Professor Elam

US Debt The Most Predictible Crisis Ever

3/17/2024

Click here to read

And of course a finance professor says it is just more than our annual income

She compares it to  a US family

If the US family owed more than its income there would be collateral like a house and two cars, here there is not collateral and the interest on the debt is now more than the defense budget

Robbing Peter to Pay Peter

1/16/2024

WSJ Today Tuesday 1/16/2024

The American welfare state is built on the idea of taxing those who are better off to give to those who are in need. Yet in today’s massive welfare state, many who receive benefits from the government also pay substantial taxes.

New research by the Manhattan Institute analyzes the amount of government benefits that are offset by taxes on the same households in the same year. The report estimates that about 20% of government benefits are returned to the government through taxes. That means that in 2022 almost $800 billion—or roughly what the government spent on defense—went out one door and in another.

These taxes cancel or net out equivalent benefits, so some could argue that they aren’t a problem. But taking money only to give it back again is costly and inefficient. Families ultimately bear the cost of applying for and maintaining benefits. The government takes hard-earned cash through taxation but often provides benefits in a less useful form, such as housing vouchers or food stamps.

Both taxes and benefit programs distort decisions. Taxes deter people from working. Means-tested programs such as food stamps pay less benefits as recipients’ incomes go up. This amounts to an implicit tax on earnings. Abundant evidence shows that certain kinds of taxes and welfare can also deter marriage. Giving benefits and then taxing recipients doesn’t only recirculate money; it destroys wealth and limits options.

Many claim that the so-called “middle-class welfare state,” including health insurance subsidies and means-tested programs for workers far up the income ladder, is a boon to working families. But taxes that cancel out benefits are the highest for households that aren’t poor and don’t receive Social Security. For them, about 45% of all benefits are returned as taxes. For those in poverty, only about 3% of benefits are returned in taxes.

Understanding this should make lawmakers think twice about creating a universal European-style welfare state in the U.S. Europe’s programs come with payroll and sales taxes that are in some cases double the American rates. These high taxes are paid by the same families that receive the supposed benefits. It would be better for the U.S. to give targeted help to those in need instead of increasing taxes only to return some of the money in less useful forms.

By any reasonable measure, taxing people and then giving them benefits is a waste of time and money. Government can shrink itself significantly without costing any household a dime by cutting both taxes on and benefits to households receiving government support. This would reduce waste and increase options for everyone. That would be better than forcing Americans to chase after money they already earned.

Mr. Glock is director of research at the Manhattan Institute and author of “The Dead Pledge: The Origins of the Mortgage Market and Federal Bailouts, 1913-1939.”

FICA Top Level Soars

Tuesday jan 17 2023

Social Security Administration announces the increases for 2023 

• The maximum earnings subject to the FICA tax will increase from $147,000 to $160,200 which means for 2023, the maximum Social Security tax that employers and employees each will pay is $9,932.40 ($160,200 x 6.2%).  The Medicare component will remain the same at 1.45% of all earnings.  Plus, individuals with earned income of more than $200,000 ($250,000 for married couples filing jointly, and $125,000 for married filing separately) will pay an additional .09% in Medicare taxes.
• The cost-of-living increase of $8.7% will be seen for recipients of Social Security Benefits and Supplemental Security Income (SSI).

 

Reality of the inflation Reduction Act

Monday Aug 8 2022

 

Here is a run down on the Democrats new tax plan. It raises taxes for everyone.

 

 

Why Do We Have to File Tax Returns

Wed Feb 16 2022

The IRS already has your W2, 1099s, and now stock trades, so why do we have to do that again?

Who Does AOC think Supports the MET?

Tuesday Sept  14, 2021

Here is an excerpt from  the news on AOC's debut at a MET Opera Gala

Democratic congresswoman Alexandria Ocasio-Cortez is well-known for making powerful statements with her political speeches but she's just got everyone talking through the medium of fashion, at her first ever Met Gala appearance.

At an event attended by the likes of Kim Kardashian, Jennifer Lopez and a load of generally extremely financially wealthy people, AOC seized her moment to make totally clear where she still stands on closing the gap between the ultra-rich and the working class people of America.

AOC's interpretation of the theme "America: A Lexicon of Fashion" was a stunning floor-length white gown by Brother Vellies, which was simple and classic from the front, and from the back was emblazoned with "TAX THE RICH" in huge red writing. In case people missed her not-subtle-at-all message, AOC's bag also read “Tax The Rich”.

 

Anyone who follows AOC's political career will likely have been aware of her stance on this issue before the Met Gala. She's previously been vocal about increasing tax for the highest earners, suggesting those who make above $10m may need to be taxed up to 70% because "As you climb up this ladder, you should be contributing more."

So, her dress was true to form and it's fair to say the people of Twitter were living for the look.

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The tickets to any arts event, the opera, ballet, art museum, symphony, do not support the endeavor. It requires serious external fund raising. And  folks on food stamps do not provide that support. Taking money away from the well to do for her latest vote buying schemes only makes it more difficult for the arts to exists. And clearly she  and Joe Biden do not grasp that this means more money (the money she wants) will be spent on attorneys and cpas to prevent the tax grab.

Biden's Corp Tax Increase will Hit Middle Class

Thursday April 1 2021

Corporations do not pay income  taxes, their customers do. Corporations pass tax increases on via higher prices or less product for the same price.

Progressives think the corporations they want to punish for their success will just wince and pay up, no way.  What do progressives learn in economics class I wonder.

 

https://www.wsj.com/articles/here-come-the-biden-taxes-11617231225

 

Steve Forbes Case For a Flat Tax

Thursday Dec 22, 2016

Steve Forbes has been advocating a Flat Tax for many years.

Here he lays out the case for a 17% Flat Tax.  His best point is that the tax system lets politicians dispense tax favors.

And then there is the incredible amount of time spent preparing tax returns, and auditing them!

A big problem in getting such an idea done, is of course, the massive ignorance about the current tax system.

The Apple Empire Strikeds Back

Labor Day Sept 5 , 2016

Apple's Tim Cook responded to EU's $14.5 B retroactive tax as he put it.

This is from the WSJ site and I do not know if the link will work but the EU minister tells Tim Cook that Apple does not understand the obligatino of big firms to pya European taxes.

Here is an excerpt of the EU comments

“The Apple response shows that they don’t grasp what’s going on in society and they do not grasp what’s going on in the public debate,” Mr. Dijsselbloem, president of the Eurogroup of finance ministers, said on the sidelines of the Ambrosetti forum of business leaders in Italy. “This is a very strong moral issue and large companies, even if they’re this large, can’t say ‘this is not about us, there’s no problem here.’”

Actually Cook understands this perfectly. Big firms with cash are being targeted by left wing governments as cash cows. The governments want the firms to make up for tax shortages due to their own failed programs which have left 10-20% unemployed and paying no taxes. Cook's first obligation is to his shareholders not to the increasingly failing EU.

This is a good time to have this debate. As the article notes, even heavily indebted Ireland would rather have the jobs and research and development expenditures than the tax. Ireland understand what it takes to attract business.Ireland has the welcome mat out for business.

Italy and France do not. This is why their countries have double digit unemployement among young people graduating from collgee.

 

 

Apple Hit with $14.5 EU Extortion Tax Bill

Wed August 30 2016

The European Union has told Ireland to collect a $14.5 Billion tax from Apple. Apple located a unit in Cork, Ireland to manage international sales. And of course to escape the highest corporate tax in the world the US rate of 35%. Read the front page story here.

Here is a comment on why Britain voted to leave the dictatorial EU.

And here is the WSJ editorial take on the matter.

There is entirely too much of this progressive, you have more money than you need, we the government know better how to spend it even though we did not and could not earn it ourselves.

If Apple pays no doubt every dubious government will find a reason to impose additional taxes until Apple's cash hoard disappears. The better idea would be for the US to allow a  one time 10% tax on money brought back to the US.  No stock buy backs should be allowed, the money needs to go for R & D. But don't expect this Administration to be that practical.