Getting the Handshake

A little too fun not to share.

My uncle, Dane McBride, gets a handshake from Gov Romney at the RNC just before Romney's acceptance speech. Thanks to Michael Bush, from Mitt the Man, for the clip!

Don't miss my new novel, "You Heard It Here First!" on Amazon, Nook, and Kindle!

Dishonorable Disclosures

Jim Davies, the brother of Ann Romney, sent this message and video out today. 

When you have 22 minutes to spare, this is an absolutely must-see video!  These people are professionals and know whereof they speak.Please watch this, share it, post to social media, etc. Every voter needs to understand the significance of the security leaks that have come from the Obama administration. It is time to put an end to the arrogance of these people who either do not understand the implications of their decisions, or are intentionally weakening and endangering our military and intelligence heroes.

http://www.youtube.com/watch?v=X-Xfti7qtT0

Food Stamp Recipients Rise, 100 Days Until Taxmageddon

It was the side by side headlines on Drudge that caught my attention. 

"More Americans Added to Food Stamps Than Find Jobs"

and 

"100 Days Until Taxmageddon"

Together those two headlines can really make you think. 

We're about to get taxed to death and 265,000 people were added to food stamps last month. (And only 200,000 jobs were created.)

Here's the thing, folks. Taxmageddon doesn't include how we're going to pay for that many people to be on welfare. 

I'm not criticizing anyone for needing food stamps. I just wonder how we're going to handle being able to support ourselves and pay that much in taxes. Not being able to feed and house yourself when employed because taxes are so burdensome does not qualify someone for food stamps. 

 

Taxmageddon is still avoidable. But I hope people understand Taxmageddon is in the hands of Congress and the Senate. It has little to do with the ongoing presidential battle. 

If Congress doesn't figure out how to fix things, this stuff really will happen. These aren't worthless political ad threats. It is a real thing. 

Personal income tax rates will rise on January 1, 2013. All tax brackets will move. Everyone poor, middle, or rich, will have their income taxes go up. The top income tax rate will rise from 35 to 39.6% (same rate most small business profits are taxed).  The lowest rate will rise from 10 to 15%.  Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates.  The full list of marginal rate hikes is below:
-The 10% bracket rises to a new and expanded 15%
-The 25% bracket rises to 28%
-The 28% bracket rises to 31%
-The 33% bracket rises to 36%
-The 35% bracket rises to 39.6%
Itemized deductions and personal exemptions? What are they? How about your mortgage deduction or child tax credit? Think I'm making empty threats? I'm not.
Higher taxes on marriage and family coming on January 1, 2013.  The “marriage penalty” (narrower tax brackets for married couples) will return from the first dollar of taxable income.  The child tax credit will be cut in half from $1000 to $500 per child.  The standard deduction will no longer be doubled for married couples relative to the single level.


This is getting scary. As someone who doesn't have a full-time job or full-time wages, this is more than scary. I have to pay taxes, but I don't have reliable income. And I don't qualify for any sort of assistance. I really don't know how I am going to both pay those taxes and support myself.

Mitt Romney and the "taker class"

I'll let the national media and sensationalist bloggers hash out Gov Romney's statements about the "taker class." But just so we're all on the same page, here is what he said-

“These are people who pay no income tax,” but they are people “who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it.” 

I'm going to jump right ahead to where this argument will inevitably lead (once the mainstream media has finished their attack and decided to actually discuss the issue) (also known as when MSNBC and Fox News have found something else to talk about). 

The real question at the bottom of all this will be whether or not you think/feel/believe that someone who is on welfare should have to pay taxes.

On one hand there is the argument that if they are on welfare that obviously they cannot afford to pay taxes. 

Counterargument to that is could they get by if they didn't have to pay taxes and the welfare was removed? Or what if the precise dollar amount of the owed taxes was subtracted from the welfare payment? Could they get by then? 

There is also the argument of the free lunch. If taxes were removed and the welfare given, exactly what incentive is there ever for the recipient to find work? Why would they want to end the free lunch?

I admit that when I first lost my job a few years back that it came as a very rude awakening that I would be taxed for my unemployment benefits/insurance (UI). After all, I had paid taxes for years that entitled me to the UI. After all those years of paying taxes I was barely getting enough in UI to get by. And now they expected me to pay the same amount of taxes on the UI? It seemed contradictory to me to say the least. Take money from the government just to give money to the government? Senseless!

Except I never felt I was "taking" money from the government. The real answer comes just before that statement. "All those years of paying taxes." I had earned my UI. Every year since I was 14 years old I have had to pay taxes on my income. I've paid state and federal taxes for a very long time. The way I saw it, I was cashing out what I had put in to the system. I had helped contribute to the safety net. 

It still makes little sense to me to have to pay taxes on what is essentially the pay out of my taxes. But there is a big difference between welfare and unemployment insurance. I never qualified for welfare. (After all I am an able-bodied, single, adult, Caucasian female, with no dependents. They don't provide welfare to that category.) I only qualified for the part of the system I contributed to. But the welfare system is for those people who haven't contributed, who don't collect unemployment. 

Should those people be taxed? Should the poorer class be taxed? Or should the working or upper classes have to pay taxes to support them?

 

Don't miss my new novel, "You Heard It Here First!" on Amazon, Nook, and Kindle!

Taxmageddon and Fiscal Cliffs- how much do you know?

So the question of the day is, how many of you know what "Taxmageddon" or the "fiscal cliff" really means? It is a word that has been tossed about in the news media for nearly 6 months now. Has it just sounded like a scary word about taxes? Or do you know what it actually means? 

In my new novel, "You Heard It Here First," the main character, Haley, finds herself in the middle of a political scandal regarding taxes. When I wrote it- more than 6 months ago- I had never heard the terms "fiscal cliff" or  "taxmageddon." You can only imagine my surprise when I began to research those terms a few weeks ago, and discovered that the completely fictitious storyline in my book, is actually a real life scenario right now (minus the political subterfuge and bad guys plot). 

Just like my character in the book, I'm starting to see a need more and more for women to learn and understand financial responsibility. I wrote a blog piece for the Motley Fool ("5 Ways to Protect Yourself from the Looming Fiscal Cliff") that hopefully explains what is going on right now, and why it is so important. And hopefully I wrote it in plain enough language that anyone could follow along.

Normally I just post pieces and say, hey, go check out my latest article! But today I'm going to ask you to check it out because I really do believe it is important to understand. The "fiscal cliff" or "taxmageddon" (which, btw, are the same thing) is not only very real, it is a very real threat to you personally, and to the economy. And once you understand the reality and severity of the situation, you'll see why those 2 names are not just for dramatic effect. The potential fallout of the current situation really would be a financial Armageddon!

DNC boos putting God into the platform

Something fascinating happened off peak hours, and was therefore largely unseen, at the Democratic National Committee today.  The DNC suspended the rules of the convention and inserted language back into the platform.
It was called to a voice vote. Representatives there have made it clear that they did not have a quorum present to do so, and even then, the new language was not voted in favor of. In fact, it was booed.
The language in question- putting the word "God" back into the statement "we need a government that stands up for the hopes, values and interests of working people and gives everyone willing to work hard the chance to make the most of their God-given potential."
And-
" Jerusalem is and will remain the capital of Israel. The parties have agreed that Jerusalem is a matter for final status negotiations. It should remain an undivided city accessible to people of all faiths."
Yes, that was booed.
Need more proof?

Both statements were in the 2008 party platform. The DNC had approved a platform the night before. Restoring the mention of Jerusalem goes along with what advisers said was the president's personal view, if not the policy of his administration. The administration has long said determining Jerusalem's status was an issue that should be decided by Israelis and Palestinians in peace talks, but has been careful not to state that Jerusalem is Israel's capital.

There is no question about it though. What happened around 5 pm ET today did not reflect the views of the majority of delegates at the convention. The vote had to be taken 3 times and even then, it is something of a stretch to say it passed with a majority (if they even had a 2/3 quorum present). After it passed it was loudly booed in the convention hall. 

Only time will tell if we will get an answer as to why these two defining and religious changes were made. Only time will tell why they were left out in the first place. 

But one thing is for sure, the reaction by the delegates may be the most telling part of the entire thing.

Don't miss my new novel, "You Heard It Here First!" on Amazon, Nook, and Kindle!

Bain Capital's Tax Dodge- How David Callahan Gets it Completely Wrong

Far be it for me to take on a supposed expert such as David Callahan, senior fellow at Demos. He presumably has an education that I clearly do not have. But his piece today, "Bain Capital's Tax Dodge", in the Huffington Post is wrong. Plain and simple, wrong. 

His facts are right, as far as I know, but he comes to the absolutely wrong conclusion based entirely on his own anti-Romney bias. 

And so, because I have never been one to keep my mouth shut, I must address just how wrong he is. His text is "normal" below, my insertions in red. 

It's not often that we get a detailed look inside the tax strategies of a private equity firm, so Gawker's publication of a trove of documents related to Bain Capital is a welcome event.

Meh. They are private for a reason. Why should we get to look at the tax strategies of a business that doesn't have our money or interests?

The documents show -- once again -- how sophisticated business people have myriad ways to avoid taxes and, in the case of Bain anyway, will readily skirt or break the law.

Oops, your bias is showing.

The main revelation so far is that Bain seems to have pushed the envelope and misrepresented some of its income -- saying that management fees, which would be taxable as regular income, were actually capital gains, which are taxed at a much lower rate thanks to the infamous "carried-interest" loophole.

About that loophole. Hedge funds and private equity firms make their big money by taking a cut of the returns on client money they invest. So if I invest $10 million with a hedge fund or private equity firm, and they make a 30 percent return on that money next year -- or $3 million -- they would typically take 20 percent of that return, or $600,000. In addition, they would charge me an annual management fee of probably 2 percent, or $200,000. Thanks to the carried-interest loophole, the $3 million cut is treated as capital gains earnings by the firm, and taxed at a mere 15 percent, and only the management fee is taxed as regular income.

The reason the carried-interest loophole is so outrageous is that, of course, that $3 million cut is not capital gains made by the firm. It is the firm's cut of somebody else's capital gains -- the investor who actually took the risk. The theory behind low taxes on capital gains is that it incentivizes risk-taking investment by people who might otherwise stash their wealth in safer but less productive places. But hedge funds and private equity firms are not risking their own money; they are risking somebody else's and their cut simply is not a capital gain. It is regular income and should be taxed as such.

I don't disagree with any of that. In fact, this is one of the best explanations of capital gains taxes I have read yet. Good work, Callahan. I agree completely, it is regular income and should be taxes as such. 

All this is bad enough. One reason that private equity types like Mitt Romney have such large fortunes is because their taxes are so low, leaving other taxpayers to pay more.

Wait, no. Not true. That's a popular twist of the facts. They have large fortunes because they earned the money. Not because they have lower taxes. They have lower taxes because government taxes them less. You earn what you earn. 

And just because he pays what he is taxed, does not leave other taxpayers to pay more. They pay more, because that is how much the government taxes them. 

Those are the facts. 

Is it fair? No. But it doesn't become fair by twisting the facts. Romney made more money than you. He also paid a lot more in taxes than you even earned. (You're a fellow at a small name think tank, I can just assume you make in a year what he makes in a speaking fee.) Because he has a great deal of experience understanding wealth, laws, and taxes (see: Harvard MBA, law school, and being a Governor), he pays a smaller percentage of his money to the government. The percentage he pays has no bearing on the percentage of your wealth that you pay. 

If you think he should have to pay a larger percentage than you, take it up with your Congressional representative.  

But the Bain documents show something worse. Apparently, Bain's partners resented paying regular income taxes on their management fees, and so maneuvered to represent those fees as capital gains and pay a lower rate. 

Are you suggesting that Bain's partners are somehow unique in resenting paying taxes? I thought pretty much every American ever resented paying taxes? Maybe you are different? You like giving Uncle Sam your money?

Also, let's say you really did have $10 million to invest. Who would you rather invest it with- the private equity firm that knows the laws so well as to be able to take advantage of loop-holes? Or the firm that is paying millions more in fees because they don't know the laws? 

Again, if you have a problem with the tax code (and I'm not arguing that there isn't one) your issue shouldn't be with the people paying the taxes. It should be with the people who pass taxes (ahem, the Democrats).  

As reported in the New York Times:

Bain private equity funds in which the Romney family's trusts are invested appear to have used an aggressive tax approach, which some tax lawyers believe is not legal, to save Bain partners more than $200 million in income taxes and more than $20 million in Medicare taxes.

Annual reports for four Bain Capital funds indicate that the funds converted $1.05 billion in accumulated fees that otherwise would have been ordinary income for Bain partners into capital gains, which are taxed at a much lower rate. Although some tax experts have criticized the approach, the Internal Revenue Service is not known to have challenged any such arrangements.
In a blog post Thursday, Victor Fleischer, a law professor at the University of Colorado, said that there was some disagreement among lawyers, but that he believed: "If challenged in court, Bain would lose. The Bain partners, in my opinion, misreported their income if they reported these converted fees as capital gain instead of ordinary income."

You would think that the super wealthy might shrug at paying taxes they can easily afford, but here the opposite appears to be the case: Bain's wealthy partners have been hyper-aggressive about lowering their tax bill.

Good for Bain! Did you really think people who know how to make millions, billions actually, would want to readily hand over their money? No, they want to make more. That is what they do! They are an equity firm!

The Medicare dodge is especially notable, given how conservatives endlessly trumpet the financial troubles of that program. Capital gains are not subject to payroll taxes, which means that one effect of the carried-interest loophole -- which the right defends -- is that it weakens the financial situation of Medicare and Social Security.

Again, your problem here should be with the law, not Bain. Also, "how conservatives endlessly trumpet"- gag me. You are so biased here you don't even see how ridiculous you sound. 

Also notable in this story is that the IRS has not moved more aggressively to crack down on tax cheats who misrepresent management fees as capital gains. Presumably that is because the IRS doesn't have firepower to go up against some of the best tax attorneys in the nation in legal disputes that could take years.

I am surprised that as a Democrat you don't suggest that the best tax attorneys should HAVE to work for the IRS. And again, your problem here isn't with Bain, it is with the IRS. You really have some misdirected anger issues. You really ought to get that checked out. 

All in all, the revelations about Bain's taxes confirm what New York Times tax reporter David Cay Johnston told us eight years ago in his book Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super-Rich-and Cheat Everybody Else.

Only in this case, it's not clear that what Bain did was, in fact, perfectly legal.

Do you really think they would release all of their paperwork if they weren't confident that they know the laws, considering, as you put it, they are the best tax attorneys in the nation? 

Don't miss my new novel, "You Heard It Here First!" on Amazon, Nook, and Kindle!