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Monday, April 23, 2007
April 16, 2007
Cleaning Up the Alternative Tax
This page normally has little patience for people who gripe about paying taxes. But most of the four million taxpayers who owed the alternative minimum tax this filing season have cause to complain.
The alternative tax is supposed to apply to multimillionaires whose high-end tax shelters would otherwise reduce their tax bills to a pittance. The aim is a good one. But in the last decade, lawmakers have willfully undermined the tax's intent, mainly with overly generous tax breaks for investment income that enable many of the richest Americans to escape the alternative tax.
As a result, only an estimated 3 percent of alternative-tax payers for 2006 are tax-sheltering multimillionaires. Most people who owe the tax make between $200,000 and $500,000; nearly a fourth make $75,000 to $200,000. In those groups, the most common breaks are write-offs for children and for state and local taxes — hardly aggressive tax shelters. Yet, on average, the alternative tax has boosted those filers' 2006 tax bills by an estimated $4,200.
So, there are really two problems with the alternative tax: it fails to catch tax avoidance among the richest taxpayers while ensnaring people it was never intended for. In recent hearings, Congress has focused mainly on the wrongly afflicted taxpayers. But that is the easier part of the problem to solve. Simply making inflation adjustments to the levels at which the tax kicks in — which hasn't been done since 1993 — would shield most taxpayers. Letting the Bush tax cuts expire as scheduled would also help. Because of the way tax provisions interact, those cuts cause many filers' tax bills to drop initially only to shoot back up when the alternative tax is assessed.
Which brings us to the real hot-button issue. The alternative tax should be reformed so that it does what it is supposed to do: make wealthy taxpayers with excessive tax shelters pay up. The wealthier one is, the more of one's income is from capital gains on the sale of investments rather than wages and salaries. Capital gains come with a huge advantage: they're taxed at 15 percent versus a top rate of 35 percent for ordinary income. The lower rate for capital gains is one of the biggest breaks in the code. But under the law, capital gains are not classified as sheltered income subject to the alternative tax.
The result is that the richest taxpayers get a windfall while the burden shifts to others. That huge — and hugely unfair — tax shift will soon get worse....
April 9, 2007
Democrats Seek to Lead the Way in Tax Overhaul
By EDMUND L. ANDREWS
WASHINGTON — House Democratic leaders, in an effort to upstage Republicans on the issue of tax cuts, are preparing legislation that would permanently shield all but the very richest taxpayers from the alternative minimum tax, which is likely to affect tens of millions of families as early as next year if it is left unchanged....
April 17, 2007
Managers Use Hedge Funds as Big I.R.A.'s
By JENNY ANDERSON
Many Americans squirrel away as much as they can into retirement investment accounts like 401(k)s and I.R.A.'s that allow them to compound their earnings tax free. The accounts also reduce what they owe when tax day rolls around. For the average person, however, the government strictly limits the contributions to about $20,000 a year.
And then there are people who work at hedge funds.
A lot of the hedge fund managers earning the astronomical paychecks making headlines these days are able to postpone paying taxes on much of that income for 10 years or more.
The key to the hedge fund tax boon is that many managers of these lightly regulated private pools of capital have the ability to earn the bulk of their compensation offshore and invest it in their funds where it grows tax-free.
"If you could compound your compensation tax-free, why wouldn't you?" asked Stewart Massey, founding partner of Massey & Quick, a consulting firm.
Few people know the power of compounding better than hedge fund managers. Consider the following calculation done by Financial Engines, a financial advisory and portfolio management firm: A hedge fund manager makes $10 million in fees and defers it for five years, earning a return of 10 percent a year. When he pays taxes at the end, he walks away with $10.5 million. Another manager who makes the same $10 million pays his taxes immediately. He still earns 10 percent on what's left, but over the same period he accumulates just $8.9 million.
Elevate the comparison to $130 million, the minimum take-home pay needed to make it on Alpha magazine's list of the 25 highest-paid hedge fund managers: the first manager receives $136.1 million; the second $115.8 million....
April 23, 2007
A Hostage Situation
By PAUL KRUGMAN
So how should Congress respond to Mr. Bush's threats?
Everyone talks about the political risks of confrontation, recalling the backlash when Newt Gingrich shut down the federal government in 1995. But there's a big difference between trying to force a fairly popular president to accept deep cuts in Medicare — which is what the 1995 confrontation was about — and trying to get a deeply unpopular, distrusted president to set some limits on an immensely unpopular war....
Confronting Mr. Bush on Iraq has become a patriotic duty....
Already this morning, public radio is reporting on what is suddenly taken as a fierce deficit for Medicare that has to be acted on though, of course, politics will as always make acting difficult. Not a hint of context that Paul Krugman has been supplying of why Medicare is suddenly a budget problem or if it really is a budget problem and how-so. But then in 1995, Newt Gingrich was trying to force cuts in Medicare and here we are again but with the war in and occupation of Iraq to muddy the politics.
Yes; and there are taxes and taxes, we understand....
March 7, 2007
Powerful Governor Stands His Ground, Again, on Food Tax
By ADAM NOSSITER
JACKSON, Miss. — The shoppers at the no-frills Brookshire's supermarket — plate lunches $4.49, food stamps gladly accepted — have no doubt: swapping the nation's highest state grocery tax for one of its lowest cigarette taxes is an excellent idea, and fie on the governor who opposes it.
"Oh, yeah, no doubt about it, they need to put it off the food," said Reggie Funchess, a worker at the BASF plant. "It's something that will help the people. Politicians, they must have a treasure chest somewhere."
Up at the stately domed Mississippi Capitol, Gov. Haley Barbour, a former tobacco lobbyist, has other ideas. Studies, polls, protests at the Capitol, legislative sentiment and America's highest cardiovascular disease rate notwithstanding, the governor of the poorest state is not budging, for the second year in a row: no cut in the 7 percent grocery tax and no increase in the 18-cents-a-pack third-lowest-in-the-nation, cigarette tax.
Mr. Barbour, the former Republican National Committee chairman and big-time Washington lobbyist whose clients included the five major tobacco companies, is a busy man these days, and a powerful governor.
Basking at home in the reflection of his national image as the post-Hurricane Katrina success story among governors, having last week scored a giant automobile plant for his state and considered a shoo-in for re-election this year, Mr. Barbour faces few opponents, legislators say. He pushed through the Legislature hundreds of millions in subsidies for the plant, for Toyota S.U.V.s, three days after announcing it.
Mr. Barbour, the lawmakers say, is getting used to getting his way and is likely to do so on the doomed groceries-for-cigarettes tax swap.
"Can we talk about it some other time?" the governor asked as he bustled down a marble corridor to an appointment and as an aide cut in that "the governor wasn't going to be able to talk about this today."
And so it is that a bill to increase the cigarette tax to $1 a pack and cut the grocery tax in half overwhelmingly passed in the Mississippi House last month, remains bottled up in the State Senate Finance Committee, which is friendly to Mr. Barbour. Other poor states — Arkansas, South Carolina and Utah — have moved to cut their sales taxes on groceries. Not Mississippi....
Yes; and there are consequences to taxes and taxes, say, in how we may eat when we are poorer, say....
April 22, 2007
You Are What You Grow
By MICHAEL POLLAN
A few years ago, an obesity researcher at the University of Washington named Adam Drewnowski ventured into the supermarket to solve a mystery. He wanted to figure out why it is that the most reliable predictor of obesity in America today is a person's wealth. For most of history, after all, the poor have typically suffered from a shortage of calories, not a surfeit. So how is it that today the people with the least amount of money to spend on food are the ones most likely to be overweight?
Drewnowski gave himself a hypothetical dollar to spend, using it to purchase as many calories as he possibly could. He discovered that he could buy the most calories per dollar in the middle aisles of the supermarket, among the towering canyons of processed food and soft drink. (In the typical American supermarket, the fresh foods — dairy, meat, fish and produce — line the perimeter walls, while the imperishable packaged goods dominate the center.) Drewnowski found that a dollar could buy 1,200 calories of cookies or potato chips but only 250 calories of carrots. Looking for something to wash down those chips, he discovered that his dollar bought 875 calories of soda but only 170 calories of orange juice.
As a rule, processed foods are more "energy dense" than fresh foods: they contain less water and fiber but more added fat and sugar, which makes them both less filling and more fattening. These particular calories also happen to be the least healthful ones in the marketplace, which is why we call the foods that contain them "junk." Drewnowski concluded that the rules of the food game in America are organized in such a way that if you are eating on a budget, the most rational economic strategy is to eat badly — and get fat....
Yes; and there are taxes and taxes and consequences of consequences....
April 22, 2007
In Turnabout, Infant Deaths Climb in South
By ERIK ECKHOLM
HOLLANDALE, Miss. — For decades, Mississippi and neighboring states with large black populations and expanses of enduring poverty made steady progress in reducing infant death. But, in what health experts call an ominous portent, progress has stalled and in recent years the death rate has risen in Mississippi and several other states.
The setbacks have raised questions about the impact of cuts in welfare and Medicaid and of poor access to doctors, and, many doctors say, the growing epidemics of obesity, diabetes and hypertension among potential mothers, some of whom tip the scales here at 300 to 400 pounds.
"I don't think the rise is a fluke, and it's a disturbing trend, not only in Mississippi but throughout the Southeast," said Dr. Christina Glick, a neonatologist in Jackson, Miss., and past president of the National Perinatal Association.
To the shock of Mississippi officials, who in 2004 had seen the infant mortality rate — defined as deaths by the age of 1 year per thousand live births — fall to 9.7, the rate jumped sharply in 2005, to 11.4. The national average in 2003, the last year for which data have been compiled, was 6.9. Smaller rises also occurred in 2005 in Alabama, North Carolina and Tennessee. Louisiana and South Carolina saw rises in 2004 and have not yet reported on 2005.
Whether the rises continue or not, federal officials say, rates have stagnated in the Deep South at levels well above the national average.
Most striking, here and throughout the country, is the large racial disparity. In Mississippi, infant deaths among blacks rose to 17 per thousand births in 2005 from 14.2 per thousand in 2004, while those among whites rose to 6.6 per thousand from 6.1. (The national average in 2003 was 5.7 for whites and 14.0 for blacks.)
The overall jump in Mississippi meant that 65 more babies died in 2005 than in the previous year, for a total of 481.
The toll is visible in Hollandale, a tired town in the impoverished Delta region of northwest Mississippi....
Dear Brad DeLong helps us understand what consequences are:
April 23, 2007
And, of course, Erik Eckholm doesn't have control over the data or the statistics.. He doesn't seem to know that there are 2.8 million people in Mississippi. He doesn't seem to know that about 15% of the non-elderly population--make that 350,000--were on Medicaid. Cut Medicaid enrollments by 50,000, by 1/7. 42,000 babies born in Mississippi each year. For the share who die to jump from 0.97% to 1.14%... That's a less than 1/3000 chance. That's worth saying.
There was complaint and sorrow when Medicaid was slashed in Mississippi, but complaint simply passed in Mississippi. But, the consequences come with a stunning inevitability and always there is sadness.
Someone asked Brad whether such a degrading in life quality has happened before in a modern developed country, and I do not know but I do not recall any such degradation.
March 13, 2006
By BOB HERBERT
When it comes to providing desperately needed services for children who have been beaten, starved, sexually abused or otherwise mistreated, the state of Mississippi offers what is probably the worst-case scenario.
Mississippi gets more than 25,000 allegations of abuse and neglect each year, and it can't handle them.
Way back in 1992 the Child Welfare League of America issued a blistering report about the backward state of affairs in Mississippi. The league warned that vulnerable children would suffer irreparable harm if steps weren't taken to reduce caseloads, increase staffing and locate additional foster care and adoptive homes.
In 2001, Sue Perry, the state's director of family and children's services, warned top state officials that "the crisis needs to be addressed by whomever has the power to rectify the situation — before a tragedy occurs."
She quit the following year, saying in a letter to then-Governor Ronnie Musgrove that the system was starved for resources and had deteriorated so badly that protecting the children had become "an impossible task." At the time she wrote the letter, Ms. Perry was being directed to abolish 88 additional full-time positions.
She told the governor that Mississippi's children had been placed at such great risk that some would die. "I am sorry to inform you," she said, "that this has already happened in DeSoto County. A 19-month-old child was brutally beaten by his stepfather in a case known to this agency."
Warnings don't get much louder, but the honchos in Mississippi were in no mood to listen. These were poor kids, after all. What claim did they have on the state's resources?
Two years after Ms. Perry resigned, Gov. Haley Barbour acknowledged that the state's Department of Human Services had "collapsed for lack of management and a lack of leadership." Collapsed. That was the governor's word. Was he serious? Was he planning to do something about it? You must be joking. He made the comment as he was announcing additional budget cuts for the agency....
February 7, 2006
Mississippi's 'Heart Man' Examines Links Between Race and Disease
By CLAUDIA DREIFUS
JACKSON, Miss. — When Dr. Herman A. Taylor Jr. goes for breakfast in this city of 180,000, he orders carefully: granola, fresh fruit. "People look at what I put on my tray," he said on a recent morning at the Broad Street Bakery, a local cafe. "They wonder if I practice what I preach."
Around Jackson, where a common breakfast can be eggs fried in lard, Dr. Taylor, a University of Mississippi cardiologist, is known as "heart man." He is the director of the Jackson Heart Study, the largest epidemiological investigation ever undertaken to discover the links between cardiovascular disease and race.
From now until 2014, Dr. Taylor and his team will be following 5,302 black residents of three Mississippi counties — Hinds, Rankin and Madison — observing their lives and how their heart health is related to their environment.
For the study's participants, there will be periodic medical examinations and referrals for care when problems are detected. The ultimate aim of the $54 million investigation, Dr. Taylor said, "is to gain the information we need to stop an epidemic of cardiovascular diseases within the African-American community."
Q. The Framingham Heart Study, which tracked cardiovascular disease in three generations of New Englanders, is thought to be the most productive investigation in public health history. With Framingham's research continuing, why do something similar here in Jackson?
A. Framingham can't tell us everything. You can probably count the number of blacks in the original study on one hand. Well, maybe two. It's no one's fault. When that study was first begun in 1948, the town of Framingham was mostly populated by second-generation immigrants and Yankees. That's just what it was.
But if there are unique risks and environmental agents triggering cardiovascular disease in African-Americans, Framingham's data can't be that helpful.
Q. Is there a special problem with heart disease in African-Americans?
A. For the nation as a whole, death from cardiovascular disease has declined since 1963. Yet, if you look at African-Americans in regions like Mississippi, mortality from heart disease is flat, or trending upward. This is particularly true for women. A middle-aged black woman in Mississippi will have four times the risk of death from cardiovascular disease than a white woman elsewhere in the country.
We have reasonable guesses why this is so. We think obesity is hugely important. We also think that smoking, inactivity, high blood pressure and access to health care figure into the problem, too. But we have to pin it down. We need more information on things like social support, anger, hostility, optimism. There may also be some unique buffers against stress within our community — like religion and extended family.
When you do a study like this, you want to figure out what's killing people. You enroll a large number and follow them. Over the years, some people will get sick; others won't. So the job is to try to determine the difference between those who got sick and those who didn't.
That's how Framingham worked.
Q. Why do a health study in Jackson?
A. What did the bank robber Willie Sutton answer when asked why he robbed banks? "Because that's where the money is!" Mississippi is where the heart disease is. We have the highest rates of it in the country.
Q. You've just finished collecting your base line data. Have you found anything interesting? A. Very high levels of obesity, higher than the national average. African-American women lead the way in obesity nationally, and our numbers here are significantly higher than that. The rates of diabetes and hypertension are quite high.
Interestingly, alcohol consumption among the women is much lower than average....
Notice, then, how we can begin to unravel the threads of adverse health characteristics in Mississippi from several perspectives.Post a Comment