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.