]

Democratic Tax Hypocrisy
Posted By Larry Elder On February 3, 2012 @ 12:11AM

Forgive Republican candidate Mitt Romney for his alleged failure to adequately explain why he paid “only” 14 percent of his income in taxes.

The honest answer — “Well, because my accountants couldn’t figure out how to get them any lower” — does not work in this or very many other election years. Romney seemed flat-footed because, like most business people, he seeks to minimize costs and expenses.

This includes taxes.

A normal wealthy-and-proud-of-it guy would have said: “Let me get this straight, pal. I’m not supposed to take every legal advantage provided me by the tax laws to reduce my taxes?” For what it’s worth, about 15 percent of Romney’s last two years of income went to charity — substantially higher than the percentage given by the Obamas or Joe Biden’s $380 (not a typo) of his quarter-million dollar income in 2006.

“Tax savings” allows people more money to save, spend, invest, bequeath and donate. On some level, even Democrats understand this.

Democrat Rep. Barney Frank, D-Mass., is one of them. In 2001, Massachusetts lowered it state income tax rate. But the legislature showed mercy for the Bay State’s guilt-ridden, tax-hike-supporting liberals. The tax form allowed the filer to check a special box — and pay the old, higher rate. Out of more than 3 million tax filers in 2004, a tiny fraction of 1 percent — 930 taxpayers — volunteered to pay the higher rate. Among those who declined the opportunity was Mr. Frank. Frank explained, “I don’t trust the legislative leadership and Gov. (Mitt) Romney to make the right decisions.” Instead, Frank said, “I’ll donate the money myself.” What?! Charity might better spend money than can government, which, by its nature, operates less efficiently and more expensively than can private welfare?

Democrat Sen. Howard Metzenbaum from Ohio (served 1974, 1976-1995) was another tax-supporting Democrat not too keen on paying more in taxes than he needed to. But after retirement, the wealthy Metzenbaum moved to Florida, which, unlike Ohio, is a state with no estate or personal income taxes. This saved him millions.

Democrat John Edwards’ wife Elizabeth, during the 2004 campaign, said rich politicians like her husband reveal “character” when they vote against financial “interest” by supporting higher taxes.

This is the same John Edwards who, as a trial lawyer winning big jury awards, established a separate sub-corporation to accept the money, paying him through dividends rather than income. Perfectly legal. But this allowed Edwards to avoid some $600K in Medicare payroll taxes.

Democrats like Sen. John Kerry, D-Mass., rail against the Bush tax cuts that rich people — like himself — “didn’t need” and “didn’t ask for.” Rhode Island requires no sales tax on yachts registered in that state — provided the boat is primarily housed in Rhode Island. Massachusetts is not so understanding. That state requires a sales tax and annual excise taxes. Folks say that Kerry and his 75-foot yacht spend way more time in Massachusetts than in Rhode Island. But accountants say that the wealthy yachtsman can avoid nearly $500K in state taxes by registering his boat in Rhode Island — which he did. All was going well, until a New York paper got hold of the story and Kerry “voluntarily” agreed to pay the Mass. tax — while continuing to insist that he does not really owe it.

Democrats like the late Ted Kennedy support the estate tax. And why not? The Kennedy family transfers wealth from generation to generation through trusts that avoid the very estate taxes that Kennedy consistently voted to impose on the wealth of others.

Shouldn’t tax-hike-supporting rich people like Warren Buffett want to pay more rather than less taxes? Yet one of Buffett’s companies is contesting tax claims against it.

Pro-tax-hike Democrats like MSNB-Hee-Haw’s the Rev. Al Sharpton deserve a special wing all to themselves in the Chutzpah Hall of Fame. Sharpton assails the Bush-era tax cuts and wants “the rich” to pay more. Sharpton lists income from his nonprofit at just under a quarter million dollars. Add this to his estimated salary at the cable network, and the “civil rights leader” likely pulls in a tidy $500K. Not bad for a guy that not long ago was a gold-medallion-wearing Harlem rabble-rouser in velour sweatpants who got famous by playing the race card in a phony rape case.

Sharpton, according to the New York Post, owes federal taxes and state taxes totaling $3.5 million. How much income would Sharpton have had to earn to amass $3.5 million in state and local taxes? A lot. How much nerve does it take for a guy making a half mil to go on television and pound the podium for higher taxes on the rich — when his own effective tax rate is 0 percent?

Ask Sharpton.

[JDN]

I'm not a fan of Mitts, but I don't think anyone is questioning that Mitts did anything illegal or wrong.  Nor did Buffet.  At least I sure don't.

The question on the table is whether the tax laws should be changed; is it is appropriate that an individual making millions upon millions of dollars only pay 14% while some middle class working people pay a much higher percentage?  I know the arguments, but it just doesn't sit right....

[Crafty_Dog]

The money is already taxed at the corporate level-- 35%.  When Japan drops its rate in April (IIRC) we will be the highest in the world.

[JDN]

Yeah, but as Mitts has proven, nobody pays that!   

It's all in the deductions (Mitts had lots) and keeping money offshore (Mitts did that too). 

Further, I think it's an issue of fairness.

Why does a guy who buys/owns stocks/companies/real estate for a living and hold them for a while pay a lot less tax as a percentage than some poor schmuck who is a wage earner?

Frankly, assuming Mitts wins the nomination, I think it will be an issue in the election.

[G M]

So, should everyone pay taxes at the same rate?

[JDN]

Sounds good to me.  Give a floor for the poor; after that all earnings from whatever source get taxed at the same rate.  And forget all deductions.

[G M]

Why should there be a floor for the poor? Fair means the same for everyone, right?

[JDN]

Not looking to have someone starve....

There has to be compassion someplace...

[G M]

You are free to pay other people's taxes with your own money, if you wish.

Fair means the same taxes for everyone, right?

[Crafty_Dog]

"Yeah, but as Mitts has proven, nobody pays that!"

Forgive me, but you have not yet grasped the point-- it is that the 15% comes on top of the corporate rate of 35%. 

"Why does a guy who buys/owns stocks/companies/real estate for a living and hold them for a while pay a lot less tax as a percentage than some poor schmuck who is a wage earner?"

Because it is on top of the corporate tax.  Because part of the gain is illusory due to inflation.  But mostly because he put capital at risk-- capital which is his AFTER the taxation upon what he actually made.  He can lose the money he invests.
 

[JDN]

The highest corporate rate is 35%; I repeat myself; who pays that?

Let's compare the average middle class schmuck.  He works hard, pays taxes far above the 15% rate of Mitts and has a few dollars left over.
Where does he put it?  Probably in a savings account.  Fully taxable; again. 

Mitts?  He might buy a second vacation home.  Is the interest deductible?  Yep!  If he sells it for a profit, he pays the minimal capital gains rate; not
the tax rate the middle class schmuck pays on his savings account.  Or Mitts even keeps some of his money offshore and pays no tax.

Or maybe Mitts buys stock and holds them for a year.  Again, does he pay a lower rate than the middle class schmuck who put his money in savings because
he really didn't have a lot of choices like the rich do?  Yep.

Or maybe Mitts buys a company; calls himself president.  Takes deductions that you cannot even fathom, then sells it for a profit.  Yep, again he pays less tax
than the middle class schmuck.

I've got a friend who puts his kids on the payroll.  Pays them 100K+ and they do filing in office once a month.  Great deduction huh?  The business pays for his car, his
meals, his maid, you name it, the business pays for it; all deductible.  What does the average middle class schmuck do?  He just pays his taxes and weeps. 

Or maybe Mitts buys a new house.  Lives in it for a few years.  He deducts the interest, then decides to sell it at a profit (maybe not lately).  The middle class schmuck who only rents
can't deduct interest, heck he can't even deduct his car payment, and his savings in the bank is taxed as ordinary income. 

So Mitts sits back in his easy chair, making millions upon millions, AND paying less tax as a percentage than the middle class schmuck.  It's all funny money, probably little of it is wages earned. 
I notice Mark Zuckerberg, the president/owner of Facebook is going to reduce his salary to $1.00.  Mind you, he is majority shareholder; a billionaire, actually a multi billionaire. 
Zuckerberg is not dumb enough to pay regular tax on wages when he can pay 15% like Mitts.  Heck he can borrow against his stock at a rate far lower than the tax rate.

But does the average schmuck have those options?  Nope, he just pays and pays and pays.....

Is that fair?

Mitts has done nothing illegal; I don't question or criticize what he has done.  If I were him and I had his money, I would do the same.

But most of us don't....  And we end up paying higher taxes than Mitts.

Is that fair....

So it's going to be an interesting election. 

[G M]

The highest corporate rate is 35%; I repeat myself; who pays that?

Any tax on any business is ultimately paid by those that consume the products/services of that business.

[Crafty_Dog]

Well said GM, but answering JDN on the level on which he meant his comment:

Yes, the government hands out favors and further manipulates how businesses invest and/or spend their money.  That said, does this mean you recognize the principal that Mitt's 15% is on top of corporate taxes?

[JDN]

Well said GM, but answering JDN on the level on which he meant his comment:

Yes, the government hands out favors and further manipulates how businesses invest and/or spend their money.  That said, does this mean you recognize the principal that Mitt's 15% is on top of corporate taxes?

In general, yes, I acknowledge your point, but there are numerous exceptions as I indirectly pointed out.  For example, as I pointed out, for lack of alternatives, the middle class guy already paid taxes, then puts his money in a savings account for lack of alternatives and AGAIN pays taxes.  What's the difference?  Or for lack of funds, he doesn't buy a house, or a second house, which IMHO is a tax boondoggle for the rich.

But my primary point is as GM has tried to address (we disagree) is how to define "fairness".  I do respect GM's point, perhaps because he IS a wage earner, but not all people are so logical or "fair" as he defines it.

However, I do understand your math, also I acknowledged that Mitts did absolutely nothing wrong.  BUT....  it just looks bad, IMHO (and perhaps other Americans) that someone who makes millions pays less than 15%, an amount less than middle America.

I think the next election will address that point....

[G M]

JDN is concerned that people with actual ability and intelligence might get rewarded in this country.

I mean Mitt actually made money by being smart, while Obama had to get by as an affirmative action token and Chicago graft to make his money. Is that fair? What if Obama had to actually make money with his brains and talent? S-O-L-Y-N-D-R-A spells poverty and failure.

That isn't going to keep Michelle in Wagyu beef and luxury foreign vacations, is it? No private schools for the girls either. Imagine if they had to attend the same schools that the dems inflict on poor black children. Nope, not for the dem elites, who really care about the common people they fly over on their jets.

So, if your're going to be rich, make sure you align yourself with the left, then your wealth is fine, especially if you made it through graft/politics or married/inherited it.

Just don't do it honestly and through hard work, because that's not fair.

[G M]

First Lady Celebrates B-Day at Steakhouse Featuring $28 'Obama' Burger--Kobe Beef, Bacon, Cheese







By Susan Jones and Greg Gwyn-Williams

January 18, 2012

Subscribe to Susan Jones and Greg Gwyn-Williams's posts



   


President Barack Obama and first lady Michelle Obama arrive on the South Lawn of the White House in Washington on Dec. 14, 2011. (AP Photo/Haraz N. Ghanbari, File)
 
(CNSNews.com) - Michelle Obama celebrated her 48th birthday Tuesday night with her husband and friends at a D.C. steakhouse where the menu features a $28 hamburger named "The Obama."
 
BLT Steak describes its "Obama" burger as an 8-ounce American Kobe burger with bacon, cheddar cheese, burnt tomato ketchup, and scallion mustard.

American Kobe beef is from a line of Japanese Wagyu cattle, which traditionally are fed a special diet and massaged to produce the fat-marbling for which the meat is prized.
 
But the Obamas didn't have burgers--they reportedly had steak in the private dining room.

In response to a query from CNSNews.com, the BLT restaurant chain would not provide any details of the Obamas' visit, except to say they were "quite honored to have them as our guests."
 
But according to one food blog--in a town famous for leaks--the President and Mrs. Obama ordered a 10-ounce American Wagyu steak, which at $81 is the second most expensive item on the menu, just behind the 12-ounce American Wagyu for $92.
 
Dessert reportedly was a special-order red velvet cake.
 
The a la carte dinner menu, posted online, shows the Obamas had plenty of food to choose from: The appetizers at BLT Steak range in price from $11 (for a Bibb lettuce salad with mustard dressing) to $34 for a dozen oysters.
 
Entrees range from $26 for lemon-rosemary chicken to $92 for the 12-ounce Wagyu Ribeye.
 
Side dishes include an $8 order of French fries or onion rings. The most expensive side dish is $13 for "Hen of the Woods" mushrooms.
 
Most desserts are $10, and they include crêpe soufflé with passion fruit sauce and mini doughnuts with chocolate sauce and coffee ice cream.
 
"The Obama" is one of 5 burgers listed on the restaurant's "Political Burger Board." At $28, it is the second most expensive burger, right after "The Bi Partisan," which costs $32. The Bi Partisan is also an 8 ounce Kobe beef burger, topped with lobster, cheddar cheese and "black truffle buttermilk dressing."  The other three burgers--including "The Pork Barrel"--cost either $16 or $18.
 
The restaurant's assistant general manager told the blog Foodorama that Michelle Obama "dines with us quite regularly."

[G M]

Expensive massages, top shelf vodka and five-star hotels: First Lady accused of spending $10m in public money on her vacations
By Daily Mail Reporter
Created 3:33 PM on 24th August 2011


The Obamas' summer break on Martha's Vineyard has already been branded a PR disaster after the couple arrived four hours apart on separate government jets.
But according to new reports, this is the least of their extravagances.
White House sources today claimed that the First Lady has spent $10million of U.S. taxpayers' money on vacations alone in the past year.
 Expensive taste: Michelle Obama, pictured yesterday in Massachusetts, has been accused of spending $10m of public money on vacations
Branding her 'disgusting' and 'a vacation junkie', they say the 47-year-old mother-of-two has been indulging in five-star hotels, where she splashes out on expensive massages and alcohol.

 More...Revealed: How Obama goes hobnobbing with friends and donors while on Martha's Vineyard family holiday
Michelle Obama shows up her husband in tiny purple bike shorts as the President lags behind in jeans
Nothing like a world of porn kings and gangsters to take your mind off things... Obama gets stuck into his holiday reading amidst global turmoil
Get Mrs Obama's sense of style with MailLife.co.uk

The 'top source' told the National Enquirer: 'It's disgusting. Michelle is taking advantage of her privileged position while the most hardworking Americans can barely afford a week or two off work.
'When it's all added up, she's spent more than $10million in taxpayers' money on her vacations.'
 His and her jets: The President and his wife, who are spending nine days on Martha's Vineyard, have come under fire for travelling on separate planes
The First Lady is believed to have taken 42 days of holiday in the past year, including a $375,000 break in Spain and a four-day ski trip to Vail, Colorado, where she spent $2,000 a night on a suite at the Sebastian hotel.
And the first family's nine-day stay in Martha's Vineyard is also proving costly, with rental of the Blue Heron Farm property alone costing an estimated $50,000 a week.
The source continued: 'Michelle also enjoys drinking expensive booze during her trips. She favours martinis with top-shelf vodka and has a taste for rich sparking wines.
'The vacations are totally Michelle's idea. She's like a junkie. She can't schedule enough getaways, and she lives from one to the next - all the while sticking it to hardworking Americans.'
 Travelling in style: Mrs Obama during her $375,000 trip to Spain last year
 

High security: Bodyguards surround the First Lady and youngest daughter Sasha as they take a stroll on the Costa del Sol
While the President and his wife do pay for some of their personal expenses from their own pocket, the website whitehousedossier.com says that the amount paid by the couple is 'dwarfed by the overall cost to the public'.
The magazine also reported that Mrs Obama, whose fashion choices are widely followed, had been going on 'wild shopping sprees', much to the distress of her husband, who, its sources reveal, is 'absolutely furious' at his wife's 'out-of-control spending'.
The President has already come under fire this week over his decision to take a family vacation while millions of Americans are out of work and countless more are financially strapped.
 Luxury break: The President and his family, pictured in December, splashed out more than $1.5million on a Christmas holiday in Hawaii
 'Winter White House': The property in Kailua cost $38,000 to rent
But the situation sparked further anger after he and his wife elected to fly separately to the Massachusetts retreat - despite travelling on the same day.
Mr Obama left the White House aboard Marine One on his way to Andrews Air Force base to hitch a lift aboard Air Force One - along with First Dog Bo.
After landing at Cape Cod Coast Guard Air Station, he then took a final helicopter to his holiday destination to complete the remarkable 500-mile journey.
His wife and daughters, who arrived just four hours earlier, were also travelling from Washington, but took a specially designed military aircraft.
They would also have had their own motorcade from the airport to the vacation residence.
FIRST LADY OF LUXURY TRAVEL: HIGHLIGHTS FROM THE OBAMAS' LAVISH GETAWAYS OVER THE PAST 12 MONTHS
GIRLS' TRIP TO SPAIN: AUGUST 2010

The exact cost is unclear as Mrs Obama and her 40 friends footed many personal expenses, such as hotels and meals themselves.
But the U.S. taxpayer would have paid for the First Lady's 68-strong security detail, personal staff, and use of presidential jet Air Force Two.
Per diems for the secret service team runs at around $281 each - nearly $98,000 for the length of the summer break.

Use of Air Force Two, the Air Force version of a 757, comes in at $149,900 for the round trip. This does not include time on the ground.

Mrs Obama's personal staff, of which there are an unknown amount and might cost considerably more per day, should also be taken into account.

CHRISTMAS BREAK IN HAWAII: DECEMBER 2010

According to the Hawaii Reporter, the bill for the $1.5m trip included:

$63,000 on an early flight bringing Mrs Obama and the children to Hawaii ahead of the President.
$1,000,000 on Mr Obama’s return trip from Washington on Air Force One.
$38,000 for the ‘Winter White House’ beach property rental.
$16,000 to rent nearby homes for Secret Service and Navy Seals.
$134,000 for 24 White House staff to stay at the Moana Hotel.
$251,000 in police overtime.
$10,000 for an ambulance to be on hand at all times

SKI TRIP TO VAIL: FEBRUARY 2011

Mrs Obama and her daughters stayed at the Sebastian hotel on Vail Mountain, where rooms cost more than $2,400 for multi-bedroom suites.
The family appear to have flown there on Air Force Two.
They were escorted to the resort by a motorcade of about a dozen vehicles, including 15 state and local law enforcement officers
SUMMER HOLIDAY ON MARTHA'S VINEYARD: AUGUST 2011

The Blue Heron Farm estate, where the Obama family are currently staying, rents for about $50,000 a week.
According to U.S. News and World Report, the Coast Guard is required to keep ships floating near the property, the presidential helicopter and jet remain at the ready and security agents will be on 24-hour duty.



Read more: http://www.dailymail.co.uk/news/article-2029615/Michelle-Obama-accused-spending-10m-public-money-vacations.html

[JDN]

Good grief GM; now you are picking on Mrs. Obama because on her birthday she goes to an expensive restaurant?  Or a vacation?

My parents for many years used to live 5 doors down from Nixon's Western White House in San Clemente.  I still remember the
navy or coast guard ship offshore, the helicopters, the marine guards stopping the surfers (there is a famous surfing beach nearby) etc.
I'm sure he drank fine wine, ate nice steaks, etc.  Who knows what the cost was; who cares?

I don't own or have much, but I too favor "expensive booze"

So what....

You must be kidding; this is the best you can post regarding "Tax Policy"?

[G M]

Hey, you're trying to push the class warfare theme. I guess after 4 years of failure, that's the best you and Obozo have.

[DougMacG]

JDN,  You wrote personal and hypothetical about the advantages Gov. Romney had.  Deducting interest which is ludicrous, he doesn't need to borrow to buy a home.  They goaded him into releasing tax returns to look for wrongdoing, found none and then exploited his perdsonal information for political cheapshotting. Romney's homes didn't cause tax burdens to go up on someone else.  Michelle's lifestyle does.  FDR ( a Dem) was winniong WWII with less staff than the first lady.  If the idea is to stay on topic, please post what YOU think the rate for quadrupletaxation rates should be on illusory, inflationary gains.

Comparing with the average Joe (schmuck?)?  The American at the 50th percentile pays roughly NOTHING in federal income tax.  If you are counting FICA and oppose it, then good, let's all work to repeal it.

The poor do not work harder than the rich and I watch that pretty closely.  But if they did or didn't would that affect what tax rates should be?  Should we factor that in as a difficulty factor like they do for gymnastics or figure skating, or ... a wild idea, tax all income of all taxpayers from all legal sources at the same rate, without judgment from the government.

The nice thing about the Mitt and Buff personal stories is that if the rich are not in fact paying a higher rate, why are we so obsessed with continuing that failed policy?

[Crafty_Dog]

AS JDN notes, we are wandering a bit far from tax policy here.

That said, last word mine    

It is my understanding that Michele has far exceeded the norm when it comes to spending public money on vacation (e.g. separate jets on mulitple occasions?!?) and that there is plenty of data showing that other presidents (e.g. Reagan, Bush 1 + 2) have had far more respect for the public purse and far more humility in their importance in relation to that of the people whom guard them (e.g. not taking certain trips at all so that personel could spend holiday time with families-- but that was is not something that was spoken about out of simple good manners and class. I would note also the incongruity of Mitt's wealth getting the treatment it has in comparison to Gigolo John Kerry, who did NOT earn his own money and who married a fabulously wealth woman not once but twice.  A cynic might wonder as to the motivations implied by such a coincidence-- not to mention it is only the blogosphere which reports his tax doding ways with his yacht , , , until he was caught.  Ditto the treatment of presidential hopeful John Edwards and his tax avoiding ways.  etc etc etc etc

Anyway, returning to matters more pertinent to this thread, I invite JDN to address the variable of the possible LOSS of capital that is part of the differential between the treatment of capital gains and income.  I also invite him to include in his calculus, that wages are a cost of doing business for a corporation (i.e. they are deducted) and dividends, which are a distribution of profit (i.e. money that is already taxed.)

[JDN]

Doug, I was using Mitts as an example.  Over and over did you notice I acknowledged that in my opinion he did absolutely NOTHING wrong.  I'm no more likely or less likely to vote for him since I found that he paid 14% in taxes.  I could argue like GM has argued before (yachts) that Michelle's lifestyle helps keep people employed,  but that too is a rather silly argument. 

As to who works harder, well, it doesn't really matter.  It's how smart you are and how talented you are.  That's true in all walks of life.  Hard work is nice, but God given talent is better.  I have friends who are partners at large law firms and they work hard; they also get paid very well.  And I play golf with a gardener who also works very hard, but makes very little.  That's life...

The issue I'm trying to focus on and I know you and I disagree on this point is the issue of fairness of taxation.

Let me give you a hypothetical example (I'm sure you will disagree, but stay with me).

On one hand we have a hard working dentist.  He is employed by a large dental clinic; technically he is an employee.  His salary is low six figures; he pays ordinary income tax on his income and further, various other taxes as well.

On the other hand we have a passive investor.  He works just as hard as the dentist to find businesses to invest in and/or real estate to buy.  I am not questioning his work ethic.  Further, let's say he is successful as well, however he derives all of his income from these business investments and real estate at time of sale.  Yet in my investor's case, all would be taxed at the much lower capital gains rate and further he avoids the various other taxes our dentist had to pay.  Plus he has the luxury of various deductions unavailable to our wage earning dentist.

Now they both work equally hard. They both earn about the same.  But one pays taxes left and right, while the other pays taxes at a much lower rate. 

Is that fair?


On another point/question, yes, the loss of capital is a risk, but then so is the loss of the wage earner's job a risk.  Neither party has a guarantee of success.

[Crafty_Dog]

Sorry, but that does not fly.  The wage earner does not risk losing money he has already received.  The wage earner does not have to put up his previous earnings in order to get the job.