SUPPLY-SIDE STUPIDITY

(The following is from an e-mail to wealthy skeptical acquaintances:)

Per recent research:

The FICA payroll tax is 6.2% direct and another 6.2% nominally paid by the employer (total 12.4%) ON TOP OF income taxes and levied on first dollars (unlike income taxes), no exemptions or exclusions.  I say "nominally" because it is really a pass-through cost for employers since all employers are thus taxed, so it tends to suppress wages and employment.  I believe it is payroll workers who suffer the brunt of all of it, even the portion "nominally" paid by employers.  And, as you know, self-employed people must pay 12.4% on the whole!  The FICA tax is paid ONLY on the first $110K of EARNED income and not on PASSIVE income like dividends, interest or cap-gains.  Therefore, it DISPROPORTIONATELY falls on workers mostly and not on wealthier folks, since 100% of the workers' GROSS incomes are thus taxed on top of whatever taxes on net TAXABLE income they must also pay.

True, SS benefits are proportionately capped because the FICA tax is not assessed on higher earned incomes, but the bulk of the personal cashflow in this country is not subject to the FICA tax.  According to the Kaiser Family Foundation, median US GROSS household income for 2011 was $50,443 (I suspect it's even lower this year), so that means that HALF of all households are grossing less than that number, and I daresay that at least 64% of all households were under $75K.  A bit over 77% were probably under $100K.  (See the last table for 2010.)

The reason the income tax rates need to be adjusted higher is not to "punish" wealthier folks but to avoid falsely using Social Security issues as red herrings to balance the Federal budget by delaying eligibility and/or increasing the FICA bite, wherein SS payouts are misrepresented as contributing to the Federal deficit, which is NOT TRUE.  FICA revenues currently cover the SS payouts.  And, lower-income folks spend about 100% of their net incomes (no savings) into mostly local economies, whereas wealthier folks do not.  As I have been saying, I believe it is the lack of SPENDING that is hurting our economy, NOT the lack of capital investment.  There is simply no such thing as a "supply-side" market.  All markets are DEMAND-driven.  If there is no demand, there is no market!  With us Boomers reducing our spending, SOMETHING must take its place in order for there to be economic "recovery."

We are suffering a SPENDING crisis, not a capital-investment crisis, yet most of the "experts" and politicians are still jabbering about cutting higher-bracket taxes (despite the humongous Federal deficit that disproportionately hurts lower incomes) to "stimulate" more capital investment!  That is utter nonsense!  That is a "solution" in search of a problem!

Below are shown the brackets for INCOME-tax rates.  The 39.6% bracket does not kick in until $406,751 TAXABLE (not gross) single income.  It is now above $450K for "middle-class" joint marrieds, thanks to Barack Obama.  The lower brackets are the brackets that were created for the so-called "Bush" tax cuts in 2001.  So folks with taxable incomes at the highest levels STILL get to keep over 50% of their gross dollars, even allowing for state and local taxes.  And, most of those folks are taking not one but two mortgage-interest deductions, including on yachts and beach cottages deemed "2d homes."  Working stiffs don't even get to deduct the RENTS they pay for basic housing, so that throws them into the rather stingy Standard Deduction. 

Landlords should think of the boom in rental housing construction (terrible shortages in central Virginia) that would likely be created if folks could deduct their apartment rents from gross income!

Per www.bankrate.com:

2014 Tax Brackets (for taxes due April 15, 2015)
Tax rate	Single filers	Married filing jointly or qualifying widow/widower	Married filing separately	Head of household
10%	Up to $9,075	Up to $18,150	Up to $9,075	Up to $12,950
15%	$9,076 to $36,900	$18,151 to $73,800	$9,076 to $36,900	$12,951 to $49,400
25%	$36,901 to $89,350	$73,801 to $148,850	$36,901 to $74,425	$49,401 to $127,550
28%	$89,351 to $186,350	$148,851 to $226,850	$74,426 to $113,425	$127,551 to $206,600
33%	$186,351 to $405,100	$226,851 to $405,100	$113,426 to $202,550	$206,601 to $405,100
35%	$405,101 to $406,750	$405,101 to $457,600	$202,551 to $228,800	$405,101 to $432,200
39.6%	$406,751 or more	$457,601 or more	$228,801 or more	$432,201 or more

Read more: http://www.bankrate.com/finance/taxes/tax-brackets.aspx#ixzz3G43dhG5i 

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<350px-personal_household_income_u .png="">

This graph shows the percentage of persons and households in each of the income groups shown.^{[citation needed]}

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The percent of households with six figure incomes and individuals with incomes in the top 10%, exceeding $77,500.^{[citation needed]}

Per Wikipedia, here are the distributions of household income per bracket for 2010.  The first graph to the right is the most telling--only 28% of ALL households grossed over $75K

that year, and only 17% were over $100K.

The chart below shows that in 2010 there were 121 Million households in the data group, and the median was somewhere between $50K and $54K.  64% were at or below $75K:

Income range	Households (thousands)	Percent	Percentile	Mean number of earners	Mean house- hold size
Under $5,000	4,261	3.52%		0.23	2.02
$5,000 to $9,999	4,972	4.11%	3.52%	0.36	1.81
$10,000 to $14,999	7,127	5.89%	7.63%	0.42	1.74
$15,000 to $19,999	6,882	5.68%	13.51%	0.57	1.96
$20,000 to $24,999	7,095	5.86%	19.19%	0.75	2.14
$25,000 to $29,999	6,591	5.44%	25.05%	0.85	2.22
$30,000 to $34,999	6,667	5.51%	30.50%	0.97	2.34
$35,000 to $39,999	6,136	5.07%	36.00%	1.06	2.41
$40,000 to $44,999	5,795	4.79%	41.07%	1.20	2.46
$45,000 to $49,999	4,945	4.08%	45.86%	1.32	2.55
$50,000 to $54,999	5,170	4.27%	49.94%	1.32	2.52
$55,000 to $59,999	4,250	3.51%	54.21%	1.49	2.72
$60,000 to $64,999	4,432	3.66%	57.72%	1.49	2.66
$65,000 to $69,999	3,836	3.17%	61.38%	1.58	2.75
$70,000 to $74,999	3,606	2.98%	64.55%	1.63	2.82
$75,000 to $79,999	3,452	2.85%	67.53%	1.70	2.89
$80,000 to $84,999	3,036	2.51%	70.38%	1.73	2.86
$85,000 to $89,999	2,566	2.12%	72.89%	1.80	3.00
$90,000 to $94,999	2,594	2.14%	75.00%	1.79	2.96
$95,000 to $99,999	2,251	1.86%	77.15%	1.87	3.09
$100,000 to $104,999	2,527	2.09%	79.01%	1.78	2.94
$105,000 to $109,999	1,771	1.46%	81.09%	2.01	3.18
$110,000 to $114,999	1,723	1.42%	82.56%	1.96	3.11
$115,000 to $119,999	1,569	1.30%	83.98%	1.98	3.06
$120,000 to $124,999	1,540	1.27%	85.27%	2.01	3.16
$125,000 to $129,999	1,258	1.04%	86.55%	1.97	3.08
$130,000 to $134,999	1,211	1.00%	87.59%	2.00	3.17
$135,000 to $139,999	918	0.76%	88.59%	2.10	3.18
$140,000 to $144,999	1,031	0.85%	89.34%	2.12	3.26
$145,000 to $149,999	893	0.74%	90.20%	2.11	3.21
$150,000 to $154,999	1,166	0.96%	90.93%	1.86	3.09
$155,000 to $159,999	740	0.61%	91.90%	2.04	3.11
$160,000 to $164,999	697	0.58%	92.51%	2.05	3.29
$165,000 to $169,999	610	0.50%	93.08%	2.15	3.17
$170,000 to $174,999	617	0.51%	93.59%	1.99	3.05
$175,000 to $179,999	530	0.44%	94.10%	2.09	3.08
$180,000 to $184,999	460	0.38%	94.53%	2.12	3.28
$185,000 to $189,999	363	0.30%	94.91%	2.30	3.32
$190,000 to $194,999	380	0.31%	95.21%	2.22	3.17
$195,000 to $199,999	312	0.26%	95.53%	2.30	3.28
$200,000 to $249,999	2,297	1.90%	95.78%	2.06	3.24
$250,000 and over	2,808	2.32%	97.68%	ca. 2	ca. 3
Total	121,084

DC STATEHOOD

The NY Times Online for October 6 reports on the "state" of DC statehood.  I have no desire to align myself with the overt racism of those who oppose statehood because of DC's predominantly black constituency.  But, I think statehood for a mere city is absurd, regardless of demographics.  There is no way to justify the voting clout of two US senators for a mere city.

I do agree that the people of DC have been wrongfully deprived of congressional representation.  The answer to that problem is to proceed with creating a voting congressional district for the city which has about the proper population for a district.  That would address House representation.  For the Senate, the present District of Columbia was carved out of the State of Maryland and "ceded" over to the Federal Government as was present-day Arlington County in Virginia, which was then "ceded back" to Virginia a few years later.  No constitutional amendments were adopted to effect those changes, so even though the land areas were ceded to the Federal Government, the voting rights of the residents therein could NOT have been lawfully abrogated by mere legislative/congressional act.

Many people erroneously believe that the Federal Government has exclusive JURISDICTION within the District of Columbia, so that the residents therein are no longer a part of the State of Maryland.  A close reading of the US Constitution, however, does not support this erroneous conclusion!  In any event, I would argue that the Framers were not empowered to take away precious personal voting rights, as there were Maryland residents living within the proposed District at the time of its establishment.  But, for 225 years everyone has wrongly ASSUMED that those folks and their successors are no longer within the State of Maryland, but I contend that they still are for federal voting purposes!

Article I, Section 8, Paragraph 17 of the US Constitution empowers the Congress to "exercise exclusive LEGISLATION [not "jurisdiction"] ... over such District ... as may, by Cession of particular States, ... become the Seat of the Government...."  Nevertheless, this language has been misinterpreted by one and all to deprive DC residents of their right to continue voting in Maryland's congressional elections.  Now, I think that since the Congress does have "exclusive Legislation" in the District, there is no point for DC residents voting in Maryland state elections, but those persons in DC STILL have a right to be fully represented in the legislative body (Congress) that controls them, and there is nothing in the US Constitution that says otherwise, regardless of the misinterpretations of our predecessors!

So, let's correct a 225-year-old mistake and allow the people within the District of Columbia to send a VOTING rep to the House and to vote in the Maryland US senator elections.  That is the proper solution to the legitimate issue of disenfranchisement.

(See post 3/4/09)

SCALIA: A COURT OF ONE

10/1/14:

Law professor Justin Driver of the University of Chicago has recently reviewed Bruce Allen Murphy's new bio about Justice Antonin Scalia.  I am not gonna go racing out to buy that book.  As much as I hate Scalia, I don't trust anyone else who also hates him!  According to Driver, Murphy seems to squander most objectivity.

According to Driver, Scalia supposedly embraces a literal reading of written statutory text for interpretation (instead of its "legislative history").  However, it seems to me that Scalia does not embrace a literal reading of the text of the Constitution in most instances, apparently preferring, instead (per Murphy), to divine the "public" opinion held about the Constitution by those now long dead, probably in the early 1800's before the widely-held approval of Negro slavery was found to be absurdly wrong!  For years I mistakenly thought Scalia was channeling the ghosts of James Madison, et als, to divine the "original intent" of said "Framers," but Driver indicates that Scalia's version of "originalism" is even more speculative!  Silly me!  I think Scalia really pines for the early opinions of the Supreme Court, when the "luminaries" thereon were rather stingy with personal liberties and issued such wonderfully statist rulings as the 1857 DRED SCOTT decision.

Scalia, apparently a "hyper-democrat," also apparently would give great weight (as many now do) to validating whatever a dominant majority would inveigle to get passed.  That  validates my belief that the purest form of "democracy" is a lynch mob, since everyone in attendance agrees on the outcome except for the victim!

It does not bother me that Scalia disavows "legislative history."  I think that has been mostly fabricated &/or irrelevant bullshit for a long time.  Elected reps vote a given way for a variety of reasons, and even where some committee decides to approve some sort of appendix that purports to declare the rationale for adopting some law, I think the written word must speak for itself.  If it is too inscrutable to be plainly interpreted, then the courts ought to strike it down.  If it mistakenly says the opposite of what was intended, then a legislature is obliged to change it!  The courts were not created to "wet-nurse" the elected legislators by fixing their boo-boos!

Scalia and I see the Constitution differently and have done so for a very long time.  He mistakenly would validate almost anything an elected majority passes, and he seems to find all sorts of implicit government powers despite the rather unambiguous  language of the Tenth Amendment to the contrary.  Concurrently, he refuses to recognize almost any personal "rights" not spelled out in the Constitution, despite the clear language of the Ninth Amendment attempting to preserve same.  The Ninth Amendment was strongly cited by Harry Blackmun in ROE v. WADE.  What galls me is that no one who interviews Scalia has challenged him on these interpretations nor ever demanded of him an explanation of how he gets past the plain language of both the Ninth and Tenth Amendments!

I was fascinated to learn while watching some of the PBS series about the Roosevelts last week that "TR" was one of the first Presidents to assert expansive executive power beyond whatever Congress or the courts might like!  I firmly believe that the former revolutionaries who framed or approved the Constitution would NOT (based on the history of the times and their dealings with the British Empire) have implicitly or expansively empowered the supreme leader of our central government!  Time and again, most Framers were on record as being vehemently against regarding the President as some sort of king.  I guess that makes me something of an "originalist," too!  

I firmly believe that the Framers and those who approved the Constitution saw the absurdity of trying to enumerate all the personal liberties desired thus implying a refutation of those not mentioned which, I understand, was the basis of Alexander Hamiltion's opposition to adoption of a "bill of rights."  So, the 9th Amendment was produced in an effort to preserve those "rights" not enumerated, which Scalia and others of his ilk seem so eager to ignore or dismiss.

Barack Obama seems to have that same problem, as did so many of his predecessors.  Too many today, including some Supreme Court justices, see the Constitution as a recitation of discrete rights instead of a recitation of limited governmental powers.