New math

We seem to have become a "math challenged" society.  I saw it many times during my 40+ years as a custom homebuilder.  A client would come to me and say they had a hard budget of $    X     .  After learning what they wanted in terms of their amenities, I would advise them they should expect approx    Y    square feet in order to stay within budget.

Then we would all sit down with the architect and they would tell him to cap the footage at    Y    feet, and that they were willing to accept smaller secondary bedrooms, say 100 square feet each...."so make them 12 feet x 12 feet."

That's pretty much how our government has worked for decades.  A succession of congresses and presidents have wanted more than they could pay for.  That's how we got our $19,000,000,000,000 deficit.  We got away with it because no matter how badly we f__ked things up here in America, we were still less f__ked up than the rest of the world.  Smart money "over there" would invest their money here (read:  finance our deficit) because we were still considered a safe, stable country.  It was  all relative.

Tomorrow Prez Trump is going to give Congress his new budget outline.  He's said he was going to dramatically boost defense spending and infrastructure improvement, while not touching Social Security or Medicare.  Oh, and he wants a BIG tax cut, too.  I'm sure the Tea Party is sweating bullets right now!  Their whole reason for being is to cut spending and the deficit, and here a fellow Republican is proposing an increase in both.

"Not to worry" they'll say.  "We're going to increase income by growing the economy by 4% (thereby increasing tax revenues) and by cutting 'waste, fraud, and inefficiency'".

Have you ever heard a competent financial adviser say, "Sure, go ahead and buy that big new vacation house.  You're bound to get a substantial raise any day now.  I hope." And hasn't every president since Calvin Coolidge promised to save money by cutting waste, fraud, and inefficiency?  *still waiting*

The truth is, there are too many powerful constituencies (read: voters, special interests, and campaign contributors) who would scream bloody murder if Congress cut anything that affected them, and if there's anything every congressman loves it's happy voters and campaign contributors, so....

What will eventually happen is there will be, out of absolute dire necessity, a substantial tax increase on the wealthy.  "But how is that fair", the rich will ask?  My answer:  It isn't, but it's sorta like the answer John Dillinger gave when asked why he robbed banks:  "Because that's where the money is."

Fact.

S

And the wheels on the bus go round and round....

Note:  The politician in the middle could have been any one of many from either political party.

In today's news:  "Federal authorities are scrutinizing private consultants hired to clean up financial misdeeds....taking aim at an industry that is paid billions of dollars by the same banks it is expected to police."

Yep, it seems the banking biz is still just one, big happy family.  Federal regulators uncover some sort of fraud, money laundering, etc, so they mandate the guilty bank hire outside "consultants" to clean things up and get the banks back on the straight and narrow.

Really?  Can anyone but me see this is just one big good 'ol boy charade?  Is anybody going to even attempt to follow the money trail?

Here's how it's worked so far:  Fourteen big banks were fined a record (combined) $8.5 BILLION dollars for screwing over consumers.  The private consultants were charged with finding out who was eligible to participate in the settlement.  Of the $8.5B the banks coughed up, $3.3B was paid to customers, most of the rest went to THE CONSULTANTS!

I'd love to see how much the consultants (Deloitte & Touche was prominently mentioned) contributed to various political campaigns. 

(Late update:  An online search found that in 2011 and 2012 D&T alone contributed approx. $700,000.)

And of course the consultants won't ever be in a position in the future to help out the bankers.  No, of course not. 

S

I want THEIR tax guy....

Several news sources reported over the weekend that the most valuable, most profitable company in the world, Apple, is a tax-paying lightweight.  Or to put it another way, Apple is a tax-avoiding heavyweight.  


Last year Apple had profits of $34.2B dollars, yet paid only $3.3B in taxes.  That's a rate of just 9.8%, which is 1/3 less than the average corporate tax paid by other Fortune 500 companies.  By comparison, Walmart paid a rate of over 24% in corporate income tax.


And it's all perfectly legal.  How'd they do it?  By claiming that most of their profits were made by Apple entities located in foreign, low-tax places such as Ireland, the Netherlands, and various post office boxes in the Caribbean.  US taxes are paid based on where "value is created".  If you were making cars or appliances or almost any other tangible product, the place where the factory is located would be where "value is created" and that's where taxes would be paid.  But with intangibles like patent royalties and intellectual property that can be pretty much anywhere they want it to be.  That's why 70% of Apple's profits are made *wink* outside the US.


I don't blame Apple or any other company who takes advantage of this gaping tax loophole.   I blame our congress who created it and does absolutely nothing to fix it.  But with a TRILLION dollar deficit why wouldn't they at least try, you ask? 

Simple....campaign contributions, aka legal bribes.  "Big Bidness" likes our tax system juuuuuust the way it is, thank you very much....subsidies, loopholes and all.  And they make lots of "contributions" to make sure it stays that way.  (And BTW...they're "legal" bribes only because those receiving the bribes are the same ones who get to define "legal".  Pretty sweet, huh?)

S