October 2008 Archives

A Case For Building Wealth

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The United States has a progressive Federal tax system. The more money you make, the more taxes you pay as the image below illustrates.

Tax Rates
You can see that the bottom rate is 10% and the top rate is currently 35%. The long and short of this system is that people are punished for their success. In my post titled fairness and taxes I give a simple example of the difference in tax liabilities between a couple earning $50,000 and a couple earning $250,000. That comparison speaks for itself.

Some people believe that with every additional dollar that a person earns that there is an incremental responsibility to support the rest of society. There are people who have little and those who have more should sacrifice what they don't need to help others. That's one argument for a progressive tax structure and the same argument for ever higher taxes on people earning $xxx,xxx (fill in the number that feels good to you) per year. I've got a few arguments against that approach.

Freedom

There's a thing we call freedom in the United States. And financial wealth building is supposed to be one of the benefits of a free society. If someone earns an honest living, plays fair, and doesn't break the law, they are entitled to build wealth. Most people aren't misers racking up cash for me, me, me! Most people have families in multiple generations that they may need to care for. Most people have other needs (and dare I say wants) that the tax policies don't account for. So when money is lifted directly from a person's paycheck there's a certain tyranny in having to wonder if you may or may not get a small pittance of it back from the government someday.

Efficiency 

The government does nothing in an efficient manner. Most people assume that $1 taxed that is earmarked with a social program will end up in $1 going to a social program. Ha! If you believe that then you need to grow up a bit. Our money gets filtered through a massive bureaucracy that probably burns at least 70% before something comes out on the other side. So if you're of a redistribute wealth (aka socialist) mindset when it comes to taxes then just know that you're encouragingwaste and helping a lot fewer people than you think you are.

A Plumber's Life

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One of my favorite movies of all time, and definitely my favorite movie geared towards children is called A Bugs Life. In the film, a perpetual dreamer named Flik invents a device that harvests grain (Flik is an ant) that his colony must collect for the evil grasshoppers.

Flik does not seem to be very highly regarded by the rest of his colony at the start of the film. They are focused on collecting enough food to satisfy the grasshoppers so they can then begin to pick enough food for themselves to make it through the winter. Flik's fellow ants would rather do what is safe than risk using new methods to collect food. And so the colony is amused, at best, with Flik's attempts to do it faster.

What the rest of the ant colony does not understand is that what Flik is doing is not just about getting done quicker because he is lazy. Flik is sick of the tyranny of the grasshoppers and the fear that it instills in his fellow ants. Flik wants everyone in the colony to be more free and have a better life. Some would dare to call what Flick is doing the pursuit of a dream. I call it the American Dream.

Early on in the story Flik makes a mistake that causes him to end up face-to-face with the leader of the grasshoppers (appropriately named Hopper) as the entire ant colony looks on. In the face of Hopper Flik gets scared, clams up and steps back into line. The moment when Flik steps back is a sad moment in the film but it is only the beginning of the story.

Sometimes life imitates art. And this week life definitely imitated art when a plumber from Ohio stepped forward to challenge Presidential candidate Barack Obama on the question of taxes. The man now known as "Joe The Plumber" queried the Democratic candidate on his tax plan that would raise the liability for people and small businesses earning more than $250,000 per year. During the exchange Senator Obama mentions that a tax on higher earners serves to help others by spreading the wealth around. The comment from Obama represented a rare moment of candor in what has been a amazingly long campaign.

Fairness and Taxes

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There's a lot of talk during this election cycle about fairness and taxes. John McCain says that everyone should pay a little less. Barack Obama says that people who make $250,000 per year and up should pay more.

The interesting thing that rarely gets spoken about is the fact that the United States has a progressive tax system. Taxes aren't based on a fixed percentage of income but on a scale that gets progressively higher as income increases.

There are currently five Federal income tax brackets in the system: 10%, 15%, 25%, 28%, 33% and 35%. A married couple earning $50,000 per year are in the 15% bracket and a married couple earning $250,000 per year falls into the 33% bracket. At first glance you might think that this is unfair because it appears that a family earning five times the income only pays a little more than double the taxes. Let's do the math and see if that is true.

Married Couple Earning $50,000

Earnings   Rate  Taxes
$16050       0.10   $1605
$33950       0.15   $5092.5
$50000                $6697.5

Married Couple Earning $250,000

Earnings   Rate  Taxes
$16050       0.10   $1605
$49050       0.15   $7357.5
$66350       0.25   $16587.5
$68850       0.28   $19278
$49700       0.33   $16401
$250000              $61229

* Based on the brackets detailed here.

The numbers here don't lie. The couple earning $250,000 has a Federal tax liability that is nine times the Federal tax liability of the couple earning $50,000 per year, not the two to three times that many people assume.

Actual tax paid will vary based on deductions. But it is an undeniable fact the taxpayers who Barack Obama says should pay more, in the interest of fairness and spreading the wealth, already incur a very large percentage of the tax liability in the United States. If we still think thay they should pay more then the following question needs to be asked. How much is enough?

Fall!

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Leaves-October-2008.jpg

Fall is here in full force and I'm raking.

This is part II in a series of two posts that detail some of the more troubling associations of Presidential candidate Barack Obama. In my previous post I highlighted his relationships with the Reverend Jeremiah Wright and the activist group known as ACORN. 

Interestingly enough, in the day since I published the first post, news has broken that ACORN voter fraud may have occurred in yet another state. In what I hope is an isolated incident, a 7 year old girl has shown up on the voter registration rolls in Connecticut. The form that registered the girl to vote was fraudulently submitted by ACORN workers.

It is very clear that Senator Obama cultivated his associations with Wright and ACORN in order to gain acceptance and trust in the local community in Chicago. Entry into Chicago politics required further assistance and more money. Senator Obama was able to find the assistance he needed, financial and otherwise, via friendships with Tony Rezko and Bill Ayers.

Tony Rezko

Tony Rezko is a very powerful man in the world of Chicago politics with the ability to raise hundreds of thousands of dollars for political campaigns. Tony Rezko has been a longtime friend and associate of Barack Obama. In a story published today by the Associated Press the link between Obama and Rezko is confirmed.

"Rezko also was friendly with Obama -- offering him a job when he finished law school, funding his earliest political campaigns and purchasing a lot next to his house."


Mr. Rezko did a little more than just purchase the lot next to Senator Obama's house. When Senator Obama purchased his million dollar mansion in the Hyde Park section of Chicago, the sale price was for $300,000 less than the asking price. The lot next door was purchased by Tony Rezko's wife at full asking price. Later on Senator Obama purchased a parcel of the lot next door back from Mrs. Rezko in order to expand his own yard. Call the situation what you like, but the whole deal looks like a favor. This favor occurred while Mr. Rezko was under investigation for the crimes he would eventually be convicted for.

Tony Rezko is now a convicted felon. He was convicted in June 2008 of fraud in attempting to get millions of dollars in kickbacks on state funded real estate deals. Tony Rezko is also a slumlord. And Barack Obama was connected to some of the housing deals whose costs were forced onto the backs of taxpayers when Mr. Rezko stopped making payments on the projects.

An investigation by the Chicago Sun-Times titled, "Obama and His Rezko Ties" makes the connection between Obama and Rezko's real estate deals.

"Obama was an attorney with a small Chicago law firm -- Davis Miner Barnhill & Galland -- that helped Rezmar get more than $43 million in government funding to rehab 15 of their 30 apartment buildings for the poor."

The same Sun-Times report also reveals that while residents of Rezko's buildings were freezing without heat in the winter of 1997, Tony Rezko somehow scraped up $1000 to donate to the campaign fund of a new State Senator named Barack Obama. 

Another report by the Sun-Times titled, "8 Things You Need To Know About Obama and Rezko," details a relationship between Obama and Rezko that lasted for years, long after everyone knew Tony Rezko was using state money to refurbish and then neglect Chicago housing for the poor for his own personal gain.

How could someone with good judgment maintain such a long relationship with an individual who not only wasted taxpayer money but also engaged in criminal behavior? How could a U.S. Senator do a real estate deal with a man under deep investigation for crimes that were well known in the Chicago community? It's a question of judgment. 

I think it's more accurate to say that it's a reflection of poor judgment by Senator Obama who aligned himself with a slumlord that wasted the state taxpayers money in order to forward his own political career. Senator Obama should have denounced Tony Rezko and demanded that he make restitution to the citizens of Rezko's slums as well as to the taxpayers of the state. Instead, after years of devastating results in Rezko's housing projects, Senator Obama allowed Rezko to raise funds for his campaign for U.S. Senate.

As always, Obama claims ignorance, telling the Chicago Sun-Times the following. 

"While I was a state senator, he had buildings in my district that apparently were not managed properly. I had no knowledge of that at the time.''

As a state Senator Barack Obama could not keep track of neglected housing projects in his own district. And now he wants people to believe that he can keep track of the entire United States. An even more troubling question is this one. What favors does Barack Obama owe to Tony Rezko? And what would a President Obama do to repay those favors?
Those who are very close to me know very well that I'm a person who adheres to very conservative political values. I believe in personal responsibility. I believe in smaller government that runs on a realistic budget. I believe in a strong national defense to deter our nation's enemies. I believe that unborn children have rights. I believe that it is better to teach a person than to give to a person. Those are just a few of my very strong core beliefs that guide my view on politics.

It should not come as a surprise to anyone who knows me that I support the John McCain - Sarah Palin ticket for President of the United States. I don't support Obama - Biden chiefly because I don't agree with them on any major issue. But I'm also moved by what I see as Senator Obama's blind ambition that has brought him to where he is today.

Senator Obama has indeed engineered an impressive ascent through American politics. From the streets of Chicago as a community organizer, to the State Senate of Illinois to the U.S. Senate. And now who knows? He may just be the next President of the United States. Senator Obama's ascent is an example of how the American dream is truly alive and well.

But now I dare to ask a question. Does the path to the American dream matter when evaluating a person's readiness for the highest office in the land. Should we only acknowledge the titles, Community Organizer, State Senator, U.S. Senator? Do we dare ask what good a person actually accomplished? Do we dare evaluate the ethics and beliefs of the individuals that helped Senator Obama get where his today? I think we should.

For what does it profit a man to gain the whole world, and forfeit his soul? 
- Mark 8:36

During his ascent through the ranks of Chicago politics Barack Obama associated himself with a roster of questionable individuals and organizations. These associations enabled Mr. Obama to more easily make the ascent he has made. These associations represent the establishment in Chicago politics. I profile these associations one-by-one below.
This video makes what I think are very good points on the issue of access to health insurance. The fact is that health insurance is available and affordable to many people who don't have it. Some people choose to spend their money on other things that are less of a necessity. One guy in the video forgoes health insurance while he spends $300 a month on vitamin supplements. 

One point not mentioned in the video is the fact that many larger states have programs that allow those who are working, but not covered by their employer, to purchase coverage at group rates that are far less than the individual premiums. The plan in New York State is called Healthy New York.

Get Some: How To Fix America's Health Insurance Crisis
Is there anyone who can make a case that the video embedded below does not constitute a smoking gun in the case of the current credit market meltdown? Here we have calls for increase oversight on a quasi-government organization that was already known to have cooked the books.

A New York Times story on June 23, 2003 titled, "Fannie Mae's Accounting Finds Critics Of Its Own," states that, "Regulators, lawmakers and investors have battered Freddie Mac, the country's second-largest mortgage financier, since it fired its president two weeks ago, after the company said he failed to cooperate with an internal inquiry into its accounting."

The hearing shown below took place in 2004.


Perhaps this one should be filed under, things that make you go hmmm.

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This page is an archive of entries from October 2008 listed from newest to oldest.

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