Here We Go Again: “Tax the Rich”

 

ProPublica, which describes itself as “an independent, nonprofit newsroom that produces investigative journalism with moral force”, recently published findings—gleaned from confidential IRS data it obtained—showing that some billionaires have paid (relatively) little to no income tax in recent years.  The names include Jeff Bezos, the CEO of Amazon; Tesla CEO Elon Musk; Democrat presidential candidate Michael Bloomberg; investor and liberal champion George Soros; and the “Oracle of Omaha”, Warren Buffett.

Naturally, this caused an uproar and the usual call to tax the rich more.  Senator Elizabeth Warren urged Congress to take up her idea of charging billionaires a tax of 2% annually of their net worth.  Indeed, a “millionaires surtax” was proposed in legislation introduced by a couple of other Democrats shortly thereafter.

Let’s be plain though.  None of these men is accused of doing anything illegal.  Yes, their net worth grew by billions of dollars during the years for which ProPublica reviewed their tax data.  But actual income?  That was relatively little; it was mostly appreciation of the value of their stock holdings that accounted for the increase, and that is not immediately taxable.  And by using write-offs, deductions, and other legitimate means, actual income was reduced or offset to the point that taxation was minimal.

Allow me a few thoughts on this….

I was taken aback by the apparent  hypocrisy of some of these uber-rich folks.  Warren Buffett was not the only one of the group to have said previously that the rich should pay more taxes.  We might rightly question their sincerity now.  But ignoring that, should we expect them to NOT take advantage of the tax laws to minimize their payouts to the government?  As the famous jurist Learned Hand wrote in a case back in the 1930’s:

Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one’s taxes.

So if people are offended by the avoidance (not the evasion) of taxes by the wealthy, then change the tax laws.  And that is what some are aiming to do.  But be careful what you ask for.  Some of the tax minimization schemes the rich use are also available to those in the lower income brackets.  “Oh, but we’ll make the changes apply only to those with a net worth over a certain amount.”  Fine, but now you’ve singled out a group of people for worse treatment than others.  That breeds class warfare, and we have too much of that already.

And the taxation on net worth (not income) that Senator Warren proposes for the rich?  Is that even constitutional?  And would you want such a law to apply to you someday?  What if you were taxed on your net worth: your retirement accounts, your house, your vacation property, your business, your car, your furniture?  Would you have to liquidate some of your retirement savings or sell property in order to pay the taxes on it? 

I don’t think it’s fair to (and I know this is a strong word) persecute the rich by making laws specifically to get more money from them.  One journalist, expressing his outrage over the ProPublica findings, said “there are not billions of billionaires.  Let’s come up with something for this small group.”  As if the small size of the group (a minority) justifies different treatment.  What about the charitable giving by this “small group”?  It’s in the billions of dollars.  Warren Buffett has given away more than half his wealth.  Have you done as much, Elizabeth Warren?  And you, indignant journalist…have you created as many jobs for Americans as Jeff Bezos?  While businesses were closing down and people losing their jobs during the pandemic, Amazon was hiring tens of thousands of people.

No, I’m not a fan of our national taxation system.  It’s too complex and probably unfair in some respects.   But will you pick on one group because you don’t like them, think they need to “give more”, or pay their fair share?  And I haven’t even addressed the fact that ProPublica came by the information illegally.  If the tax returns of someone who is not part of the wealthy class were scrutinized in the press, the cries about invasion of privacy would be deafening.  But it’s okay to do it to the rich?  Who’s the next group to fall out of favor and lose their rights?  Pray it’s not you.

Until next time,

Roger

 

“Do not pervert justice; do not show partiality to the poor or favoritism to the great, but judge your neighbor fairly.”  Leviticus 19:15 NIV*

“And don’t favor the poor, simply because they are poor.” Exodus 23:3 CEV

 

*Scripture quotations taken from the Holy Bible, New International Version® NIV®

Copyright © 1973, 1978, 1984, 2011 by Biblica, Inc.™

Used by permission.  All rights reserved worldwide.

Protect the Elderly from Fraud

 

“What is that on the mountain?” my granddaughter inquired as we were watering flowers together in my front yard.

“Where?”

“Up there,” she pointed.  “The red and white thing.”

I looked toward the mountain that dominates the eastern view from my yard.  Not seeing what might have caught her attention, I absent-mindedly said it was leaves on the trees.

“Now Pop Pop,” she began to lecture me, “have you EVER seen white leaves?”

I had to confess I had not, so I made an extra effort to determine what interested her so much.  I finally figured out she was looking at the radio towers—painted white and red—along the ridge of the mountain.

Don’t try to fool a six-year-old.

I wish I could as confidently offer the same caution about the elderly; but alas, that segment of our population makes a very vulnerable and juicy target for scammers.  They are more prone to answer their phone (when I was growing up before the age of caller ID, letting a phone ring more than three times at my house was very nearly a criminal act), are generally more trusting and polite (and thus less likely to abruptly hang up on a suspicious caller), are more likely to have a large savings (retirement) account, and may suffer from some degree of cognitive decline, rendering them less able to recognize a con.  The FBI estimates that last year the elderly lost $2.9 billion to financial scams.

Some of the more common scams are:

1.       Fake lotteries  A caller tells the potential victim they have won some lottery—often in another country—but must send a security deposit to have the funds released.

2.       Relative in trouble   The caller pretends to either be a relative (often a grandchild) or the friend of a relative who has found herself in trouble with the law in another state, due to no fault of her own, but needs bail money.

3.       Social Security at risk  The caller poses as a government agent, saying that the person on the other end of the call has had his Social Security number cancelled and he must pay a fine right away to restore it and ensure his benefits continue.

4.       Love  The proliferation of dating websites and social media in general offers unscrupulous people opportunity to pose as old friends or cultivate a fake love relationship—sometimes to the point of becoming potential marriage partners—but then ask for money to get out of some financial jam or just to buy an airplane ticket to come see the victim.

June 15, 2021 is World Elder Abuse Awareness Day.  It is sad that we must have a day to bring attention to this shameful treatment of those we should respect most.  But take some time this week and every week to check on the welfare of your parents, aunts, uncles….anyone elderly and at risk of falling victim to fraud or physical or mental abuse.  Teach them to do what I did NOT do with my granddaughter in the story above:  Take time to understand what is being said, don’t make assumptions, pay close attention and ask questions.  And be a resource for them.  These scammers thrive on secrecy.  If everyone can learn to ask a trusted friend or relative about an abusive or potentially abusive situation before it goes too far, then we might be able to ensure a safer world for the vulnerable elderly.

Until next time,

Roger

“Stand up in the presence of the aged, show respect for the elderly and revere your God.  I am the Lord.” Leviticus 19:32 NIV*

*Scripture quotations taken from the Holy Bible, New International Version® NIV® Copyright © 1973,   1978, 1984, 2011 by Biblica, Inc.™  Used by permission.  All rights reserved worldwide.

Does a Prenuptial Agreement Doom a Marriage?

 

I'm not one who fears that talking about something will “jinx” it, or make it more likely to happen.   Some folks will not prepare, or even talk about preparing, a will for fear that it will hasten their death.  I understand wanting to avoid unpleasant topics; but that can run afoul of the need to prepare for the future and (depending on your religious beliefs about death, rapture, or the Second Coming) the certainty of death. 

But that’s just one example.  How about divorce?  Talking about divorce—and divorce itself—were once taboo.  Now, with divorce sadly commonplace, it might make sense to openly discuss it and even prepare for it in the form of prenuptial agreements.

I have a strong reservation on my own part about having a prenuptial agreement.  That is likely because divorce has not hit close to home for me.  My parents did not divorce.  My children haven’t divorced.  My siblings haven’t divorced.  I’ve been married to the same woman for over 42 years.  With a family history like that (and I am EXTREMELY thankful for that history) I suppose it is natural to rebel against “preparing” for divorce by having a prenuptial contract.  And 42 years ago, having a prenuptial agreement was not common anyway—certainly in my economic stratum.

That said, I can make allowance for those who have experienced divorce either directly or indirectly who want a prenuptial before they “take the leap” again.  It’s scary.  One divorcee I know will not marry again unless there is a solid pre-nup in place to protect her financially.  (She is a high-earning professional.)  But are there limits?  Should there be limits?

A recent Wall Street Journal article highlighted the trend among millennials to use pre-nuptial agreements for some unusual purposes.  Perhaps burned indirectly by divorce like no other generation, they are crafting agreements with their spouse-to-be that address not only financial arrangements but nearly everything else, from care of pets to ownership of embryos. 

I’m not an expert on marital relationships, but I want to comment on a couple of the more unusual provisions inserted into some of these marriage contracts.

First is many millennials’ desire, as one family law attorney quoted in the article put it, “to live like financial roommates”.  In other words, these couples-to-be want to lead separate financial lives.  Separate checking accounts?  Yeah, I get it.  But to lead separate lives financially?  I DON’T get that.  Aside from our sexual selves, finances might be the most intimate part of our lives.  I’ve written before in this forum about not keeping money secrets from our spouse.  It’s a trust thing to me.  We should know what’s going on in each other’s financial lives.  We are there to help each other in tough times; and some of the toughest times are when we are financially strained.  If we’ve led separate financial lives, if we are not intimately connected to our lover in this area of life, is not the marriage bond weakened?  Vulnerability to each other—emotionally, sexually, and financially—is critical to cementing a marriage.

Second—and this is just beyond the pale to me—is the wish by some to ensure that an ex-partner does not bad-mouth them on social media.  Again, maybe because I don’t use Facebook or some of the more popular apps for online interaction and thus not been exposed to harassment that way, I might lack some empathy for those who want to write such provisions into their pre-nup.  But do we really want people to put a muzzle on others?  I consider it a violation of the marriage vows and probably federal law to post intimate pictures of an ex-spouse on the internet.   But what about publicly talking trash about their former spouse?  A decent person wouldn’t do that anyway, but formally forbidding it sounds like a violation of the First Amendment protecting free speech.  Almost always there is a blame-game played in a divorce; there will naturally be some bitterness, some finger-pointing.  We’re going to end that with a prenuptial agreement?  I doubt it.  Try to enforce that in a court of law.

So does composing a prenuptial agreement make divorce more likely?  I doubt it.  If the couple didn’t trust each other with money and aren’t decent enough to respect their partner or ex-partner in social interactions, they  are already half-way to divorce court anyway.

Until next time,

Roger

“Honor Christ and put others first.  A wife should put her husband first, as she does the Lord….Wives should always put their husbands first, as the church puts Christ first.  A husband should love his wife as much as Christ loved the church and gave his life for it….As the Scriptures say, ‘A man leaves his father and mother to get married, and he becomes like one person with his wife.’”  Ephesians 5:21, 22, 25, 31 CEV.