robertboseley

CARRIED INTEREST. A rose by any other name is still a rose. Compensation for service’s rendered by any other name is still compensation for services rendered, In tax speak – that is ordinary income. As opposed to income received on investments – or so-called passive income. Private Equity Firms and Hedge Funds compensate their managers primarily via carried interest. So, while doing the 9 – 5 routine, Mitt Romney, as manager of Bain Capital was being taxed at around 15%. Same as now. Why? Because the influence peddlers sold the idea to the honorable members of Congress. It is a purely “made up” name for income. Earned income. The kind of income a truck driver or pizza maker earns. But truck drivers and pizza makers do not visit K Street in the Nation’s Capitol. Proponents of the low taxation of Equity firm’s executives make the old argument that these folks need special incentive to work hard. Earn lots of money for their clients. That is so much BS it would take years to clean up. Support the administration’s efforts to make carried interest ordinary income.

I seriously believe we should cancel the 2012 election. There is no contest – or if most Americans are of sound mind – there will not be. Look at the picture. In that corner we have a man who hid millions of dollars off-shore. In addition to whatever other purpose he had – he avoided ten’s of thousands of tax dollars in the U.S. He is an unprincipled person – who has done a 180 on many issues. A fraud. Over in this corner we have a bona fide crook. A man his own party said was not fit to serve. A man who wants to colonize the Moon. A “man” with one in every port. This must be a tag match, because I see two others outside the ropes. There is the one who believes he is more holy than any of us. A man who stood smiling while a member of his crowd called the current president a non-citizen. Then there is a kindly older gentleman who is a bit nutty. Reduce the income tax to zero. Do away with virtually all aid to citizens. I believe he comes to us from Texas. Has a batty son serving in the Senate. ONE of these against a man who has had a sensational 3 years??? I can’t begin to list the accomplishments of this administration. The list would violate FB rules. Another daring rescue of two hostages, following the call to get ben Laden. Saved GM. Has overseen two years of steady growth in the economy. So is there a contest? To those who only want Barack Obama out of office at all cost: You had best start using your brains for something other that raising your center of gravity. I’m making the call. No election. Full steam ahead Mr.President.

MITT AND DOUBLE TAXATION: I addressed double taxation in a very elementary form a few days ago. Whether specific dollars are double taxed may fit in with discussions of religion or politics. Mitt argues that profits of a corporation are taxed at 35%. Should that company declare a dividend, and distribute two-thirds of that profit to the shareholders, the shareholders then pay tax on the same money. Mitt is correct that somewhere in time Congress believed the dividend funds have already been taxed – thus must be taxed at a much lower rate to the recipient. Thus Mitt says HE actually pays a 50% tax – 35% on the corporation plus 15% personal. Where to begin. First – the effective corporate tax rate is about 16%. But regardless of what rate the corporation pays, the question here is – “is it double taxed”. The entire tax code, and the concept of taxation in the U.S., centers around WHO receives the income.

At some point a business is incorporated. The owners do that for many reasons – but they make a decision that being incorporated is to their advantage. At the time, these owners do, or should, understand that taxation is part of the equation. So the ABC Corporation is born. It prospers. After a couple of years, the retained earnings look very good – so a dividend is declared. The corporation files its return and pays whatever IT owes. The dividend is received – yes out of the same pot – and THAT recipient takes it into income as such. The 1040 is filed and the amount of the dividend is reported. A tax is applied. Double taxation? Absolutely not. Were one to accept the double taxation myth – why not take it to its logical conclusion? That is – if you had any way to trace the life of the one-hundred dollar bill in your pocket – you would find that it has been taxed before. To someone else. At some time. Dollars rotate. Your employer earns the income which is paid to you as a salary or wages. Both pay taxes on their RESPECTIVE incomes. (By the way, we don’t hear the shareholders complain about the many advantages a corporation enjoys – limited liability being among them.)

The only “point” the double taxation folks may have is this: Your salary is paid out of gross income, whereas the dividend is paid from net income. That is a difference without a distinction. Corporations which are so fortunate to build a good retained earnings and pay a dividend, should count their blessings. The double, or triple taxation bucket definitely has a hole in it.

Capital Gains. When Republicans make a case that capital gains should be taxed at very low rates – or eliminated – they often say the income has already been taxed. That argument is so silly, I hate addressing it – but I will force myself. Ed works and gets paid $100 – he puts in on his tax return as ordinary income and it will be taxed according to his tax bracket. On the way home from that work, Ed stops and purchases $100 in groceries. Bill, the owner of Bill’s Market takes the $100, puts in in his sales, and pays tax on it at year’s end. Did we not just tax that $100 twice? Yes, of course we did, and quite properly. OK – so then the GOPer’s say “OH that was on different people”. So, let’s see what happens by changing the facts. Instead of buying groceries, Ed buys ten shares of ABC Corporation at $10 or a total of $100 He still pays tax on the earned income, same as before. Assume he holds the stock for five years, and sells it for a NET profit of $3000 That $3000 gain is put on Schedule D. Further assume no other stock or investment activity. The $3000 MAY be taxed – and if so at a low rate which changes with each congress. There is no way one can successfully argue that the $3000 was double taxed. OK – but we must have a low CPT to attract capital. Total BS which can be proven. Ed did not buy that ABC stock so that some business venture could prosper and hire folks. Ed wanted to make a profit. That’s fine. He did. Spend an hour or so – and trace the CGT rates – and compare with the GDP at the same period. There is absolutely no correlation between capital gains tax rates and the overall economy. None at all. It should make no difference if one earns money by sweat or clipping coupons. We need not play around with rates. Just make capital gains ordinary income. Economy fixed. Sorry Ed.

So old Newt believes in open marriage. We know this, because he wanted it for himself. Surely Newt would not want special privileges. Now I have no real opinion about open marriages – except I would not want one – for myself OR my wife. Seems like just more fuel for for the many fires most marriages face. But, the subject is Newt. Just put the marriage thing in your pocket. Newt has a long history of double standards – including now a double belly. Watching him walk is hilarious. Then there is the 2 sizes too small suit jacket.

Newt is at home in HIS element in the middle of the South Carolina Old Guard. (White, rich, and still fighting the civil war). If nothing else – and that is the fact actually – Newt is a politician. WOW I happen to believe Newt is a mean, rotten, racist man. But he also plays that part. He knew so well what the reaction would be if he attacked CNN in that particular crowd. Good circus – but not a very wise audition to be President. (Except where he was).

Juan Williams. Used to like him. Then he sold his soul to Fox. But how he can continue to call himself a man, after letting Newt “PUT HIM IN HIS PLACE” – in the year 2012 – brings up questions about Mr. Williams. He should have fired back – not at the debate – but the next day. Perhaps he wanted to. Obviously Fox would fire him if he made a sound – but Juan should not wait for a firing. He should quit that national disgrace NOW. Up to you Juan. You have spent years being put down by Brit Hume. Are you just used to it now?

Now for the good news. We (Obama campaigners) could not be happier than with the prospect of running against either Newt or Mitt. I would add the remaining Rick to that. Speaking for myself – I am ready. I personally have 3 binders of material on Newt. I’m not saying this is all dirt – some is – but it is facts from Newt’s political life. Far less on Mitt, but I am working hard on that. The off-shore bank accounts raise so many red flags they cannot be counted.

Obama 2012

How is it possible that a supposedly educated nation can get so hopelessly confused about capitalism? When Bill Gates was a very young man – in fact when he was a very young kid – his passion was not to create jobs. Nor was his passion to make money for himself. His passion was computers and technology. IT HAPPENS that in his case, his passion grew into a business. Yes, it eventually employed thousands – purely as a result of what Bill Gates saw as the future. The same can be said of Steve Jobs. In fact, if we look back at America’s history, most industry’s were born and grew as a result of some person’s passion for an idea for the future. Virtually none were created purely to create jobs for people. Only the government could or would ever create jobs – solely for the intention to create jobs. That was not, and is not, a bad thing. People who work pay taxes. Taxes are revenue. All governments as well as all businesses require revenue. Even Not-for-Profit enterprises must have revenue – and in fact must produce a profit. The difference is that the MOTIVE is not for profit.

When private equity firms are formed – the investors have one motive: To make a profit. The investors did not sit in a quiet room and discuss “those unfortunate folks at Company Z really need some help”. The discussion was – Company Z is in trouble and there is money to be made by acquiring it. And so they acquire it. Now the managers of the PE firm have many choices. Perhaps they can totally rebuild the company, including layoffs, and make the bottom line black. If they do that, then they can continue their ownership, or sell it. A nicely run private equity firm, doing what WE expect them to do. But even in this “as it should be” scenario, THE ONLY MOTIVE IS TO MAKE A PROFIT FOR THE INVESTOR’S IN THE PEF.

Now there are other ways for a group of “investors” to own and operate a firm by the same name. There is nothing magic in the name “Private Equity Firm”. It has a fancy sound – but it is as simple as falling from the proverbable log. Let’s talk about what you know I’m going to talk about – Bain Capital. Let me say right here, that I have done “a bit” of research on Bain. “A bit” can only give one a clue. It can by no means be sufficient to make any conclusions. There are those with the resources and ability to do a complete analysis of Bain. I believe they will do that at some point.

Sometimes it is fun, if nothing else, to jump to conclusions. In the case of Bain, I feel somewhat justified in making that jump. So, for the purpose of this discussion, I have concluded that Bain was not and is not the “nice” PEF we looked at above. The difference is the manner in which the manager’s manage. In at least two of the cases I looked at – Bain saw company’s in trouble – but perhaps “rich” in assets. Their inability to succeed appeared to be simply poor management. But Bain had absolutely no interest in owning the company long term. Now they become raiders. Buy the company, sell off the valuable assets, layoff 70% of the workforce, run up the debt and sell. Result? Bain makes a haul – and the previously owned company winds up in bankruptcy. I maintain that sort of raiding is not moral and is not ethical. Both Bain and the acquired company could have been winners – but that was not the intention of the managers. An immediate big profit for Bain and a go-to-hell attitude toward the now sold company.

So – private equity firms come in various flavors. Should the Obama folks decide that attacking Bain should be the primary strategy for 2012 – it will prove to be a mistake. At the moment, the Right is doing our job. Making our case. By the time the general rolls around – the case for or against Bain will have been made. There are so many other options for running against Mitt Romney. We are used to working from being in a hole. Being in that hole is unfair, but it is a fact of life. Mitt Romney, also rather unfortunately, also is in a hole. MSNBC’s Chuck Todd reports that GOP insiders have told him 20% of evangelicals will never vote for Romney. They also will not vote for Barack, but 20% staying home works for us. Then there is the detached persona of Mr. Romney. “Taxes are for discussion in quiet rooms”. A 180 degree flip on right to life. Speaking of holes – he has another. He is very proud of the MA Health Plan – with a mandate. His position that what is great for MA does not apply anywhere else is pure fantasy. No, we have more than enough ammunition so that we can let Bain rest. Hopefully not in peace.

We all make a decision. Each and every American, at some point in their life, makes a decision to serve in the military – or to decline. Obviously there are some for whom the decision is made. Health being the primary intervener. Military service is obviously not a requirement to become President of the U.S. – nor should it be. The decision – and actions taken to make that decision happen – is something each person who presents themselves as a presidential candidate should discuss. In the case of Mitt Romney, it is absolutely critical that he explain his actions to stay out of Viet Nam.

Before joining college, Romney had received a deferment from the draft as a Mormon ‘minister of religion’ for the duration of his missionary work in France, which lasted two and a half years. At the time, there was an agreement of sorts between the church and the Selective Service allowing exemptions from the draft for missionaries. Before and after his missionary deferment, Romney also received nearly three years of deferments for his academic studies.

Missionaries – by definition and practice – serve one major purpose. That is to “sell” their particular brand of religion – most often to people in dire conditions. True, some may also do some good work while tending to the primary purpose. This happens most often in third world nations. Mitt Romney did his missionary “work” in France. It is widely reported that he actually lived in a mansion while in France. After milking the missionary deferments – he got himself into college – and played that card until danger was past. Fine – IF ONE IS ABSOLUTELY OPPOSED TO WAR. It is not fine for a self-proclaimed war hawk. In fact – it is just not acceptable. I really do not like to criticize a man for the conduct of his children – but how SIX sons can see fit to to take the same path needs some discussion.

Finally – and to change directions – Mitt made a brief appearance at a coffee shop in Iowa – on the set of Morning Joe. This is the most awkward man – of such stature – I recall seeing. As they began the segment, a very young girl, there with her mother and sister – had asked beforehand to have a shirt signed by Mitt. With the girl beaming and most attention on her – Mitt takes the shirt, signs it, and passes it off without so much as a glance at the child. In fact – not once during the entire program did Mitt ever look at anyone other that the person asking a question. OK – so one can be a nerd and become president.

Things add up. With Mitt, if one takes the sum of the man – military service; personality; completely inconsistent positions; and all other factors – the number does not reach anything close to someone who would be President.

Some things just won’t sell. This could be due to faulty marketing, or poor engineering. It could also be that the public just does not like it. For those of us who go back far enough – we remember that in the 60’s, Americans said they wanted smaller, more efficient cars. Ford came forward with the Falcon. GM proudly gave us the Corvair. No amount of outstanding marketing could persuade folks to buy these two horrible pieces of Detroit junk. They were poorly designed. Unsafe. Unreliable. False and make-believe.

Mitt Romney reminds me of the Falcon and the Corvair. (Perhaps his father had something to do with it). Mitt is not what the country is asking for. He has been poorly designed. People do not relate to him as being real. Instead he reminds us of the ever present wind-up dolls. Wind Mitt up and he smiles. Wind Mitt up and uncaring words spew from his lips. Mitt is poorly engineered. A software malfunction caused Mitt to say that he would prefer to cut food stamps rather that add 1% tax to the 1% richest. Mitt is unreliable at any speed. Want far left? Pay the right amount and you got it. Want Mitt to change his position on major issues? Not a problem.

No, Mitt Romney will go the way of the Falcon and Corvair. Americans do not react well to people with no vision. Indeed, those with vision may not always be immediately successful. Vision takes time. But it must be present. Ever hear Mitt speak of his “vision for America”? I frankly believe Mitt looks down upon the masses. They are not worthy of his time. By all means don’t touch them. Like Trump – I see Mitt rushing to the facilities to wash his hands after greeting a commoner.

Vision. JFK had a vision, but was not able to pursue it for obvious reasons. LBJ had no vision – but got caught up in the post-assassination flurry and got much accomplished. We need not discuss Nixon or Ford – they were place holders. Carter was Carter. I will not argue with those who believe Reagan was a man of vision. Perhaps he was – even if I did’t approve of the vision. 41 was 41. Ah, then there was Clinton. Bill Clinton’s vision was clouded by ambition. Like Carter, Clinton’s legacy may be his post-presidency years. W was W. Barack Obama has a vision. I was not as distant from the inner campaign as some. Nor did I sit at David Plouffe’s table. From day one, Obama has been blocked by hate and practical politics. (The politics was not actually practical – but the GOP thought so). Stand in the way of anything Obama proposed or said. Put up a road block and dare him to cross it. Barack Obama still has a healthy vision for America. He needs the second term. He needs for the hate to subside.