Saturday, April 11, 2009

Death Tax

In response to the New York Times article Fate of Estate Tax Imperils Obama’s Ambitions:

1) "Studies show that the tax hits merely a sliver of wealthy American families." - This is really irrelevant in a discussion whether the tax is just and effective. If it hit only one family, would it be just?

2) "...simply a capital gains tax on investments that never previously changed hands." - Capital gain taxes are not 45%. Further, this is offered as a rebuttal to the "double taxation" argument, however, there is nothing in the estate tax to ensure that it is applied to previously untaxed income. If all the estate were created through ordinary income (and therefore taxed), it would still be subject to the estate tax. (Don't say it isn't possible; Lawrence Summers almost did in a single year.)

3) "They see it as a legitimate effort to require some of the nation’s most affluent families to share some of the rewards they have reaped." - On what grounds is this legitimate? Why is taking private property from one family and giving it to another legitimate just because one died?

4) Finally, the structure of creating a tax that by design hits only a minority but benefits everyone else is a form of taxation without representation; mathematically, it is impossible for the taxed to win a vote against this.

If taxing people with assets > $7 million is so good for society, be honest and tax people with any assets and redistribute to those with fewer assets; there are always people with $0 assets, and therefore in worse condition.

Thursday, February 26, 2009


Massive changes are planned by the Administration.

Huge bailout bill was just passed, and then Obama presents a budget with another 8% increase in the budget over just 6 months, or 16% increase in government spending per year.

While understated, Brook's New York Times article hit the nail on the head: this immodesty is making changes too quickly.

Sunday, February 22, 2009

Happiness is a Low Benchmark

President Obama announced his intention to cut the deficit in half by the end of his four-year term. Of course, given the significant increase in the deficit this year an next, that only means getting back to a deficit of $600B/year. And with a decreasing GDP, this is an even larger percentage of GDP than it would have been in 2007.

Sunday, January 25, 2009

Obama the car salesman

The New York Times reports that President Obama will allow 14 states (Why only 14? I haven't figured that out yet.) to enforce their own emissions standards on vehicles.

As a result, a car sold in California may be required to meet different standards than a car sold in Rhode Island. This may require car manufacturers to determine the state in which a car will be sold at the moment of manufacturer, raising assembly costs and diminishing flexibility in liquidating inventory.

Prior to this decision, the US Department of Energy estimated that California's 2002 law (A.B. 1493) will raise the average vehicle price by $1,860 vs. $1,029 without the law. That is, inflation of car prices will increase by 81%.

One can only imagine that a situation in which car manufacturers must sell cars that meeting differing (and potentially mutually exclusive) standards will require manufacturing and distribution complexities that will raise the inflation rate even even further.

If Obama thought tougher standards were such a good idea, why did he create such a cost inefficient and complex system and devolve the power to the states? Does he believe in federalism and conclude the issue doesn't meet the constitutional standard of interstate commerce?

This does not seem to me like an example of the good judgment we are all hoping for. I hope he now doesn't turn his eye to CAFE standards.