Tag Archives: financial

Taxing Amazon.com Purchases: The Good, the Bad, and the Future of Tech

It looks like 12 states governments could be taxing our Amazon.com purchases in the near future.  (I hate you, Government!) That means some of us will be saying saying “goodbye” to tax free purchases on high-end electronics and home goods and cringing at the extra 10% added on to our dreaded subtotal. Cash strapped state Governments are set to collect, but is it worth the cost to the customer and Amazon.com? Methinks not.

How Taxing Amazon Could Hurt Everyone

If Amazon.com is taxed I become poorer and so does every other middle class online shopper.  Taxes like these hit the poor and middle class the hardest too and may actually effect where we shop.

I know I have went to Amazon more than a few times to make large purchases on electronics and other items simply because I knew I could save a few bucks by avoiding the tax (plus Amazon has great prices).  I doubt Mitt Romney considers such things when he’s buying a new laptop or TV.

More taxes also means bad things for Amazon.com.  Many consumers head online instead of their closest retailer to make their purchase just to save a few bucks.  If the Government takes away the cost incentive and we consider other factors such as paying for shipping and waiting for the item to come in the mail (waiting!?) it becomes clear Amazon may take a hit.

How Taxing Amazon Could Help Everyone

On the other hand there is an argument to be made that taxing Amazon.com will do more good than bad.  For one, retailers may see an increase in revenue.  That could mean (maybe) more jobs for the local economy.

Also, since a lot of states are barely making ends meet with their current tax revenues a few million (or billion?) in revenue could mean additional public services.  And while most of us in the middle and upper class may not benefit directly from the tax – some people relying upon State Government services may reap the benefits.  However, it is worth mentioning no State Government has outlined where the extra tax money might go – or who it might go to.

Basically, an income tax on Amazon.com will serve as a transfer payment from the middle class to the poor and to the Government.  It’s hard to say if that’s a good thing or not, but somehow I doubt that anyone (especially the poor) will see much benefit or increased Government service as a result of taxing Amazon.

The biggest loser will undoubtedly be the middle class and Amazon.com.

What this means for Technology and the Internet

Honestly, I think this is bad news for technology and the internet.  Internet companies have long fought problems inherent in online shopping – such as building trust with customers, convincing people to pay shipping costs, and getting past the “I want it now” culture.  Taxes have actually been a safe haven.  The one incentive customers have (not withstanding convenience and choice) to shop on the internet instead of their local department stores.

The internet has long been the new Wild West and taxing Amazon.com is just one more small step to regulate it.  Attempts made by ISPs and the Federal Government to regulate the internet and online communication is just one angle – taxation is another.  I fear that establishing a precedence of taxation on internet sites will only serve, in the long run, as the first step in a long line of techniques to implement further regulation and governance.

Amazon.com has worked for over a decade to be competitive in the marketplace.  It has done so mostly with great customer service and by doing a great job adjusting to market demands.  Only the customer has benefited.  I say leave them alone and let retailers figure out how to compete without the help of the Government.  The rest of us will benefit with lower prices and better service – something more taxes can never promise.

 

Are the 1% Paying their fair share?

According to Greg Mankiw when you take transfer payments into account the one percent effectively pays the highest percentage of their income when compared to any other income group.

From Greg Mankiw’s Blog:

Because transfer payments are, in effect, the opposite of taxes, it makes sense to look not just at taxes paid, but at taxes paid minus transfers received.  For 2009, the most recent year available, here are taxes less transfers as a percentage of market income (income that households earned from their work and savings):

Bottom quintile: -301 percent
Second quintile: -42 percent
Middle quintile: -5 percent
Fourth quintile: 10 percent
Highest quintile: 22 percent

Top one percent: 28 percent

The negative 301 percent means that a typical family in the bottom quintile receives about $3 in transfer payments for every dollar earned.

This is an interesting view of the tax code. Not just what one pays, but more of an income – expenses view. I personally think this is much more telling than just the effective tax rate an individual may or may not pay into the system. I also found this very interesting:

…the middle class, having long been a net contributor to the funding of government, is now a net recipient of government largess.

I think that statement might become important later. Especially when we start to frame the middle class as beneficiaries of the state rather than a group paying into it.

Income vs. Market Income

Just in case you were thinking that Mankiw was playing with the definition of income by calling it “Market Income” (I suspected fowl play to adust the statistics) here is a definition:

Market Income: Market income is the sum of earnings (from employment and net self-employment), net investment income, (private) retirement income, and the items under “Other income”. It is equivalent to total income minus government transfers. It is also called income before taxes and transfers.

I have to say, upon further research, using the term Market Income seems pretty water tight.

Thoughts on these findings?

PERSONAL RESPONSIBILITY: not just a conservative buzz word

Personal responsibility has become quite the buzz word.  I think it almost annoys some people.  A lot of conservative republicans have kind of hijacked the phrase and “responsibility” has almost become synonymous with neo-conservatism.  It’s a shame too.  Because really personal responsibility is what America is all about.

What is personal responsibility and what it’s not?

Personal responsibility is helping your neighbor when they need to paint their house.  It’s giving generously to a charity that feeds the hungry.  It’s giving your friend a few groceries to get by when times are tight. It’s busting your ass doing something you love week in and week out so you can get meet your own goals. 

Personal responsibility isn’t looking down on the poor or believing that everyone can be rich.  Those are lies the conservatives on TV seem to believe and liberals spread. 

It’s almost like everyone wants something for nothing.  They expect the invisible pocketbook of the system to pay for it all.  I think that’s where a lot of my distaste for government programs stems from.  Sure – it’s great that there is safety net in place to help out those who can’t help themselves, but it seems so much more moral if the people would do it themselves.  That is – instead of the government helping – we would help our own neighbor. It’s almost like people have become lazy.  Big Brother government will take care of us.

I’m not saying we should disband all government welfare programs.  Hell, keep them all!  I’m just saying lets change the culture and attitude of everyone.  Lets make “help thy neighbor” popular again.  Tax me less so I can give more to my Mother.  Spend less on fighting with Iranians and spend more on hungry Americans (hungry anybody!).  Maybe I’m being overly optimistic about the nature of our fellow humans, maybe no one would give shit unless they were forced to, but surely a system that provides people with the opportunities to take on responsibility for themselves is better than one that is our babysitter.

An example

A perfect example is in my own neighborhood.  We have an optional home owners association fee of $25 a year.  That’s it!  $25 to keep our neighborhood beautiful and home prices high.  We have a volunteer crew that does “handyman” work around the public spaces.  It’s the perfect example of a free market system – helping yourself helps everyone and visa versa.  However, of 185 households only about 35 households have paid the voluntary dues this year.  I suspect eventually around 50 will pay.  Why such a low participation rate for a service that so obviously benefits you directly?

The desire to pass the buck is an obvious tendency.  What if it were a mandatory $25 fee?  The neighborhood would be much nicer and happier – but a little less free.  Which is better?  I have to admit that I think that enforcing the rule may benefit me more (this time), but what about later when I disagree a rule?  What about when that fee is increased to $100, $500, etc.?  

Any Government or system of power has the incentive to keep taxing you more and more because it benefits the decison maker – where as a voluntary fee has the incentive to stay low – so people will actually pay it.  Which system is better?  Both have their benefits, but I choose freedom.  Especially when those enforcing the rules aren’t living in your neighborhood.

The Third Option

A third option exists.  One where everyone freely does the right thing –  everyone would do their part and take responsibility.  All 185 household would pay the $25, the neighborhood would be beautiful.  We could be both rich and free – not just one or the other.

Unfortunately there are always those who will buck the system.  Not do their part.  Some that can’t do their part.  That’s the problem.  How do we solve it?  I don’t know, but I do know that it starts with each and every one of us taking responsibility for ourselves and doing as much as we can for the rest of mankind – Maximizing Liberty and Happiness.

The Truth about Healthcare, Culture, and Taxation in the US

I discuss the myth that higher taxes will result in a better healthcare system and compare the United States to Japan and Switzerland (both countries with Universal Healthcare Options) .

I also touch on the myth that higher healthcare costs and lower life expectancy in the United States versus other developed nations is a result of not having a Universal Healthcare Option. *You can see the charts and statistics better if you expand the video to full screen.

You can check out the all the stats used in this video here.  Also thanks to Phil Ebersole’s Blog for the inspiration on this topic.

Poorer in 2012: Increased Social Security and Income Taxes in 2012

I was paid today. That’s normally a good day, but when I saw that my paycheck was about $20 less than it was in 2011 I became angry. I decided to do a quick bit of research to make sure there were no errors. I mean that’s about $250 a year I could be giving away for nothing. After a few quick Google searches I learned that there was a tax increase in Social Security. Great.

A program that I will probably never benefit from in any way is taking more money out of my wallet. The funny thing is – the government pulls cash out of the Social Security savings fund all the time – like some sort of emergency savings fund! So right when you think, “at least the people who have paid into the system their whole life are getting something back” you realize the guys in control in Washington are stealing from you.

You might also be interested to know that the guys stealing from us in Washington aren’t tied to Social Security. Congressional pensions are seperate – they don’t pay into Social Secuirty and do not recieve any.  (They actually do pay into Social Secuirty, sorry for the bad information – most ARE wealthy enough not to have to rely on it though…)Funny the guys deciding the rest of the countries fate have almost no stake in the outcome. What incentive do they have to use the system fairly? They can tax us, use the money, and then tax us again to prop up the system a little longer. What a flawed system.

You might even be thinking – well at least we have a few rich lobbyist fighting for us “regular” guys, but you’d be wrong. Rich peopld don’t care. There is a $110,000 cap on taxable income for social security. That means a guy making $110,000 is taxed the same as a guy making $110 million. I’m not for higher taxes – not for anyone, but it’s no wonder main street doesn’t have a say in this whole thing. Social Secuirty is a failed program paid for by the poor and middle class, used by the political machine, and designed to make everyone feel okay about it.

Personally, I wish I could opt out.

We may also see a 2% hike in taxes come March 2012. The renmints of the Bush era tax cuts are coming to a close and congress just approved an extension through February. If nothing more is done the rest of us migh see about a 2% total decrease in their take home pay come March. (For a grand total of about 5-6% in 2012) Inflation and taxation – Happy days!

I’m sure my analysis and summary of what’s going to happen is off here and there. You can check it out for yourself here or here.

Greg Mankiw’s Blog

I do my best to say an intelligent thing or two about economic issues with varying degrees of success, but I ran across Harvard Economics professor Greg Mankiw’s Blog and think where my little blog falls short – his picks up the slack.  I wanted to share it here – especially since it affirms a lot of my own beliefs. :)

an intellectually honest discussion: HIGHER TAXES DOESN’T ADDRESS WEALTH INEQUALITY

No – this isn’t going to be another conservative defense of “trickle down” economics.  My opposition to additional taxes has nothing to do with my desire to further sheild the rich from taxes in hopes that they may use that extra money in a way that will somehow benefit the rest of us.  Rather my oposition to taxes is a logical oposition to government and my lack of confidence in its ability or desire to use taxes to benefit the people.

We are a country with $15 trillion of national debt and growing.  We could increase the tax rate to 100% and still not pay that amount off in the next century.  The income the government does recieve is spent on an already bloated military to further expand our empire.  The military industiral complex, the corporations, and the politicians are the beneficiaries – NOT the people and especially not the poor.  Who are we kidding?

Perhaps an argument for higher taxes is based on good intentions, but it’s an illogical argument at best.  Those who argue for higher taxes are either in denial or totally ignorant of the government they trust.  People were disgusted with Mitt Romney’s astronomical income and seemingly low tax rat of 15% (still higher than 80% of America’s tax rate).  They ignore that Romney also gave about $7 million dollars to charity (about 15% of his income).  Who among us can say that?  I’m not defending Mitt Romney, but the point that I am trying to make is that charitable donations are far more efficient and effective in addressing the income inequality than giving more money to a government that has already shown they can’t be trusted to manage wealth.

Conservatives get a lot of grief for their distaste for taxes and government social programs.  Often getting the label of greedy and not understanding or empathizing with the poor, but I think there is a fundamental misunderstanding of why fiscal conservatives think this way.  It is not our desire to keep the money from the poor and needy, but rather our desire to keep the money AWAY from the government.  A belief that additional taxes would be used to help anyone is a fallacy.  Additional taxes only serve to further chip away at the liberty of every American, expand our empire, wage wars, and pad the pockets of corporate politicians and lobbyist. 

If anything, higher taxes only kill the poor by aiding the government to wage and fund wars – where the poorest of our sons go to their slaughter to settle the agenda of the elite in this country.  Don’t be fooled – this is the cold sad truth – the faster we recognize it the faster we can change our way of thinking.  We can stop expecting the government to take care of us and our poor, we can stop passing the buck to our government, and take responsibility for this situation ourselves.  Lower taxes empower the people, not the super-rich. 

Warren Buffet once wrote a very popular article saying he wouldn’t mind being taxed more – I say keep the taxes – if you want to give more of your money – give it to a charity where it can be much better utilized.  His article was a brillian PR stunt, but a fantacy.  When has any rich man ever had a problem finding a way to give more of his money away?  If the government does’t want to take it – there are an infinite number of organizations who will.  If anything, his article was a perfect example of our over reliance on the government.

Look folks, the government already takes about 50% of our income (income tax, property tax, sales tax, etc.).  If they can’t make ends meet with half of the country’s wealth then they aren’t doing something right.  The answer is far more simple and MORAL than raising taxes.  Stop waging war, stop expanding the empire, and spend that money on the people who need it.  The country would be that much more peaceful and well fed.

who will save us? the rich or the government? NEITHER!

Last night I had dinner with a few of the “most important” people in the region for our company.  Basically, I was sitting next to a few of my company’s leadership and making small talk for two hours while eating over priced, but delicious, Italian food.  Just based on the conversation at certain points I realized that despite where the individuals may have “come from” they have completely forgotten what it’s like to have an average income – or especially poor. 

It wasn’t that many years ago I was living at home with my parents, receiving free lunch at school, taking my mom to the doctor on her Medicaid insurance, and working doubles on the weekends so I could afford insurance and gas.  I’m not complaining – I didn’t even realize that wasn’t normal at the time.  I mean, had you asked anyone of my friends it I was completely normal.  Working builds character and hardship teaches lessons – even if you don’t even realize you are learning a single thing at the time. 

Anyways, back to the rich guys at dinner.  They were dropping topics like “lake house”, “sending my child to private school”, etc.  Their problems didn’t seem to be issues that regular people deal with – although I am sure to them they were.  Poor people worry about keeping the heat on in the winter, worry about their friends judging them because they get free lunch at school – the rich worry about their “insurance going up on the jet ski at their lake house” (real conversation). 

All this made me think about one thing – the empathy gap.  As you may or may not know I am highly against government interventionism and taxation, but I have to wonder how the poor – the real poor – would get by without government social programs.  Could we depend on the rich to be charitable to a group of people they blatantly do not understand – can’t begin to empathize with?  I doubt it.

Of course the current system is flawed, I hate it in fact.  People abuse the system, the government programs give people incentive to become welfare babies and grow dependent on those resources.  However, what is the solution?  How do we take care of the poor and needy in this country and still minimize abuse of the system, maximize personal liberty, and minimize government taxation and involvement in the rest of our lives? 

I have to believe that due to the amount of bureaucracy, politics, abuse, and general lack of efficiency that any government is not the best way to redistribute wealth – but what is the solution?  I certainly do not claim to have the answer. 

Republicans may say let the rich keep their money and the wealth will “trickle down”.  Democrats might laugh at that idea and push for higher taxes and more social programs to “redistribute the wealth.”  I’m not sure that either of those all so common solutions will solve anything for a hard working mother that can’t make ends meet. 

I know two things: 1. We can’t rely on the rich to be generous or understanding enough to take care of the poor, and 2. This country can’t afford more failing social programs and higher taxes.

So, it seems, we need answers.  We need change.  We need ideas.  We need leadership not tied to the corporate or political agendas.  In the mean time, if you can, be charitable.  We can’t rely on anyone else – not the rich and not the government – to do the right thing.

An organization every intellectually honest American should question: THE FEDERAL RESERVE

What is the Federal Reserve?

“The Federal Reserve System (also known as the Federal Reserve, and informally as the Fed) is the central banking system of the United States…The task of the Federal Reserve System is to maintain employment, keep prices stable, and keep interest rates at a moderate level by regulating monetary policy. Components of the Federal Reserve System also supervise banks, provide financial services, and conduct research on the United States economy and the economies in the surrounding region.” (wikipedia)

That sounds great, right?  Well, there are some problems.  First off our currency has no real value.  You can’t redeem your dollar for a certain amount of gold or silver – the value of the dollar is only perceived.  As in what a dollar can purchase today might be drastically different from what it can purchase next year.  (re: problems with fiat currency, what has the government done to our money)  However, problems with inflation or the federal reserve constantly printing money and further devaluing our currency is not what I want to talk about.  Rather, the glaring problem, in my opinion, is the secrecy.

“…under current law the Federal Reserve cannot be audited.  As well, its decisions do not require ratification by anyone in the executive or legislative branches of government.  Each time Congress has requested that the Federal Reserve submit to a voluntary audit, only refusals have been recieved.  The Chairman of the Fed is therefore free to say anything he wants to Congress, and there is no way to verify the truth of his statements.

The Monetary Policy decisions made by the Fed are made at secret meetings, and Congress, as well as the public, are only made privy of brief reports released weeks later.  Any transcripts made of the deliberations are destroyed.  Every other government agency, even the CIA and NSA, are required by law to maintain all documents and transcripts of their activities.  Since the Federal Reserve is not a government agency, these laws do not apply.”  (Judge Andrew Napolitano)

Does it sound funny to anyone else that an organization that is in control of and put in charge of the entire country’s (one may argue world’s) money supply is not monitored or audited?  I mean damn, every public company in the US is subject to an audit under Sarbanes Oxley!  Why is arguably the most powerful organization on earth exempt from any accountablility?

If printing money as if was a manufacturer of monopoly bills or the secrecy doesn’t bother you perhaps the way the founding of the Federal Reserve occurred will. The first draft of the Federal Reserve Act of 1913 was drafted, in secret, by none other than a few of the most powerful bankers and their associates  in U.S. history: Senator Nelson Aldrich, father in law of John D. Rockefeller; Frank Vanderlip, vice President of Rockefeller’s National city Bank of New York, Charles Norton, president of Morgan’s First National Bank of New York, Henry Davison, senior partner of J.P. Morgan Company, Benjamin Strong, head of J.P. Morgan’s Banker’s Trust Company, Paul Warburg, representative of the Rothschilds, and Abraham Andrew, Assistant Secretary of the Treasury.  Anyone else find this an interesting group of people to propose and organization that would control the money supply?  More importantly – why would they want to? (why would bankers want to control the money supply, seems like an easy one…)

” [The Banks] argue that the Federal Reserve Act…ensured that our currency was flexible…that if state banks did not have someone to look out for them, they would in essence over issue their notes and reduce the amount of money they dept in reserve because of their need to make a profit.  They can make an agreement to warn each other when reserves are low and therefore not cash the checks from the deposits of banks whose reserves are low…when banks work together and work from one central place, no one needs to worry about crashing because it cannot pay back its debts, since it and its competition are all backed by a “lender of last resort.” It’s like a teenager with an unlimited credit card who knows that no matter how much money she spends, her parents will always pat the bill.  Ant then imagine that the parents were able to force their neighbors to contribute to payments for the bill.  Well, we are those neighbors…”  (Lies the Government told You” pg. 153-156)

It sounds like the perfect scheme.  The banks can overextend, lend more money, take on more risks, and collect more money via interest payments – and when they fail WE PAY THE BILL via taxes and inflation.  I’ll bet some people would argue this would never happen – if it hadn’t already happened. (re: the Bank Bailout List) Great.  Does no one else have a problem with this?

Hey, I’m no expert in monetary policy.  Not even close, but it seems like everyone should agree that something is wrong when you can’t audit the very organization that controls the money and when no one holds the organization accountable.  If money is power, it looks like the Fed can create power out of thin air.

Like Thomas Jefferson said, “If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow around them will deprive the people of their property until their children wake up homeless on the continent their fathers conquered.”

We’re in a Depression, Not a Recession

My Granny died at age 94. She was born in 1917 and live a full life – she was only sick the last couple of days of her life. Overall, I would call it a success. She was thoughtful, generous, and even in her old age able to carry on a good conversation.

I was always pretty fascinated by the things she had lived through. Pretty much every modern day historical event I could think of. The World Wars, the Great Depression, race riots, she even saw two states become part of the Union!  I would always ask her about historical events and what it was like to live through them – I guess I expected it to be somehow different than my own experience living through historical events (like 9/11). One day I asked her what it was like to live through the great depression.

She explained to me that, at the time, no one even realized it was the “Great Depression”. People were poor, a lot of people didn’t have jobs, but most of what we see on TV was the worst of it – not the typical. I started thinking about what we are going through today in “the Recession” and I can’t help but think that nothing is too differnt. I mean almost just as many people are without jobs, underemployed, or work for government created jobs. In fact, many sources site actual unemployment around 22% or higher, not a tthe government’s 10% figure (not including the underemployed). (re: Hiding a Depression, Alternate Unemployment Chart). I mean, about 50 miles north of where I live there is actually a tent town. Sound familiar? Sounds a lot like a modern day great depression.

Anyways, I started doing some research to find out what’s going on. Why did the government say that the recession was over in 2009, but nothing seems to have changed. Sure the stock market has improved a bit (has it?), but I’m still losing value in my 401k, unemployment is still as high as ever, the federal government is even more in debt, and the financial trouble abroad is as bad as ever! So are we really not even in a recession, or is this something worse? Allow me to quote someone more credable than me: (re: Let’s Be Honest: We’re in a Depression, Not a Recession, And There’s No End In Sight)

Richard A. Posner is a judge on the U.S. Court of Appeals for the Seventh Circuit and a senior lecturer at the University of Chicago Law School.

If the notion that we are merely living through the aftereffects of a mere “recession” that ended in 2009 sounds somewhat ridiculous, that’s because it is. If we were being honest with ourselves, we would call this a depression. That would certainly better convey both the severity of our problems, and the fact that those problems have no evident solutions.

That’s right, we’re in a depression. Why? In my opinion that’s because things are bad, nothing has changed, and there is no end in sight. As much as the government wants to tell us things are going to improve soon – it’s all phony. I’m not saying we’re at the end of the world, but don’t expect things to change. The Fed is still over spending and printing more money(deficit), the EU has its own problems so there’s no help there, and we still aren’t producing anything! This isn’t a short term problem, its a long road, folks. The Keynesian economic theory of “spend your way out of the reciession” doesn’t apply this time. (re: We are in a modern day depression)

If you are thinking: “this doesn’t look like the movies about the great depression” there is a good reason for that. As economist David Rosenberg of Gluskin Sheff points out, “The soup lines have been replaced with unemployment payment checks. Over 10 million such checks are being sent out now for up to 99 weeks.” We still have a long way to go and someone has to pay for those unemployment checks.

When I talk to my parents and the typical “uninformed” person I get the feeling that they are just waiting for things to turn around. There is a sense of “any day now” things will just get better. I wonder how many other people out there feel the same way? Citing the 1970s and 1980s as examples when we pulled through recessions followed by periods of sharp growth afterwards – but that ain’t happening…

I’m not trying to promote fear mongering here and I’m not saying that we should expect hyper-inflation or civilized US to crumble.  What I am saying is that things have changed for a lot of Americans – maybe forever.  Instead of waiting on the government to fix it – its up to us, the individual.  Re-education, training, and acceptance that the hay days are over for a while.  Basically, we were spending too much – we were gluttons and now its time to pay for it.  The real question I have, is how long is the government going to downplay this situation?  When are we going to be honest with ourselves and REALLY fix this shit?  The longer the government unfairly downplays our situation – the longer its going to take the bottom 50% of America to react.