Tag Archives: taxes

Voodoo You

“It just isn’t going to work, and it’s very interesting that the man who invented this type of what I call a voodoo economic policy is Art Laffer, a California economist.” – George H.W. Bush, Carnegie Mellon University, April 10, 1980

 

I’m frightened for the United States, and it’s not just because of my disdain for our faux president, Donald Trump.  I’m genuinely concerned about what could happen over the next few years.

In the above quote, George H.W. Bush was referring to the plans of fellow Republican and 1980 presidential candidate Ronald Reagan for revitalizing a stagnant U.S. economy.  Then, when Reagan won in most of the primaries, his camp offered Bush the vice-presidential position, and the former Texas congressman shut up about economics.  In 1980, the nation was in a bad financial situation.  The costs of the Vietnam War, coupled with oil embargoes from OPEC nations, had finally taken their toll.  Unemployment stood at nearly 10%; the prime interest rate was 21%; inflation was 14%; home mortgage rates were 17%; and the top marginal tax rate was 70%.  In the second quarter of 1980, the U.S. gross domestic product (GDP) declined by 8%.  By the end of the year, the overall GDP boasted about $3 trillion (in today’s dollars).

With the help of some Democrats in both houses of the U.S. Congress, Reagan was able to generate an agreement that slashed taxes down to 50% on wages, to 48% on corporate income, and to 20% on capital gains.  These measures initially jumpstarted the economy.  Average citizens had more expendable income, which they poured back into the economy by purchasing many so-called big ticket items, like vehicle and electronics.  By 1990, the size of the U.S. economy had grown from $3 trillion to $6 trillion, with roughly 4 million new businesses and 20 million new jobs created.  Although the national debt increased from $1 trillion to $4 trillion during the same period, overall revenues doubled.

Reagan’s economic policies were in line with conservative views on taxation: if we give the “investing class” (meaning, the most affluent) generous tax breaks, they will respond by expanding their businesses or starting new ones, which in turn, will create more products and / or services and more jobs.  Along with reduced business regulations (“job killers” in conservative lingo), average citizens will have more income, which of course, they will pour back into the economy.  Such growth then will expand the tax base; the additional revenue will replace any money lost to the initial tax cuts.

Ask any frustrated project manager and they will tell you that everything always looks great on paper.  While Reagan disciples keep championing his financial moves, the reality is that “Reaganomics” didn’t work out as planned.  One thing people forget is a little thing called the Garn-St. Germain Depository Institutions Act of 1982, which rolled back financial regulations that had been established by the administration of Franklin D. Roosevelt to prevent further damage caused by the 1929 stock market crash and the ensuing Great Depression.  It’s interesting that Bush’s voodoo comment was made at Carnegie Mellon University.  Founded by Andrew Carnegie in 1900 as Carnegie Technical School, it merged with the Mellon Institute of Industrial Research in 1967 to become Carnegie Mellon.  The Mellon Institute had been established in 1913 by brothers Andrew and Richard B. Mellon who, like Carnegie, were self-made businessmen and titans of early 20th century America.  Andrew Mellon served as Secretary of the Treasury from 1921 – 1932, one of the longest tenures for this position.  He created the “trickle-down” economic theory by declaring, “Give tax breaks to large corporations, so that money can trickle down to the general public, in the form of extra jobs.”

But Andrew Mellon is also known for a notoriously rotten hands-off policy with the Great Depression.  The banks that failed had put themselves in such a precarious financial position, he believed, and thus, they were responsible for extricating themselves from it.  It didn’t seem to matter that these bank failures took people’s money with them; therefore, amplifying the effects of the 1929 crash.

Still, President Reagan – like any good fiscal conservative – held onto these beliefs and eagerly signed the Garn-St. Germain bill.  That reduced the number of regulations on financial institutions and allowed them to expand and invest more of their customers’ deposits in various ventures, particularly home mortgages.  Again, that looks-great-on-paper ideology swung back around to bite everyone when the Savings & Loans Crisis erupted.  Between 1986 and 1995, 1,043 out of the 3,234 savings and loan institutions in the U.S. failed; costing $160 billion overall, with taxpayers footing $132 billion of it.  It was the worst series of bank collapses since the Great Depression.  That led to the 1990-91 Recession, the longest and most wide-spread economic downturn since the late 1940s.  I started working for a large bank in Dallas in April of 1990 and saw the S&L crisis unfold in real time.

Nonetheless, trickle-down economics saw a rebirth with George W. Bush, as his administration further deregulated the banking industry and also deregulated housing.  Combined with the costs of wars in Afghanistan and Iraq, the U.S. economy almost completely collapsed at the end of 2008.  The 2007-08 Recession was the worst economic downturn since the Great Depression.  Unemployment reached double digits for the first time since the start of the Reagan era, as millions of citizens lost their homes and their savings.  Had it not been for such programs as the Federal Deposit Insurance Corporation (the FDIC, established by Roosevelt), we surely would have plunged into another depression.

Now, with Donald Trump in office, I fear we’re headed for the same morass.  On December 22, 2017, Trump signed the Tax Cuts and Jobs Act; the largest overhaul of the U.S. tax code in 30 years.  Financial prognosticators have already forecast the act will raise the federal deficit by hundreds of billions of U.S. dollars over the next 10 years.  The law cuts individual taxes temporarily, but cuts corporate tax rates permanently.  As suspected, the most affluent citizens will benefit greatly, as they experience a significant reduction in their taxes.  The rest of us lowly peons may see a tax increase after those temporary provisions expire in 2025.

You know that classic definition of insanity?  Doing the same thing over and over, while expecting different results.  It’s more like, well, if you keep doing stupid shit, stupid shit will keep happening!

Ignore Russia-gate for a moment and the fact Melania’s side of the First Bed is colder than a Chicago winter.  This past week Trump visited the World Economic Forum (WEF) annual meeting in Davos, Switzerland.  This is where the most elite members of the business world meet (conspire) with leaders of developed nations to create economic policies and decide what’s best for us peons.  Kind of like evangelical Christians often meet to decide what people should see and read.  They’ve set themselves up as the righteous few; the ones who supposedly understand exactly what works and what doesn’t and are divinely compelled to bestow such knowledge upon the rest of us.

Trump ran his presidential campaign on the wave of anti-Washington sentiment; appealing to average citizens about reviving a once-lost “Great America” with a variety of clever ruses: ban Muslims, build a wall along the Mexican border, etc.  So many people, of course, bought into it.  Like Ronald Reagan, Trump was able to tap into that sensitive nerve of everyday angst; spitting out a slew of quaint buzz words to appeal to average folks.  He had said he would never take part in a WEF convention.  Yet, there he was; leading a parade of those self-righteous few into another kind of revitalization: the Gilded Age.

I doubt if most Trump voters even know what Davos means and how it could impact their lives.  Understand, though, that Switzerland is a place where Hollywood celebrities often went for a retreat or a little vacation – code words for cosmetic surgery; long before Phyllis Diller made it openly acceptable.  That’s essentially what Donald Trump did this past week.  He flew to Davos to tell the world, “America first is not America alone.”

I’m frightened for the United States.

 

Image: Golden Spike National Historic Site, Utah.

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Why My Dog Is a Tax Deductible Expense

“Come a little closer.  I dare you.”

“Come a little closer. I dare you.”

I decided at the start of this year to use the costs associated with the care of Wolfgang as a tax deduction.  A little background is necessary.  I adopted Wolfgang from a dilapidated former roommate thirteen years ago.  Tom* had gotten him in August 2002 to replace a much-loved dog of the same breed he had to put to sleep.  By the end of that year, however, Tom realized he could no longer care for the new puppy, and I realized I no longer could stop plotting to get rid of Tom by making it look like a game of pool and tequila shots gone wrong.  He’d have to give him up.  I couldn’t bear the thought of it.  I’d already grown too attached to the little furball and feared he’d end up in a home with someone more irresponsible.  Tom left in January, and the puppy stayed.  I renamed him Wolfgang.

He’s supposedly a miniature schnauzer, but I realized almost immediately that he’s an undiscovered species of canid: a miniature wolf.  Neither the Smithsonian nor the National Geographic Society has responded to my requests for a detailed analysis.  At first glance, he looks like any other small dog – cute and adorable.  But that’s part of the inborn ruse.  A closer examination, however, reveals the monster lurking behind the pools of dark chocolate known as his eyes and the fluffy silver and white hairs coating his face.  A serial rabbit killer, Wolfgang has terrorized more squirrels than the German shepherd I had decades ago.  A deep, loud voice resides within his little throat; another coy, inborn trick to make the unsuspecting believe they’re standing just feet from a coyote.  He is 22 pounds of raw, canine angst.

But he has become my savior in so many ways.  As I struggled with my freelance and creative writing careers, I realized the value Wolfgang adds to my professional life.  He is my therapist, focus group and lifestyle consultant.  He is the only one who truly understands why I say and do what I say and do, and therefore, is the only one who reserves the right to criticize me for it all.  He truly comprehends the reasoning behind my deliriously twisted stories.  He sees the genius of my mind; whereas others would see a psychiatric trauma case, a recovering Catholic or a porn star reject.  And, since we’re all bearing our souls here, I fit each of the above descriptions in the worst way.

Wolfgang at 3 months.

Wolfgang at 3 months.

Despite my occasional rapid-fire mood swings, bouts of euphoria mixed in with valleys of despair, Wolfgang has proven to be a constant source of inspiration and reality.  Most dogs are like that anyway.  And, as with most dogs, Wolfgang has his own unique personality.  He doesn’t have an attitude – a nasty trait exhibited by those bipedal cretins known as humans.  Just touching him puts me in a better mood, even if I’m already feeling good.  But it’s his visual responses to my stories that tell me if what I’ve written makes general sense.  In one tale, for example, I wondered if a rather mundane character should have a greater role.  Wolfgang’s empathetic gaze told me yes.  So I expanded the character, and the story benefited.  In another, I thought that a rather cantankerous individual was nevertheless crucial to the moral arc I was trying to convey.  Wolfgang’s snarl told me the bitch had to die.  Again, the story turned out better, after the character accidentally stumbled onto a paper shredder.

Aside from keeping his shots up to date, I had Wolfgang neutered years ago, which prolongs a domesticated animal’s life.  (Many people should have the same thing done, but not because their lives are worth prolonging.)  I bathe him every Sunday night and clean his teeth regularly by spreading a dab of canine toothpaste on a small hand towel.  (Actually trying to brush them turns into a physical battle, with my hands on the losing end.)  When his fur gets long, I brush it the day after his bath.  In this case, “brush” is a subjective term, because he often spirals into an alligator-death-roll maneuver.

I’ve had his health care covered through Veterinary Pet Insurance (VPI), which is now NationWide.  Because he’s almost 14, the premiums have increased.  But again, he’s worth the cost.  The money I’ve spent on that insurance, along with other veterinary bills and food, could have just as easily bought me a high-powered computer, an I-Phone, the complete Photoshop Suite to create art for my stories, and / or a week at a leather bondage festival.  I suppose I could have churned out some really good stories with all of that.  (Yes, even a bondage festival can be enlightening.  I have the handcuffs and thong underwear to prove it.)  But, without Wolfgang’s presence, I just can’t see any good stories popping out of my head.  What good are all sorts of luxuries if you’re not mentally fit?  I mean, look at the Kardashian girls!  Well… they’re mentally ill; they’re just dumbasses.  Regardless, medical expenses are often genuinely tax-deductible.

My followers surely know by now that I’m a devout animal lover.  I’d rather see a thousand drug addicts or sexually-irresponsible people die of AIDS than see one animal suffer due to human neglect.  A close friend shares my sentiments; he likes cats.  Cats are pretty, but I’m allergic to them.  Besides, when have you ever heard of a rescue cat?

Still, the more I get to know people, the more I love my dog.  I seriously don’t know how the Internal Revenue Service (a.k.a. the “Washington mob”) will respond to this deduction on my 2015 tax return.  And I seriously don’t care.  They can laugh all they want, which I’m sure they’ll do.  I’ve had worse happen to me, such as pretending someone who cuts me off in traffic is just having a bad day and they’re not really an asshole.

For now, though, I have another story to run by Wolfgang.  This one’s kind of mushy, so I have to conjure up a more creative demise than a demonically-possessed paper-shredder.

For real!

For real!

*Name changed.

 

ASPCA.

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Why the hell not?!

Gary Varvel 041513

I’ve been paying for those lazy welfare fuckers for over 30 years!  I’m not talking about unemployment or social security!  People pay into that.  But, I can’t stand all these people who sit around on their butts – fucking, getting drunk, playing dominoes and trying to figure out ways to take things from the rest of us.  That’s why people are crossing the border illegally from México.  That goes for corporate welfare, too!  We hard-working folks need all the help we can get.

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Coulter Capitulates

mccarthy-grave

“OK fine, let’s do that, but in the end, at some point, if the Bush tax cuts are repealed and everyone’s taxes go up, I promise you Republicans will get blamed for it.  “It doesn’t mean you cave on everything, but there are some things Republicans do that feed into what the media is telling America about Republicans.”

– Ann Coulter, admitting to Sean Hannity on FOX News that taxes on the wealthy should be raised.

At last!  There’s a victory on the reasonable front!  Now, if we could get more conservatives to admit George W. Bush’s tax policies are what screwed up the economy in the first place, we’d be on the road to recovery.  Getting over denial is always the toughest part.

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Quote of the Day

“[Romney] has to release his tax returns to clear this up.  Release the tax returns from 1999, 2000, 2001, 2002.  There’s a reason why he doesn’t want to release them.  Because he knows he’ll be tied to Bain and those investments offshore, and the offshoring of jobs will be tied around his neck.”

Jennifer Granholm, former governor of Michigan, in “The War Room.”

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Tax Rates, 1960-2010

This puts the taxation mess into perspective.  The wealthiest 10% still won’t be scrambling to update their resumes should tax rates be evened out, like they were in the 1990’s.  In other words, Ann Romney really won’t have to go out and find a job for the first time in her adult life.  Besides, she’ll have a stroke when she realizes, at her age, it’s tough out there.  Source.

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Quote of the Day

“I couldn’t get a disease named after me, so I settled for a tax.”

– Billionaire investor and businessman Warren Buffett, on the so-called “Buffett Rule,” a proposal that would make Americans with annual incomes above $1 million to pay a 30% tax rate.

He doesn’t have to worry about not having a disease named after him.  There are plenty of people in both houses of Congress – mostly Republicans – who could take his place on that level.

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