Tax dodging by the super rich

http://www.thetakeaway.org/story/two-tiered-taxes-one-system-rich-one-everyone-else/

This is a "no duh" story to end 2015, but the explicit details are interesting (more so than the typical corporate inversions we've recently heard about). During the Clinton years, the 400 highest income American households paid an effective rate of 27%. Now it's 17%. And because payroll taxes hit the less wealthy harder, that 17% rate means that the highest-income Americans are paying about the same tax rate as a family with $100K household income (80th percentile in the US). How can that be democratic and just?

Like their gated communities and hedge funds, there is an exclusive-access world of private tax dodging infrastructure that the super-rich pay millions in fees to access (including political contributions), but it saves them tens or hundreds of millions in taxes per household. These families span the political landscape, which is especially dismaying for the supposed "progressive rich." If they adopt the same practices as the Kochs, then they are just adding to the problem instead of fighting it.

Their biggest source of tax savings is of course that schlubs like us earn wages as income, while they earn the bulk of their money through complex investment vehicles, shell corporations, and trusts - and those barely get taxed. They need pricey lawyers and bankers to set up, but it pays off. The NYT article said that the rich treat it like a fun game - like an easter egg hunt to find all the possible loopholes to screw Uncle Sam and the 99%. But I'm sure they don't think of the impact that way - they "deserve" the rewards because they're just more clever/influential than the rest of us. Some of the arrangements are so complex that the underfunded and maligned IRS can't even keep track, and they are supposedly the custodians of the rulebook. But they don't craft the tax policy, they just do their best to interpret and enforce it.

The NYT article failed to state what the total tax losses are to the US due to these practices by the super rich. But I wouldn't be surprised if it numbers in the tens of billions. Maybe that is not a huge # vs. the total US income tax revenue (over a trillion per year), but it could buy a lot of road repairs and school programs. And besides the actual revenue, cracking down should send the message that the rich do not get to play by a different set of rules. They already enjoy vast socioeconomic advantages that enable them to grow their wealth, and maybe some of those advantages should be reduced too, but at least they should not weasel their way out of their patriotic and civic obligations.

Otherwise IMO they are more damaging to the country than all the deranged mass shooters and ISIS-inspired amateur terrorists, because the cheating rich are undermining US principles of equality, justice, and community, which hurts us all. Remember the old saying (paraphrase), an accepted injustice anywhere diminishes justice everywhere.

Army misdiagnosed and kicked out thousands of mentally ill vets

http://hereandnow.wbur.org/2015/12/09/discharged-soldiers-mental-health

Previous investigations revealed how the VA was underprepared to meet the medical needs of the War on Terror vets, and the backlog for mental health care was horrendous.

Not sure if it's related, but a new study found that the Army systematically under-diagnosed soldiers with "adjustment disorder" rather than PTSD/depression (a vague classification from the Vietnam era that suggests a soldier is *temporarily* experiencing poor emotional/behavioral symptoms after a deployment). The former implied that the soldier was unable to perform his/her duties stateside and should be dishonorably discharged (i.e. it's the soldier's fault). However, if they were diagnosed with PTSD/depression, that is considered a debilitation due to their military service (i.e. it's the war's fault), which is an honorable discharge that guarantees lifetime free medical care for themselves, spouse, and kids (equivalent to losing a leg or an eye).

That Vietnam vets site above suggested that the military "saved" $12B on medical/disability payments for Vietnam vets who were misdiagnosed.

In many cases, suffering vets got both civilian and Army psych evals. The civilian diagnosis was depression, but the Army diagnosis disagreed (even after reviewing the civilian diagnosis). It's possible that the civilian doctors were sometime wrong, but not to the tune of two thousand independent cases.

Since 2009, the Army has also kicked out 22,000 vets for various misconduct. But when a soldier has PTSD/depression, that increases the likelihood that they will fall into a misconduct situation (dereliction of duties, fighting, substance abuse, etc.). So we're not sure how many of the 22K were misdiagnosed, but I would bet it's at least a third. There is now a Congressional inquiry about this issue due to NPR's reporting.

You can't get a mortgage unless you can prove that you can afford it. We shouldn't go to war unless we can prove that we need to, we are likely to win, and our gov't can and will handle the costs.

Zuckerbergs plan to give 99% of their FB shares to charity

https://finance.yahoo.com/news/mark-zuckerberg-away-99-percent-211800451.html

We will give 99% of our Facebook shares -- currently about $45 billion -- during our lives to advance this mission. We know this is a small contribution compared to all the resources and talents of those already working on these issues. But we want to do what we can, working alongside many others.

Small contribution - is that like humble bragging? :) All US corporations give about $15-20B/year, so Zuck can spot corporate America for like 3 years.

https://www.charitynavigator.org/index.cfm?bay=content.view&cpid=42#.Vl42q8omz9k

Maybe this is a brilliant strategic move too, because if FB prospers, then that means humanity ostensibly prospers too. So will that make people and gov'ts more friendly to FB's interests? :)

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I'm imagining a time 20 or so years from now when we find that the extremely well funded pet projects of these super rich are found to be counterproductive in those communities.  Similar to food aid to Africa destroying local food economies.  So hopefully he, and others, donate to well established orgs instead of koch style spending.

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Yeah I guess the impacts are yet to be seen. But I think Zuck will be more like Gates than Koch (btw the Gates Fdn. is generally hailed as the best run philanthropic NGO in the world). The mission is sufficiently vague/broad that they could invest in almost anything though. Maybe Zuck is already at the point in his career where he is less concerned with his business empire and more focused on "moonshot" projects and impacting humanity (like Gates circa 2000 and Page now). I don't think selling more FB ads is what fires him up every morning (or if it ever did).

On a side note, I do think that the IRS should abolish all tax incentives for charitable giving (or maybe have a very low cap on deductions like $1,000/pers and $100K per company). That might impact the total amount of giving, but at least it sends the message that rich people can't get "paid" to support their Koch-esque pet project causes that are really political spending. Also, I don't think rich donors should be rewarded for giving millions to some orchestra (whose customer base is almost exclusively rich people) or a university so their name can be on a bldg -> causes like that which have questionable overall social benefits.

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I just heard something on PRI that hasn't made it to the web yet re: Zuck's donation: http://www.pri.org/search/node?search_api_views_fulltext=zuckerberg&sort_by=field_date_published&sort_order=DESC.

As I said in the OP, it's could be a double-edged sword when stock shares are donated to NGOs, or when those orgs invest their endowments in the markets. Of course these groups would prefer to make (tax free) cap gains so they can advance their mission more, but there can be a tension between their mission and how their cap gains are generated.

The Gates Fdn. is very interested in reducing climate change, yet they own over a billion USD worth of stock in the fossil fuel sector (collecting dividends directly from the sale of a polluting product). So do you want to make money, or do you want to not support polluters? I guess that's why some universities divested from gun/fossil fuel/etc. industries in favor of "impact investing" like Gore's fund (see our prior post below, "Al Gore profits from going green"). So there could be a time when the beneficiaries of Zuck's shares may see their mission at odds with FB's business interests. At that point, what do they do? Accept the shares or say no thank you? It might not be a big deal for Zuck, because I'm sure there is a line around the block of orgs who are OK to take his shares (and what comes with it), even if it could send the wrong message or even hurt their stakeholders.

But tech companies always, without fail, do good for the world, right? :)

http://www.newyorker.com/news/john-cassidy/mark-zuckerberg-and-the-rise-of-philanthrocapitalism?mbid=social_facebook

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http://www.theatlantic.com/magazine/archive/2015/11/the-planet-saving-capitalism-subverting-surprisingly-lucrative-investment-secrets-of-al-gore/407857/

His fund called Generation (a tiny $12B under mgmt. but growing) is gaining attention because it only invests in ostensibly green, sustainable, ethical businesses. These businesses also happen to be outperforming their dirtier (in many senses of the word) rivals. But maybe it has less to do with ethics/cleanliness and more to do with "proper capitalism" - firms that preserve and grow value with a long-term horizon in mind (i.e. businesses that Buffet types like), not the quick buck companies at the mercy of the quarterly earnings report (to show short-run gains, they often have to sacrifice long-term value and social/environmental good).

We know that the average fund manager (even hedge funds) barely outperform passive index funds (way to earn their salaries), and most definitely don't sustain abnormal performance over time (regression to the mean). But so far Generation's global equity fund is earning 12% returns vs. 7% for index funds and traditional funds (after mgmt. fees). And Generation is one of the least volatile funds of its class, which investors also love to see. Unfortunately they won't take investors with less than $3MM to contribute. :P

"Prayer shaming" after the CA mass shooting

http://www.npr.org/2015/12/03/458361194/god-isnt-fixing-this-politicians-reactions-to-san-bernardino-shooting

The tweet from this CT Senator sums up the issue: https://mobile.twitter.com/ChrisMurphyCT/status/672176555859296256?ref_src=twsrc^tfw

Forgive me for ranting and using foul language here, but for "religious pro-gun conservatives" who find prayer-shaming "offensive and dismissive of their faith," I say... go F yourselves.

We don't have to respect your so-called faith if you don't even show respect for the tenets of the faith. I'm no expert in Christianity, but WEAPONS ARE UN-CHRISTIAN. I know that the history of organized Christianity is barbaric and violent (some periods make ISIS look like pacifists), but the beliefs are pretty clear:

• Do not live by the sword; violence of any kind is unequivocly wrong
• Defeat your enemy with love, not with violence
• Protect the vulnerable, even if it kills you
• Blessed are the peacemakers

So for the conservative leaders who claim to be Christians, if you don't espouse the most obvious, fundamental teachings of Christ, then you're not really a Christian and your prayers don't mean squat. There is absolutely zero way to justify gun rights and gun ownership through the lens of Christianity (on paper).

These leaders are religious, but they seem to worship guns, money, and themselves more than they love Jesus' teachings.

http://www.post-gazette.com/opinion/Op-Ed/2013/03/03/What-kind-of-gun-would-Jesus-carry/stories/201303030208