Thursday, November 25, 2010

What is rich -an interesting perspective and food for thought

Go Ahead, Tax the Rich, Just as Long as It's Not Me
Cliff Ennico
A lot of people are confused right now about Congress' plans to raise taxes (more precisely, eliminate the Bush-era tax cuts) for people with incomes of $250,000 per year or more.

"How can anyone argue against a tax increase for rich people?" I've heard people ask. "After all, they can afford it more than middle-class people can. And raising these taxes will generate $700 billion in revenue for the government over the next 10 years without anyone suffering too badly."

There's nothing wrong with that logic. Since 1913, the federal government has been committed to a program of "progressive" taxation -- basically, the more you make, the more taxes you pay. Aside from affordability, many people believe that wealthier people have a social obligation to subsidize government benefits for those who are less well off (and besides, there are so few rich people that their votes at election time don't count for much).

The problem comes about in defining precisely who is "rich" and who isn't. There's an old saying: "A rich person is anyone who makes more than I do." In other words, it's OK to increase taxes on the rich as long as I myself am not included in the definition of "rich."

I have always had a problem with a progressive tax system that is based solely on people's income. The reason is that I have always lived in the New York City metropolitan area, where the cost of living is extremely high. A lot of people I know make more than $250,000 a year, and they are outraged by the notion that they are so rich that they can afford a significant tax hike.

To understand the shortcomings of a progressive tax system based solely on income, take the following two situations:

-- Person A lives in rural Kansas, in a sprawling family farmhouse with no mortgage. Person A has an annual pretax income of $150,000, has no dependents and has average annual expenses of $30,000.

-- Person B lives in midtown Manhattan, in a cramped two-bedroom condo with two mortgages and two children in private schools (not because Person B is a snob, but because his kids stand a better chance of surviving to adulthood than if they were in New York City's public schools). Person B has an annual pretax income of $300,000 and has average annual expenses of $270,000.

Who would you say is the "richer" of the two? Most of us would say Person A, and we would be right from an economic point of view. Person A makes half as much as Person B, but has four times the discretionary income of Person B ($120,000 versus $30,000) because of Person A's low expenses.

However, under our current tax system, Person B is considered to be "richer" than Person A, and is taxed at a higher rate. If the Bush-era tax cuts for high-income people are not extended, Person B will see a significant increase in his taxes. The tax increase for Person B may be enough to wipe out his meager discretionary income and may threaten his personal liquidity. Meanwhile, Person A, who could more easily afford a tax increase because of his high annual discretionary income, continues to enjoy a "windfall" from his continued low tax rate.

The big assumption here, of course, is that all of Person B's expenses are necessary and unavoidable, and not the result of irresponsible luxury spending. In my example, I think they would be -- New York City has the highest cost of living, real estate costs, and state and local taxes of just about anyplace in America. And anyone who knows anything about New York City's public schools would send their kids to private schools in a heartbeat if they lived there. Frankly, there isn't much room for Person B to cut back on his living expenses.

There isn't any effective way for the government to base taxes on "discretionary income" -- this varies widely from individual to individual, and somebody's "necessary" expense is somebody else's "luxury." ("After all," I can hear some readers thinking, "nobody's forcing Person B to live in Manhattan" -- except perhaps his employer).

But if the government's goal is to allocate tax burdens to those best able to bear them, I think a better approach would be to base our tax system upon people's assets -- what they're worth after taking expenses into account -- rather than just their income. With a tax on individual net worth (or perhaps a progressive income tax that is adjusted or "weighted" to reflect a person's overall assets), Person A would pay higher taxes than Person B, resulting in a much more fair and equitable outcome.

If as a business owner you make a significant income but are working 24/7 in your business and are up to your ears in legitimate business debts, you are not "rich," yet the government thinks you are. It's time for that mentality to change.

Cliff Ennico ( is a syndicated columnist, author and former host of the PBS television series "Money Hunt."


Hollecrest & Associates Inc   -"Turnaround Consultants"  .

Sunridge Lodge  "Back to Eden" quality 24/7 care
261 Oakhill Drive, Brantford
"Building elder peer communities that are cozy,caring and comfortable" -
Brant Positive Action Group -a positive community affirmative action group that promotes goodwill and timely cost effective creative solutions to enhance the competitive well being of Brant Brantford and Six Nations  

Wednesday, November 24, 2010

Target: New business culture needed -Rejecting Subsidy, Shunning Dependencyfrom Frontier Centre

Rejecting Subsidy, Shunning Dependency
Ben Eisen's study of "stealth equalization" provides further evidence for the new movement of Atlantic Canadians who understand that federal subsidies undermine their economic capacity for self-reliance and foster dependency. Frontier's Research Director Marco Navarro-Genie discusses how the notion of dependency is being restored to its non-ideological meaning.

Hollecrest & Associates Inc   -"Turnaround Consultants"  .

Sunridge Lodge  "Back to Eden" quality 24/7 care
261 Oakhill Drive, Brantford
"Building elder peer communities that are cozy,caring and comfortable" -
Brant Positive Action Group -a positive community affirmative action group that promotes goodwill and timely cost effective creative solutions to enhance the competitive well being of Brant Brantford and Six Nations  

Tuesday, November 23, 2010

Interesting food for thought on property rights

Private Property Is Nothing To Fear

An economic study of successful First Nations is being held in suspicion through erroneous thinking about the notion of private property. Aboriginal policy analyst Joseph Quesnel looks at some common fallacies held about indigenous peoples in Canada and the notion of private property. He argues the debate about the appropriateness of property as an economic development tool should be free of misinformation.
Freedom Is The Destiny Of Native Canadians
A poll conducted by Frontier Centre reveals there is a hunger out in Indian Country for more democracy, starting with an elected grand chief in each province. Frontier's Aboriginal policy fellow Don Sandberg looks at a poll conducted by the Frontier Centre which highlights strong support across all Prairie First Nations for elected grand chiefs. First Nations clearly want democratic leadership and an end to the system where only chiefs select important leaders.

How to help small business create jobs

Here are two news bulletins for new members of Government
 We are watching what you do

-- Small-business owners will not go out and hire people if by doing
so they have to reduce their take-home pay -- they will continue to do
most of the work themselves and pocket the profits.
-- Asking small-business owners to increase their expenses today in
return for a tax deduction or credit, which they won't see until next
year, is a non-starter -- it's like the Wimpy character in the old
Popeye cartoons, who "will gladly pay you Tuesday for a hamburger
For small-business tax breaks to be really effective, they will need
to put more money in small-business owners' pockets (or at least not
reduce their current ODI).
Here are the tax breaks America's small businesses really need to grow
and create jobs the way the government wants them to do. Newly elected
members , whatever your party affiliation, please take note.
  • -- Eliminate employment taxes for small payrolls. Most employee
    salaries are artificially inflated because of Social Security,
    Medicare and other employment taxes. This makes employees extremely
    expensive and discourages small-business owners from hiring people. By
    eliminating these taxes for payrolls of less than $5 million, three
    wonderful things will happen:
  • -- Small businesses will actually go out and hire people, because they
    can now pay them lower wages that employees can live on without
    drastically reducing the owners' own incomes.
  • -- Employees will end up with more after-tax money in their pockets
    (many existing employees will get a "de facto" wage increase), which
    will encourage them to spend more on stuff.
  • -- Small-business owners will no longer have to pay huge sums to
    bookkeepers, accountants and payroll services to help them keep track
    of the byzantine employment tax rules.
I would also recommend that in adopting this law, government
eliminate these taxes on the owners' "self-employment income" as well.
A "pre-emption" of state and local payroll taxes eliminating those as
well on payrolls of less than $5 million would be nice, but I'm not
holding my breath for that.

For the ideas file on how to make things work better

Inspirational fact -what goes around comes around -pass it on

Go-Getters Who Give    This Zig Ziglar column was originally published in 2000
Zig Ziglar

Many years ago, in the moors of Scotland, a farmer named Fleming was working hard to support his family. One day, while he was out in his fields working, he heard a distinct cry for help coming from a nearby bog. Mr. Fleming dropped his tools and ran to the bog, where he saw a young lad mired to his waist in black muck. The youngster was screaming and struggling to free himself. The farmer jumped into the bog, saving the young lad from a horrible death.
Thinking no more about it, Mr. Fleming went on about his work. The next day, a beautiful carriage pulled up to the front of their modest cottage. Out stepped an elegantly dressed nobleman, who introduced himself as the father of the boy Mr. Fleming had saved. The man said, "I want to repay you for saving my son's life."
However, the farmer said he couldn't accept payment for what he did, which he said was only the right thing to do. At that moment, the farmer's young son walked up, and the nobleman asked the farmer if that was his son. Mr. Fleming replied, "Yes." And the nobleman said, "I'll make you a deal. Let me take your son and give him a good education. If he's like his father, he will grow up to be a man you can be proud of." The farmer agreed, and the son left his home and went with the nobleman to receive an education.
Later, the son, whose name was Alexander, finished his education and graduated from St. Mary's Hospital School in London. He went on to become known throughout the world as the noted Sir Alexander Fleming, the man who discovered penicillin. Many years later, the son of the nobleman who put Alexander Fleming through school fell gravely ill with pneumonia. He was near death's door, but was saved by a new drug called "penicillin."
You probably have guessed that the nobleman was Lord Randolph Churchill. His son was Sir Winston Churchill. The old saying that "bread cast upon the waters often returns buttered" was certainly true in this case.
I'm not even mildly hinting that when you do something for someone else, the story will have an ending as dramatic as this one. However, what Mr. Fleming did was save a life, and any life has enormous value. He did it without thinking, without any motive other than to save the young boy's life. He graciously accepted the education for his son, because that was for his son's benefit.
The rest of the story is that Lord Randolph Churchill felt a lot better about the transaction because he had a chance to express his deep gratitude in a very real way. This is a classic example of my oft-quoted statement that you can have everything in life you want if you will just help enough other people get what they want. I'm certain Mr. Fleming did not have that in mind when he rushed to the aid of young Winston Churchill, but nevertheless, the application is perfect.
The same applies when you give a person in need a word of encouragement. An act of kindness, a helping hand to a youth in trouble, an encouraging word to someone who has lost his or her job can mean a world of difference to that person. There is nothing quite like encouraging people in their struggles through life.
Interestingly enough, research shows that those who get involved in local projects like cleaning up a neighborhood, serving in a soup kitchen, participating with Habitat for Humanity in building homes for the homeless, and so on, are so energized in the process that they end up being more successful in their chosen professions. Now, as newscaster Paul Harvey would say, that's "the rest of the story."

Brant Positve Action Group
 If they can not do it –we can as citizens
 – all ideas and community action plans welcome

A call to action for Brantford

Subject: A call to action for Brantford


A community call to action for Brantford, Brant and Six Nations
"We have to do more then water the flowers –we need to plant a vibrant
garden with the help of many good people"

As the many good people who did not win the race for official
government office take down their election signs, action plans and
better vision platforms, please remember that your community needs you
in many capacities. You have spent months getting real face to face
input and grassroots feedback from the people of your community. You
are now an real expert on what the people want, what the people do not
want and you have their pulse and the many ideas of what they think
should be done to better their community..

There are many issues that must be addressed to grow our community
successfully with your help. Individually or together we can make a
difference. I am sharing some current challenges gleaned from my
"boots walking" people survey . Here are some of the things that I
heard and learned from the people .

"Energy costs are rising to hurtful levels " … "Many costs of living
are rising  here"

This is a issue that is going to get hot in the cold of winter -
particularly for those who use electrical heat and the costs escalate
to unaffordable "shut off "levels. What are we going to do to help
these people-that is the question?  Some issues that are of interest
•       An upload to the the provincial and federal govt- can the home
energy sector be made exempt from the HST  ? What actions or
considerations will make this possible?  There are citizen groups
starting to promote this " Influencing actions at the federal and
provincial level on utility bills like hydro, water and other
municipal intergovernmental issues"
•       Predatory pricing practices of local utilities -such as connect and
disconnect charges - excessive interest and service charges hidden and
new profit centres to subsidize cost centres? - What to do to
remediate this or remedies on an exception basis?
•       Consolidation of local utilities - there is one energy supplier -why
do we need multiple energy distributors - what happened to the
consolidation strategy - to reduce the number of overheads of the many
local energy distributors?

Why are the bad investment decisions of the past absorbed or
subsidized by the utility user?   This is a monopoly pricing situation
over which they -the user have no control. Should these bad decisions
not come out of the general account?

A further sampling of my boots survey    Voter comments

"Taxes and fees are out of control and we are not getting much for the
increased costs"." How are we going to pay for it?" "How are we going
to get high paying jobs here? "I just lost my job after many years and
now work for a temp agency-I have no choice and hate it." "There is a
drug house in the neighbourhood, I am afraid and the police can do
nothing about it. "  " I moved from Toronto and commute every day –my
taxes are higher here-can you improve transportation to make it easier
to get to my work- a Go Station would be nice " " I live here, but the
large company that I run is in Cambridge –would have built it here –
but the City administration reneged on a major promise " "What do
those people who work for the city really do for the big money we pay
them –I work harder for less money ?" " This development plan for  80
heactres is owned by the city and could support 500 houses -we have
been working at it for 5 years – this part of the public consultation
has cost $200,000  , and it is going on for longer to make sure we
have proper input-what is your opinion?" "Why does everything take so
long to get approvals to do my projects- it is easier and faster in
other cities?" Why can we not get along with our neighbours and work
with them better –losing 350 jobs because of disputes is childish and
stupid "   " Why is city garbage piled up next to my house –it stinks –
the city owns the rental complex –I have complained but nobody helps
me or cares" . "Why does it take a city truck , with  a crew take  two
days to paint a park bench" "Why do we have so many empty city owned
buildings  seems like a waste to me – should we sell them to someone
who cares" 'Great plan but I have heard this before  can you deliver
on the promise –action is really better then words –show me how I can
help get it done " "You are the first person who asked me –thank you
for asking  "

The need for change

These questions and public comments from the people indicate that we
must change how we do things in this city and area- in the future
-.for the better . It is a call to action to do things that deliver
positive outcomes. It is a challenge to the new council to deliver
results , it is a challenge to business to grow jobs , it is a
challenge to all existing and new volunteer groups to add real value ,
it is a challenge to all individuals and groups to care how things are
done  in this community .  It is our city, our community and we get
what we put in.

I thank the people of Brantford for the opportunity to listen to your
very real concerns. It is a call to action that I accept as a
community volunteer and business person . I wish the new council every
success and sincerely hope all other candidates -not chosen for
council- will continue to support this community with their energy,
plans and ideas. Together we can make this an even better place to
live and prosper.

Thank you, people its been an exhilarating march  and new self
motivating leadership ride

Sieg  Holle BS MBA

Moving forward with new energy and ideas –
please join me
Brantford Economic Initiative   BEi

In progress - Brant Positve Action Group  If they can not do it –we can as citizens – all ideas and community action plans welcome
Join the Brant tea party -can we duplicate the success of the USA tea party group

Saturday, November 20, 2010

Energy trend

Study: Energy alternatives won't be ready
DAVIS, Calif. (UPI) -- Given the current pace of research and development, global oil supplies will run out 90 years before replacement technologies are ready, a U.S. study says.

Researchers at the University of California, Davis, based their conclusions on stock market expectations, on the theory that long-term investors are good predictors of whether and when new energy technologies will become commonplace, a university release said.

Two key elements of the new theory are market capitalizations, based on stock share prices, and dividends of publicly owned oil companies and alternative-energy companies.

Other analysts have used similar equations to predict events in finance, politics and even sports, the university said.

"Sophisticated investors tend to put considerable effort into collecting, processing and understanding information relevant to the future cash flows paid by securities," UC Davis post-doctoral researcher Nataliya Malyshkina said.

"As a result, market forecasts of future events, representing consensus predictions of a large number of investors, tend to be relatively accurate."

The forecast was published in the journal Environmental Science & Technology.

"Our results suggest it will take a long time before renewable replacement fuels can be self-sustaining, at least from a market perspective," said study author Debbie Niemeier, a UC-Davis professor of civil and environmental engineering.

Hollecrest & Associates Inc   -"Turnaround Consultants" .

Back to Eden communities
 Sunridge -261 Oakhill Drive, Brantford
"Building elder peer communities that are cozy,caring and comfortable" -quality 24/7 care