Category Archives: Money Matters

Longish Tax Sentence To Ponder

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It’s well known that in the (dis)United States, many business owners do not report all of their income. It is also well known that the Internal Revenue Service is unable to catch and penalize them.

From the New York Times editorial team:

Mr. Rossotti, together with the Harvard economist Lawrence Summers and the University of Pennsylvania law professor Natasha Sarin, argued in an analysis published in November that investing $100 billion in the I.R.S. over the next decade, for technology and personnel, in combination with better data on business income, would allow the agency to collect up to $1.4 trillion in lawful tax revenue that otherwise would go uncollected.

What percentage of tax evading business owners routinely bitch about the “criminal element” in society?

Mo’ Money, Less Effort

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People who think money is the only true motivator in the workplace have a lot of explaining to do when it comes to professional basketball player Blake Griffin.

Until yesterday, Griffin, 31, played for the Detroit Pistons on a 2 year/$75,553,024 contract for an annual average salary of $37,776,512.

What did the lowly Pistons get for that? 12 points and 5 rebounds a game. Griffin’s anemic productivity is partly the result of a previous injury that cost him some athleticism, but mostly, NBA analysts say, because he wasn’t motivated given the Pistons’ futility.

Imagine being the Pistons owner and having to deal with the fact that $37,776,512 wasn’t enough for Griffin to play hard. All the king’s ransom bought was consistent mediocrity.

No wonder the Pistons let him go to the Eastern Conference leading Brooklyn Nets. Now apparently, he’s motivated, and is going to try to be some sort of facsimile of his former All-Star self.

Sometimes, Often, when it comes to exorbitant compensation in professional sports and other fields, there’s a definite point of diminishing returns.

Think FDR Not Obama

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Biden’s COVID Bill Is His First Step Toward an FDR-Style Presidency.

Strong opening paragraph:

“President Joe Biden and Democratic legislative leaders were extremely clear about how they hoped to govern when they won full control of Washington for the first time in more than a decade. Their mantra? Be more like Franklin Roosevelt and the Congress of 1933, and less like Barack Obama and the Congress of 2009.”

Interesting insight:

“Democrats may be able to pass a transformative agenda despite having just a bare legislative majority. . . . It depends on whether Republicans ever stop talking about Dr. Seuss long enough to fight back against the next big Democratic bill.” 

It also depends on whether the Republicans’ media allies ever stop obsessing about Biden’s mental acuity long enough to fight back against the next big Democratic bill. Whenever you hear Republican politicians and media rip the President as “out of it” ask yourself what they did to reduce childhood poverty. Two months versus four years and it’s not even close.

Inexplicably left out of the Slate piece was any mention of the significant expansion of the Affordable Care Act which was written into the Covid relief legislation.

Hot damn, all of a sudden we have the makings of a real-life safety net.

Wealth Tax Weirdness

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I’m confused. Which won’t surprise anyone who knows me very well.

Elizabeth ‘Has a Plan For That’ Warren is reviving her wealth tax proposal.

“Ms. Warren’s wealth tax would apply a 2 percent tax to individual net worth — including the value of stocks, houses, boats and anything else a person owns, after subtracting out any debts — above $50 million. It would add an additional 1 percent surcharge for net worth above $1 billion.”

Three in five Americans support the proposal. Cue my confusion. Why does 99.9% of the 40% oppose the proposal when the tax will never come close to applying to them.

“Ms. Warren estimated her initial proposal during the 2020 campaign would raise $2.75 trillion over a decade, which she proposed spending on education and child care, based on estimates from the University of California, Berkeley economists Emmanuel Saez and Gabriel Zucman.”

Maybe the answer to my question lies within that dastardly sentence. Maybe the “anti-wealth tax forty percenters” have the backs of the ultra-wealthy because they know how just how bad things could turn out if people of modest means are able to provide their children improved childcare and schooling.

Personally, just to be safe, I’m going to do everything possible to keep my net worth under $50m.

I Will Never Ever Be A Landlord

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Even if a Major League Baseball team offers me 14 years and $340m.

Renting out apartments or homes has always been a favorite wealth-building strategy of some financial planners.

Here’s the problem. No financial planner will ever ask you to imagine having to replace a washer and dryer for a tenant who’s not paying rent.

If this financial and legal horror story doesn’t demystify being a landlord, I don’t know what will.

Wednesday Required Reading

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1. You try to give people the benefit of the doubt. Deep down, there’s goodness. Then this. Criminals are selling fake Covid test results as they look to profit from travel restrictions.

2. What the next generation of editors need to tell their political reporters. A complete rethinking of journalism.

3. Aswath Damodaran makes sense of GameStop.

“The difference, I think, between our views is that many of you seem to believe that hedge funds (and other Wall Streeters) have been winning the investment sweepstakes, at your expense, and I believe that they are much too incompetent to do so. In my view, many hedge funds are run by people who bring little to the investment table, other than bluster, and charge their investors obscene amounts as fees, while delivering sub-standard results, and it is the fees that make hedge fund managers rich, not their performance.”

4. Betraying Your Church—And Your Party. How Representative Adam Kinzinger, an evangelical Republican, decided to vote for impeachment—and start calling out his church. My headline would’ve been, “Don’t Lump All Republicans Together Y’all”. His nickname has to be “Zinger”.

Suck It, Wall Street

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The title of the best GameStop crowd-squeeze story I’ve read thus far. By Matt Taibbi. Taibbi skewers the monied class for their blatant hypocrisy, describing the week’s events as. . .

“. . . an updated and superior version of Occupy Wall Street.”

On the hypocrisy:

“The only thing ‘dangerous’ about a gang of Reddit investors blowing up hedge funds is that some of us reading about it might die of laughter. That bit about investigating this as a ‘pump and dump scheme’ to push prices away from their ‘fundamental value’ is particularly hilarious. What does the Washington Post think the entire stock market is, in the bailout age?”

Taibbi’s short and sweet tutorial on the week’s events:

“Furthermore, everybody ‘understands’ what happened with GameStop. Unlike some other Wall Street stories, this one isn’t complicated. The entire tale, in a nutshell, goes like this. One group of gamblers announced, ‘Fuck you!’ Another group announced back: ‘No, fuck YOU!’

That’s it. Or, as one market analyst put it to me this morning, ‘A bunch of guys made a bet, got killed, then doubled and tripled down and got killed even more.'”

On why Taibbi’s siding with the Redditors:

“They’ve seen first that our markets are basically fake, set up to artificially accelerate the wealth divide, and not in their favor. Secondly they see that the stock market, like the ballot box, remains one of the only places where sheer numbers still matter more than capital or connections. And they’re piling on, and it’s delicious, not so much because they’re right, but because the people running for cover are so wrong, and still can’t admit it.

Buy the ticket, take the ride, nitwits. If you earned anything, it’s this.”