Category: Government

Would limiting charitable deductions raise more than a wealth tax?

by philg

“President Biden not ruling out wealth tax and believes rich aren’t paying enough, White House says” (USA Todaym March 15):

Warren, who campaigned for president on a platform including a wealth tax, introduced an “ultra-millionaire tax” in her legislation. The tax would impose a 2% annual tax on the net worth of households and trusts between $50 million and $1 billion and another 1% surtax on any wealth above $1 billion.

In contrast to income taxes, which are applied to a person’s individual earnings or an entity’s profits, a wealth tax charges an amount from the value of given assets. Progressive economists have long argued for a wealth tax as a means of combating wealth inequality and other ills.

We already have a few wealth taxes, though. One is property tax, which is almost impossible to get out of. The second is capital gains tax, which actually functions as a wealth tax because it isn’t indexed to inflation. Any time someone sells a long-held asset, some of the original value will be taxed away due to the fact that even an asset whose value falls will usually appreciate in nominal terms. The third is estate (inheritance) tax. The super rich generally escape both capital gains and estate taxes by putting money into their pet foundations. Most of Bill Gates’s personal profits from Microsoft will never be taxed, for example, because he puts appreciated Microsoft stock into the Gates Foundation and from there the money can go straight to Africa without the U.S. Treasury getting a rake.

What if Warren Buffett and Bill Gates could still carry out their charitable goals, but had to sell appreciated assets and pay capital gains tax before donating the resulting cash? In California, for example, at least one third of the money would end up in the hands of state and federal government (the other two-thirds can then be sent to Africa!).

Readers: What do you think would raise more money for the U.S. government (now $2 trillion (about 10% of GDP) larger than before and therefore occupying as large a role in our economy as the most lavishly funded European governments (but without providing the free education, free health care, and other good stuff that the European governments provide)), Warren’s wealth tax or eliminating the ability of billionaires to stuff what would have been taxable $billions into foundations?

Once implemented, would President Harris keep the wealth tax at 2-3%? From The Last Castle:

In 1909, President Taft suggested a tax on income. In July 1909, the Sixteenth Amendment passed but four years elapsed before Wyoming became the thirty-sixth state to ratify it. On February 3, 1913, it became law. Its first full year in effect was 1914, the same year of George [Vanderbilt]’s unexpected death.

Later that year, the government levied a 1 percent tax on net personal income in excess of $3,000 annually, and a 6 percent surtax on income that exceeded $500,000.

Note that the $500,000 threshold is equivalent to roughly $13 million in today’s mini-dollars. I.e., if the rates had stayed where they were when proposed, anyone earning under $13 million/year today would pay at most 1 percent income tax and those earning less than $80,000/year would pay nothing.

A fishing boat in Dar es Salaam (2008) that could use some paint, but I’m not sure that the Gates Foundation has delivered…

Related:

  • “MacKenzie Scott Announces $4.2 Billion More in Charitable Giving” (New York Times): “In her short career as one of the world’s leading philanthropists, MacKenzie Scott has made a mark through the enormous scale of her giving and also through its speed, donating nearly $6 billion of her fortune this year alone.” (Also a good example of how much more lucrative it is to have sex with the boss than to continue working as an admin assistant.) Washington State has no income tax, but this would have yielded 23.8 percent (20 percent capital gains; 3.8 percent Obamacare tax) = $1.428 billion for the federal government.
  • “Biden has promised not to raise taxes on people earning less than $400,000. Here’s what he might push for instead” (CNBC): She clarified on Wednesday that the $400,000 threshold applies to families, not individuals. Consequently, individuals who make $200,000 could be affected if they are married to someone who earns that same amount, for example.
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Passover 2021: Would Pharaoh have allowed Israelites to travel with a vaccine passport?

by philg

Happy Passover, starting tonight, for readers who are practicing Jewcraft. We celebrate G*d facilitating our travel from Egypt to Israel, which Pharaoh had purportedly obstructed. “Once We Were Slaves, Now We Are Free” is the conventional sentiment to express.

I wonder if Passover 2021 should be modified. Jews in most parts of the world are not, in fact, free to travel. Borders are closed (except to the undocumented coming to the U.S.; read what Obama’s Border Patrol chief has to say) or obstructed via administrative requirements. In many parts of the world, people (including Jews) are not free to leave their apartments, work at their trade, teach children, gather with friends, etc. If they can do any of these things at the moment, that’s by permission of the local rulers and the freedoms can be revoked at any time. (66 governor’s orders so far here in Maskachusetts; see Freedom to travel, Maskachusetts $500/day edition)

For American Jews, “Once We Were Slaves, Now We Are Free” should be replaced during this year’s Seder with “Once We Were Slaves, Now We Are as Free as Our Governor Wants Us To Be”? Jews in Ireland could say “Once We Were Slaves, Now We Are Free to Wait Another Few Months Before Going More Than 5 km From the House” (pubs are still closed too!) Those Jews in the Czech Republic who survived the animosity of some of their neighbors and the Germans can say “Once We Were Slaves, Now We Are Free to Watch TV at Home” (Euronews: “the government is set to limit the free movement of people by not allowing them to travel to other counties”)?

(Note that historical “slavery” in Ancient Egypt may simply have been the requirement to pay 20 percent of one’s income in tax. See Passover thoughts on slavery in Egypt and Passover Tax Day thoughts. So it might be more accurate to say “Once we paid 20 percent tax. Now we pay 90 percent and vote for Elizabeth Warren who promises to raise that to 98 percent.” Note also that the “Egyptians” who purportedly enslaved (or taxed) the Israelites have been mostly replaced by Arabs via conquest and immigration; the “Egyptians” of the Torah survive as today’s Coptics. Note further that the dramatic events of Exodus cannot be confirmed by scholars reading the excellent records that Ancient Egyptians kept. When a Swiss friend asked what she should bring to the (potentially legal depending on how you read the 66 Maskachusetts Governor’s executive orders) Seder we are hosting, I replied “Häagen-Dazs because the academics tell us that the Jews were never in Egypt so we should eat the Bronx-based ice cream that was never in Denmark“.)

Cairo, 1992:

Also, what would be the Facebook fact check if someone in a locked down country were to post “Let My People Go”? How about this: “Science proves that travel restrictions are an effective means of fighting Covid.”

Original post:

When Israel was in Egypt’s land
Let my people go
Oppress’d so hard they could not stand
Let my people go

Refrain:
Go down, Moses
Way down in Egypt’s land
Tell old Pharaoh
Let my people go

Facebook Fact Karens:

Dr. Fauci and the CDC recommend that Americans avoid Passover gatherings and travel.

Related:

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How did the coronanxious come into power?

by philg

Still celebrating the start of Year 2 of “14 Days to Flatten the Curve”…

I closed out Commercial flights during Coronapanic: a mostly mask-free experience with

I wouldn’t recommended the experience for those who are anxious about COVID-19. While you’re constantly being reminded about how hazardous COVID-19 is, there isn’t enough room in the airport to be truly distant from those who are potentially infected. People sit glumly with their masks on, waiting to see how the Russian roulette game that they’ve chosen to play will turn out. Unless you believe in the effectiveness of crude non-N95 masks, it’s the same risk level as being in a crowded Miami club, but a lot less fun.

One of the great things about Internet, which even Facebook hasn’t managed to destroy, is that reader comments can be much more interesting than the original post. From RS:

Can we just say that about all other aspects of life? I would love if people who are anxious about COVID-19 would just stay home so the rest of us can get back to normal life. It feels like they’re holding society hostage so they can have the illusion of protecting themselves without having to do the one thing that actually protects them (staying home).

With a handful of exceptions (Florida, South Dakota, Sweden, Russia), it seems as though the coronanxious are in charge and able to force those who don’t mind coexistence with this virus and its myriad variants (the “covidiots”) into various forms of shutdown, mask theater, etc. The coronanxious have pretty much sat at home for a year anyway. It wouldn’t have cost them anything or increased their personal risk if they’d let the non-anxious carry on with their lives, education, and careers.

So that raises the question… why is it obvious that the coronanxious would prevail in setting government policy? (i.e., could we have predicted Mass Karenhood?) Is it because leaders tend to be old and therefore personally vulnerable? Is it because the restrictions imposed don’t hurt the elite and the elite are indifferent to the suffering imposed on the non-elite? (public school shutdowns aren’t a problem when your children and/or grandchildren are in private school…)

From the CDC, March 14, California and Florida, at opposite ends of the shutdown spectrum:

Note that more than 20 percent of Florida’s residents are over 65 (and therefore potentially vulnerable to COVID) while just 14 percent of Californians are over 65. So the COVID death rate among the elderly in Florida is almost surely much lower than in masked-and-shut California.

An objective measure of panic from one of America’s principal vendors of panic, the New York Times (March 18, 2021):

First of all, it is unclear whether the 1-5% hospitalized answer is actually “correct” if you consider “with Covid” to mean “could produce a positive PCR test”. With the CDC estimating that more than half of Americans have been infected with coronavirus, is it conceivable that COVID-19 means a 5 percent risk of hospitalization? We should have seen 2.5 percent of the folks we know carted off to the hospital (with a median personal network size of 472, the typical person should know 12 people who’ve been hospitalized with COVID). Leaving that aside. Casual inspection of this chart shows that 88 percent of Democrats overestimate the risk of hospitalization from COVID-19 while 70 percent of Republicans do. The journalists at the New York Times nonetheless report that “Republicans tend to underestimate Covid risks”. Based on the chart, it would be more accurate to say “Four percent of Republicans tend to underestimate Covid risks.”

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Year 2 AC: Public versus private sector jobs

by philg

I’ve been referring to everything that happened prior to March 2020 as “BC” (Before Corona, not to be confused with “BCE” for years prior to Jesus’s birth). We’re just beginning Year 2 “AC”, therefore. Public sector workers have been mostly relaxing at home for a year, still drawing full paychecks, e.g., Boston Public School teachers. Should one of these folks fall ill due to COVID-19 or any other cause, he/she/ze/they will be paid via disability insurance.

What’s it like in the private sector? A housecleaner I know had to continue working, accepting whatever risk of COVID-19 was entailed, if she wanted to be paid. She’s around 60 years old and therefore has more age-related COIVD-19 risk than the average public sector worker (many of whom are eligible to retire at 50 or younger). She recently suffered a fall on a narrow staircase in a Beacon Hill home (these structures are fully compliant with all building and safety codes… of the early 1800s; see “For $20.5 million, Beacon Hill town house next to John Kerry” for an example) and broke both radius bones in her forearms. She’s unable to work, of course, and won’t be receiving payments from a disability policy. She’s expected to recover and has a lot of support from family (Brazilian immigrants), but the story made me reflect on the precariousness of a lot of folks’ existence.

(The teachers aren’t “relaxing at home,” you say, because they have to be present on Zoom for some hours each week? While down in Florida in January, I met a Massachusetts public school system employee nearing full retirement (early 60s). She didn’t enjoy being on Zoom so she began to use the months of sick leave she’d accumulated over the years. “It will run out by next fall,” she explained, “but the union says that I’ll be able to use days from the sick bank until I’m eligible for maximum retirement benefits in November.” In other words, she will have been paid in full for 1.5 years without having to get closer to the Massachusetts school than Florida and without having to appear on Zoom.)

Now that economic opportunities exist only when governors give permission, is it more important than ever to prepare young people for careers as government workers?

Loosely related, from February 19, 2021 in Waltham, Massachusetts:

We still have plenty of opioids for anyone who is depressed about losing a private sector job!

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A 7-year-old contemplates the government’s $1.9 trillion gift to the American People

by philg

A bedtime scene:

  • 7-year-old: Joe Biden is going to send us money.
  • Mom: No. Joe Biden is going to take money from us and send it to other people. Our income is too high to qualify for the money that Joe Biden is sending out.
  • 7-year-old: You and Dad should stop working then, so that you can get the money instead of paying the money.

Which reminds me… what is actually in this bill? It is supposedly about $1,400 checks for most Americans (do children, retirees, and those already on welfare get checks?)? But if we divide $1.9 trillion by 308 million (Census-estimated population of 330 million minus the 22 million undocumented who presumably won’t qualify for a federal program organized by Social Security number), we get $6,169 per documented American. Plainly, the majority of this $1.9 trillion is going somewhere other than into average Americans’ pockets.

(Does it make sense to pay the same amount to a government worker who has been paid in full to stay home and work a few hours per day as it does to a self-employed Uber driver whose income has been reduced and whose job requires leaving the house and being exposed to COVID-19?)

From the New York Times:

It would inject vast amounts of federal resources into the economy, including one-time direct payments of up to $1,400 for hundreds of millions of Americans, jobless aid of $300 a week to last through the summer, money for distributing coronavirus vaccines and relief for states, cities, schools and small businesses struggling during the pandemic.

Beyond the immediate aid, the bill, titled the American Rescue Plan, is estimated to cut poverty by a third this year and would plant the seeds for what Democrats hope will become an income guarantee for children. It would potentially cut child poverty in half, through a generous expansion of tax credits for Americans with children — which Democrats hope to make permanent — increases in subsidies for child care, a broadening of eligibility under the Affordable Care Act, and an expansion of food stamps and rental assistance.

The last part sounds like a continuation of the trend discussed in When and why did it become necessary to pay Americans to have children? (2015). Going forward, the childless will be mined out even more thoroughly and made to work even longer hours to take over what would have been the costs of rearing children. I also wonder if this will make being a family court entrepreneur more lucrative relative to working. State child support formulae won’t change. Having sex with a dentist, for example, should still yield $1-2 million in Massachusetts. But the plaintiff who collects child support and works a few hours per week will now also be entitled to additional tax credits and taxpayer-funded child care. Instead of building the spending power of a dentist by having sex with three dentists, it might be possible to obtain the spending power of a dentist by having sex with two dentists (especially if income tax rates also go up; remember that child support is not taxable). Going to dental school may not look so smart anymore.

How does this spending compare to the Collapse of 2008?

Its eye-popping cost is just shy of the $2.2 trillion stimulus measure that became law last March … Even with changes, the bill remained more than than double the size of the roughly $800 billion stimulus package that Congress approved in 2009, when Mr. Biden was vice president, to counter the toll of the Great Recession.

So Americans are spending more than 4X at the federal level on coronapanic compared to what we spent cleaning up after our unwise enthusiasm for subprime mortgages.

What about the only enterprise in the U.S. that couldn’t figure out how to reopen?

$130 billion to primary and secondary schools

Rewarding public schools’ lack of effort with $130 billion will certainly not encourage them to repeat their performance during the next wave of coronavariants! (Alternatively, why not give the $130 billion to the schools that actually reopened no later than, say, September 1, 2020?)

Fair to say that this $1.9 trillion spending package will address every bumper sticker on the back of this car? (from January 2020)

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The emergency continues on two fronts: insurrection and coronaplague

by philg

The 2,200 members of the Capitol Police and 3,800 officers of the D.C. Police and the FBI and the Secret Service are not sufficient to protect our nation from an ongoing insurrectionmergency. “Capitol Police Call For Extension Of National Guard Help” (NPR):

U.S. Capitol Police requested a 60-day extension for a portion of the National Guard troops currently in Washington, D.C., Thursday as the threat of a possible attack from militia groups looms over the city.

How are we doing in Year 2 of “14 Days to Flatten the Curve”? “It’s Too Soon to Lift COVID Restrictions: Fauci” (U.S. News):

Coronavirus restrictions should not be lifted until the daily toll of new U.S. cases falls below 10,000, “and maybe even considerably less than that,” Dr. Anthony Fauci said Thursday.

The last time the United States saw that low a number was almost a year ago. The daily case count hasn’t fallen below 50,000 since mid-October, and the seven-day average on Wednesday was more than 64,000, CNN reported.

Who wants to make a prediction as to when positive PCR tests (“cases”) will fall below 10,000 per day? (let’s say that it needs to be a 7-day moving average of 10,000/day so that we exclude reporting glitches)

Given that Americans love to run PCR tests, even on those who have zero symptoms, my guess is “never”. Example: friends in NYC are trying to sort out a cancer question regarding the mom. A coronaplague test was required before she could get a follow-up cancer test. She tested positive and therefore her cancer appointments were canceled. One of her two children tested positive. (The husband is vaccinated so he refused to participate in the festival of testing.) She never had any Covid-19 symptoms, but the family remembered that both kids had slight sore throats a week or two before the test. As long as we have a lot of checkpoints at state borders (the Maskachusetts travel order, for example), national borders, schools (can’t return without a Covid test), hospitals (can’t get treatment without a Covid test), etc., if we’re still running PCR at the same number of cycles we should still have at least 10,000 positives per day forever.

(Separately, consider this NYC family. They’ve endured a year of lockdown in an apartment. Their kids haven’t seen the inside of a school since March 2020. They’ve avoided gatherings with friends and family. Now the mom and the kids have exactly the same medical status that they would have had if there had never been any kind of shutdown or masquerade. Aside from wars, in all of U.S. history, has there ever been a sacrifice more meaningless and useless?)

From December, approaching the Hudson River Corridor from Teterboro (a VFR interlude in an instrument practice flight in a Cirrus):

Related:

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Windfall Profits Tax on Bitcoin?

by philg

Whenever other people are smarter and more successful than I am, I like to propose a massive tax applicable only to them. Since I neglected to buy Bitcoin…. it is time for a Jimmy Carter style Windfall Profits Tax on cryptoprofiteers! (spoiler: the Tax Foundation says that this is a bad idea)

One challenge with this is that it might be hard to hunt down folks who have a seed phrase and a passphrase written down on a Post-It note. Some Bitcoin success stories invested in ETFs and public equities that are somehow tied to Bitcoin and they’ll be easy to hit with Philip’s 95 percent windfall profits tax. But the richest/biggest fish may get away (renounce U.S. citizenship, pay the exit tax, move to a tax-free country, and then start cashing in the Bitcoin).

Is Bitcoin a bubble? Physicist and general smart guy Brian Keating points out that the “bubble” has lasted for ten years, much longer than tulip mania (six months) and other historical bubbles. Peter Schiff, smart enough to move to Puerto Rico in 2015 and skip on Federal taxes, points out that the Feds began inflating the stock market and housing market in the mid-1990s and the collapse didn’t come until 2008. Schiff: “If people are dumb enough to pay $50,000 for Bitcoin, maybe they’ll be dumb enough to pay $100,000.” Isn’t it a good hedge against governments printing money and inflation? “Maybe Bitcoin is a hedge against stupidity because if people are still stupid they will still buy it. If you’re worried about the dollar going down, don’t hedge it with something riskier than the dollar. Buy Swiss francs.” (watch Keating and Schiff talk)

A bad guy lair (for a Bitcoin early adopter?) under construction in Sarasota:

Related:

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Shutdown favors bigger enterprises: car registration example

by philg

Here in Maskachusetts, our year-old state of emergency means that the Registry of Motor Vehicles (RMV) will see people in person only by appointment. Appointments are seldom available, however, and typically a Boston-area resident who needs to do business with the RMV will have to drive to Pittsfield, Massachusetts, more than 5 hours round trip.

While swapping our 2018 Honda Odyssey for a 2021 Honda Odyssey, the salesman told us about his recent trip to Pittsfield. He had purchased a car privately and there was no way to register it without an in-person trip. “Why don’t we have to go to Pittsfield to register this new Odyssey?” we asked. “Dealers are able to do everything online,” he explained.

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We will solve our affordable housing crisis with vastly expanded immigration

by philg

From the New York Times, a tireless cheerleader for more low-skill immigration into the U.S…. “Pandemic’s Toll on Housing: Falling Behind, Doubling Up”:

Even before last year, about 11 million households — one in four U.S. renters — were spending more than half their pretax income on housing, and overcrowding was on the rise. By one estimate, for every 100 very low-income households, only 36 affordable rentals are available.

When your hospitals are 110 percent full, the solution is more immigration. When there are 3X as many people who need affordable housing compared to the supply, the solution is more immigration.

One block back from the sand in Atlantic Beach, Florida:

(in other words, migrants are welcome, but not the big concrete condo and apartment buildings that could actually house an expanded population; note that signs of virtue/justice were extremely rare in Florida (January 2021 trip) compared to here in Maskachusetts; I took this photo because it was an unusual scene)

Related:

  • “Hunter Biden and wife Melissa upsize into $25k-a-month canal-front home in Venice, California” (Daily Mail): “Interestingly the homeless people who were living up along the street he now lives on are gone. … His two-year-old daughter with stripper Lunden Roberts, 29, was not present. … The stylish 3,700 square feet home boasts 25-foot acoustic ceilings hanging over contemporary limestone white floors in the living room.” (a fairly spacious house; will Hunter Biden be willing to dedicate a spare bedroom to housing one of the migrant families that his father tells Americans it is their responsibility to shelter?)
  • “Turned Back by Italy, Migrants Face Perilous Winter in Balkans” (NYT, today): “To escape persecution in his homeland, a 27-year-old Pakistani man walked over mountains and through woods on an arduous 18-month journey across Bosnia, Croatia and Slovenia until he finally reached the Italian border.” (the remaining 216 million people in Pakistan must suffer continued persecution? Italians don’t want to solve their own hospital and housing overcrowding situation by taking in more migrants?)
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How are FBI agents almost always able to avoid being killed?

by philg

“2 F.B.I. Agents Killed in Shooting in Florida” (NYT):

The sun had not come up yet on Tuesday when a group of F.B.I. agents assigned to investigate criminals who prey on children online approached the Water Terrace apartments in Sunrise, Fla., to execute a search warrant, a routine part of the job that is always fraught with risk.

What exactly happened in the ensuing minutes is unknown, but a gun battle broke out, rousting neighbors out of bed in the quiet residential community. Law enforcement officials called emergency dispatchers. Multiple shots fired, they reported. Send air rescue.

Two F.B.I. agents died and three more were injured in one of the deadliest shootings in the bureau’s history. No agent had been shot and killed on duty since 2008. A similarly bloody shootout took place in a Miami suburb 35 years ago, killing two F.B.I. agents and injuring five others.

A sad outcome, obviously, but the history is much more cheerful than what we see in Hollywood portrayals of the FBI, in which the pursued quite often manage to kill at least some of their pursuers.

The FBI has 35,000 employees, of whom more than 13,400 are “special agents” (Wikipedia). How did they manage to go 13 years without a Hollywood-style event in which an agent was killed?

From a recent flight up the U.S. coast, KFLL and the condo forest of Ft. Lauderdale:

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