Tuesday, October 30, 2007

Kindly Mr. Buffet's Wild Tale

It's happened again, this time with the "Oracle of Omaha". What is "it"? Why we're talking old guys who get rich, and then upon developing a Messiah Complex, deem it appropriate to tell the rest of us what is good for us.

To Warren, as with all these other self important boobs I say, stop. Please.

Warren's version of this all too common phenomena apparently has to do with our tax system in the United States. According to the Oracle, it simply isn't a fair system. How has he come to this great decision? Why he has determined that he isn't paying enough in taxes, or more specifically, that he isn't paying as high a percentage as his staff.

Admittedly, on first blush this sounds unfair. The Oracle is paid around $7.5 million in federal taxes on his $43 million in income, but this only represented 17.5% whereas his secretary ponied up a cool 30% of his/her $60,000 income. Can this be correct?

Well, yes I suppose (we'll get to that secretary's dubious 30% figure in a moment) but we really need to look behind the numbers to understand what is going on here. Mr. Buffet, the kindly investor from Omaha, who just happened to amass a $50B fortune without ever hurting a flea, pays a lower tax rate for a reason. You see his income, because he is an investor, is primarily made up of dividends and long-term capital gains. Because taxes are a significant inefficiency in the capital markets our tax policy is designed to limit their impact on individual's buy/sell decisions, so that market activity more closely relates to the underlying economics thereby pricing securities based on their financial fundamentals. In other words taxing capital market activity at lower rates is generally regarded as sound economic policy

Of course this policy when discussed in regard to billionaire financiers sounds a bit unfair, but if we're to look at individuals and the tax rate's broad impact we need to expand our view a bit further down the food chain. For every billionaire that kindly Mr. Buffet can point to, I can identify 1,000 or more retirees who live off of the income from their investment portfolios. I'm not going to claim these folks are poor, but their portfolios represent a lifetime of prudent financial management and provide a means of living for them that keeps their financial security separate from governmental support. Tax these folks more and they'll have less to pay for health care and day to day living expenses. Without this self funded safety net, many more will become reliant on the creaking finances of Medicare, Medicaid, and the Social Security System.

Still, I suppose Mr. Buffet's conscience must be assuaged.

And this is where I get a little hacked off. First, Mr. Buffet is comparing his investment driven income with his secretary's (nice anachronistic title there Mr. Buffet!) wage driven income. Why? Because, quite obviously, Mr. Buffet has not seen to providing this person with a similarly lucrative investment portfolio that would earn money and be taxed at the lower rates! Why he can't peel off one billion of his fifty two billion dollars in assets and spread it around the office is beyond me. Heck, I bet these folks would agree to work for the investment income they'd earn and give up their wages if it would encourage Mr. Buffet to share a bit!

Of course it's possible that Mr. Buffet has done this in the form of tax deferred 401k's and just neglected to mention this fact. If this is the case then these folks won't have to pay any tax on their investment earnings for as long as they don't liquidate the funds. Wouldn't a fair analysis of applicable tax rates include this tax deferred income in their effective tax rate? Of course it would.

And what of that 30% tax on $60k. To be candid, I'm a bit dubious. I looked up the federal tax schedules for 2006 and found the following:

Schedule X — Single

If taxable income is over-- But not over-- The tax is:
$0 $7,550 10% of the amount over $0
$7,550 $30,650 $755 plus 15% of the amount over 7,550
$30,650 $74,200 $4,220.00 plus 25% of the amount over 30,650
$74,200 $154,800 $15,107.50 plus 28% of the amount over 74,200
$154,800 $336,550 $37,675.50 plus 33% of the amount over 154,800
$336,550 no limit $97,653.00 plus 35% of the amount over 336,550

Now, if I follow these instructions (like kindly Mr. Buffet I'm not using an accountant here) I get a tax on $60k of income of $11,557.5 which represents an effective tax rate of 19%, not the 30% claimed by Mr. Buffet. Remember too, that the $60,000 in income did not get netted by any deductions for home mortgages, real estate tax or even the standard deductions. Had we considered these items, that secretary might have had a lower rate than her billionaire boss.

So Mr. Buffet has a problem, and I don't just mean with the facts. The problem is that he thinks he ought to be paying more tax. One question Mr. Buffet: If you really mean it, why not write the check?

Monday, October 29, 2007

Swiss Pics

Well, I promised to post a few pics of my 2 day jaunt to Zurich, but when I tried to upload at the hotel, I realized I left the connecto thingy back home. So here we are two weeks later, ok, three, and I've got 'em ready.

The first photo? Some dude fishing. The second, a nice little lake scene, and the last was my hotel, the Storchen. Enjoy.

Friday, October 26, 2007

The Mofo's Photos

Am I wrong, or is this man not a great American? Note, the link is NOT safe for work, because you work for a bunch of unevolved prudes.

Saturday, October 13, 2007

All Hail Your New God

Hey, if you want to voluntarily follow this goof ball's prescriptions for a better life I'm totally cool with it. But I gotta tell ya, I'm beginning to feel like the last sane man in America.

Do you think the Goreacle will even notice that his award was not for science? Interesting, no?

Tuesday, October 9, 2007

Greetings From Switzerland!

The Pursuit week of travel continues with a stop today and tomorrow in lovely Zurich Switzerland. Man, I love this city. During a spot in the 90's I worked for one of the local financial institutions and found myself traveling to Zurich (and later, Basel) fairly frequently. The truth is that I was here so much that I actually wound up in the background of the "Welcome to Zurich" video that American used to show prior to landing. Might still be there, I don't know.

Anyway, I sort of fell in love with this place. It's not very cosmopolitan, but this to me was its allure. Zurich is just a terrifically civilized, extremely livable place. People who live here can commute to work, in under 30 minutes, get to the slopes in 40 minutes, and enjoy a real outdoor lifestyle.

Times are changing a bit though. When I first started coming to Zurich in '92 every Thursday was known as "late shopping night"; literally the night that shops stayed open so that folks could pick things up after work. When I mentioned this to my hosts tonight, they all laughed and talked about how shops now stayed open later every night. "We just had a vote to allow shops to open on Sunday and voted it down though", they told me. It’s not very anti-regulation of me, but I hope this continues. It’s nice to come to a country where every day isn’t a 24 hour binge of consumption and people understand that quality of life is more important than quantity. As other countries have learned, once the magic is lost, it is gone forever.

Today was a great day. The weather - sunny 60 degrees - was perfect. I went for a run along the Limat and down the Bahnhoff Strasse (were I was rocking to Guerrilla Radio, followed by Rasta Holliday) and then had a lunch of veal bratwurst and pommes frittes in Schnitzel Park. After some quick study this afternoon, I met our hosts for dinner and will spend the day with them tomorrow. I brought my camera, so if I get out early I'll try to post some pics.

Gruetsi Mittenand!

Friday, October 5, 2007

I Savant

I'm like a savant I tell ya. My uncanny ability to literally stumble on wonderfully unexpected food moments is almost a little bit scary. Today was no exception.

Allow me to back up a bit. I'm in Washington DC with PD1 this weekend as she and her soccer team will be competing in the WAGS tournament. There are some pretty high powered teams out here, so I have no idea how they will do, but none-the-less, it promises to be an exciting weekend of soccer for us.

Earlier today, I ventured out to find some last minute items; sunblock, black electrical tape (to hold up socks and shin guards), water and a few other items. I was on my way back to the hotel when I momentarily glanced to my left and saw a sign that read, "Red Hot & Blue Express". Well, given that it was both 11:45 in the morning and my blueberry muffin breakfast was a bit insufficient on the sustanence side following my Olympian like performance on the elyptical, one thought ran through my malnourished brain.


Clearly, this was too good to be true; a real honest to goodness BBQ joint in Falls Church Virginia. But my stomach was empty and my hopes were high so I strode through the front doors of the place ready for whatever the fates had in store. As I approached the counter a nice young man came over and asked if I would like to order. I glanced at his name tag.


Not a good sign, no sireee. Of course I personally have nothing against our fine fellow citizens of middle eastern descent, it's just that you don't see a lot of guys manning the BBQ pit who don't have names like Smitty, or Hoyt, or Bubba. Not that Ahmed couldn't be a great pit man, I'm just sayin' its unlikely.

None-the less, I perserveered. I ordered a pulled pork sandwich, some fries and a coke to go. I thought about eating in, but my rental has Sirrus radio and I had been listening to the blues channel when I pulled up to the joint. They were midway through a three set comparison of Muddy Waters', Jeff Beck/Rod Stewart's and Led Zeppelin's versions of "You Shook Me" and I wanted to get back and hear the rest. For the record, I liked Zep's version best, which surprised me a bit.

Anyway, back in the car I dug into my lunch. The pork was served between two halves of a bun, which I discarded. "Not bad" I thought as I began eating the meat without any of the sauce. It was very tender, moist and mildly smoky. In short, Ahmed was putting out some decent stuff - take that all you profilers!

After I finished the meat I tried the fries. Not so good here. Do you remember those ads in the back of magazines when we were kids? You know, the ones next to the "X-Ray Specs" ads for "Tricky Joke Buzzers". The basic premise was that you'd offer to shake your friend's hand after secretly putting the buzzer in your palm, and when the foolish dupe would take you up on your offer of friedship ZAPPPP - he'd bet buzzed! Good yuks for you, pain for him! Apparently somebody thought this was the basis for a lasting friendship.

I bring this up because there are those, and my dear friend Ahmed appears to be one of them, who do the same thing with french fries. Not content to leave well enough alone, they sprinkle some reddish powder over them in a doomed quest to "make them better than before". Of course, any decent American realizes that fries need only salt and katsup, and eating the doctored version of fries is like getting zapped with the buzzer in comparison. All the anticipation of fresh cut potatoes, cooked in oil and lightly salted comes crashing down in a painful rejection of this most American of foods.

Still, the pork was good.

So, undeterred by the marring of the fries I re-entered the restaurant.

"Is something wrong" Amed said, clearly thinking I was on to him about the tricky joke fries.

"Yes, there is. It seems I didn't order any brisket and that was a mistake" I said.

"You want the combo meal again?", a greatly relieved Ahmed said.

"Not a fan of those fries Ahmed, just give me the sandwich. Oh, and hold the bun" I said

"No bun?"

"No, no bun"?

"You just want meat?"

"Brisket, to be specific"

Well Ahmed hustled in back and brought me a to go plate. As I started the car again, Albert Collins - "The Iceman" was playing, "I Ain't Drunk, I'm Just Drinkin'" on the radio. Listening, I began to eat the brisket. This too was good - an unexpected pleasure in the middle of Virginia. Now, don't get me wrong, it was nowhere near the quality of some of the stuff I had in Texas, but it was quite good. There was a curious aspect to the beef that I did find a bit off putting though. It seems that after they slice it, they lightly dust it with some sort of orangey powder and crumbled bay leaves. I'm not saying this tasted bad, - it didn't - but it did detract from the pure smoky goodness of the meat. A minor quibble.

All in all, my new buddy Ahmed is doing ok with the que. I plan to return for the ribs tomorrow.