Opinion

Felix Salmon

Counterparties

By Felix Salmon
February 25, 2011

How can Buddy Fletcher’s tax returns show income of $1.5m from 2007-9 when he was paid $13.5m in dividends alone? — NYT

Google fires the first shot against Demand Media — Google

The cost of the Madoff investigation is equal to the annual budget of the SEC — NYT

Don’t Believe Everything You Read: The Real Skinny on Servicer Settlement Talks — American Banker

In Anti-Bike Lane Case, Gibson Dunn Strays From Pro Bono Standards — Streetsblog

“Avoid the guy who offers his clients ‘a very special opportunity’ to invest in anything. He has a problem with cocaine” — CNBC

Bill Black on Finance’s Five Fatal Flaws — Ritholtz

Amazing interactive health map of America — Measure of America (Check out the other maps too!)

The crazy corporate maneuvering behind the Smile Train-Operation Smile Merger — NYT

Comments
5 comments so far | RSS Comments RSS

Our present tax system is a severely regressive joke, in which the wealthiest individuals pay a smaller percentage of their income than the middle class. So what’s the news?

Posted by TFF | Report as abusive
 

“How can Buddy Fletcher’s tax returns show income of $1.5m from 2007-9 when he was paid $13.5m in dividends alone?”

He had a really good accountant?

Posted by SGKingsley | Report as abusive
 

TFF

My wife and I make a decent living for Maine… but with two kids, a mortgage, expensive health insurance, and agressive IRA and 401k contributions we’re happy to pay a shockingly small amount of Fed Income taxes. My mother still works full time but doesn’t make much actually gets a tax return that exceeds her withholdings due to the EITC.

My most successful customers some of whom net 1MM/year are actually paying over 30% federal and 8.5% state at the margin on their earned income. I’ve seen their returns and we send in their quarterly estimates. I know they use the best CPA’s in town and take advantage of every tool to minimzie their burden… so it’s not like they are not getting good advice.

I’ve always thought that taxes were the one place the middle class actually comes out ahead of the game. What am I missing?

Posted by y2kurtus | Report as abusive
 

y2kurtus, The wealthiest individuals are not your clients. The wealthiest individuals are the “investor class” that lives off dividends and capital gains, either their own or that of others.

Warren Buffett contributes less than 20% of his income to the federal government. Bill Gates is surely in the same boat. Same applies to hedge fund managers. It is VERY HARD to pay 30% of your income in tax when your marginal tax rate is capped at 15% for 90%+ of your income.

People who actually work for a living pay 15% FICA taxes on their wages and business income. In addition, those above the median pay income tax on their earnings — call it another 10% for somebody making ~$100k. Total of 25% of gross income.

Moreover, the ceiling on the Social Security tax kicks in before most households hit the 30%+ tax brackets. Thus your median household pays marginal taxes of 30% on their income (15% FICA, 15% marginal income tax) while your upper-middle-class clients with $1M/year of earnings are paying only a slightly higher marginal rate.

There are also substantial tax deductions available as soon as you become a “small business” rather than an “employee”. Even if you are merely a business of one, selling your labor to others.

The tax system as presently constituted has essentially flat marginal rates throughout most of its range, with an exemption for the investor class.

Posted by TFF | Report as abusive
 

A vote of confidence in the quality and workmanship of Boeing aircraft? Or did it “all come down to price”? (And more than a little lobbying.)

http://seattletimes.nwsource.com/html/bo eingaerospace/2014320058_tanker25.html

http://www.reuters.com/article/2011/02/2 5/us-boeing-idUSTRE71N63F20110225?feedTy pe=RSS&feedName=topNews

Posted by TFF | Report as abusive
 

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