TAX SMACKS

(Excerpts from an e-mail to WAMU's Diane Rehm, 12/10/12:)

You have had a number of shows recently that have taken up some aspect of resolving the fiscal "cliff," and I commend you for it.  I seem to recall one not too long ago where a guest brought up (all too briefly) the FACT of another mortgage-interest deduction for so-called "second" homes, including beach cottages, mountain cabins, RV's and yachts, all of which may be classified as "second homes" and thus interest thereon is deductible.  Now such resources are not usually available for those other than the "well-to-do."  I think it is safe to say that even if a "working stiff" (wage-earner) has a home mortgage-interest deduction, he or she won't likely have a SECOND.

Yet, out of the 15 or 20 people (at least) I have heard address the issue on your show or elsewhere, pontificating one way or the other about the elimination of the home mortgage-interest deduction, only that one recent guest of yours has mentioned the SECOND-home mortgage-interest deduction!  I think it is ludicrous to debate the issue of eliminating the FIRST-home mortgage-interest deduction and to say nothing about the costs of the SECOND-home deduction!

FINALLY, I must ask why don't workers get to deduct residential rents paid?  Wealthier folks get not one but TWO mortgage-interest deductions, while said "working stiffs" who don't own their homes get nothing except the piddly Standard Deduction.  It makes no ECONOMIC sense, as more multi-family housing will be needed as we Baby Boomers age.

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Another serious tax issue NOT being discussed is the negative impact of the FICA (Social Security) payroll tax on the economy.  There has been almost NO discussion of this separate tax, despite the fact that it (12.4%) is assessed on gross wages and salaries up to about $110,000 and on no salaries higher than that.  Nor is FICA assessed on dividends, interest or capital gains, all of which are federally taxed at a measly 15% DESPITE the marginal bracket of the recipient.  FICA is in addition to the state and federal income-tax burdens on workers, it is not deductible from taxable income, so it is levied on GROSS earned income (up to about $110K) without any deductions allowed against it.  It is nominally split between the worker and the employer, but the workers bear the entire economic burden of the FICA tax because ALL available employers must pay it, and those employers will eliminate wages and salaries if they can swap laid-off workers for machines.  After all, there is no payroll tax levied on machinery!

As a result of the utterly stupid BIPARTISAN tax cuts back in 2001, workers and lower-income salaried personnel now pay a disproportionate share of their gross incomes in taxes, when measured as a ratio of after-tax-and-living-expense net income to gross income.  In other words, the more gross income someone realizes, the higher PERCENTAGE (not just total dollars) retained after taxes and living expenses.  This is the TRUE measure of the impact of income taxation: not which share of the population as a group pays the most aggregate dollars.  That is a red herring intended to distract the credulous and ignorant from the serious issue of too much taxation on lower incomes.  I worked out spreadsheets back then that showed the validity of my assertions.  That tax cut was rammed through the Congress so fast I was unable to complete my spreadsheets and study them before the bill became law!  Democrats have been almost incoherent when discussing this matter!

Note also that over half of all households in the US are now grossing less than $60,000 a year.  With two earners therein, that is an average of less than $30,000 each GROSS (pre-tax) income, which is chicken-feed!  Coupled with the widespread reduction or elimination of benefits, it is clear that over half of all Americans and/or their small-scale employers are bearing stupendously heavy burdens.  How many more households supposedly earn more than $60K but less than $75K?  I don't know, but I would bet it's a lot.  Yet we are absurdly debating the horrifying impact of modest income-tax increases on incomes above $250K!  Where is the reality in any of this?  How dumb must people be to even TOLERATE this stupid debate?

I wish to question, as the FICA tax is levied on gross (not after-tax) incomes at the time it is assessed, and the future value of those withholdings (inclusive of earned return) are what is doled out later as Social Security, why is it justifiable for SS receipts to be taxed twice as income?  The withheld FICA previously earned was subjected to the income tax at the time it was withheld, and now people are proposing to tax it again!  That is ludicrous, ESPECIALLY when measured against the one-time 15% levy on dividends, interest and capital gains!  Further, there are current proposals being discussed by the "experts" to defer retirement payouts of Social Security and/or to increase the FICA bite so there will be less need to raise INCOME taxes on wealthier folks (or to cut the Pentagon budget)!  All of that is absurd beyond belief!  Why should the lower-income folks bear an onerously disproportionate FICA burden in order to relieve the wealthy of the additional pittance being asked of them?

There is a lot of Chicken-Little doom and gloom being parroted about the decline of Social Security and the looming bankruptcy of the system, yet the system is currently flush with value (albeit federal IOU's).  Most commentators have gotten their lemming-like "fear factor" from reading the Trustees' Report SUMMARY published in 2009 raising the spectre of eventual bankruptcy of the Social Security Fund.  However, I downloaded both the Summary and the actual Report, and the Report paints a far less gloomy picture than does the Summary.  It pays to go to the source, for the Trustees concluded in the actual Report that future FICA receipts were PREDICTED to be insufficient merely because of their projected declining future birthrate of potential workers!  Also, much agony has been expressed about us Baby Boomers draining the SS Fund, but as I was born in 1946, I will be 89 years old if I live to 2035, the projected year of disaster.  I don't think I will live that long, and I expect the youngest Baby Boomers (at age 74 then) will have also experienced a significant "thinning of the ranks."  I was unable to find anywhere in the 2009 Trustees' Report any discussion of the likely mortality rate of Baby Boomers which would REDUCE the likely claims on the SS Fund!  Their projections seem to assume that ALL OF US will be alive and perniciously draining the Fund of its dwindling resources.

Finally, one should not conflate the maliciously fabricated Social-Security panic with the very real problems with Medicare.  Too many people are jabbering away about "entitlement reform" without being specific and without making any distinction between Social Security and Medicare.  There are important distinctions.  It would also be nice if the "experts" would read the actual Trustees' Report and not rely on just the Summary when pontificating their dreadful conclusions.  I hope you might get a chance to explore all these issues with your future guests.  I hope to be listening.

As you can see, none of this would have fit very well in a phone call!

CONSERVATISM = STUPID?

I have been wrestling with the notion that conservatives have embraced anti-intellectualism as proof of their adherence to the litmus test of biblical "Truth."  The flap over Sen. Marco Rubio's recent GQ interview comments about the age of the Earth (roughly 10,000 years) has revived my thinking on this matter.

Back in college I was president of the Young Republicans and a fervent Goldwater "conservative," even though I was not old enough to vote.   My first vote, however, was cast when I was only 20 years old in the summer of 1967 at an American consulate in Munich, Germany.  I was due to turn 21 by the general election, so I was allowed to vote in the Va. Democratic primary that summer.  Back then there were no more than 5 or 6 Republicans in the House of Delegates, and most Democrats were pretty "conservative" back then.  (Most of them later migrated to the Republican Party, including Gov. Mills Godwin.  George McGovern's opposition to the Vietnam War drove a lot of them out of the Democratic Party.)

But also back then, conservatives like myself did not identify with know-nothing anti-intellectualism.  In fact, "conservatism" was itself considered somewhat intellectual, bolstered by the rising prominence of William F. Buckley, Jr.  In any event, I recall no quarrel with what was assumed to be scientifically-based FACT.  Conservatism was about POLITICAL ideas and opinions, not science.  With the presidential advent of the incredible "Know-Nothing-in-Chief," Ronald Reagan, who cleverly welcomed the religiously disaffected into the Republican Party, the definition of "conservatism" evolved quite differently from what I had thought it to mean.  Some smarter, more educated Republicans were dismayed by that but, unfortunately, they went along with it because it meant more votes and more political power.  About that time, and consistent with what was happening generally in the Republican Party, Buckley enunciated his support of anti-choice pregnancy policy and the attendant criminalization thereof, and a breach seemed to be forming in the conservative notion of individual liberty.  Ronald Reagan embraced those policies to get elected President, with the help of the anti-intellectuals, and thus the Republican Party was transformed, for the worse.

It seems to me that conservatism has always had a legitimate role in promoting its ideas in areas of opinion and government policy, like regulating or limiting government benefits, taxation, war policies and financing and the merits or demerits of a social "safety net."  That has traditionally been the most fertile ground for the creative aspects of conservatism.  But when the redefined "conservatism" picks fights with fairly settled scientific fact, it is way off-base, as Senator Rubio's initial comments about the age of the Earth indicate.  Rubio later quickly revised his remarks when confronted with overwhelming scientific opinion to the contrary, but he then "hedged" by asserting that parents should be free to teach their children utter pseudo-religious nonsense if they wished.

To the extent that "conservatism" is seen as embracing notions hostile to fairly well-settled science, it deserves to be called "stupid."  Even Republican La. Gov. Bobby Jindal has recognized that.  Those anti-intellectual notions include asserting coexistence of humans and dinosaurs (thus disputing Evolution and the much older age of the Earth than as described in Genesis), asserting homosexuality as a choice and its "reversibility," denying the human contribution to "global warming," asserting the unlikely possibility of pregnancy by rape, proclaiming the innate intellectual inferiority of other races, and disputing other biological and scientific matters for which exist considerable amounts of contrary empirical data that are consistent in their support of scientific "theory."  Plus, there is also the notion that scientific "theory" is nothing more than "opinion" or "hypothesis," like the theory of gravity.  Therefore, as it is OK to have differing opinions on matters of government policy, so may one have differing opinions about scientific matters if they are contrary which what is claimed to be written in the Bible, which is definitely NOT a scientific treatise.  Scientific "theory" is a lot more certain and is more backed up by empirical evidence than mere "hypothesis," a distinction lost on the know-nothings, most of whom have no more than a high-school education and harbor barely concealed jealousy of the more-educated among us.

President George W. Bush, a graduate of both Yale and Harvard Business School, famously said that "the jury is still out" on Evolution.  Now, whether or not he really believes that to be true is less important than the mere fact that he said it.  Whether he was stating a matter of personal opinion is no more important (nor reliable) than if he was merely pandering to the religiously intolerant know-nothings who abound in the Republican Party.  There are those know-nothings who believe that Evolution asserts human descent from apes when, in fact, it asserts that humans and apes likely had a common ancestor from which both lines are descendant.  Similar beliefs fail to distinguish between the research and conclusions of Charles Darwin ("natural selection") and the larger issues within Evolution.

I believe most of this know-nothing anti-intellectualism is attributable to the fact that most well-educated folks are perceived as "liberal" (like Al Gore); thus, neither they nor their "theories" are worthy of respect.  The hostility is real, actually on both sides, as the well-educated understandably scorn the know-nothings who yet express such absurd opinions about scientific matters.  I know that I do.  In the New York Times recently there was an op-ed piece about the Rubio matter by Charles M. Blow that laid out the following statistics: 

Only 6% of scientists identify themselves as "Republican";

Only 15% of college professors identify themselves as "conservative," thus reinforcing the notion of "liberal bias" on college campuses;

58% of self-identified Republicans believe "God" created humans in their current form less than 10,000 years ago.

It utterly escapes those True Believers that the reason so few scientists and college professors self-identify as "conservative" might be because credulous know-nothings are not welcome in such circles!  They are called "dumb-asses" for a reason!

According to Blow, taxpayers in Louisiana are being assessed the costs of private education (under notions of school "choice") for children to be brainwashed with such hyper-religious nonsense as that dinosaurs roamed the Garden of Eden, that Evolution is merely an unreliable crackpot "guess" about the origins of humans, that the Loch Ness monster really exists, etc.  Where does this crap come from?  WHY is the Republican Party home to such foolishness?  Fortunately, a state judge recently ruled as unconstitutional the Louisiana statute that Gov. Jindal signed that overtly promotes Creationism with those "choice" vouchers.  But, it's also going on in several other states.  The state of Kentucky (which Mitt Romney won) has recently approved diversion of $44 Million of taxpayer money as tax incentives for the building of a Creationist theme park.  Jesus wept!

This foolishness is blatantly unconstitutional, anti-intellectual and it must stop.  So long as the Republican Party, however, is held hostage to such nonsense by its members and leaders, it will continue.  Arguably, Barack Obama could have been defeated this year had the Republicans not been seen mostly as a pack of slavering idiots.  The insults and horrific nonsense thrown at Obama and "liberals" by many Republicans certainly helped generate sympathy and votes for Obama.  Republicans need only look in the mirror to see who is most at fault for the loss.

So long as Republicans fail to distinguish those matters which may be addressed by opinion and the matters concerning settled scientific fact, they will and should be dismissed as "stupid."

DAVE BRUBECK, d. December 5, 2012

Dave Brubeck died yesterday at the age of 91.  I think there was no other musician who gave me a sense of what the 1960's could be about. listening to his very sophisticated use of 5/4 time in "Take Five" or his other famous jazz pieces, "Blue Rondo a la Turk," "Three To Get Ready," "Bossa Nova USA," etc.

Even though he was almost as old as my parents, I thought of him as an ultra-cool almost-contemporary, expressing both youth and sophistication at the same time with his extraordinary music.  I thought both he and I would live forever.  Reading about his death abruptly jerks me into the reality of knowing how much older I am now, as when the person you once knew as a baby now stands before you as a college graduate, or even a parent herself!

My musical tastes and preferences have changed over the years, from rock 'n' roll, to soul, to beach music, to the Beatles & Stones, to bluegrass, to (traditional) country, to psychedelic, to Little Feat, to Big Band, to jazz, etc.  Those are not sharp delineations, they all just "evolved" into each other.  (I NEVER liked rap "music"!)  But, I have always enjoyed listening to Brubeck.  Now, I somehow find myself smack in the middle of trying to sell blues music in a shrinking market, knowing I'll never be as good a sax player as Jr. Walker or Paul Desmond.  Instead, I SHOULD just be collecting my Social Security, taking my numerous pills and trying to figure out which Medicare supplemental insurance plan to choose by December 7!  And, with frost on the ground, there is definitely going to be a "nip" in the air tomorrow!  (I never liked doing what I SHOULD!)

Thanks to modern technology, Dave Brubeck's music will live forever, even as he has died.  I am just amazed that my iPod, smaller than a soft book of matches, stores over 3500 songs!  Some of those songs and albums are Dave Brubeck's music.  I can and will be listening to Dave, until I die.

December 6, 2012.