Raising The Capital Gains Tax ≠ Socialism.

Not to be painted red or anything but: raising the capital gains tax ≠ (does not equal) socialism.

A friend posted an interesting story on Facebook, summarized here, it uses the example of true socialism in the classroom setting. It does a perfect job of showing us the faults of Marxist socialism, and I agree with it completely. But here is where it breaks down: The point of the post was not to warn against Stalin's communism, or Marxist socialism (or perhaps a critique on why you shouldn't live in Cuba), instead the post calls it "Obama's socialism". Now I'm not Obama's biggest fan, by any measure, but I am a fan of the facts.

The facts:
 - Democrats, including Obama, want to increase the capital gains tax above its current level of 15%. But haven't yet. Probably because of political consensus and the economy.
 - The capital gains tax is a tax on the money you make by the investment/ownership you have in a company (investment income).
 - In 2006 President George W. Bush extended the lower capital gains tax.
 - In 2010 President Obama also extended the lower capital gains tax.

If Obama were trying to raise it to 100% then I would have my issues, but he isn't. So quit fear-mongering.

Tax example: If I made a cool $2,500,000 (taxable income) in 2011...
 - in the form of a CEO salary I would be taxed at about 33.79%, which is about $845,000.
 - in the form of an investor/owner, or smart CEO who requests his pay in stock options, I would be taxed at 15%, which is about $375,000.

The everyday working person, who makes their money via wage income and who often has minimal abilities to achieve investor/owner status*, is taxed with a progressive tax. When that person moves up in the world and makes more money, they are taxed more (up to 35%). That makes sense (with some minor reservations). But here is the problem: if you make your money via investment income, then the most you will be taxed at is 15%.

What does this mean? The US tax code favors investment income over wage income. Pure and simple.

As an aspiring business owner and someone who has directly benefited from low capital gains tax, I understand the arguments - but I'm not buying it any more. Our values need to change, we need to show that we value the "average American".

This actually reminds me a bit of a Ted Talks video with the host of Dirty Jobs Mike Rowe. http://www.youtube.com/watch?v=IRVdiHu1VCc

*I know, I know, anyone can get an E*Trade account. Or anyone can get a 401k, IRA, or Roth IRA. Blah, blah, blah.
 - Fact is most people don't trade stocks on E*Trade, because they don't have the disposable income to make those kinds of bets (I mean investments, oops).
 - As for retirement vehicles such as a 401k, IRA, or Roth IRA, I do believe they should be taxed at a lower rate. These are long-term investments (real long-term, not fake 1-year "long-term" capital gains). The keyword in this case is retirement.

I Did A Guest Post

My writing skills and experiences are so in demand that I did a guest post about an experience I had on an airplane. You can read it here: http://karinkas.blogspot.com/2011/10/what-not-to-do-on-airplane.html

TEASER: Lets just say people are a bit edgy on airplanes ever since 9/11.

Ok, ok, that may be my beautiful wife's blog - but that does not change the fact that I did a guest post!

Will Money Buy You Happiness?

A while back ago my boss posed a question: Will money buy you happiness? My answer was: yes and no. That's a pretty lame cop out.

I felt conflicted with the conventional wisdom and my personal feelings. Then I heard a podcast by Planet Money, and (from an economic standpoint) yes it does...kind of.  Feel free to give it a listen: http://www.npr.org/blogs/money/2011/03/09/134370052/the-tuesday-podcast-money-buys-happiness

I would say that money makes life easier, not necessarily happier. Having an easier life creates less friction for happiness. So, my answer stands.

Spurned

Hello Minions,

Karen and I recently made and posted our silly stop-motion short film The Adventures of "The Pepé". The film can be found on YouTube here: http://www.youtube.com/watch?v=N00pBOTCh_o. The blog post can be found here: http://hardwaterstains.blogspot.com/2010/12/pepe.html.

Because of "The Pepé" and its runaway success we decided to do another. This time with no tripod, no clear plot, and significantly shorter...BUT! this (very) short film now features sound! As my grandpa would say "You made a talkie" - he's that old. We spared no expense on the voice talent (myself). The title is Spurned. Take a look:

http://www.youtube.com/watch?v=GZcrFkjE8TI

Bah! Humbug!

Minions, do you think I am a Scrooge? Am I a grumpy person during the holidays? If you ask my wife her response is a resounding "YES!"

I suppose I can't blame her, I do have a number of qualities that stack against me.

1. I am generally a very temperate person, staying pretty even keel regardless of the season. Juxtaposed my wife, I can see her point. She lights up during the holidays. She can't stop thinking of how wonderful our apartment will look with all the new Christmas decorations or what deliciously amazing holiday foods she could make. Don't get me wrong, I love how creative my wife is and I love to see her excited - just don't expect me to be bouncing off the walls.
2. As a general rule, I do not like Christmas music. Every year some one-hit wonder says "You know what? White Christmas is in need of my voice." No, no it is not. Not only is your imitation regurgitated and unoriginal crap but it has forever sullied the original. There are few exceptions to this rule.
3. I really do hate Christmas music. Perhaps I am just restating #2, but does it really need to be played for over a month? Really? Why would I want to dedicate 1/12th of my yearly music listening time to "artists" who I wouldn't have listened to during the other 11 months?

When pressed, my wife confesses that it is my disdain towards the music of the season. In my defense I do enjoy a few Christmas songs. The problem: If I took the time to categorize and determine my ultimate Christmas playlist it wouldn't be much of a playlist - and referring back to #3, I would grow tired of it by the end of the day (let alone a full month).

Postscript: I do appreciate the reason for the season and am thankful for the true gift we commemorate every year. Merry Christmas!

"The Pepé"

Hello, Minions. Earlier this week my wife Karen and I were hard at work on a fun little short film project. It is titled The Adventures of "The Pepé". It is actually stop-motion movie we pieced together for kicks and giggles. I hope you check it out. (more below the video)

http://www.youtube.com/watch?v=N00pBOTCh_o

This project got me thinking about the brave new world of consumer engagement in advertising. Most forms of advertising is one sided (the TV yelling at you to buy their products). More and more companies encouraging their customers to be engaged and to spread their message for them. I believe what my friends tell me far more than a clever commercial (as witty as it may be).

How easily would it have been if Charmin (the maker of the best toilet paper known to man: Charmin Ultra with Aloe) posted a competition for the highest voted video that focuses on one of their products? The winner would win X (perhaps money, camera equipment, free TP, whatever).
At the very least it would have had the following characteristics:
- Cheap: Charmin doesn't have to do spend millions of dollars. And the prize can be relatively modest.
- Spreadable: People are going to be so proud of the work they did that they will post it everywhere to get votes.
- Increases the bottom line: They'll make money. People will need to buy the product to film it - consider it paid sampling.

What I am saying is this: Charmin, you can make your check payable to: Jason Marrott.

Commitment

Today a section from Advanced Riskology stuck out:

What is commitment?

Merriam-Webster defines it as “the state of being obligated or emotionally compelled.”

Commitment, in my mind, is the resolution to succeed. It’s the burning desire that absolutely has to be present in order to do your impossible [objective]. It’s the drive that keeps you moving forward when defeat looks certain. It’s your obligation to risk everything for success because living without it seems pointless.

This applies to a lot in my life, but it especially reminds me of the advice I gave a loved one recently. If you really do believe in something (or love someone, or need something) nothing should deter you from it. If it is a worthy enough to believe (or love, or need) then it is worthy enough to commit to (or stand behind, or submit yourself to, or care about). It is not impossible, only hard.

Sorry for the ambiguous nature of this post.

MEMO: Congress shall make no law...

Below is a list of all the Senators who voted to censor the internet.

• Patrick J. Leahy -- Vermont (Democrat)
• Herb Kohl -- Wisconsin (Democrat)
• Jeff Sessions -- Alabama (Republican)
• Dianne Feinstein -- California (Democrat)
• Orrin G. Hatch -- Utah (Republican)
• Russ Feingold -- Wisconsin (Democrat)
• Chuck Grassley -- Iowa (Republican)
• Arlen Specter -- Pennsylvania (Democrat)
• Jon Kyl -- Arizona (Republican)
• Chuck Schumer -- New York (Democrat)
• Lindsey Graham -- South Carolina (Republican)
• Dick Durbin -- Illinois (Democrat)
• John Cornyn -- Texas (Republican)
• Benjamin L. Cardin -- Maryland (Democrat)
• Tom Coburn -- Oklahoma (Republican)
• Sheldon Whitehouse -- Rhode Island (Democrat)
• Amy Klobuchar -- Minnesota (Minnesota Democratic-Farmer-Labor Party)
• Al Franken -- Minnesota (Minnesota Democratic-Farmer-Labor Party)
• Chris Coons -- Delaware (Democrat)

Doesn't anyone understand the First Amendment?

What is this: China?

Original article: The 19 Senators Who Voted To Censor The Internet

"...the end of the republic"

Benjamin Franklin uttered startling words nearly 200 years or so ago, that undoubtedly has come to fruition: "When the people find they can vote themselves money, that will herald the end of the republic."

Lobbying, special interest groups, campaign contributions, and social entitlement is getting out of hand.

Private prison companies drafted the Arizona immigration law: Prison Economics Help Drive Ariz. Immigration Law. Say what you will about the immigration law, but this type of lobbying has got me worried.

Austerity Plan

The inner need to look at an issue from another angle (and my friend Jeff's comments) has brought me to another post where I critique myself - as there were a few inconsistencies that need to be clarified.

1. When you increase taxes you are then taking money out of peoples pockets and therefore they have less to spend. They are then not able to buy that flat-screen TV (or at least need to delay it) - then that TV salesman is unable to get a new laptop… As I said in my original post: "GDP will go down."

2. When you decrease spending you are then taking money out of government employees pockets, and, following the same argument as above, taking money out of the system. Once again "GDP will go down."

"GDP will go down." The austerity plan of increasing taxes and decreasing spending will both make GDP decrease. The potential problem would then be as follows: now since everyone earns and spends less money the government collects less taxes (from incomes, goods purchased, etc.) despite the higher tax percentage (no longer assuming that GDP is constant). How much less is debatable - they could actually collect less, or more, or the exact same amount depending on the types of changes made.

I left out the specifics. I didn’t specify how much to increase taxes or who, in our variable tax system, to increase it to (Big or small businesses? Rich or poor people?). I also didn't specify which public services to decrease or how much. I suppose I would leave that to the bickering politics.

Are we at the happy medium in tax rates and public spending? To suppose that we are at the most optimal level of taxes is preposterous. These rates are determined by bickering lawyers turned politicians, NOT economists (to quote Jeff: "I think Democrats will eternally believe we are below that happy medium and Republicans will believe that we are above it."). Because of this, my proposed austerity plan would be whittled down to its bare bones. Perhaps those bones would have enough impact to make a significant impact on the national debt (but still unlikely).

NPR did a follow-up (think rebuttal) story. In it a Mark Blyth, of Brown University, argues that increasing taxes is too hard - so the more likely route for the austerity plan is to decrease public spending. By his logic, this will affect the lower income citizens more (as they use a proportionally larger amount of public services). I do agree with his logic. See the article here.