Monthly Archives: May 2013

BILLIONAIRE BOZOS

5/25/13 BILLIONAIRE BOZOS
Michael Bloomberg, the Mayor of New York City, is an accomplished and brilliant individual. He made billions in business, and when he decided to enter politics, he didn’t have to raise money from anybody, special interests or otherwise.

Recently, the Mayor decided that New York City should “do something” about obesity, so he proposed banning the sale “sugary beverages” over 16 ounces by restaurants. For this act of moronic hubris, I awarded him my coveted BILLIONAIRE BOZO award.  (If you think it is entirely appropriate for a mayor or other elected officials to micromanage what the public eats and drinks, and you don’t have a billion dollars, I’m afraid you are just an ordinary bozo.)

On Thursday, May 2, I was watching CNBC’s Squawk Box show, and they had as a guest the reclusive billionaire Ronald Perelman.  Perelman is an interesting, very successful businessman.  When asked about the next presidential race, he said he liked both Hillary Clinton and Jeb Bush, but then he said, “I think Hillary is one of the great assets we have in America.”  BOZO ALERT – BOZO ALERT.

Perhaps he was thinking of Hillary’s proven record as a commodity trader. Remember that one?   She turned $1,000 into $100,000 by trading cattle futures.  Three things wrong with that one, folks.
1) Margin accounts required at least $2,000 opening equity back then.
2) She kept her trading prowess a secret.  Hillary not telling the world what a genius she is? Right.
3) Most damning fact: After she turned $1,000 into $100,000, SHE QUIT.

Since Ron Perelman is an investment genius and I’m not, and since he knows Hillary and I don’t, it could be I’m all wrong in my analysis.  So I withheld the award pending additional facts.  Ron was not long in providing them. He believes income taxes should be higher for wealthy people.

“I think wealthy people should be taxed more.  I think if you can afford it, that’s where the money’s gotta come, and they’ve gotta raise the money.”

The problem with this sort of thinking, and since Perelman has $14 billion he sure as Hell should know, is that wealth is measured by a person’s assets, not the income statement filed annually with the IRS.  There are only a couple of items on the 1040 that relate to the assets of the individual, and those items are guarded by an army of special interests.

The most popular is the deduction allowed for mortgage interest.  The bigger the mortgage, the higher your wealth probably is, and the higher your deduction is.  Canada doesn’t have this deduction, by the way, and Canada’s proportion of home ownership is about the same as in the U.S.

The other deduction is the one allowed for property taxes, which are supposed to reflect the value of the real estate assets owned by an individual. People with million dollar homes get big deductions. Apartment renters don’t.

There is one tax, though, that is directly related to an individual’s wealth.  It is the estate tax. Currently, the tax is zero on an estate’s assets up to $5.25 million per person, $10.5 million per married couple, and 40 percent on the assets above those levels.  Since this is unquestionably a tax on wealthy people, you would think Perelman wants to see it raised,  right?

Wrong. He thinks the estate tax should be eliminated. “I could get to the next thing that really bothers me, which is estate taxes. Double taxation,” he said.  “You’re taxed on the creation, and you’re taxed on the distribution.”

I totally agree with him, but for wanting to raise income taxes, but not estate taxes, as a way for wealthy people to pay more, he gets my BILLIONAIRE BOZO award.

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Morons With Megaphones

5/24/13
Last Tuesday, May 21, two long-serving U.S. Senators showed the nation why we need term limits. Sen. Carl Levin, D-MI, and John McCain, R-AZ,  used the bully pulpit of a Senate subcommittee hearing to show the world how indignant they are that Apple Corporation uses the tax laws to avoid paying taxes.

Who’s in charge of writing tax laws, Senator Morons?  Apparently the Senators think Apple is in violation of some unwritten Cosmic Fair Tax Code that only Senators are privy to.

Here’s what Senator McCain said: “A company that found remarkable success  by harnessing American ingenuity and the opportunities afforded by the U.S. Economy should not be shifting its profits overseas to avoid the payment of U.S. tax, purposely depriving the American people of revenue. It is important to understand Apple’s Byzantine tax structure so that we can effectively close the loopholes utilized by many U.S. multinational companies—.”

Deprive the American people of revenue? Don’t you mean the American government, Senator? Apple’s Byzantine tax structure? I didn’t know corporations were in charge of tax structures, Byzantine or otherwise.

Here’s a sample of Senator Levin’s babblings: “Apple sought the Holy Grail of tax avoidance.  We intend to highlight that gimmick and other Apple offshore tax avoidance tactics so that American working families who pay their fair share of taxes understand how offshore tax loopholes raise their tax burden — and ought to be closed.”

The Holy Grail of tax avoidance? Do you mean avoiding taxes by the gimmick of scrupulously obeying tax laws, as Apple has done?  Fair Share?  I suppose you have to be an elected official to know what a “fair share” is.  On top of that, it no doubt helps to be really stupid about who pays taxes.

Apple CEO Tim Cook, until now just a guy following in the impossible-to-fill shoes of Steve Jobs, showed himself to be one helluva class act.  Dignified, polite, knowledgeable, and infinitely patient with the Senator morons, he emerged from the hearing the clear victor.

And why not?  His testimony, as follows, was delivered firmly and unapologetically:  “We pay all the taxes we owe.  Every single dollar. We not only comply with the law, but we comply with the spirit of the laws. We don’t depend on tax gimmicks. We don’t move intellectual property offshore and use it to sell our products back to the United States to avoid taxes. We don’t stash money on some Caribbean island. We don’t move our money from our foreign subsidiaries to fund our U.S. business in order to skirt the repatriation tax.”

Four points to consider:
1)  Apple, and all other international companies, must find the lowest cost areas to do business or their competitors, who also seek the lowest cost areas, will under price them and put them out of business. Do bankrupt companies pay taxes, Senator Morons?
2) Taxes are a cost (duh!), just like raw materials or electricity.  In the venerable DuPont formula, the last factor in the equation is one minus the tax rate, or (1-Tax rate).  The higher the tax rate, the lower the return on investment.  As returns on investment are lowered, expect the amount invested to be lower. How many jobs are created by lack of investment, Senator Morons?
3) Corporations don’t pay taxes.  A dramatic illustration of that fact is all the taxes imposed on cigarettes. Has that put Phillip Morris out of business?
4) Lower foreign taxes attract companies to locate their operations there, just like Silver City’s taxes attracted me to move here. Why is the U.S. corporate tax rate the highest in the world, Senator Morons?

Senators Levin and McCain have a combined 65 years of Washington, D.C. experience, and are responsible for the tax code they complain Apple abuses..  Both these despicable demagogues should never have been allowed to be in office as long as they have been. TERM LIMITS!!

The 99% vs. the 1%, Part Four

5/19/13 Note: “99% vs. 1%” is a metaphor for masses vs. the powerful few, and rarely refers to the mathematical 1% that is richer than the other 99%, or smarter, or luckier or whatever. I define the 1% as those who advocate or benefit from government abuse of power. They total much more than 1%.

“Government is the great fiction through which everybody endeavors to live at the expense of everybody else.”  Fredrich Bastiat (1801 – 1850)

“—- and some succeed.”  El Burro (1939 –   )

Who are the 1%?  Most people assume the 1% are the just the very rich. They’re wrong.  Nobody puts Oprah Winfrey, Clint Eastwood or Peyton manning in the 1%, though surely those three are in the top 1% of Americans as far as personal wealth is concerned.

It takes more than “rich” to make the 1% as I define them.  Rich or poor, my 1% have to advocate a misuse of government power, for either personal enrichment or to pursue some ideological goal.  Mayor Bloomberg of New York, a perfect example, wants the government to ban 16 oz. servings of “sugary” drinks, showing the whole world he’s a one percenter.

He’s also a hard-working, brilliant business man and a multibillionaire.  He is definitely a superior individual in many ways, yet all too common when it comes to abusing power.  Thomas Sowell has written books about elitists like Mayor Bloomberg e.g. Vision of the Anointed  (1995), Intellectuals and Race (2013).

Government employees are not often thought of as belonging to the 1%, but as enthusiastic recipients of government favoritism, they are at the top of the list.  Remember the noisy, trashing mobs that took over the capital building in Madison, Wisconsin, when governor Walker proposed public worker reforms?

As more and more state and local governments face bankruptcy because of the overly generous pay and pensions of public employees,  we can expect more such demonstrations.  What these public employees are really saying as they march, trash and threaten, is that they are ENTITLED to be overpaid, underworked, impossible to fire, retired too early and retired too generously.

All of us know people in their fifties, or even in their forties, who are retired public employees.  I don’t put all of them in the 1%, just those who think it’s perfectly fair to work thirty years and comfortably retire for perhaps another thirty, and all on the taxpayers’ dime.

The most egregious public employee abuse I can think of was in Bell, California, a city of 37,000 with, according to Wikipedia, 25% living below the poverty level.  The city manager, Robert Rizzo, was squeaking by on an annual salary of $787,637 and was no doubt dreading the thought of retiring on only $600,000 per year.

His assistant city manager was being paid $376, 000 per year, the chief of Police $457,000, and four of five city council members were getting $100,000 for their part time jobs. I wonder about the fifth council member: Stupid or honest? Google up Bell, CA, for the details. The last I looked, nobody was yet in jail, but Rizzo’s pension had been cut to $50,000.  That’ll teach him!

Also, you’ll have to look very, very hard to discover what political party all these benighted one percenters belong to.  The media gurus no doubt thought such a detail was unimportant. Right.  Hint: It wasn’t the Libertarian Party.

Unfortunately, what went on in Bell, CA, is going on all over the country, just not as audaciously. To borrow from the Declaration of Independence, our government has erected a multitude of new offices, and sent hither swarms of bureaucrats to harass our people and eat out our substance.  Another swarm is on the horizon marching under the banner of Obamacare.

Paul Gessing, President of the Rio Grande Foundation, a Libertarian think tank in Albuquerque, noted in his  newsletter on August 11, 2010, that a study from the Bureau of Economic Analysis showed federal workers earn over twice their private sector counterparts.

Gessing’s memorable conclusion:  “John Edwards was right about one thing when he ran for president several years ago. There are indeed ‘two Americas’. The two Americas are not specifically rich and poor, but government workers vs. the rest of us.”

The 99% vs. the 1%, Part Three

The 99% vs. the 1%, Part Three  5/14/13 Note: “99% vs. 1%” is a metaphor for the exploitation of the masses by the powerful few, and rarely refers to the mathematical 1% that is smarter than the other 99%, or richer, or luckier, or whatever. I define the 1% as those who advocate or benefit from government abuse of power. They total much more than 1%.

People often accuse corporations of abusing their “power“.  This rarely refers to a violation of written laws, but some violation of Cosmic Justice, such as not paying workers “enough“, or selling products that are “bad” for us, such as Big Macs.

It is true that some people in business will, if given the opportunity, screw their employees and customers with great abandon, but this sort of behavior is not inherent to just business enterprises. People tend to act in their self interest, and if that means cutting corners and doing it the easy way, ethics and laws be damned, it will happen. Unions, churches, charities, armies, universities, el al and ad infinitum, people will be people, not angels.

Milton Friedman, the famed Libertarian economist, was once accused of being pro-business. He took great umbrage and replied that he was not pro business, but pro free markets.  He then went on to say that businessmen have always been the biggest foes of free markets, and always will be.

When businesses try to do things the easy way, and do it legally, it always involves getting the government to do thier dirty work, impose tariffs or import quotas against foreign competitors. I can’t think of examples of corporations abusing their power, however defined, that doesn’t really mean government abuse of power.

A current example is the recent  natural gas boom in the U.S.  Dow Chemical opposes exporting any of this new-found bonanza because Dow uses a lot of natural gas, and cheap gas gives them a cost advantage in world markets.  Dow has lots of support from the environmentalists, and both of these one per centers want THE GOVERNMENT to ban natural gas exports. How typical.

On their own, businesses don’t have any “power”.  For example, two of the most successful businessmen in America are Bill Gates, founder of Microsoft, and Warren Buffett, head of the holding company Berkshire Hathaway. Both are worth $40-50 billion, and neither has a scintilla of power over you or me.

If Gates came into my office, could he force me to erase the Mozilla Firefox browser on my computer and force me to use his lousy Windows browser? Hardly. Berkshire Hathaway has long had a big position in Coca Cola, but could Warren Buffett come into my house and force me to throw out my Dr. Pepper? Of  course not.

Neither one of these billionaire liberals, by themselves or through their corporations, has the power of a Meter Maid when it comes to ordering anybody to do anything. Both men may be in the top one per cent of the top one percent in terms of wealth, but that alone doesn’t put them on my 1% list.  To make my list you need to show a dictatorial impulse.

WalMart, for instance, makes the 1% list of the Occupy crowd for things such as “worker exploitation“ or “causing unemployment” by putting local retailers out of business. In fact, nobody is forced to work at WalMart, and nobody with a gun and a badge keeps customers away from stores that can’t compete with WalMart.  (I note people outraged by WalMart’s sins never start competing stores and hire employees for a “fair” wage, and they all want laws that prevent Walmart from opening new stores, effectively putting government guns and badges in front of Walmart’s doors.)

This is not to say that WalMart is always on the side of the angels. They make my 1% list when they support minimum wage laws. WalMart typically starts workers at more than the minimum, so they support the government increasing minimum wages because it’s more of a negative for their competitors.

Now that the President has proposed increasing the minimum a whopping 24%, from $7.25 to $9.00, nary a peep from  WalMart’s front office. Obama’s proposed increase, you see, is big enough to hurt Walmart, too. Does this mean Walmart will stop supporting the government mandating minimum wages?  Only as long as it’s in their self interest.

The 99% vs. the 1%, Part Two

The 99% vs. the 1%, Part Two 5/9/13 by Peter Burrows – elburropete@gmail.com Note: “99% vs. 1%” is a metaphor for the exploitation of the masses by the powerful few, and rarely refers to the mathematical 1% that is smarter than the other 99%, or richer, or luckier, or whatever. I define the 1% as those who advocate or benefit from government abuse of power. They total much more than 1%.

In the ongoing battle of the 99% against the evil 1%, corporations are always at the top of the evil list. As mentioned last week in Part One, in September, 2011, Occupy New York, “to express a feeling of mass injustice”,  came up with 23 grievances against corporations which range from poisoning the food supply to keeping people misinformed and “fearful” through  control of the media.  (As an aside, when the occupy geniuses are watching MSNBC, do they know where the “MS” in MSNBC came from?)

Google “Declaration Occupy New York” and you can enjoy the list for yourself. Don’t be  alarmed by all the corporate atrocities.  If any American corporation is even suspected of breaking a law, tons of attorneys will be eager to take them to court.  Our contingent fee tort system guarantees it.  The tobacco lawsuits and settlements are a prime example.

However, If corporations are breaking laws that don’t exist but instead are in violation of some Cosmic Justice as perceived by the Occupy movement, than lawmakers should be blamed, not corporations.  But that wouldn’t be any fun.  That wouldn’t get the juices of righteous indignation flowing.

I see the Occupy people, many of them over 40, and I wonder how they can live amidst our unprecedented prosperity with no clue as to how that prosperity has come about.  At some point such willful ignorance morphs into just plain stupidity.

I suspect most of the occupy crowd have never worked in private enterprise and associate corporations with the pursuit of profits, a word that means “exploitation” in their little minds. “People Not Profits” is a popular slogan amongst the benighted, yet few can define “profits”.

In the real world, there is no conflict between people and profits.  Every economic system must have profits or it stagnates.  When farmers started to plow and irrigate some 10,000 years ago they began to produce more than they consumed. They had PROFITS to buy/trade for the fisherman’s extra catch, the weaver’s extra cloth, etc. etc.

The more profits, the better off people are.  In the last two hundred years, more profits/wealth have been created than in the entire previous 50,000 years or so of human existence.  We can thank democracy, free enterprise, and that great legal tool that allowed “everyman” to accumulate capital, limit his risk, and pursue his dreams: The corporation.

Does this mean that corporations should pursue profits regardless of consequences? Absolutely not.  Have corporations ever pursued profits in disregard to the well being of customers, employees or the environment? Many, many times.  Corporations are run by human beings, and no organization is free from the foibles of the people who run it, whether it is a church, a charity, a union, a government or a corporation.

Consequently, corporations must be constrained by laws, which is to say, THE PEOPLE WHO RUN CORPORATIONS MUST OBEY THE LAWS.  While we frequently read about some corporation being in violation of a law, this is essentially a legal technicality which obscures the fact that there is some person or persons working at the corporation who broke the law.

If the penalty is to go to jail, it won’t be a “corporation”  that does time.  There is no jail cell somewhere in Texas incarcerating Enron Corporation. A couple of the SOBs that ran Enron have jail cells, but there is no cell holding the corporeal corporation, so to speak. (I couldn’t resist.)

Corporation haters have lost sight of the reality that corporations are simply people, and apparently think of them as disembodied specters doing evil to one and all.  This is contrary to what common sense and experience should have taught them, namely, that corporations have benefited society, top to bottom, more than any government run economy ever has or ever will. That’s the “occupier’s” real beef.

In conclusion, the Occupy movement doesn’t represent the “99%“. In fact, they are a movement of the  “1%”, the totalitarians who would rule us if we let them.

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