Category Archives: News commentary

“Asking a billionaire to pay at least as much [tax] as his secretary is plain common sense,” says President Obama. When Warren Buffett announced that his secretary paid a higher rate than he did, some people calculated that he must pay her at least $200,000 a year to put her in an (average) 19 percent tax bracket.

Yet the latest report is that Warren Buffett’s secretary pays 35.8 percent of her income in federal income taxes, and other people in his office pay as high as 41 percent. Buffett himself supposedly pays only 11 percent. As dramatic as this sounds, the problem with this story is that the marginal federal tax rate is 35 percent. In 2010, people only paid that rate on incomes over $373,650; the rate on all income up to that amount is lower. If a married person’s income is $400,000, for example, and they they take only the standard deductions, their tax rate is less than 27 percent.

In other words, you can’t have a tax rate of 35.8 percent, much less 41 percent. If Warren Buffett’s secretary is paying that much, she needs a new accountant.

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The New York Times Magazine has discovered what everyone who has ever been to a Tea Party meeting already knew: tea parties are a coalition of social conservatives and libertarians. Both are fiscally conservative and so the tea parties focus on fiscal issues and agree to disagree on social issues.

Does this mean the tea parties are losing influence? No, but it does mean that the tea parties will have little influence on the Republican presidential nomination (which can’t be counted as a loss of influence because they never influenced one before). Both sides dislike Romney, but the social conservatives support Santorum while the libertarians support Paul.

Unfortunately for those who are not neoconservatives, that means Romney is likely to be the nominee. But the Antiplanner doesn’t think the president is as important as Congress, and the tea parties are likely to remain influential in many Congressional and local elections.

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The Obama administration’s rejection of the Keystone pipeline was predictably stupid and will do little to protect the environment other than by slightly increasing world oil prices. Opponents made it clear that they didn’t care about the negligible environmental impacts of the pipeline; they just wanted to “keep the tar sands in the soil.”

The existence of tar sands refutes the frequent assertion that oil is going to become fantastically expensive in the near future. The Alberta tar sands are estimated to be the second-largest petroleum deposit in the world, but are ignored by those who want “peak oil,” who focus only on the liquid oil that has historically been our main source of petroleum. Extracting liquid oil costs less than extracting tar-sands oil, but since extraction costs form only a fraction of the cost of gasoline, access to tar-sands oil is going to keep gasoline affordable for a long time.

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One of the Occupy Wall Street slogans was “corporations are not people.” But what does this mean? People have a variety of rights, including the right to sign (and be obligated by) contracts, the right to free speech, and the right to vote. When the Supreme Court decided that corporations are persons (as it did in 1819), the court meant that corporations have some of these rights (such as the right to sign contracts), but not others (such as the right to vote, which is reserved to “citizens,” not “people”).

When Mitt Romney said, “Corporations are people, my friend,” he didn’t mean it in a legal sense but in the sense that corporations are made up of people and corporate profits eventually end up in the hands of at least some of those people.

The question is: where do we draw the line? If we deny corporations the right to contract, then corporations could not exist, as the whole point of corporations is for investors and managers to contract with one another. While some may think eliminating corporations is a good idea, without corporations most goods would be a lot more expensive and it is likely that wealth would be even more concentrated in the hands of a few because only those with wealth would be able to invest in productive activities that could return large profits.

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