Friday, January 2, 2015

Holidays Are Over. (Let's work on our taxes.)



1/2/2015 5:48 PM

January 2nd, and I’ve already broken my first resolution: to write and post every day. Well, yesterday was a holiday…and other excuses.
And to ease into the year, I’ll keep this to a short number of subjects. Not Ferguson, or Cuba, or any of the front-page subjects that are already overloading you. I’m talking taxes and two obits. Maybe three.
On-line, it’s titled “A tax system tilted towards the rich”, but my print version was headlined “How to make taxes fair again”. And “fair” is what it’s all about, isn’t it? The author, Joseph Anthony, compares the equal incomes, and unequal federal taxation, of two couples through the years, 1993, 2000 and 2014, which happens to be the tax year we’re all getting ready to file. The only difference is the income sources of the two couples. One gets it from salaries, the other from long-term capital gains. Guess which one pays less.
The article is great in the detailed analysis of a simple example. I want to examine the effects in the larger picture, as a result of the changing taxation on both of the couples.
Here are the three years, the same income each year, and the taxations for the salaried and cap-gains couples:

1993   $150,000   $35,650   $34,158

2000   $150,000   $33,607   $23,025

2014   $150,000   $24,138     $8,385

Yes, it’s appalling how much the cap-gains couple’s taxation falls off, especially as a result of the Bush tax cuts, but they got a reduction during the Clinton years too.

But adjust these numbers for inflation, and what struck me may astonish you.
Adjusting these numbers for inflation, using the calculatorat Bureau of Labor, that $150,000 is worth less every year. Keeping all numbers in 1993 dollars:
1993   $150,000   $35,650   $34,158

2000   $125,871   $28,201   $19,321

2014     $91,784   $14,770     $5,131

What this means is that, even though the two couples both lost about 39% of their income’ buying value in the past 21 years due to inflation, (a little over a third of the value,) the buying power of the federal tax went down over almost 60% for the salaried couple, and for the couple living off long-term cap gains, federal tax value dropped by 85%. This is because, while income values dropped only due to inflation, the tax value dropped due to inflation combined with tax cuts.  

And we wonder why so many public services, like schools, hospitals, universities, research, infrastructure, so much of what made (notice the use of past tense) America great. The investor in the markets no longer is an investor in public America, only in private, for-profit, hardly-taxed America.

Now, soon after this op-ed, the probably-all-Republican AICPA assigned a minion to write the LA Times to argue that this is a goodthing. He finished by saying we can’t eliminate preferential treatment for capital. “We tried it in the 1970’s, and the result was a stagnant economy.” Is he lying, ignorant, forgetful (there was that little thing called the OPEC oil embargo in 1973,) or just an ideologue who thinks that…oh, wait, he’s obviously not thinking.

I think I’ll leave the obits for another day. Those folks are dead already, they can wait.

Monarch update: I released seven today. Two of them had malformed wings, but the others sunned themselves for a while in my tree out back, then took off. And this afternoon, another one came out, looking good, which I’ll send on its way tomorrow. There’s still twenty-seven little green-and-gold pupa hanging in the cages. Gonna be a busy January.

Welcome to 2015…and we’re off!

1/2/2015 7:34 PM

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