Tax me to help us

This is not my typical post. I came across the following rather interesting news story on the BBC website and thought of sharing it with the readers of this blog. What are your thoughts? 

Rich Germans demand higher taxes

http://news.bbc.co.uk/2/hi/europe/8321967.stm

A group of rich Germans has launched a petition calling for the government to make wealthy people pay higher taxes.

The group say they have more money than they need, and the extra revenue could fund economic and social programmes to aid Germany’s economic recovery.

Germany could raise 100bn euros (£91bn) if the richest people paid a 5% wealth tax for two years, they say.

The petition has 44 signatories so far, and will be presented to newly re-elected Chancellor Angela Merkel.

The group say the financial crisis is leading to an increase in unemployment, poverty and social inequality.

Simply donating money to deal with the problems is not enough, they want a change in the whole approach.

“The path out of the crisis must be paved with massive investment in ecology, education and social justice,” they say in the petition.

Those who had “made a fortune through inheritance, hard work, hard-working, successful entrepreneurship, or investment” should contribute by paying more to alleviate the crisis.

The man behind the petition, Dieter Lehmkuhl, told Berlin’s Tagesspiegel that there were 2.2 million people in Germany with a fortune of more than 500,000 euros.

If they all paid the tax for two years, Germany could raise 100bn euros to fund ecological programmes, education and social projects, said the retired doctor and heir to a brewery.

Signatory Peter Vollmer told AFP news agency he was supporting the proposal because he had inherited “a lot of money I do not need”.

He said the tax would be “a viable and socially acceptable way out of the flagrant budget crisis”.

The group held a demonstration in Berlin on Wednesday to draw attention to their plans, throwing fake banknotes into the air.

Mr Vollmer said it was “really strange that so few people came”.

The real bailout prescription

Banks Only

It seems like I am in a statistical state-of-mind lately.
If you were to go to the IRS website you will find the total number of Individual Income Tax Returns for the year 2008 is: 156,297,000 (Source: http://www.irs.gov/taxstats/ –>Filing Season Statistics –>Filing Season Weekly Reports –> Report for filing year 2008 –> End of Year End Report.)

Let’s take the top 25% of tax payers out and we are left with 117 million individuals.
Next, let’s take the $3.8 Trillion (anticipated government spending across current and pending stimulus and bailouts including Bush bailout) and distribute it evenly to the 117M individuals that filed taxes.

You will arrive at the astounding number of $32,478!

That’s what we all could have gotten (except for the top 25% of earners who shouldn’t need it) instead of the current morass of bailouts and stimulus.

Let’s play this hypothetical scenario out a little further:
Imagine how fast our economy would have recovered if we were given this money, income tax free in a special account, to spend within two years within United States including purchase of airline tickets to fly out of United States (money spent abroad will not count). For any one with credit card loan or mortgage default, there would be additional stipulation that they pay off the loans/mortgage first. I am sure IRS can think of many other stipulations (and that would be fine). At the end of each of the two years we all would have to submit receipts to ensure we complied with the stipulations.

Continue reading

Education and its importance

The fecklessness of some of the Republican representatives to the Congress and Republican Senators is hard to believe — they oppose the money allocated for education in the stimulus bill for the reason that money cannot buy good education.

Wrong!

According to the American Federation of Teacher’s website, the average salary of a public school teacher in 2006-2007 was $51,009 and it was the first time since 2003 that it surpassed the inflation rate. And  A University of Washington study had calculated that the recession would lead to cuts of 574,000 school jobs without a stimulus.

I am sorry, but with the finance industry “worker” wolfing in millions on the average as compensation — I bet you even the secretary at these institutions is paid more than $51,000 — and knowing what we all know about the $18.4B taxpayer paid bonuses in 2008, I cannot fathom what these so-called representatives of people are thinking? I rather that the teacher’s average salary rise up to $100,000 so the best and the brightest start becoming teachers than give these exorbitant Wall Street bonuses. Continue reading

How does one solve the apparently unsolvable ills of Capitalism?

Mr. Kristof, an Op-Ed Columnist at the New York Times, wrote an insightful article titled, “Mistresses of the Universe,” that cites good research which relates preponderance of males on Wall Street and the high-risk decisions taken in turn. The article argues for more diversity in all Financial Institutions, especially increasing Women population.  There is no argument against more diversity on Wall Street — Women, African American, Asians, Hispanics, et al. — it can only be positive, however, I do not believe that will solve Wall Street’s ills.

I have seen corporations with great diversity yet forcing a singular agenda and eerie silence at the top no matter what the mix —  don’t see evil, don’t hear evil and hence don’t talk evil being the very easy to adopt philosophy no matter White, Black, Asian, Hispanic, Man or Woman.

Wall Street is burdened by its very nature — it deals with money. Firstly, it will attract people who want to make money, loads of it, and at any cost (Go to, “Why not socialism for all in bad times?” to read mind-numbing utterances from Mr. Welch, exposing himself as yetanother “money at any cost” guy).  The ones that do join the Financial sector due to academic achievement or lack there of (it is the average mind on the average that makes it to Finance) or “my-parents-told-me-so” phenomenon will soon find the temptation too great.

Continue reading

Obama restricts Executive pay!

The news is just in and I cannot be happier:  New York Times is reporting that the Obama administration plans to impose a cap of $500,000 for executive pay for any firm that will benefit from the next round of bailout money. This restriction is obviously not retroactive but many of the big banks are expected to come to the well once again given the deepening recession.

Yahoo! News reports, “Administration officials have said that the new restrictions would apply only to those struggling large firms that receive “exceptional assistance,” such as the American International Group Inc., Citigroup Inc., and Detroit automakers. They would not apply to healthy banks that receive government infusions of capital.

And Obama’s chief economic adviser, Larry Summers, has proposed that firms that want to pay executives above a certain threshold would have to compensate them with stock that could not be sold or liquidated until they pay back the government funds.”

On the same day, Obama was brave enough to admit that he made a mistake in nominating Tom Daschle for the Cabinet position — I like the courage in contrition displayed by our Commander-In-Chief. 

Hail the new President!

Why not socialism for all in bad times?

When it was reported that $18.4B were paid in bonus by the New York based Investment banks who were recently bailed out by tax payer money, the recriminations were swift: Obama called the act “shameful” and Senator McCaskill, reported Kansas City Star, called Wall Street executives “idiots” and proposed limits on some of their salaries.  For all in politics who were enraged by the mind-numbing greed and psychotically selfish behavior of these “guardians” of our financial system, the shocking part was that there were equal number of highly influential people who were supporting the bonuses!

The two that stand out are former NYC Mayor Rudolph Giuliani and the legendary former GE CEO Jack Welch.

Jack Welch said on Charlie Rose (paraphrasing), “while it might sound horrible but you have to realize that these people did not chose to cure cancer, educate kids. These people chose to make money, Charlie. And if we do not pay them bonuses they will go to other investment banks because they all know each other.”

And equally loopy logic from the egotistical Mayor Giuliani, “If you somehow take that bonus out of the economy, it really will create unemployment,” Giuliani said on CNN. “It means less spending in restaurants, less spending in department stores, so everything has an impact.” 

Mr. Welch and Mr. Giuliani, let’s start with basics: bonus is given based upon performance. The more enriching to the company an individual’s performance is, the more the bonus payout for the person. If you have sunk $1 trillion in wealth, taken anywhere from $200 to $300 billion of real cash in compensation and bonuses in previous years all under, what is obvious now, false premise of having grown money and then turned around and asked $350 billion in tax payer money to save your lousy, wretched enterprise then you should not be allowed to spell the word bonus! You should be sick to your stomach everyday on behalf of wrecking free enterprise and should be asking forgiveness of every person you have fleeced in your career.

Continue reading