Ken's Project Blog

September 30, 2011

Warren Buffett

Filed under: In The News,Politics,Taxation — Ken @ 3:06 pm

Remember when then-Senator Obama was running for President how excited the left was that ‘The Wizard of Omaha,’ Warren Buffet, one of the wealthiest people in America would be advising President Obama? Well, fast-forward a couple years and we find President Obama in what one of his top political advisors described as a ‘Titanic Battle’ for re-election, and he appears to not be listening to his advisors, at least not Mr. Buffett.

Mr. Buffett has come out publicly against (or perhaps confused is a better word) this administration’s decision to rescind a generous tax deduction for corporate jet purchases made during this downturn in the economy. The tax deduction was put in place during the Bush administration, but once President Obama took office he not only extended the deduction, but increased it from 50% to 100%. But once this administration learned how well the American public reacted to the heads of the failing automakers being attacked for taking corporate jets to ask congress for a bailout, the President apparently rethought his attempts to stimulate the corporate jet industry – and held corporate jet owners out as examples of excess, and wanted to rescind the very deductions he implemented. That same deduction for corporate jets (not personal) also applied to other capital investments by American companies, but this administration is willing to hurt the jet industry to score political points. As Mr. Buffett said, why does it make sense for a company to be able to deduct the price of a new locomotive, but not a corporate jet? Both are pieces of equipment used by businesses to make money.

Now the President has set his sights on high-income earners (over $1M/year) that pay a ‘lower tax rate than their secretaries.’ this is based in part on a famous line Mr. Buffett used in a WSJ op-ed piece. First off, I thought the issue was revenue, not rates, and millionaires pay more than their secretaries, but let’s put that aside. The President has rolled-out what he calls “The Buffett Plan” – an alternative minimum tax for people that earn over $1M in income. Mr. Buffett, despite allowing the administration to name the proposal after him has come out against it. Mr. Buffett wanted the very high-earners to be subject to a higher rate than they currently are. The President’s ‘Buffett Plan’ does nothing to increase the taxes owed by say a person who earns millions a year playing a sport or in the entertainment industry – their compensation isn’t covered by the proposed change. Mr. Buffett wanted a tax on them.

Maybe President Obama should start meeting with, and listening to, the advisors he touted on the campaign trail, not reacting to polls and working on his re-election…


September 21, 2011

Obamanomics vs. Reaganomics

Filed under: In The News,Politics,Taxation — Ken @ 12:37 am

Over at the Wall Street Journal Stephen Moore penned a great piece comparing Obamanomics and Reganomics, as he wrote in the piece:

My purpose here is not more Reagan idolatry, but to point out an incontrovertible truth: One program for recovery worked, and the other hasn’t.

I encourage you to click-thru and take a look at his piece, it’s over at

Sources: Obamanomics vs. Reaganomics

September 4, 2011

The Three Levers and Two Parties of Government

Filed under: Politics,Taxation — Ken @ 10:09 am

The government only has three levers to manipulate the economy: regulation, taxation, and investment, and investments are tied to taxation (to pay for the investments).

One party feels the path out of our economic malaise is to increase investments, with a generous helping of tax increases (primarily by eliminating tax ‘loopholes’), the other thinks that lowering taxes and reducing government regulation are what is needed.

The Republicans feel that letting individuals and corporations keep more of their own money, by making private investment & risk taking more valuable, there will be an increase in both, raising our GDP/economy.

Democrats favor increasing taxes to fund investments by government, believing those investments will spur private industry to grow and raise our economy out of it’s doldrums – despite numerous examples to the contrary (cash for clunkers, investments in ‘green’ jobs, etc.).

In the final analysis, Democrats seem to believe that the best way to grow the economy is to increase taxes, feeding the ‘engine of efficiency’ known as the federal government to coerce private industry to grow despite increased regulations and taxes. Any attempts to point out that this strategy has failed (repeatedly) in the past is met with cries from the left that previous attempts were underfunded, and that what is called for now is even greater investments by government. Republicans feel that those that created industries, created jobs, are the ones that best know how to grow not only their companies, but also the economy.

The only jobs the government can create are ones it directly funds, requiring ever-increasing taxation to fund job desired job increases – remove the funding and the government-created jobs disappear. Jobs created by the private sector, on the other hand, generate tax revenues.

August 18, 2011


Filed under: Politics,Taxation — Ken @ 3:47 pm

This video was shared with me on Facebook, and it quickly makes an excellent point, in a way many people never think about.


youtube: Doorbell

August 17, 2011

Whither the Millionaires and Billionaires

Filed under: In The News,Politics,Taxation — Ken @ 5:40 pm

Politicians on the left are fond of saying the rich are getting richer while the poor are getting poorer, but if a recent report in the Wall Street Journal is to be believed, it seems we had fewer so-called Millionaires and Billionaires (based on income tax returns) in 2009 than we had in 2007.

According to reports, there were 13% less tax returns filed with incomes over $200,000 in 2009 versus the number filed in 2007. The decrease is even more noteworthy when you look at the number of returns filed with incomes over $1 Million or over $10 Million – there were, respectively, drops of 39% and 55% in the number of returns filed in 2009 when compared with the 2007 tax filings.

Where’d they go, or, more to the point, where did their income go? The next time someone says “The rich are getting richer” ask them to prove it, because based on the evidence I see, based on actual tax return information leads me to believe we have fewer “Millionaires and Billionaires” than we used to…

Sources: Millionaires Go Missing Tax Year 2009 Detailed Information

August 13, 2011

Matt Damon, on Tax Policy

Filed under: Politics,Taxation — Ken @ 9:58 pm

First off, I agree with Greg Guttfield – “Don’t blast Damon for answering a question that he was asked” – he wasn’t at a podium pontificating, he was asked a question about taxes and he answered. Blast the reporter for looking to a hollywood star for tax policy insight…

Second, when he claims that he is “socking away” his money, exactly where does he “sock it away”? Perchance the stock market? (investing in the stock market fuels the companies and the investors in the market to create more jobs through expansion) Bonds? (Bonds are used to fund construction projects, those create jobs) Putting it in a bank account? (that give his bank the ability to make home mortgage loans, which again, creates jobs)

Aside from putting money in a mason jar in the backyard, there are very few things he can do with money that doesn’t create jobs.

Finally, his proposed 50% income tax on those that make over $5 million/year – has he really thought it through? That would mean his $20 million movie deals would net him $10.75M, with him writing Uncle Sam a $9.25M tax check. ($20M – $5M = $15M, 50% of $15M = $7.5M – plus, of course, the estimated $1.75M he would owe at the current 35% tax rate which he feels is too low.) And let’s not forget California state income taxes of 11% after the first $1M, so that would deduct another almost $2M off the $20M deal, leaving him with around $9M from his $20M “deal”…

Sources: CA Tax Brackets

YouTube: Matt Damon Says Nobody Who Earns Over $250,000 Starts Business If They Keep More of Their Own

July 22, 2011

Paul Krugman – Not so good with the math

Filed under: In The News,Politics,Taxation — Ken @ 6:09 pm

Back in August of last year, Paul Krugman attempted to rouse the rabble with his column “Now That’s Rich,” wherein he laid forth the following proposition when describing the extension of the so-called “Bush Tax Cuts for the Wealthy”:

But these same politicians are eager to cut checks averaging $3 million each to the richest 120,000 people in the country.

Now, I don’t have a Nobel prize in Economics like Mr. Krugman, but that comes out to $360 Billion – am I right, check my math, that’s $3 million times 120,000 – yep, $360 Billion. That’s what Mr. Krugman says the tax benefits of the top 0.1% of income earners (with an average income level of about $8.4 million/year) would get $3 million each back in tax savings…

But if I follow through to the very handy link Mr. Krugman provided to and read their report entitled “The Debate over Expiring Tax Cuts: What about the Deficit?” I find that the average increase in tax savings provided to the top 0.1% of income earners would be $310,140. How could Mr. Krugman be so far off?

Later in the column, Mr. Krugman mentions that ten years of the tax cuts the Republicans wanted to keep in effect (on the top 1%, not just the top 0.1%) would cost $680 Billion over the course of ten years – how weird that he wouldn’t catch that internal inconsistency in his own article – how can one year of tax cuts for the top 1% cost $68 Billion/year, while the tax cuts for the top 0.1% (a subset of the 1% just mentioned) would cost $360 Billion/year?

Either Mr. Krugman made a simple error (it’s possible, but doesn’t the New York Times have editors and researchers to catch these things) or was Mr. Krugman trying to intentionally confuse the discussion with his alarmist numbers – either way, it’s another nail in the coffin of his credibility.

Sources: Now that’s Rich The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2008 – Paul Krugman The Debate over Expiring Tax Cuts: What about the Deficit?

You Don’t Get It

Filed under: In The News,Politics,Taxation — Ken @ 5:27 pm

Rep. Jan Schakowsky is caught in this radio interview trying to explain how Social Security works, that the “Social Security lockbox” exists, and that Social Security is fully-funded and can make payments for the next 25 years or so… Yet without a debt increase the Social Security checks can’t go out. When the hosts of the radio show call her on the seeming contradiction of statements, she tells them they just “don’t get it.” I’d like to take a moment and make sure you get it.

Let’s take a look at each of her statements, and consider them individually:

Social Security is a ‘pay-as-you-go’ system

Ok, fair enough – that means that each year, social security receipts essentially cover the payment of benefits for Social Security recipients, and until last year (2010) that was true. The year 2010 was the first year that Social Security was forced to supplement receipts to meet its obligations, but those supplemental funds didn’t come from the general funds of the federal government, they came from the “lock box,” which was funded by the surpluses of previous years, when Social Security’s receipts exceeded their obligations.

The Social Security ‘lock box’ exists

Yep, it sure does – and what a great name that ‘lock box’ name is, by the way – it implies that the surplus funds have put away, and they can not be used for any other expense – that the Social Security surpluses are secure, until needed. Well, sorta…

See, the lock box is really an account that is full, but not of cash money, but instead with interest-paying federal securities, much like the Treasuries we sell to investors and foreign countries like China. In fact, the so-called ‘lock box’ actually has about $2.5 trilion in these federal securities, which accounts for about 1/6th of our national debt, currently $14.3 trillion). All the surplus funds working Americans have paid in to Social Security over the years have been invested in our national debt, so if our government were to default on its debts, it would also be defaulting on the debts owed to the Social Security ‘lock box’.

Social Security is fully funded for the next 25 years

This is also a true statement – based on the latest projections from the Congressional Budget Office as the so-called ‘baby-boomers’ leave the workforce and transition from Social Security contributor to beneficiary at the estimated rate of 10,000/day for the next 19 years, Social Security will be able to meet its obligations by relying on both payroll contributions and by drawing down ever more from the ‘lock box.’ The CBO estimates that the trust fund and payroll contributions will run out in about 25 years.

But without timely access to its ‘lock box’ funds that are tied up in federal securities, it is possible for Social Security to run the risk of not being able to meet its obligations to beneficiaries.

As shown in the above video, the regular, monthly payroll contributions for Social Security will be sufficient to fully fund the August benefits checks without having to increase our debt ceiling to allow Social Security to borrow needed funds (which they have never done before, by the way) or take funds from our general receipts to fund those payments (again, something they have never done before). The only way Social Security checks would not be sent out would be if:

  • the federal government were to seize all August Social Security contributions, starving Social Security of its regular revenues AND
  • the federal government were to fail to repay enough federal securities to the Social Security ‘lock box’ to allow it to meet it’s August obligations using funds from the “lock box”

Both would have to happen for Social Security to not be able to meet its obligations in August if the debt ceiling isn’t raised.

So where are we now in the debt ceiling crisis?

In the Senate, the ranking Republican Sen. McConnell has proposed a bill that would allow the President to raise the debt ceiling in three installments, to a level that would allow the federal government to fund its operation through Fiscal Year 2012, based on implementing certain proscribed spending cuts before raising the debt ceiling each of the three times (While far from ideal, many in leadership on the left have praised this as a possible ‘Plan B’ should other options fail.)

In the Congress, they approved a so-called “Cap, Cut, and Balance” bill that would bring federal spending to a more manageable 20% or less of GDP over a number of years, would enact cuts in the levels of federal spending to achieve the goal of reigning in spending, and would set in motion a process to enact a balanced budget amendment to the Constitution, similar to the balanced budget requirements currently in effect in 49 out of our 50 states. The debt level would be allowed to rise under this bill, allowing us to run deficit budgets until the balanced budget amendment would be in place. This “Cap, Cut, and Balance” bill was defeated today in the Senate today.

The President has announced that he will only sign off on a debt level increase that provides sufficient “headroom” for the deficit to grow through the next election (through calendar year 2012), AND the legislation must include new tax revenues. Send him a bill lacking either, and he has said he would not sign it… Leading at least one reporter to ask his spokesperson why vetoing a bill that doesn’t meet his requirements and causing the government to fail to meet all its obligations is preferable to signing a bill with cost savings and increases the debt ceiling. The President’s spokesman didn’t really have an answer to that question.

Sources: You Don’t Get It: Congresswoman Agrees With President Americans Too Stupid Social Security and Debt Limit Debate

Laura Ingraham on ‘Shared Sacrifice’

Filed under: In The News,Politics,Taxation — Ken @ 4:58 pm

From the above video:

Laura: Taxing the upper 1 or 2% income earners in this country does not get us to the math. We have to shrink government – putting more burdens on the people that actually create jobs – hey, like NBC – we don’t need to do that.

Matt: I think everybody agrees that there’s gotta be some changes in that side, the Gallup…

Laura: Matt, when Washington starts sacrificing instead of actually increasing the salaries of individuals within the Executive Offices of the Presidency – when they start sacrificing then we can talk about the real meaning of sacrifice to the American people.

Matt: Recent Gallup poll said that only 20% of Americans think that spending cuts are the only thing that should be on the table when they talk about this, so they are talking about increasing revenues… They are talking about raising taxes on the 1%, on corporations, even the corporate jets which is only a few hundred million…

Laura: That was a scam, and that was a lie – the fact that the media allowed him to get away with that for five seconds was absurd…

That recent Gallup poll point has tripped up a few commentators, the way they accomplish that staggering 80% “want tax increases” number is a bit misleading (not inaccurate, but they lump several responses to get to that number):

Using their same math, I could argue that 96% of Americans want spending cut, that would be just as accurate.

What I feel the above poll indicates is three groups of individuals – those who think most/all savings should come from spending cuts, those who think it should be equally split between spending cuts and tax increases, and those who think it should be most/all tax increases, which breaks out this way:

  • Mostly/Only with spending cuts – 50%
  • Equally with spending cuts and tax increases – 32%
  • Mostly/Only with tax increases – 11%

The resounding, clear mandate from the American people suddenly isn’t so clear or resounding.

Sources: Laura Ingraham exposes Obama’s ‘Shared Sacrifice’ Lie Laura Ingraham Exposes Obama’s ‘Shared Sacrifice’ Lie Did Obama lie about White House salaries in Twitter town hall? On Deficit, Americans Prefer Spending Cuts; Open to Tax Hikes

President Obama’s Op-Ed in USA Today

Filed under: In The News,Politics,Taxation — Ken @ 12:11 pm

President Obama wrote an Op-Ed that was published over at, I wanted to take a close look at the following paragraphs from his Op-Ed:

That’s why people in both parties have suggested that the best way to take on our deficit is with a more balanced approach. Yes, we should make serious spending cuts. But we should also ask the wealthiest individuals and biggest corporations to pay their fair share through fundamental tax reform. Before we stop funding clean energy research, we should ask oil companies and corporate jet owners to give up the tax breaks that other companies don’t get. Before we ask college students to pay more, we should ask hedge fund managers to stop paying taxes at a lower rate than their secretaries. Before we ask seniors to pay more for Medicare, we should ask people like me to give up tax breaks they don’t need and never asked for.

The middle class hasn’t just borne the brunt of this recession; they’ve been dealing with higher costs and stagnant wages for more than a decade now. It’s just not right to ask them to pay the whole tab — especially when they’re not the ones who caused this mess in the first place.

Now, let’s step through it and see what I found interesting:

“That’s why people in both parties have suggested that the best way to take on our deficit is with a more balanced approach. Yes, we should make serious spending cuts.”

The last proposal from the President/Democrats planned to cut $2 billion in spending in FY’2012 – is that his idea of “serious spending cuts”? The bulk of his proposed cuts would take place under another President/Administration – if you want to cut spending, cut it, cut it right now – don’t propose tying the hands of future administrations with obligations you are unwilling to make yourself.

“But we should also ask the wealthiest individuals and biggest corporations to pay their fair share through fundamental tax reform.”

The top 1% of income tax filers pays 38% of all income tax revenues, yet only account for 25% of all income – the bottom 47% of tax filers pay 0% of all federal taxes, and the bottom 50% of tax filers pay 2% of all income tax revenues. Seems to me, the “fair share” of the top 1% of tax filers pays about 50% more than “their fair share” – 25% of income should pay 25% of taxes, right?

“Before we stop funding clean energy research, we should ask oil companies and corporate jet owners to give up the tax breaks that other companies don’t get.”

What exactly are those special tax breaks that oil companies and corporate jet owners get? As Warren Buffett pointed out earlier this week, only corporate jets that are used for business purposes are deductible, same as p,ant equipment, railroad locomotives, or other capital expenses with few exceptions. I’d like to see an enumerated list of the “special” tax breaks you imagine oil companies get.

“Before we ask college students to pay more, we should ask hedge fund managers to stop paying taxes at a lower rate than their secretaries.”

Their lower rate generates more income tax revenue than all the secretaries – history has proven that lowering the long-term capital gains tax rate increases revenues, increasing it lowers revenues – is your goal increased revenue or the perception of fairness?

“Before we ask seniors to pay more for Medicare, we should ask people like me to give up tax breaks they don’t need and never asked for.”

Then don’t claim the tax breaks you are entitled to, Mr. President – they aren’t required, ask your tax accountant, he’ll explain that deductions are optional. President Clinton didn’t have to claim a deduction for his donated used underwear when he was Gov. of Arkansas, but he choose to do so.

“The middle class hasn’t just borne the brunt of this recession; they’ve been dealing with higher costs and stagnant wages for more than a decade now. It’s just not right to ask them to pay the whole tab — especially when they’re not the ones who caused this mess in the first place.”

They did enjoy the “brunt” of the benefit of the so-called “Bush Tax Cuts for the Wealthy” – those earning under $250,000 or $200,000/year got about $3 Trillion in tax savings, those above that so-called “Millionaires and Billionaires” line got less than $1 Trillion in tax savings.

You can see the entire Op-Ed over at

Sources: USA Today Op-Ed “I will gladly cut spending in ten years, for a debt increase today”, Shared Sacrifice, Warren Buffet on Private Jet Deductions Transcript: Labrador Appears on “This Week” with Christiane Amanpour Obama: Raise Taxes, Capital Gains – “For Purposes of Fairness” Clinton Taxes Laid Bare, Line by Line Tax Cut Extensions Would Ratchet Up National Debt

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