Saturday, October 1, Fox News and other media outlets reported that 27 states owe the federal government $40-billion they had to borrow to pay the extension after unfunded extension of unemployment benefits the federal government mandated that they pay out of their empty coffers. The states are now in hock to Uncle Sam for billions they have no means of paying, on which they are also accruing millions of dollars of interest by the week, which they also can't pay. This makes the federal government a loan shark forcing some poor bum to borrow a big sum he has no means of paying.
Forced debt, what a concept! It's actually just a fantastical accounting scam that lets Obama and congress conceal the real cost of the debt they're building, by hiding some of it in state's books. They know full well that forgiveness of that debt and, probably, federal bail-outs of states lies just over the horizon of November 2012. It's a con job. If reporting the national debt and growth thereof factually, the media would always total the federal and states' deficits together.
The states' solution to this specific problem, by the way, is to hand employers arbitrarily calculated, surprise additional tax assessments to. Surely that won't retard hiring or inspire job elimination, now will it?
It will, thus causing even higher unemployment, thus requiring more borrowing to shell out more unemployment benefits. Pelosi has claimed this is economic stimulus, but you'd have to have the I.Q. of a bird's turd to buy that.
Another con job is Warren Buffet's back-pedaling on insistence that "the rich" should be taxed a lot more, a flag Obama now waves. Most recently Buffet has acknowledged that you might not be rich if making over $250,000 a year, and even that whacking millionaires with higher taxes might not be smart. He now, quietly, says he meant changing the way hedge fund and investment fund managers are taxed.
Obama has labeled his tax increase schemes targeting $250,000-earners and millionaires "The Buffet Plan." In reporting on this, the media blithely accepts the notion that income and net worth are the same.
"Millionaire" actually means having a net worth of a million dollars, which has not one damn thing to do with income. A person could have an income of zero but already be a millionaire, parked on his nest egg, living by drawing down principal and thus owing no income or capital gains taxes - exactly what I intend doing if America is dumb enough to re-elect this disaster, until he's finally gone.
Or, a person could be earning $300,000 a year but have zero net worth, thanks to the disappearance of his home's value and his investment losses. Or negative net worth.
So, if Buffet and Obama really want to tax the really rich more, let's first speak accurately about them, and let's quit nibbling around the edges - tax high net worth by outright, unmasked confiscation of assets. Eliminate all estate taxes and move them forward to the living. Take 10 percent of net worth above $25-million, 20 percent from $25-million to $100-million, and 30 percent of all net worth above that, each year. Now Mr. Buffet will be really taxed as he ardently claims he should be. Oh, and eliminate all charitable deductions for high net worth folks, so he and they can't escape by transfer to charities. If we really want to punish wealth, this is the way to do it.
Finally, there is another con job Buffett promulgates, that the media falls for endlessly: the argument that labor, like that of his secretary's, is taxed at a higher tax rate than his capital gains. This apples to kumquats comparison ignores four salient facts.
First, the laborer takes no capital risk to earn; she or he shows up, works, gets a paycheck, clocks out at 5:00 P.M. every evening and goes home to watch "Dancing With The Stars." The investor puts his money at risk and, often, also works managing his investments or even the businesses he has invested in - as does Buffet. If he is a big-time investor like Buffet, he is also at personal risk from shareholder lawsuits, class-action suits, government regulatory attacks and more. His secretary is not.
Second, the capital invested to earn the gains taxed at the lower capital gains rates was at some point already taxed at income tax rates. The laborer is taxed once. The investor is taxed twice. If I pay a 39 percent income tax on my income and invest what's left over, and am then again taxed at 15 percent on the gains from the leftover money put at risk, I have essentially paid a 54 percent tax.
Third, investors must put capital in place and wait, so their gains are subject to the hidden tax of inflation de-valuing the captive dollars. The laborer gets her paychecks without such delay or losses implicit in the delay.
Finally, investors create jobs. Persons working in jobs do not. On that basis alone, investors should be taxed less than are laborers, but in truth are taxed more.