Have You Forfeited American Express Points? January 23, 2003February 22, 2017 But first: SAVINGS BONDS WILL NOW HAVE TO BE HELD A YEAR A small change to be aware of: The minimum holding period for Series EE and Series I bonds has been extended from 6 months to 12 months beginning with bonds issued next month. But you can still buy them on-line with your credit card and get your frequent flier miles. And now: DO YOU HAVE AN AMERICAN EXPRESS CARD? If you do, you should be earning ‘Membership Rewards’ points for every dollar you charge. But if you pay late, you forfeit the points for that month. What I didn’t know was how easy it is to get them reinstated. I went to www.americanexpress.com and found my account balance. (If you haven’t signed up for on-line access, it’s easy.) I then clicked Membership Rewards and saw that I have truly a gazillion points – which I knew – but also that I had 33,980 forfeited points that I could reinstate online. As each point is worth a ‘mile,’ on several airline programs, I clicked to see how I could reinstate them and – the system being temporarily down – was given a toll-free phone number to call. I quickly reached a cheerful rep who explained, that (a) I could reinstate even more miles – this 33,980 was just the most recent few forfeits, but she could go back to 1998 – and that (b) each reinstated month would cost me $15. Well, that’s pretty decent of American Express, if you ask me. I had forfeited the points by being a little late with some of my payments – my fault, not theirs. I travel a lot and get a lot of mail and, well, these things happen. Indeed, these things had apparently happened seven times since 1998, so we went through each month, and I choose to pay the $15 for four of the seven, reinstating 48,000 points/miles for $60. Essentially, a free first class ticket for $60! The other three months’ balances were too low to waste the $15. Miles are worth a penny or two each to most people, so paying $15 may not make sense if you’re reinstating just 500 or 1000 of them – especially if you have a gazillion already and may not actually use them for a long time. Frequent flier miles’ value depends on how you use them. At a minimum, they are worth half a cent each – American Express will let you cash in points in 20,000-point increments for $100 each. (So on that basis I paid $60 for what could have been $200 in cash, with 8,000 Membership Rewards points left over.) The value of the stuff you can redeem airline miles for in the typical ‘rewards’ catalog – golf clubs, wheels of cheese – generally works out to a penny a mile. (The whole point of those catalogs is to get you to trade your miles for a penny instead of the greater value they can generally bring from exchanging them for air travel or hotel rooms.) So on that basis, I paid $60 for $480 worth of stuff. The wholesale value of miles within the travel industry is about 1.3 cents. (So on that basis, I was paying $60 to get $625 or so in value.) The general rule of thumb I use is 2 cents, because I can often find a way to save $500 by ‘buying’ a coach ticket for 25,000 miles. So my $60 bought me $960 worth of travel. Those who only travel with Saturday stay-overs or on routes served by Southwest Airlines or Jet Blue, or who can accept the uncertainties of booking through Priceline.com, and who thus may never pay more than $200 for an airline ticket or $39 for a hotel room, may not be able to save so much by using miles. To them, Amex points may be worth barely a penny, if that. Those who would normally pay $7,000 for a business-class roundtrip to Paris but can get it for 100,000 points instead, say, are getting 7 cents of value from each point. I would sooner swim to Paris than pay $7,000, but if I were that kind of traveler, my $60 would have bought me $3,360 in value. Note that American Express and Continental Airlines are currently running a promotion that gives a 25% bonus for transferring 10,000 or more Amex points into your Continental mileage account. One worries, of course, that Continental (and other airlines) may not be around forever and that any successor airline might not honor the points. So I wouldn’t do this just to do it. But if were about to book a trip with miles someplace Continental flies, and needed more Continental miles to do it, my 48,000 reinstated Amex miles would transfer over as 60,000 Continental miles. If those were valued at 7 cents each, my $60 would have bought me $4,200 in value.
Who Owns Mickey Mouse? January 22, 2003March 25, 2012 You probably saw that the Supreme Court upheld Congress’s 20-year copyright extension. The Court said it may have been bad public policy, but the Congress was well within its bounds to make bad policy on this. (Basically, copyrights already applied for the lifetime of the author and 50 years beyond, or for 75 years in the case of a corporate owner like Disney’s ownership of Mickey Mouse.) My own view – which is almost completely selfless, as I have zero intention of outliving myself by more than 50 years – is that it was actually good public policy. To me, there is a huge difference between a patent and a copyright. For one thing, a patent is generally issued to cover something that someone else would have invented sooner or later anyway. (Didn’t Alexander Graham Bell beat his closest competitor to the patent office by only a day or two?) What is the likelihood someone else would have written Gone With the Wind or created Mickey Mouse if Margaret Mitchell and the Walt Disney folks hadn’t? For another, a patent grants a monopoly on something people may really need, like a lifesaving drug or a TV remote control . . . or that, at the least, could cause a bottleneck in what would otherwise be a more prosperous economy if only competitors were allowed to manufacture it. Surely there is no such hardship if Mickey or Snoopy or Gone with the Wind remain under copyright. Copyright protection doesn’t keep anyone from enjoying these creative works. You can still get them free from the library or occasionally see them free on TV (even tape them for your own future viewing). Why should ownership of a copyright ever fall into the public domain unless the owner chooses to donate it (or fails to renew it)? Does private land automatically become public after 100 years of ownership? No. Must Coca Cola reveal its secret formula after a set number of years, so any company can make and sell Coca Cola? No. (And must the Coke logo itself fall into the public domain as Mickey’s likeness would without copyright extension? Not that, either, under current law.) Is the Van Gogh that your grandparents bought and passed down to you automatically snatched away to be placed on public display? No. You own this creative work and can even keep it hidden if you want. So why should the ownership of a copyright expire? Better, perhaps, to give copyright owners some modest tax incentive to donate or bequeath ownership to the public domain – but keep it voluntary. For the opposing view to mine, click here. But I would argue that life will go on if United Airlines decides not to pay $500,000 for the right to play ‘Rhapsody in Blue’ while you’re waiting on the runway. They can play something that costs less – there will be plenty of competition to sell them music – or play nothing at all. Finally, while I’m no copyright expert, ‘fair use’ and ‘parody’ conventions seem more or less adequate to allow a vigorous public debate and free press. If I quote a snippet of someone else’s work, to applaud or rebut it, or to help make a point of my own, that’s fair use (generally, up to 250 words). In most circumstances, no permission need be obtained or royalty paid. If I parody someone else’s work, there are special provisions for that as well. (And if, on occasion, I become a parody of myself, as at least one Republican friend has charged, I surely have not violated my own copyright.)
Two Short Must Reads January 21, 2003January 22, 2017 The market was closed yesterday, but I couldn’t hold back with the idiotic thing about 10 men going to the $100 dinner any longer. For those who missed it, Rick Hertzberg does it much better in this column from last week’s New Yorker. Rick’s essay does not deal with the dinner parable directly. But it lays bare what appears to be a related piece of fuzzy logic – a huge and purposeful deception by none other than our commander-in-chief (strong words, but decide for yourself): ‘These tax reductions will bring real and immediate benefits to middle-income Americans,’ Bush said in Chicago. ‘Ninety-two million Americans will keep an average of $1,083 more of their own money.’ The first of these claims, as the Financial Times editorialized the day after the speech, is ‘obviously bogus.’ The second is true, but only in the sense that it is also true that if Bill Gates happened to drop by a homeless shelter where a couple of nuns were serving soup to sixty down-and-outers dressed in rags, the average person in the room would have a net worth of a billion dollars. Read the Hertzberg piece if you have a couple of minutes. Does this sort of deception not bother you? Could it not have been purposeful? Is it in any way unimportant? More on all this in a few days, especially the excellent comments many of you have sent (enough! stop! please!). For now, take a look at this affecting little Forbes profile of Bill Gates, Sr., defending the estate tax. Between the two links – the New Yorker essay and the Forbes story – it seems to me a strong argument has been made against tilting the game further in favor of the best off. Wednesday: Who Owns Mickey Mouse? Thursday: Have You Forfeited Amex Points? (You can get them back.) Friday: More on the Idiotic Thing about the 10 Men and the $100 Dinner
That Idiotic Thing About the 10 Men Going to a $100 Dinner January 20, 2003February 22, 2017 Here it is. It’s been going around the Internet for nearly two years, but judging from the increasing frequency of late, it seems to have enjoyed new life. [My comments are in brackets.] I was having lunch with one of my favorite friends last week and the conversation turned to the government’s recent round of tax cuts. ‘I’m opposed to those tax cuts,’ the retired West coast college instructor declared, ‘because they benefit the rich. The rich get much more money back than ordinary taxpayers like you and me and that’s not fair.’ ‘But the rich pay more in the first place,’ I argued, ‘so it stands to reason that they’d get more money back.’ I could tell that my friend was unimpressed by this meager argument. So I said to him, let’s put tax cuts in terms everyone can understand. Suppose that every day 10 men go to a restaurant for dinner. The bill for all ten comes to $100. If it was paid the way we pay our taxes, the first four men would pay nothing; the fifth would pay $1; the sixth would pay $3; the seventh $7; the eighth $12; the ninth $18. The tenth man (the richest) would pay $59. The 10 men ate dinner in the restaurant every day and seemed quite happy with the arrangement until the owner threw them a curve. Since you are all such good customers, he said, I’m going to reduce the cost of your daily meal by $20. Now dinner for the 10 only costs $80. The first four are unaffected. They still eat for free. [Ah, what a sweet deal that man who cleans the airport urinals for $6 an hour has. He eats for free! Or how about that woman who cleans your hotel room. She, too, eats for free! Except for the payroll tax taken out of their checks and the sales tax they pay. And the tax they pay on their gasoline and their phones if they can afford gas or a phone. Why should the rest of us pay taxes to help educate their kids and provide them with health care? They shouldn’t be allowed to have kids. And if they have them anyway, those kids don’t deserve decent schools and health care. Our first priority has got to be cutting taxes for the top, not providing good schools and health care to deadbeat six year olds.] Can you figure out how to divvy up the $20 savings among the remaining six so that everyone gets his fair share? The men realize that $20 divided by 6 is $3.33, but if they subtract that from everybody’s share, then the fifth man and the sixth man would end up being paid to eat their meal. The restaurant owner suggested that it would be fair to reduce each man’s bill by roughly the same percentage, being sure to give each a break, and he proceeded to work out the amounts each should pay. And so now the fifth man paid nothing, the sixth pitched in $2, the seventh paid $5, the eighth paid $9, the ninth paid $12, leaving the tenth man with a bill of $52 instead of $59. Outside the restaurant, the men began to compare their savings. ‘I only got a dollar out of the $20,’ complained the sixth man, pointing to the tenth, ‘and he got $7!’ ‘Yeah, that’s right,’ exclaimed the fifth man. ‘I only saved a dollar, too. It’s unfair that he got seven times more than me!’ ‘That’s true,’ shouted the seventh man. ‘Why should he get $7 back when I got only $2? The wealthy get all the breaks!’ ‘Wait a minute,’ yelled the first four men in unison. ‘We didn’t get anything at all. The system exploits the poor.’ The nine men surrounded the tenth man and beat him up. The next night he didn’t show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they discovered something important. They were $52 short! And that, boys, girls and college instructors, is how America’s tax system works. The people who pay the highest taxes should get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up at the table any more. [This is why in the 1940s and 1950s, when the top federal tax bracket had been hiked to 90%, in part to help finance World War II and the Korean War, highly productive people all just retired and the American economy collapsed. Or, well, they didn’t and it didn’t – America did pretty well in the 1940s and 1950s – but that’s a minor detail. And this is why in the 1960s, when the top bracket was 70%, highly productive people all just retired and the American economy collapsed. Or, well, they didn’t and it didn’t either – the American economy did pretty well in the 1960s – but that, too, is just a minor detail.] I’m not arguing for a 90% or 70% top bracket. Or even for the 50% top bracket of the fist six Reagan years. What I’ve been saying ever since Texas Governor Bush began promising huge tax cuts for the wealthy is that the 39.6% top bracket of the Clinton/Gore era was a pretty good balance and should not be cut. Yes, 90% and 70% and all the crazy tax shelter schemes that went with them were nuts. But 28% – which was where the top bracket ended up in 1986 in President Reagan’s second round of cuts – we now know was too low. It may have been well intended, but it overshot the mark. We added $3 trillion to the national debt in the dozen Reagan/Bush years. The Bush administration inherited a good balance that was working. Their first round of tax cuts turned surpluses that were projected as far as the eye could see into deficits projected as far as the eye could see. And now, in the wake of two wars we need to finance, against terrorism and, whether we go to war or not, the buildup for Iraq, the President insists on more tax cuts (mainly, as usual, for the best off). Normally, taxes are raised to pay for wars. The Bush administration proposes to pay for its wars by cutting taxes on the rich and borrowing the cost from future generations. But let’s leave the macro level and get back to that top tax bracket. It’s worth pointing out that few people if any actually pay the top rate on all their income. In the first place, they pay less on the first dollars they earn, just like anyone else. It is a graduated rate. More important, they pay 0% on their municipal bond interest (while sacrificing much less than 39.6% in yield compared with equivalent taxable bonds) and 0% on their capital gains until they choose to ‘realize’ them – at which point they pay only about 20%. This is not to say that the best off don’t pay a heck of a lot in taxes – they do! They should be proud that they do. We should be grateful that they do. But it is a balance. And the balance under Clinton/Gore worked out pretty well for everyone – including the top 1%, who got richer faster than any other group, even after tax. So why, when you look at all the problems and challenges in the world, would you say, ‘Well, we can’t do everything, so let’s direct most of our efforts and resources toward improving the plight of the rich. Let’s shift the balance further in their favor.’ Why would you say that? The most remarkable thing about this idiotic thing about the 10 men having the $100 dinner is that it seems to be passed around the Internet not, for the most part, by people with adjusted gross incomes in excess of $383,000 a year (the top 1%), but, rather, by people so eager for $1,000 and $2,000 tax cuts that they don’t bother to take into account the extra $20,000 or $40,000 in national debt they and their children will be taking on in return – money borrowed largely to give much, much larger tax cuts to people like George Bush (whose annual tax savings have been estimated at $44,500) and Dick Cheney ($327,000). Not to mention the really rich. # PROGRAM NOTE: Don’t miss Brother/Outsider on PBS’s ‘P.O.V.’ tonight. It’s the life of Bayard Rustin – and a part of the Martin Luther King ‘I have a dream!’ story that many do not know. Supporting cast includes a much younger Strom Thurmond. Where I live, P.O.V. comes on at 10pm.
Come Back Tomorrow, Please January 17, 2003March 25, 2012 Well, or Monday. But in the meantime, in case you missed this ‘op-ad,’ click here for a few thoughts on class warfare.
Wide-Eyed, I’d No IDEa, divIDEends, That ID-iotic Thing January 16, 2003January 22, 2017 WIDE-EYED OPTIMIST – II Jeff Fine: ‘We had someone like Amram Mitzna not that long ago. His name was Ehud Barak (remember?) and he offered to return 96% of the West Bank territories. Arrafat said no. Could it be any clearer?’ ☞ The optimist in me likes to think that many Palestinians now think Arafat’s saying no was not such a good idea. In any event, if the news profile on Mitzna I saw was a fair portrayal, I doubt anyone need fear he is soft on Israel’s security. Jim Reed: ‘Was this quote from your website? ‘I am an optimist. It does not seem too much use being anything else.’ – Winston Churchill.‘ ☞ No, but it is now. YOU KNEW ‘IDE’ WAS NOT A WORD – BUT DID YOU KNOW THIS? Michael: ‘Yikes! If your ‘ides of January’ reference yesterday was meant to refer to the 15th of January, please note that the ides occurs on the 15th only during March, May, July, and October.’ ☞ Live and learn. TAX-FREE DIVIDENDS Burton Malkiel’s Wall Street Journal piece on the Bush dividend proposal last week makes the case for freeing dividends from tax – not the macroeconomic case as relates to the budget deficit, but the case as it relates to corporate behavior. A lot of us who oppose the Bush proposal agree with Malkiel’s case, at least in fair measure. As I argued last week, if tax-free dividends had been Bush’s one great gift to the wealthy in 2001, well, that might not have been such a bad idea. But wanting now to make permanent and even to accelerate last year’s gargantuan cut for the top 1%, adding this to it is just ridiculous. Shocking. Depressing. And – because of the massive deficits we’re headed for – irresponsible. So the best solution, actually, might be this unlikely compromise: accept tax-free dividends, but, as part of the bargain, repeal rather than accelerate any further reduction of the top tax bracket (and reform rather than eliminate the estate tax – e.g., by lifting the exemption to $5 million, indexed for inflation, and cutting the top bracket from 55% to 45%). THAT IDIOTIC THING ABOUT THE 10 MEN GOING TO A $100 DINNER Jim Hickel: ‘I really hope you debunk the ‘idiotic thing about the 10 men going to the $100 dinner’ soon, because I love that story and have been passing it around to everyone I know. I have yet to see a thoughtful liberal refutation, so you are in a position to stop me before I kill again.’ ☞ Yes! I am grabbing for my flak jacket and stun gun and will be round to your place with the handcuffs and evidence kit just as fast as I can.
Wishful Thinking January 15, 2003February 22, 2017 WE LOVE TO FLY – III Chris McMahon: ‘No, no, no, THIS is what you want! Park it in your garage, uses normal gasoline, 28 miles per gallon, cruising speed of 350 mph.’ REVERSE MORTGAGES Dan Roberts: ‘ARGH!! Please don’t give passing credit to this product without mentioning the horribly negative potential outcomes. We in the securities business view this product like viaticals, preying on the elderly and infirm. Usually, a home is the main asset a retiree has, and they get tricked into this product for some extra income. Later, the kids find out mom and dad don’t own the family home anymore, and guess who they want to sue?’ ☞ The AARP site I linked to has lots of caveats. Take them seriously! THE IDES OF JANUARY For those who file estimated quarterly tax, don’t forget: your fourth installment should be postmarked by tonight. WIDE-EYED OPTIMIST I think we won’t go to war with Iraq – or North Korea. And that Sharon may be replaced by Amram Mitzna in the Israeli election January 28, leading – FINALLY – to a ratcheting down of the conflict in the Middle East. I don’t know whether Saddam could possibly be persuaded at the last minute to hie to the compound I have heard the Libyans are building for him (or even that they are really building it) – it’s hard to picture that happening. But war is such a bad option, and I am nothing if not an optimist. These things have a rhythm. It’s time for a few good surprises. Tomorrow (or soon): That Idiotic Thing About the 10 Men Going to a $100 Dinner
Will You Still Need Me, Will You Still Feed Me, When I’m 94? January 14, 2003February 22, 2017 WE LOVE TO FLY, AND IT SHOWS – II Dan Nachbar: ‘Actually, what you REALLY want is one of these.’ ☞ No, I’ll stick with this. REVERSE MORTGAGES If you’re getting on in years and own your own home, play with the calculator at rmaarp.com to get a feel for the extra monthly income you could claim. The AARP web site appropriately notes a lot of caveats. This is not a step to be taken lightly, but it could be interesting to contemplate. And in much the same vein . . . ANNUITIES Maybe you don’t want to encumber your house, but you have some money. Check out these websites to learn more: annuity.com, annuityzone.com, annuityshopper.com, bhln.com, tiaacref.org. (But remember, any promise of a monthly payment for life that doesn’t rise with inflation is a risky best we won’t have much inflation.) May you live long and prosper. Did you see the 60 Minutes segment this past Sunday with the 90-year-old woman who is working – delightedly – as a machinist? And the 102-year-old scientist guy? Very cool.
More . . . January 13, 2003February 22, 2017 WE LOVE TO FLY, AND IT SHOWS Frank McClendon: ‘Hi. You can have TiVo. I want one of these.’ ☞ Oh, me, too! EXEMPTING DIVIDENDS FROM TAX Dan H.: ‘Here‘s a terrific website analyzing the Bush plan. Highlights: In the year 2000, 91.6% of tax returns reported income under $100K. Of these, only 22% reported any dividend income whatsoever – averaging $1159. Meanwhile, 0.2% of the returns reported incomes greater than $1 million. Of these, 96% reported dividends – averaging $75,463. In other words, 72% of the population will experience zero tax reduction from this plan . . . about 20% of the population will experience perhaps an average tax savings of $350 . . . and the top 0.2% will average a $30K tax cut from this plan.’ ☞ Here’s another statistic, this one from President Bush, who told us: ‘About half of all dividend income goes to America’s seniors.’ Technically that’s true – as it would be even if the entire benefit went solely to Warren Buffett (a senior), and not a dime to anyone else. In fact, Warren will not get it all. But as the aforelinked website notes, seniors who actually need a little help – and there are a lot of them – will get little or none from making dividends tax-free. So the President, you will be shocked to know . . . the same President who as a candidate assured us over and over that we could cut taxes dramatically and still pay down the national debt while providing a prescription drug benefit and building up our military . . . is being just a little disingenuous in suggesting that ‘seniors’ will be a primary beneficiary of his latest tax cut. They will – but mainly those who don’t need it. Barry Basden: ‘Re your comment Friday that it would sure be nice to have the balance of wealth shift further in favor of the wealthy ‘but how could we possibly live with ourselves?’ . . . Well, you would probably have to live in a highly secure gated community such as those where the rich in Argentina now find themselves confined. Argentina: the middle class is now largely extinct. The desperate poor have ripped out state monuments for the metal. They recently butchered livestock right on the highway where a cattle truck overturned while the police stood by unable to do anything about it. Those rich folks foolish enough to venture out of their compounds are robbed repeatedly or kidnapped for ransom. If America goes ahead and destroys its middle class, as some seem to be trying to do, I fear we will become just another banana republic, not much different from the Argentina of today.’ ☞ This will not happen. Eventually, yin will yang, a Democrat will be elected, and the same sort of thing will happen as did in 1992: taxes on the best off will be nudged back up some (or, more likely, just frozen from falling further), and more than lip-service will be paid to the concerns of the average citizen, whose interests the administration will once again champion. But I believe you are right to worry. For more on the growing inequality between America’s rich and, well, everyone else, read Kevin Phillips’ Wealth and Democracy: A Political History of the American Rich. 01/02/03 04:05:06:07 John Bakke: ‘If you missed this numeric moment the first time, all you need to do is fly to Europe by February 1st to enjoy it there; they list the day before the month.’ J.R.: ‘Nicoletta says, I’m a programmer and I have to deal with nanoseconds all the time. Thus – 01/02/03 04:05:06:07. Then she should know it’s written as a decimal. And can be continued — 01/02/03 04:05:06.07080910. Can we end this now?’ ☞ Oh, yes – please!
Tang, Time, and Tax January 10, 2003January 22, 2017 NEW APOLLO PROJECT Craig Wiegert: ‘Congressman Inslee’s reference to Tang was downright silly. He could have come up with many better examples when extolling the benefits, direct and indirect, of the space program. How about mylar and kevlar? How about scratch-resistant plastic lenses? How about GPS, weather satellites, DirecTV? For that matter, how about photovoltaics and fuel cells, to bring the conversation back to energy?’ ☞ I’m a great believer in the space program, and I hate Tang. WAIT A SECOND Nicoletta: ‘I’m a programmer and I have to deal with nanoseconds all the time. Thus – 01/02/03 04:05:06:07.’ DIVIDENDS Dan Flikkema: ‘The tax-free dividend proposal is an outrage. In fact, it’s a relative tax increase on those of us who hold all or most of our stocks in tax deferred accounts. We already lose the benefits of capital gains when they are earned within an IRA. Now my IRA/401k will accumulate lots of dividends over the years and when I withdraw them in 30 or so years they will be 100% taxable – no tax-free dividends for me. The Bush administration banks (correctly) on the fact that the general populace is ignorant. I work with a lot of middle income people (35-60K per yr) who have been completely baffled by the Republican banter. They have virtually no net worth but still believe they are somehow better off by eliminating the ‘death’ tax. They pay more in FICA tax than income tax but still want to see the top brackets lowered.’ John P: ‘As one who has worked for a large multinational corporation for the last 22 years and who has achieved an annual salary of $62K, I want you to know that there is at least one person who is not really rich that would benefit greatly from this tax cut. I currently receive about $15K in dividends in taxable accounts. If these dividends were not taxed I would have sufficient resources to be financially independent. I have worked hard and lived frugally in order to save these resources and to attempt to be financially independent. I have paid total federal, state and SSI taxes starting at 25% of my income (beginning of career) rising to 33% of my current income. A lot of points you made about whether or not the dividend tax is the best tax to cut for economic growth and for fairness are well taken. What I do object to is the view that only rich people will significantly benefit from a dividend tax cut/elimination. A dividend tax cut would make a major difference in my financial future.’ ☞ I agree. It would save you about $5,000 a year. It would save me money, too! I love it! I just have this nagging feeling that we shouldn’t be cutting off health care to 6 year olds in Oklahoma in order to cut your taxes or mine (a rhetorical stretch, but I know you see the connection) . . . and that as hard as you and I have worked, there are quite a lot of people out there working just as hard for their $22,000 and $32,000 and $42,000, who would also like to be financially independent. Not that everyone should be assured ‘equal outcomes’ . . . and not that those fortunate enough to have been born intelligent or good looking (or to the right parents or in the right country) aren’t entitled to the major edge that gives them, and the far more comfortable life that often results. My question simply is: Has the world been unduly kind to the folks making $22,000 a year and unduly cruel to you and me making more? So much so that we have to shift the current balance further in our favor? Our Republican friends scream an emphatic yes! (And have been screaming it from the moment they took office.) I say, well, it would sure be nice to have the balance shift further in our favor; but how could we possibly live with ourselves? Jim Hayes: ‘Remember the Buffett criterion that companies should retain earnings only if they can reinvest them in projects better than their stockholders. A lot of the bubble was companies retaining earnings and wasting it on takeovers or bad investments that would have been better returned to shareholders. The double taxation of dividends and the loopholes around it are part of the corrupt tax system that is complicated solely to exact contributions for Congress.’ ☞ I might not go that far, but as I said yesterday, if this had been the one plum W. had decided to try obtain for those at the top, I think it might have made pretty good sense. And if he wants to cancel all further tax cuts for the top 2% and do this one thing for them instead, I think that would be a lot better than the vastly more expensive track we’re on now. But to ADD this plum to the rest . . . well, the eyes widen in disbelief as the jaw just drops lower and lower. (And how about, switching fields, but with the same wide eyes and dropped jaws, waiting all of ten minutes after the Trent Lott affair to renominate Charles W. Pickering and the others. Is this what it means to be ‘a uniter not a divider?’) Donald A. Coffin: ‘A more defensible, change in the tax laws would be to allow corporations to deduct dividend payments from their taxable incomes. This would make the treatment of equity finance more like the treatment of debt finance (interest payments are deductible), and thus reduce the bias in favor of debt finance. It would also encourage corporations to pay dividends, if anyone really thinks that’s important. But the proposal to end taxation of dividends as personal income is simply a tax break for the rich masquerading as something else.’ ☞ Quite a few of you suggested this. Dividends are not an ‘expense,’ like raw materials or labor or rent or interest or the phone bill; they are a totally voluntary distribution of a portion of the owners’ share of what’s left after all the expenses. So it would be odd to make them a deductible ‘expense’ . . . but it certainly could be done. James: ‘I won’t address the dividend tax cut as I’ve yet to see all the details and don’t want to jump on a bandwagon until all the particulars are out. I do want to address your mention of state budget problems, specifically CA. I live in the Golden State and watched three years ago as the state struggled with how to spend a 21 billion dollar surplus. We added 40 plus thousand state employees and enacted a dozen new state programs to put this windfall to use. Now as we face a $40 billion state budget shortfall, it appears that the guys manning the till in Sacramento have no clue as to how we got here from there. It appears the highly educated, experienced officials we have elected could not anticipate the boom times would ever end. They could have called me (or you for that matter) and I would have told them (for free, yet) that the bubble was going to end and end badly, and that it might behoove them to hold spending and save some of that money for a rainy day. Now it appears that the legislators didn’t overspend, they are suffering from a ‘revenue shortfall’ (I actually heard this the other day). The problem is not that they spent too much, I simply didn’t send them enough money. So if I don’t shed many tears for the poor suffering state of CA, please don’t hold it against me.’ ☞ If the 40,000 new hires each earns $75,000 (once you add in benefits and office supplies), that’s just $3 billion of the $40 billion, so the problems must run deep indeed. But let’s assume you’re right. My question: If we are going to change the status quo and send the federal deficit further into the red to boost the economy, is the best way to do that to cut taxes preponderantly for the best off? Kathi Derevan: ‘Being in one of those ‘top’ income categories, I will say that I feel fortunate to pay more in taxes than most people earn in a year. You can not convince me that the rich work harder than the young mother who cleans houses to support her children, or the men who wash our cars and pick up our trash. A tax break for the rich on the backs of the working middle class and poor is outrageous. I long for a President that will use our taxes to ensure that an elderly person never has to choose between filling prescriptions or buying groceries. That a young mother doesn’t have to calculate whether she can afford to seek medical help for her sick child.’