Category: Finance

  • The Rich Are Getting Poorer

    Trouble for those “Tax the Rich!” folks:

    For the first time in history, rich people are actually getting poorer, and luxury retailers are freaking out about it.  …

    “Because these same consumers are significantly invested in their high-end lifestyle with income committed to a wide-range of fixed expenses to maintain that lifestyle, it’s in discretionary spending where they are going to take their cuts. So that translates into less money to spend each month for clothes, shoes and handbags, jewelry and home decorative accessories. These folks have plenty of all that stuff already, so it is the easiest, most painless way to adjust one’s budget when there is less money coming in each month.”

    via Business Insider.

    Intelligent people already know that government budgets at the city, state, and federal level are so out of whack that even if we EAT THE RICH it’s still not going to make a dent in the deficits.

    Our only hope out of this mess is economic growth… and a little inflation.

    Ugh.

  • Fallout of China’s One Child Policy

    I’d not thought of this:

    … The reason Chinese savings levels are so high is the one-child policy.

    In most developing countries the way that people save is they have multiple children hopefully to generate a gaggle of grandchildren all of whom are trained to respect their elders. Given most people did not live to old age if you did you became a treasured (and well cared for) family member.

    This does not work in China. Longevity in China is increasing rapidly and the one-child policy results in a grandchild potentially having four grandparents to look after. The “four grandparent policy” means the elderly cannot expect to be looked after in old age. Four grandparents, one grand-kid makes abandoning the old-folk looks easy and near certain.

    Nor can the elderly rely on a welfare state to look after them. There is no welfare state.

    So the Chinese save. Unless they save they will starve in old age. This has driven savings levels sometimes north of fifty percent of GDP. Asian savings rates have been high through all the key industrializations (Japan, Korea, Singapore etc). However Chinese savings rates are over double other Asian savings rates – this is the highest savings rate in history and the main cause is the one-child policy.

    via Business Insider.

    Kinda sad the level of social engineering that has taken place in China.

    It is this very savings that permits the Chinese government to buy trillions and trillions of dollars worth of U.S. treasuries.  Should the U.S. drive itself over the cliff (which appears more and more likely) it will cause a world-wide financial meltdown.

    Very sad in so many ways.

  • Double-Dipping Payments from the “G”

    As many as 117,000 Americans simultaneously collect unemployment benefits and federal disability each year, a form of double-dipping that investigators say costs taxpayers $850 million annually and should be ended.

    To understand why such “double-dipping” constitutes fraud, please note the following general requirements for each program: To receive unemployment insurance benefit payments, claimants must state that they are able to work. To receive disability insurance benefit payments, claimants must state that they are unable to work.

    via Townhall.

    The article actually points out that because of the significant increase in the number of people on disability the “current projections indicate that the Social Security trust fund for disability will be fully depleted in 2016, just four years from the present.”

    The data appears solid.  Where is the MSM on this story.  Is this not a significant issue in this election cycle?

     

  • Illinois – 4th Worst Legal Climate for Business

    Illinois, along with California, Louisiana, Mississippi and West Virginia, are among the worst states in the country for businesses because of their legal climates, according to survey of corporate attorneys released Monday.

    Two Illinois counties did not fare well in the survey by the U.S. Chamber of Commerce’s institute for legal reform, either. Cook County was named the most unfair and unreasonable jurisdiction, and Madison County was named the sixth most unfair county.  …

    Illinois’ ranking this year, 46th among the 50 states in terms of the fairness of its litigation environment, compares with previous rankings of the 45th worst state in 2010 and the 46th worst in 2008.via Chicago Tribune.

    So we’ve been terrible; no one’s done anything about it so we’re still terrible.  I see.  Hey Gov. Quinn, Anybody home down there?

    We have the worst pensions in the country and and a unfair and unreasonable legal environment.  It’s no wonder that businesses don’t want to be here.

    Add to that mess that fact that:

    Chicago, the city that brought us deep-dish pizza, Oprah and “da Bears,” is also home to the nation’s highest tax burden for travelers.

    via Chicago Tribune.

    So if you’re a business here you know that it hard to do business with other businesses because it’s expensive to travel here.  This is also a huge burden on tourists… who used to come here in droves until downtown wildlings become common-place.

    Rahm has a full plate.  Maybe he should get busy trying to solve a few of these problems instead of non-stop fundraising for Obama.

  • Obama’s Unemployment Chart

    Remember when we were promised that if we spent $2 billion of money we didn’t have all would be well?

    Let’s compare promised to actual:

    It’s also important to keep in mind that this chart does not reflect the millions of people who simply are no longer included in the workforce.  As of August, only 42% of the U.S. population was working.  42%!!

  • The Unemployment Farce: Only 42% of People Working

    Worst news ever!!

    The number of Americans whom the U.S. Department of Labor counted as “not in the civilian labor force” in August hit a record high of 88,921,000.  …

    In July, there were 155,013,000 in the U.S. civilian labor force. In August that dropped to 154,645,000—meaning that on net 368,000 people simply dropped out of the labor force last month and did not even look for a job.There were also 119,000 fewer Americans employed in August than there were in July. In July, according to the Bureau of Labor Statistics, there were 142,220,000 Americans working. But, in August, there were only 142,101,000 Americans working.

    Despite the fact that fewer Americans were employed in August than July, the unemployment rate ticked down from 8.3 in July to 8.1. That is because so many people dropped out of the labor force and stopped looking for work. The unemployment rate is the percentage of people in the labor force (meaning they had a job or were actively looking for one) who did not have a job.

    The Bureau of Labor Statistic also reported that in August the labor force participation rate (the percentage of the people in the civilian non-institutionalized population who either had a job or were actively looking for one) dropped to a 30-year low of 63.5 percent, down from 63.7 percent in July. The last time the labor force participation rate was as low as 63.5 percent was in September 1981.

    via cnsnews.

    Think about that.  In August the U.S. civilian labor force was 154,645,000 people.  The unemployment rate among those people was 8.1%.  So of those 154M who could/should be working 12,526,245 were not.  These 12.5M are on unemployment.  That means that 142,118,755 people are working; hooray for them!!

    We are a country of 314,330,000 people.  That means that only 42% of the people in this country are working.

    Forty-Two Percent of people in this country are working.

    Just think about that for a little bit.

  • Who Pays What Income Taxes?

    At the DNC there was a lot of talk about “Everyone has to pay their fair share.”  That seems to be at introduction into a philosophical discussion about what a particular group should pay.  What is everyone’s “fair share?”

    In Tax Year 2009:

    Top 1%   paid 36.73% of the total tax bill;
    Top 5%   paid 58.66%;
    Top 10% paid 70.47%;
    Top 25% paid 87.30%;
    Top 50% paid 97.75%;
    Bottom 50% paid 2.25%.

    Note: AGI is Adjusted Gross Income
    Source: Internal Revenue Service

    via National Taxpayers Union.

    We live in a country where the top 5% of earners pay over 1/2 of the bill.  How much more should we, as a people, ask them to pay?  What are the appropriate numbers for this summary?  If you asked a progressive, or a liberal, what percentage of the tab should the top 1% pay?  How about the top 25%?

    And if we’re going to have a philosophical discussion about who pays what, should we not consider the role of payment of taxes plays in simply being a good citizen?  Can you be a good citizen, and feel a connection to your country, when you pay nothing?  Do free rider’s feel like they are part of the greater community at large?

    When Obama says that everyone has to pay their fair share does he mean that anyone’s fair share is zero?

  • IL Pension Hole Analysis

    I wrote this a few weeks ago as a comment on a retired teacher’s blog.  The post there was about how we need to “tax the rich” in order to fund the teachers’ pensions.  I was asked to comment on the post by a retired teacher I know.  Analysis follows:

    There is no one sided solution to this problem. Perhaps if Springfield moved on this a decade ago it could be solved with “funding” but at this time both sides are going to have to give.

    According to Crain’s Illinois’ unfunded pension liabilities are $86 billion. See: https://temp.jamesbosco.com/2012/06/19/illinois-pensions-are-the-worst/

    According to the Il Dept. of Revenue there were 36,682 returns filed in the state with over $500,000 in AGI. These returns paid $1,633,991,633. See: http://www.revenue.state.il.us/AboutIdor/TaxStats/2010/IIT-NetIncome-2010-Preliminary.pdf

    If we (a/k/a Illinois) doubled the tax on these folks with AGI over $500k we could bring in an extra $1.63B assuming no one flees the state (which would happen.) So doubling the tax on “the rich” would cover 1.9% of the current pension liabilities.

    If we quadrupled the tax that would cover less than 7.6% of the current pension liabilities. So it would take over 13 years of quadruple taxation on those making over $500k per year just to get current pension liabilities square. This would not cover the additional debt.

    Union members can sit around pointing fingers but it’s not going to solve the problem. Illinois is broke. Everyone’s going to have to give more than they want. Of course, the “rich” can always move to Indiana or Wisconsin. Then they contribute nothing; that doesn’t help retired teachers one bit. So I recommend that you be careful what you wish for.

    – – –

    We cannot solve our problem by eating the rich.  We must grow the size of the pie. … Well, growth and inflation.

  • Denise Rich: Democrat Who Fled the U.S.

    Denise Rich, the wealthy socialite and former wife of pardoned billionaire trader Marc Rich, has given up her U.S. citizenship – and, with it, much of her U.S. tax bill. Rich, 68, a Grammy-nominated songwriter and glossy figure in Democratic and European royalty circles, renounced her American passport in November, according to her lawyer.

    via Independent Film News.

    Another fine Tax Avoidance / Laffer Curve example.

    Good to see a rich Democrat in on the action (no pun intended.)

  • Eat the Rich vs. Obama

    I was reading this story:

    President Barack Obama will officially launch the battle over the impending fiscal cliff this morning, announcing a plan to extend the Bush-era tax cuts for people earning under $250,000, while letting the rest of the tax cuts expire.

    via Business Insider.

    This got me thinking about how much money will really flow into the Treasury from “the rich”?  I remember this from awhile back.

    If you have not seen… it’s just plain excellent.
    [youtube http://www.youtube.com/watch?v=661pi6K-8WQ?rel=0]