If they could all be like Anthony Weiner…

Watch Rep. Anthony Weiner (D-NY) on the floor of the House of Representatives yesterday lay into Rep. Peter King (R-NY):

The legislation in questions is the 9/11 Health and Compensation Act, which would provide up to $7.4 billion in aid to first aid to survivors of 9/11, and the first responders who inhaled countless toxins.  The issue here (via DailyKos):

Bills that are non-controversial are often brought up under suspension of the rules, which also allows leadership to block amendments. Given the huge popularity of this bill, Dems wanted to prevent Republicans from adding a typically insane amendment to make the vote more difficult. So, prevented the opportunity to make political hay because of this procedural move, the Republicans (and a few Blue Dogs) used that as their excuse to vote against the bill.

This isn’t the first time Rep. Weiner has made passionate speeches on the Floor, and it likely/hopefully will not be the last, as I truly believe our Congress needs more impassioned and reasoned Members like him.

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Going forward on the 2001/03 Tax Cuts

Jonathan Chait of The New Republic has a great post today on the strategy that could be employed by the Democrats on letting the 2001 and 2003 Bush Tax Cuts sunset, while extending the same marginal rates on individuals earning less than $250,000 per year.  I’m not always the biggest fan of predicting political maneuvering, but his plan, along with the rationale, appear to be safe.

Now, here’s the underlying dynamic. Raising taxes on the middle class is unpopular. But raising taxes on the rich is wildly popular. The truth is that neither party cares very much about the portion of the Bush tax cuts that benefit the middle class. Republicans just threw that in to sell the upper-bracket tax cuts, which is what they care about. Democrats might prefer a more progressive tax code with lower middle-class taxes, but most of them would rather have the revenue instead. But Democrats promised not to raise taxes on people earning less than $250,000 a year — a promise they felt they had to make in order to win. And they can’t break that promise without suffering political consequences.

I’m all for letting the Bush Tax Cuts sunset, mostly because they have long benefited the richest in our society.  A major component of the 2003  tax cut (also known as the Jobs Growth and Tax Relief Reconciliation Act of 2003 – yes, a “reconciliation” bill), was to reduce the tax on Capital Gains and Dividend income to 15% from 35%.  In effect, this cut benefited those individuals who earned a significant portion of their income though dividends.  The average 9-5 salary person was not the biggest beneficiary of this legislation, as he or she for the most part had insignificant income sourced from dividends.

The person who owned a business however, and who structured it such that his or her income was in the form of dividends from capital stock owned, benefited greatly.  Coupled with a reduced marginal tax rate, these business owners (and by no means were all of them small, Mom & Pop businesses) made out like bandits, paying significantly less of their income in federal taxes.  Add to that the significant deductions and credits available to businesses, and faster depreciation schedules.

Which is all well and good, since these people were in fact generating some jobs.  But given the new interest in civic affairs and especially a perception of a burgeoning and unsustainable federal debt (But see Paul Krugman), people are concerned about the cost of these measures.  For all the railing against the Stimulus, Cash for Clunkers, Unemployment Benefits and Foreign Aid, the biggest culprit of increased deficits is the extension of the 2001 and 2003 tax cuts, estimated to cost $2.46 trillion over the next 10 years.  The cost of keeping the capital gains and dividend rates at 15% is $419 billion over the next three years.  So, how do you pay for these without further increasing the deficit?

The short answer is you can’t, even if you’re willing to cut every single revenue generating mechanism the federal government has.  It’s simply not manageable.  The extension of these tax cuts does more to increase our federal deficit than any other government outlay, as illustrated by Chait’s chart (via the Center for Budget and Policy Priorities):

As is obvious from the chart above is that emergency outlays made by the federal government from 2008-2009 (i.e. the TARP, American Recovery and Reinvestment Act, etc.) only accounts for a minimal portion of our long term federal debt.  The wars in Iraq and Afghanistan consume a chunk, and if budgeting is any indication of future involvement, it appears that we will be in that area for a long time to come.  It’s also obvious that the factors most responsible for increasing the federal debt are the 2001 and 2003 tax cuts (if made permanent) and the general economic downturn (which would result in lower revenue in the form of taxes).

No Virginia, Your Taxes are Just Fine

Via TaxProfBlog, here’s a fascinating article by David Cay Johnston, writing (PDF) in Tax Notes.  Johnston writes about how federal taxes, since 1979, have been the biggest “bargain” in America, compared to expenditures such as food, gasoline, and consumer goods.  Of course, given the tenor of the national media, you would think the American public was being literally taxed to death.

Anyone who pays the slightest attention to the news knows that today the meta-story is that we suffer from high taxes, confiscatory taxes, rising taxes, wasted taxes, and unfair taxes. Pick up the paper, turn on the TV, or listen to the radio and the message comes through loud and clear: Our economy is in trouble because we suffer from excessive taxation.

The problem is the facts don’t fit the story.

A new Congressional Budget Office report on incomes and taxes from 1979 to 2007 tells a story of falling tax burdens. So do other recently issued official reports.

I think this reality has been a rather under reported story.  While Tea Parties across the country are quick to allege that they are “taxed enough already,” I wonder what many of these people would think about historical income tax rates?  For the sake of my own sanity right now, I’m not going to go through the list in detail . . . you can check it out yourself.  But the point remains that comparatively speaking, our society is effectively taxed less today than it was 30 or 40 or 50 years ago, and beyond.  If anything our tax brackets have widened significantly.  In 1934, there were 34 separate marginal tax rates, for married couples earning between $4,000 and $5,000,000 (approximately $65,000  and $81.y million in 2010 dollars).  In 2010 there are only 5 brackets.  The maximum marginal rate in 1934 was 79%.  So yes, times have certainly changed, but not the way you would think if you picked up a copy of the Wall Street Journal.

Via TaxProfBlog

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The Gates/Buffett/Rockefeller Challenge

Though this is relatively old news, Fortune Magazine’s online edition produced this story, detailing Bill Gates, Melinda Gates and Warren Buffett’s plan to have the wealthiest Americans to pledge 50% of their fortune to charity.  According to Fortune, this plan would ideally raise a lot of money.  An obvious understatement:

Those qualifiers noted, the magazine stated the 2009 net worth of the Forbes 400 to be around $1.2 trillion. So if those 400 were to give 50% of that net worth away during their lifetimes or at death, that would be $600 billion. You can think of that colossal amount as what the Buffett and Gates team is stalking — at a minimum.

As the story goes, Mr. Buffett, a long time proponent of charitable giving (he’s already pledged nearly his entire fortune to the Bill and Melinda Gates Foundation), approached Bill Gates with a plan to recruit the nation’s wealthiest into pledging to donate a significant portion of their fortunes.  Their first recruit was David Rockefeller, the patriarch of the needs-no-introduction Rockefeller family.  Mr. Rockefeller, who described the request as a “surprise but a pleasure” agreed to assist the two others with their plan.

In May 2009, Mr. Gates, Mr. Buffett and Mr. Rockefeller hosted 11 others at the President’s House at Rockefeller University in Manhattan, where Mr. Rockefeller has been on the Board for the past 70 years (yes, since he was 25).  I assume he had no problem getting the room and catering request processed.  The attendees, who included Oprah Winfrey, Mayor Michael Bloomberg, George Soros and Ted Turner, kept the meeting mostly a secret. There have been, allegedly, several other meetings just like this one, across the country.

Courtesy Fortune Magazine

As the article mentions, charitable giving as a percentage of annual income tends to decrease as income increases.

The IRS facts for 2007 show that the 400 biggest taxpayers had a total adjusted income of $138 billion, and just over $11 billion was taken as a charitable deduction, a proportion of about 8%. The amount deducted, we need quickly to add, must be adjusted upward because it would have been limited for certain gifts, among them very large ones such as Buffett’s $1.8 billion donation that year to the Gates Foundation. Even so, it is hard to imagine the $11 billion rising, by any means, to more than $15 billion. If we accept $15 billion as a reasonable estimate, that would mean that the 400 biggest taxpayers gave 11% of their income to charity — just a bit more than tithing.

I once worked as a volunteer tax preparer in Chicago for a great charity, Ladder Up, an organization that assists low-income individuals and families with preparing their tax returns and filing for federal student aid.  I once filled out the tax return for a family of four, with a total annual income of about $17,000.  This family also donated $100 per month to their church — about 7% of their income.  Relatively speaking, this poor family was more charitable than the average billionaire.

Warren Buffett once said that the perfect amount of money to leave to your children is “enough money so that they would feel they could do anything, but not so much that they would do nothing.”  Fine advice, indeed.  Without getting into a debate about the estate tax (though less than 1% of Americans would actually be subject to it), I think there is something to be said about the downside of the vast accumulation of wealth, far more than would be necessary to keep a comfortable, or even pampered life.  And while the estate tax may also seem to be a method of forced giving, to the world’s largest charity, the U.S. government, a pro-active approach to lifetime giving, and even post-mortem gifts would do well to send money to institutions and charities that surely deserve and need money.

I can think of countless small colleges, community centers, legal and medical clinics that are seeing their budgets and funding slashed due to the economic climate in this country–not to mention the thousands of aid groups working abroad, that could desperately use even a small infusion of cash.  The Gates/Buffett/Rockefeller Challenge could do well to vastly change the face of charitable giving and poverty in this country, and around the world.

 

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On Sin Taxes

Friday’s New York Times featured an article on Sin Taxes, from its origin in the repeal of the 18th Amendment to the current trend of taxing certain habits and behaviors.

Cloaking taxes in moral terms is not new. Advocates for ending Prohibition during the depths of the Great Depression argued that the “noble experiment” hadn’t reduced drinking, while desperate social conditions had grown worse. Prohibition, they argued, encouraged cooperation with organized crime and contempt for the law.

But many historians have documented another reason for the end of Prohibition: the need to create new jobs and additional sales taxes.

Economists doubt that sin taxes greatly affect the behavior of most Americans, especially when the amounts tacked on are quite small (as they usually are). Demand for things like cigarettes and soda is relatively inelastic. That means modest increases in price don’t greatly influence most people’s behavior. In other words, a penny-per-ounce soda tax, which has been proposed in New York, is unlikely to deter people from supersizing their Sprites.

I’ve written on the New York soda tax and marijuana legalization before, and remain convinced that the additional cost of the drink, inclusive of the tax, would most likely be passed onto the consumer.  I still maintain that with regard to curbing consumption of these sugary drinks, the best, most surefire way to accomplish this would be to eliminate heavy government subsidies on corn and related materials used for processing cheap sugar, like high fructose corn syrup.

Nonetheless, it would appear to me that these taxes on “sin” are highly inelastic in that consumers who are addicted to these products are not likely to change their behavior simply because the cost has risen (at least to some extent).  The point of elasticity for smokers or alcoholics or drug addicts is going to come fairly late in the demand curve, at which point the effectiveness of the tax, for purposes of raising revenue for the state, will become ineffective.

From a personal standpoint, it would not bother me in the least to see heavy taxes on tobacco, soda, marijuana or strip clubs, but that’s because I don’t imbibe in, or frequent, any of those taxable activities/habits.  I think most others would agree with me on that point.  If a certain populace of our society chooses, for example, to drink sugary sodas, or smoke cigarettes or marijuana, that has a cost in health care to the rest of us.  Reckless behavior has a cost, and that cost should be paid for in additional taxes.

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Justice Stevens Retires

Courtesy The New York Times

Of course this was inevitable, but I wish he had a few more years left in him.  That’s greedy on my part, though.  John Paul Stevens, Associate Justice, and of late, the oft-leader of the minority, announced his retirement last week.  Nominated by Gerald Ford in 1975 and confirmed unanimously later that year, Justice Stevens has been a critical component of nearly every Supreme Court decision of the past 35 years.

A few years ago, then-Professor at Georgetown University Law Center (and now Principal Deputy Solicitor General) Neal Katyal, came to an event at Pace Law School to deliver a lecture on his work and his achievement of securing a 5-3 victory before the Supreme Court in the landmark Hamdan v. Rumsfeld, which held that the Bush Administration’s military commissions lacked the power to proceed because they violated both the Geneva Conventions and the Uniform Code of Military Justice (“UCMJ”).  After discussing the technical merits of the case, and answering some follow up questions about the law, the Military Commissions Act and his upbringing as the child of immigrants, he gave an anecdote about Justice Stevens:

In writing for the majority in Hamdan, Justice Stevens recounted that historically, the difference between a military commission and a military court-martial was simply one of jurisdiction, in order to “protect against abuse and ensure evenhandedness under the pressures of war,” and this notion had been traditionally upheld, save for one “glaring” exception.  In 1945, as the American military forces regained control over the Philippines, the Commanding General of the Japanese Imperial Army, General Yamashita, surrendered.  Yamashita was arraigned and tried before a military commission, and after two months of trial, was sentenced to death.  The Supreme Court, in in re Yamashita, upheld the denial of General Yamashita’s writ of habeas corpus.  Justice Stevens recalled that in that case, Justice Wiley Rutledge, joined by Justice Frank Murphy, wrote an “unusually long” and “vociferous” dissent, arguing that the procedures and rules of evidence employed by the military commission in Yamashita’s trial departed greatly from those used in court-martials.  Subsequently, after great criticism of the decision, the UCMJ was expanded to include defendants in Yamashita (and now Hamdan’s) position.

In Hamdan, Justice Stevens recalled the Court’s decision in in re Yamashita, and relying on Justice Rutledge’s dissent, and the current state of the UCMJ, found that the military commission’s rules for the trial of Hamdan were in fact, illegal.  Justice Stevens had effectively salvaged Justice Rutledge’s dissent, and vindicated him nearly 60 years later.  Precedent and stare decisis aside, occasionally the Supreme Court realizes that a past decision was incorrect, or that the circumstances of the present are sufficient to warrant a deviation from a past precedent.

What makes this situation more interesting than others is that Justice Stevens clerked for Justice Rutledge, when in re Yamashita was decided, and in all likelihood, had some part in drafting that dissent.  Justice Stevens not only redeemed his old boss, but redeemed himself.

A few days ago, The New York Times asked Justice Stevens’ former clerks to provide a memory of their work with him.  One of these sticks out, and literally made me laugh out loud.  I post it below:

ONE of Justice Stevens’s trademarks is the courteousness with which he treats the lawyers who appear before the Supreme Court. When he wants to elicit information or make a point during oral argument, he typically interrupts the lawyer with the gentle preface, “May I ask you a question?”

During William Rehnquist’s tenure as chief justice, a lawyer was arguing in the court for the first time. When asked a question by Justice Anthony Kennedy, the nervous lawyer started her response with, “Well, Judge — ”

Chief Justice Rehnquist interrupted her. “That’s Justice Kennedy,” he said.

Shaken, the lawyer continued. A few minutes later, she responded to Justice David Souter by saying, “Yes, Judge.” Chief Justice Rehnquist corrected her again: “That’s Justice Souter.” A couple of minutes later, she called Chief Justice Rehnquist himself a judge.

The chief justice leaned forward, his deep voice now at its sternest, to say, “Counsel is admonished that this court is composed of justices, not judges.”

Before the lawyer could say anything, Justice Stevens interjected: “It’s O.K., Counsel. The Constitution makes the same mistake.”

— JEFFREY L. FISHER, associate professor at Stanford Law School and clerk from 1998 to 1999

From ThinkProgress:

A Mississippi school district has canceled this year’s prom at Itawamba Agricultural High School after the Mississippi ACLU urged school officials to allow a lesbian couple to attend. Administrators turned down requests from 18-year-old Constance McMillen and her girlfriend, another student at the school, who planned on wearing a tuxedo. The school cited “distractions to the educational process caused by recent events” as reason for canceling the event, suggesting that “a private group host an independent prom instead.”

Of all the reasons to cancel a prom (expense in an economic downturn, fear of drunk driving, socioeconomic judgments and exclusion), this seems like one of the stupidest.  If anything, the biggest distraction to the educational process appears to the school district’s cancellation of the prom itself, rather than its inclusion of a gay student couple.  I’m positive that if this school had simply allowed the students to attend this “incident” would have blown over and have been forgotten by Easter.  Unfortunately, that is not the case.

Instead, this school is promoting an “alternative prom” hosted by parents.  Of course, Ms. McMillen is not invited.  Mississippi is not new to high school prom discrimination or controversy.  In 2009, documentary filmmakers led by actor Morgan Freeman shot a film at Charleston High School in Charleston, Mississippi.  From the Sundance website:

In 1997, Academy Award–winning actor Morgan Freeman offered to pay for the senior prom at Charleston High School in Mississippi under one condition: the prom had to be racially integrated. His offer was ignored. In 2008, Freeman offered again. This time the school board accepted, and history was made. Charleston High School had its first-ever integrated prom—in 2008! Until then, blacks and whites had had separate proms even though their classrooms have been integrated for decades. Canadian filmmaker Paul Saltzman follows students, teachers, and parents in the lead-up to the big day. Freeman addresses the student body. Girls shop for dresses and get their hair done. Boys rent tuxedoes and buy corsages. These seemingly inconsequential rites of passage suddenly become profound as the weight of history falls on teenage shoulders. We quickly learn that change does not come easily in this sleepy Delta town. Freeman’s generosity fans the flames of racism—and racism in Charleston has a distinctly generational tinge. Some white parents forbid their children to attend the integrated prom and hold a separate white-only dance. “”Billy Joe,”" an enlightened white senior, appears on camera in shadow, fearing his racist parents will disown him if they know his true feelings. Prom Night In Mississippi captures a big moment in a small town, where hope finally blossoms in black, white, and a whole lot of taffeta.

Truly a sad situation for the students, who in many cases do not get the credit they deserve.  For many in these situations it is pressure from parents and society that disrupts what is more or less a genial atmosphere.  Either way, it lowers the stature of all Americans when we hear of news like this.

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Tourney Time!

Courtesy NCAA Website

So it appears that yet again, I’ve failed in my attempt to create the perfect NCAA Men’s Tournament bracket.  Many thanks to Marquette, Georgetown, Vanderbilt and Notre Dame for absolutely letting me down.

The chance of actually guessing all the games correctly?

The number of ways to fill out a bracket, once the play-in game is out of the way: 9,223,372,036,854,775,808 [that's quintillion for those keeping track].

You are much more likely to win a multimillion-dollar lottery on consecutive weekends than getting a perfect bracket.

It would be easier to sit down today and correctly predict the winner of each of the next 12 World Series.

It would be the same as correctly predicting the winner of every presidential election (Democrat vs. Republican) through the year 2260.

Maybe next year.

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I think this is a great move.

The Indian cabinet approved a bill on Monday that would allow foreign universities to set up campuses in the country, a major break with a previous policy in which outside institutions were seen as a threat to the education system.

The bill, still subject to a decision by Parliament, appears to be an acknowledgment by public officials that the country’s largely public higher education system cannot cope with the rising demand for degrees from a large population of young people. About half of India’s 1.2 billion people are 25 or younger.

If foreign universities can deal with the red-tape and massive bureaucracy, as well as the quota system for minority applicants that comes with doing anything at all in India, I think they will be well rewarded with a populous hungry for global recognition.  The 21st century is certainly going to be that of India and China, and its young population is English speaking, hard working and yearning for a quality higher education.

India’s elite universities and graduate schools have long been extremely competitive, with admission rates far lower than that of U.S. colleges.  Expanding competition by allowing foreign schools, whether from the United States or elsewhere, is a positive step, for both the colleges and the students.

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