Wednesday, November 30, 2005
The AMT is a tax that is paid if the AMT tax amount exceeds the amount you would normally pay for the regular taxes. There is one deduction that can be taken. While, you can't deduct state, local and foreign taxes under AMT rules, you can deduct the refunds, which would be considered income under the regular tax rules. You’re also taxed on the spread on your incentive stock options; because of this your tax basis for the shares you bought is higher under the AMT, meaning your tax bill will be lower when you sell the shares. The more exemptions you have the more likely it is that you will have to pay the AMT. You really only have to find out which tax you have to pay if your gross income is $75,000 or more. The AMT makes you pay 26% on the first $175,000 and 28% on the excess. An example of having to pay the tax is as follows: Your regular income tax is $47,000. When you calculate your tax using the AMT rules, you come up with $58,000. You have to pay $11,000 of AMT on top of the $47,000 of regular income tax. The last thing you need to know about the AMT is that is does not recognize inflation.
First I want to say that the AMT is a flat tax rate. This is because everyone who has to pay the AMT pays 26% of there income no matter what, and if they exceed $175,000 then they pay 28% on the extra money no matter what.
Because the AMT does not recognize inflation this means every year more and more people will be paying the AMT. In my research I have found in several places that in the year 2010 the AMT will affect 33 million taxpayers. This is a great thing for people who like me like and support flat taxes. The only problem is that when state taxes and social security is added you’re paying out about 33% or a third of your income. I would love to make $175,000 a year but I am not too happy to hear that I would lose $58,333 resulting in $116,667 for the cost of living. I feel that 33% is way too much for anyone to have to pay to the government.
As for the deduction, they are very rare. If you aren’t going to get a refund from the federal government because you make too much money, do you really think your going to get a refund back from the state. Secondly, being taxed on the spread on your incentive stock options is a catch 22. If you buy 10 shares of a stock at $100 then under the AMT rules you have to pay taxes on the $1000. In a best case scenario say the stock value goes up from the $1000 to $2000. The AMT forces you to pay additional taxes on the $1000 you made. Now instead of the stock going up, say the stock goes down and that $1000 becomes $100 and you sell it. You would have to pay taxes like you still had the $1000 instead of paying taxes on the $100.
The last major thing that I think is wrong with the AMT is that it hurts the middle class more so then the upper and lower class. The lower class doesn’t have to pay the AMT ; in fact most end up getting refunds. This tax was originally designed for the upper class, so that they wouldn’t be able to have all these deductions, such as huge business expenses, and get out of paying a “fair share” of taxes. Now the middle class is getting hit with the AMT and all the deductions are going away. In fact the AMT seems to discourage marriage and having children. This is because people who have to pay the AMT loose the deductions others get for marriage and having children. You can’t throw your child to the wolves just because you don’t want another exemption, which can make it so that you have to pay the AMT. So now that the cost of living has gone up and your middle class with a spouse and two kids and you have to pay the AMT you may have some trouble saving money for the children’s college or for your retirement. (Since we know that we are never going to see our social security money.)
In conclusion, as much as I dislike the progressive tax, it works and it seems to be a lot better then the AMT. Unfortunately, I know that I will probably have to pay the AMT. The only solution is to get rid of the tax system as we know it and install a flat rate tax that recognizes inflation, and takes at most 20% of income. The flat tax should also start at a certain income level say $30,000. In this way, there will be no deductions and the people who are under the taxable income won’t get any refunds. But I don’t think I’ll get my hopes up, it will probably never happen.
some webcites to learn more :
http://www.fool.com/taxes/2003/taxes030926.htm, http://www.smartmoney.com/tax/filing/index.cfm?story=amt, http://money.cnn.com/2005/11/09/pf/taxes/amt_101/?cnn=yes
As the video game industry has grown by leaps and bounds the past decade, more and more vulgar and offensive games have been released, all to the dismay of many politicians. Many congressman and state officials have regarded that playing these violent and adult themed games might lead to unethical action later in life. They say kids will be so affected and influenced by these games to the point where they might even emulate what they are able to do in virtual reality in real life. There is hardly a correlation that playing video games will make you a violent person, and between 1994 and 2000 juvenile and young adult violent crime arrests have decreased by 44 and 24 percent respectively.
But Yesterday Senators Hillary Clinton and Joe Lieberman announced they would introduce legislation to prohibit retailers from selling video games rated "mature" or "adults-only" to teenagers. Their argument that this bill will empower parents by protecting their kids is inapt. Parents should regulate what their kids are playing because they know what material is best suited for their children. The Entertainment Software Association noted that all the new video game consoles include parental controls that can limit children's access to graphic content, similar to the V-chip embedded in new television sets. In addition, Congress isn’t supposed to have this kind of police power. If violent video games were a real threat to pubic health, then it’s in each of the States hands to protect its people. And so Governor Gary Locke of
I believe Congress as well as state officials doesn’t have the right regulate video game sales. There is no market failure involved with selling violent games to minors, so there is no reason for Congress to legislate. Furthermore States shouldn’t be using their police power to regulate these offensive games because it’s quite clear that these video games are not a threat to the safety of the pubic health, and regulating these video games is a violation of free speech under the 1st Amendment. Parents are in the best position to regulate what their kids are playing. They are in a far more superior position to know if a video game is unsuitable for their children, not the government.
Another Time for Choosing
Constitutional law is a difficult subject to speak upon because not many American citizens completely know the Constitution or can be quickly brought up to speed on precedents. For example, I think tax laws are knowable, but I wouldn't want to be a judge in that area, as it is a specialised field with a lot of traps for the unwary. To those that think any intelligent citizen can become an effective Supreme Court Justice because Constitutional Law is simple, they portray that they either don't know how complicated the subject can be--e.g. The dormant commerce clause, Colorado River abstention, Footnote 4 of Carolene Products--or that the politicians want a results oriented justice and are unconcerned how a justice makes his decisions. Just because something is knowable does not mean it's simple. If one believes constitutional law is at once knowable, complicated, and specialised, it's obvious why judges and other lawyers of great achievement and demonstrated intellect and knowledge of the field are the ones that you want making decisions. Without their intellect, their random and uninformed decisions will often be wrong and unpredictable.
Why do judges write opinions at all if the work they do is so obvious and the issues so straightforward? And what does it say about judicial claims of authority that they have long been staked on written opinions that have narrative integrity, both in a single case, and with respect to the law as a whole? Without power of their own, the judiciary depends upon its ability to justify its own assertions against those with physical power, namely the executive and legislative branches. This has been accomplished historically through written opinions that show a transparent and reasonable decision-making process. Opinion writing shows respect for the litigants and the process that is always somewhat suspect due to the absence of popular control over the judiciary. Writing opinions shows that what took place ultimately stemmed from the intersection of human reason, written laws with discernable meaning, and the facts of a particular case. That opinion is written thoughtfully and clearly is of fundamental importance to the integrity of the process and the reputation of the courts. The obvious results-oriented decisions of the 1960s did a great deal to discredit the courts, when ordinary people could discern that what had taken place was sophistry. Writing judicial opinions--like the analytical and writing process of so much law it--shows that a result alone is not enough.
The best and brightest lawyers have long been propelled into the judiciary. By best, I don't mean wealthiest or most persuasive in a courtroom, but those most capable of thoughtful, deliberate, and rigorous legal reasoning. It's important for politicians to recognise that this task can be both objective--or at least with a range of reasonable disagreement--but also requires specialized training and a well-trained, capable intellect. It's no more elitist to recognise this fact in the realm of constitutional reasoning, than it is in the realm of physics or math or other specialized fields.
Health care is not a 'right'
The campaign for socialized medicine in the US has long been a goal of several well-meaning politicians. So besides the lack of details, the class warfare rhetoric, and the doublespeak, most promises are merely a step in achieving something they dare not propose openly: the complete government takeover of the healthcare industry. Those who advocate universal healthcare have a disdain for capitalism and market economics and are really just continuing the push toward socialized healthcare that started with the failed policies of the New Deal and the Great Society. Our healthcare system is sick because of 30 years of socialization, not 'market failure'. Not surprisingly many claim the problem is market failure, greed, and the pursuit of profit.
Many states have regulated health insurance so extensively that even basic plans are expensive. In fact, health savings accounts aren't available in Maryland, Hawaii, or New Jersey. Requiring states to deregulate insurance--which Congress could easily do by allowing out-of-state insurance purchases--would mean that all Americans have the opportunity to buy basic plans. Over the years, Medicare's administrators have written, literally, more than 100,000 pages of rules governing clinics, hospitals, and physicians. This mountain of paperwork means that time and energy will have to be expended bureaucratic compliance instead of patient care. Furthermore, Medicare pricing, and insisting that it apply to everyone but managed care, means that competitive pricing doesn't exist for many services. Washington needs to cut the red tape.
If the system as it is now is broke, how do the politicians propose to fix it? The easy answer is to have the government pay for it. This will cost anywhere from $650 billion to a trillion dollars over the first ten years. The odds are it will cost a lot more than that, just like every other government initiative whose initial cost is always underestimated and downplayed. No mention of the mountains of paperwork and regulation that come from existing government meddling in healthcare. No mention of the already existing and massive subsidies that have driven up the cost of healthcare. No mention of the expensive litigation trial lawyers that have put doctors out of business and raise the cost of health care for all of us.
Exactly how does shifting the payment from the customer to government lower costs? Politicians are engaging in pure sophistry; by shifting the cost from individual to taxpayer, the politicians will be raising the cost for all of us, increasing administrative costs, bureaucracy, waste, fraud, inefficiency, and abuse, all the things he says he wants to eliminate from private sector health care but which exist in spades in government by its very nature.
The main problem with a single payer system is that it short circuits market forces, which like gravity, continue to operate nonetheless. Many seem to believe that competition and the profit motive are what drive up the cost of healthcare. Any reform that does not address this central problem is doomed to failure. The further removed the patient is from actually paying for medical services the more expensive or more degenerate the care will get. Overall, I happen to think it's a good thing if I'm paying my doctor directly.
Social Darwinism - A Conservative's Best Friend
The late nineteenth and early twentieth century economic growth in America was filled with greedy industrial, oil and coal barons who felt that their 'survival of the fittest' mentality was justified, and even fit within the religious rule of the day. This attitude allowed the rich to become richer thanks to the sweat of low paid workers who received little or no healthcare, few benefits to provide sustenance for their families when no work was available, and without much for retirement support, most workers worked until close to death. This mentality brings despair to the lower classes, which eventually brings about some sort of revolution, not unlike the changes we saw in the 1930s due to severe economic depression and in the 1990s after 12 years of conservative, pro-business economic development.
The economic changes that the American Conservative Movement are asking for aren't evil in their own rights, it's just the idea that some are more deserving of wealth and prosperity than others that seems illogical. If in America all have equal opportunity to prosper, then why is there still poverty? Are some people lazier than others? Or, are some just unlucky? It may be so, but many people don't have the advantages of wealthy parents, an advantage that makes it easier to prosper. Social Darwinism alludes to a moral inequality of sorts - which makes it easy for the wealthy to look down on the poor, assuming that it is a lack in morality that causes the laziness that keeps people poor rather that the feelings of despair that are usually at the root of the problem.
As for the requested changes, I'm in agreement for the most part, only because I see the changes as potentially strengthening our economy in the world market, but I feel that in order to make taxation fair, it's best to remember that the increased tax burden on the richest ten percent in America (usually business owners) allows compensation for the poorest ten percent who toil endlessly to help make the former rich. And when we look at who it is that needs financial assistance from the government, it's easy to see why shifting the burden of taxation in equal portions to all Americans, rich and poor, could easily cause an economic inefficiency - why take taxes from the poor, which serves to reduce their consumption in the market, thus forcing them to ask for tax-based assistance for basic needs like healthcare, food and housing. We've seen how subsidies work to raise the standard of living for the poor by giving them greater choice in the marketplace, and we've seen what that improvement in choice for the poor does to non-recipients as well. The Social Darwinist conservatives in the top ten percent don't see that shifting the tax burden places an unrealistic burden to the middle classes as well by decreasing their activity in the market, which eventually affects the value of market goods by decreasing demand and raising prices of consumer goods.
So what is the answer to the effects of Social Darwinism in America? Well, first we have to agree to either accept Darwin's theories in their entirety, or we need to agree that all in America have the right to work towards prosperity, even if it means an added benefit to the poor in order to allow them to more easily achieve prosperity. I say tax the richest about 25% as a compensation to the poor who work hard to help the rich get richer, leave the poor alone as far as taxes go, we're most likely going to give it back to them in subsidies like the Earned Income Credit anyway, and remember that the middle 80% are working hard to make the economy of this country strong, so fair taxation, about 10% is warranted. But mostly I think we need to let the science of Darwin stand on its own in our public schools and leave the opinionated ideology of Social Darwinism by the wayside.
Though Rodriguez may say things such as "...if you're a stoner it's easy to get confused", she then quoted Mason Tvert as envisioning "a system of tax and regulation where private people are licensed to grow and sell." Personally, I found that to be a great vision - and I'm not even a pothead.
America has a long history of making certain vices legal for consumption, and therefore taxation and regulation. Alcohol is the prime example, but then there's cocaine (Coca-Cola, anyone?), hemp (legal during World War II, it is now illegal to grow in the U.S.), and at least in Nevada, prostitution. Even something as controversial as abortion is okayed. On the other hand, the government also has a long tradition of declaring very private acts among consenting adults as "illegal". If I get confused at all, its because of the schizophrenic laws brought down from on high.
I will admit that I have a bias in believing that marijuana is less harmful individually and socially than alcohol is, and I do understand the initiative to bestow cannabis with the same status of alcohol (even though this initiative covered only private, in-home use). With that in mind, I wonder if it wouldn't in fact be more wise to legalize and regulate that industry, and subject it to taxation. Although the number one crop in North Carolina is officially tobacco, the number one cash crop is illicit marijuana - why shouldn't they pay taxes too? Anti-marijuana proponents might even consider that one of the effects of a tax is to lower consumption of a good; so if growers and distributors were taxed, and passed the tax on to the consumer, the effect may actually be desirous. I'm figuring that the burden of the tax would then lie on the consumer, because believe it or not, a pothead's need is fairly inelastic. Also, I'm not considering here the "moral" concerns - quite frankly I don't think that American society is prepared to handle the additional child-rearing responsibility that comes with such freedoms.
From an economic standpoint, is this policy sound?
Tuesday, November 29, 2005
With more jobs comes greater efficiency. More employees means that things will generally get done faster, hence greater efficiency. With greater efficiency, the businesses will be maximizing their production and labor force. With minimum wage laws, this does not happen. Minimum wage creates less efficiency because employers can afford less workers. From an economic efficiency point, this makes no sense.
Many people complain about outsourcing jobs, but what do you expect to happen when companies know they can pay cheaper wages in another country? If minimum wage laws are dissolved, companies would have fewer incentives to outsource which would create even more jobs with those companies opening in the U.S.
It seems to me that no matter how you look at minimum wage laws from an economic stand point, you come to the same conclusion: minimum wage laws don't make sense. To maximize our workforce efficiency we need to eliminate the laws that prevent it from happening.
"So, while it sounds warm and fuzzy to provide cheap apartments for people who cannot afford them, it just doesn’t work that way."IT JUST DOESN'T WORK THAT WAY!
Case: Jessica Gonzales called the police multiple times because her husband had violated a restraining order against him and taken her children. The police did not do anything and the husband murdered the children. Gonzales based her case on the idea that when the restraining order was issued the State of Colorado assumed a certain amount of responsibility to enforce the restraining order through its police power. She held that the lack of action on the part of the police was a violation of the due process clause of the Fourteenth Amendment.
Decision: The Supreme Court decided that Castle Rock was not in violation of the Fourteenth Amendment, since Gonzales did not have a property interest in police enforcement of the restraining order against her husband.
Correct or Incorrect: I struggle with determining whether the court decided correctly. It seems to me that this is the perfect place for the Supreme Court to act in accordance with the protective state, but they did not do so. Obviously, the corrective state is not really at issue here. It seems to me, though, as much as it bothers me, that the court decided correctly.
I think this case proves a good point with regard to the Constitution and the protective state. Even though it is a reasonable to expect the government to protect us from harm, the government can only act within the framework provided for it (or at least should). Since this case was framed by the Fourteenth Amendment, the Supreme Court did what it could. I think this illustrates some of the dangers of an over-reliance on government intervention. I also think that it is a clear illustration of the limits of the Constitution. There was definitely a tragedy that could have been prevented by effective use of police power, but the Constitution appears to be silent on the subject. I certainly found the analysis interesting, and I think it illustrated an idea worth a few minutes of thought.
Friday, November 25, 2005
Is Donation Regulation Constitutional?
I realize that the government is trying to protect the whole of the population by not having the "rich" take control but everyone is saying that everyone else is richer than they are. When it is all said and done I don't think that this is an issue that needs to be controlled as I said if someone wants to do something that has restrictions they will find a way around it. I think that it is when the restrictions are put in place that corruption is more likely to occur. If donations where out in the open we would then be allowed to judge whether the donation was given out of support (tax right off) or if there was a deal made during the donation.
Thursday, November 24, 2005
This time of the year also allows for retail stores to clear their shelves and get ready for the new inventory for next year. Not only is this a great way to sale the items at a 30-50% discount but increases some of the revenues that they can take in before marking items down by 80%. Now there is a dilemma, do I wait to get that extra 30% off of that item that I want tomorrow, odds are no, I love to shop and get a deal, so if it is in my budget I am getting it!! I know growing up that my grandma would have a section of her closet devoted to presents of all kinds, most of these accumulated during these great sales. Sometimes I noticed that things went to waste or where just given away in the most random occasions. The retailers know that most people who are shopping tomorrow are going to be impulsive and that is a big key to the high revenues that are brought in on Black Friday. Of course most things will be used and given away but there is something about getting that deal and the satisfaction that makes us want to consume more.
Wednesday, November 16, 2005
A recent article in the New York Times revealed the above quote, written in 1985 by the Supreme Court nominee Samuel A. Alito Jr. This is a fascinating statement considering our focus in the Constitution and Economy class. I do not really want to discuss the normative implications of the statement because we all have personal beliefs about the rightness or wrongness of abortion. What I would like to do is simply look at the words of the CONSTITUTION for evidence which either supports or condemns the claim made by Alito above.
"...the Constitution does not protect a right to an abortion."
Without getting into the details which so often hold up conversation, i.e. the ethical/biological/spiritual details, I think we may be able to formulate an argument that is consistent with the Constitution. We can say that if the Constitution grants the power to Congress to PROHIBIT abortion then, as Alito claims, there is no RIGHT to abortion. However, if the Constitution does NOT explicitly grant the power to the government to PROHIBIT abortion, then we know we have a RIGHT to abortion. The Constitution either protects the "right to an abortion" OR it grants the government the power to deny it as a right. As far as I can see, these are the only two options in this matter.
As we know the Constitution specifically outlines the role of government; it grants express powers to Congress to make laws which are necessary and proper to fulfill that role, which is explicitly written in Article 1, Section 8. It is apparent that nowhere in the Constitution does it say that Congress has the power to regulate or prohibit abortion. Congress can pass laws to regulate Interstate Commerce, levy taxes, and promote the General Welfare and Public Health. I don't see how abortion falls into any of these categories which would require government intervention. This leads me to see the Constitution as protecting the RIGHT to abortion, contrary to Alito's view. The 9th Amendment tells us that just because the Constitution does not state every single right that we have, we still retain them. I believe this is relevant to the issue at hand; do we not, as an individual, own our body, i.e. have the right to do with our body as we choose as long as it does not harm another person? I understand that the term "person" is ambiguous since some consider a fetus a "person" which means a woman can not Constitutionally cause him/her harm. However, if a fetus is NOT considered a "person" then a woman does have a right to do with her body as she chooses. This is beside the point; the 9th Amendment protects our rights that are not expressly stated in the Constitution, and the 10th Amendment makes clear that unless the Constitution gives government the power, the power is reserved to the States or the people. This is a check against legislating morality. Since we did not SPECIFICALLY give government the power to PROHIBIT abortion, then the 9th and 10th Amendments guarantee that the right lies with the people. I'm not even going to address the 14th Amendment (upon which Roe v. Wade was decided) because the right to Privacy is basically captured in the 9th and 10th.
No doubt there are moral quandries here that will lead people to disagree on whether they BELIEVE it is right or wrong, but from the perspective of the Constitution there is no justification to support the quote above. Therefore, I think that Alito, in saying "...the Constitution does not protect a right to an abortion" is wrong.
Tuesday, November 08, 2005
"I've often suggested that when you hear about a 'shortage' of something, you should first suspect not that the invisible hand in involved, but rather that the HEAVY HAND of government in involved."Check out my comment as well as the post by Russell Roberts that is linked.
Thursday, November 03, 2005
"The Democrats will pull out all stops in an attempt to defeat this nomination. Ultimately, they will lose the battle. Conservatives who are now happy that President Bush did not squander his opportunity regarding this nomination, must now be careful not to squander their opportunity of having the “mother of all” debates.What do you think? Are we going to have a debate about whether the Supreme Court should see the Constitution as an effective and significant constraint to national government power? I suspect we will not. Unfortunately, the political issue for debate seems to have been framed as: Should judges legislate from the bench? I think this question is easy to answer in principle: No.
The essence of the debate we are about to have is:
* Do we want the Federal Government to be bound by, and pay attention to, the Constitution?
Or, do we want our Federal Government to be able to disregard the Constitution when the expedience of the moment provides them with cover?
Liberals, most Democrats and far too many career Republicans do not want the debate framed so that it focuses on the Constitution. They want the debate to be about the man and whether he should have a seat on the Supreme Court. At the end of the day, the most likely scenario will be that conservatives win the seat, but miss the opportunity to move the nation back towards the original intent of the Constitution."
I would hope we would discuss whether the Court should see the Constitution as evolving as Justices come and go, and as their views of evolving culture change, or whether the Court should see the Constitution as evolving through the formal ratification process. The first view seems to see the Constitution "living," and instead of seeing the Court's role as constraining government, it seems to see its role as finding a way for the Constitution to facilitate government's efforts. The second view seems to see the Constitution as limiting government's power and efforts, and it relies on WE THE PEOPLE to facilitate changes in government through the formal process by which the Constitution allows amendments.
I like the second view, and I think our country would benefit from a vigorous public discussion of these two views. Do you agree?
Wednesday, November 02, 2005
"Judge Jones concluded her analysis by pointing out that:
Lopez reminds us forcefully that Congress's enumerated power over commerce must have some limits in order to maintain our federal system of government and preserve the states' traditional exercise of the police power. Section 922(o) is a purely criminal law, without any nexus to commercial activity, and its enforcement would intrude the federal police power into every village and remote enclave of this vast and diverse nation.
United States v. Kirk, 70 F.3d 791, 799, 802 (5th Cir. 1996) (Jones, J., dissenting)."
Tuesday, November 01, 2005
Social Security and Ownership
But, how can you NOT own that benefit, if you worked for it?
The following proposal is called, GROW (Growing Real Ownership for Workers) and S1302 Proposal. It is designed to prevent Congress from spending the surplus and allow individual workers to save money toward their retirement. The proposal reads as follows,
Although there are differences between the House and Senate versions of the proposal,
at the core both are built around the same concept and provisions:
• Workers under the age of 55 could
choose to remain entirely within the
current Social Security system or participate
in a personal account option.
• The accounts would be financed through
a rebate of surplus Social Security taxes
(directly in the case of S1302 and
through an equivalent general revenue
transfer in the House version). That surplus
would be defined as the difference
between all OASDI tax income for a given
calendar year, minus the cost of paying
Social Security benefits for that year, plus
administrative costs. Each worker would
receive a rebate of payroll taxes directly
proportional to the size of the surplus as
a percentage of the system’s total tax
• Initially, workers could invest in government
bonds only. Unlike the special issue
bonds issued to the Social Security Trust
Fund, these would be fully marketable
government securities. Beginning in
2008 under the Senate proposal and in
2009 under the House plan, workers
would be offered additional investment
• Workers would own the funds in their
accounts and those funds would be fully
• At retirement, benefits from traditional
Social Security would be reduced by an
amount proportional to the account
contributions, plus an offset interest
rate equivalent to the realized yield on
U.S. Treasury bonds less an administrative
fee of 30 basis points.
• At retirement, workers could, but would
not be required to, convert the funds in
their account to an inflation-adjusted
This may be a small step towards reform but it is seems like a plausible one.