In This VAT, There Be Billions

Scrambling to come up with money (i.e., take it from us taxpayers), Congress and the White House are experiencing a taxing time figuring out sources of revenue that won’t have serious political repercussions.

One that is almost sure to be enacted in the name of “healthcare reform” (since when did health care become one word?) is a tax on employer-provided health benefits, which will probably be skewed toward those with the highest wages and/or highest priced plans.

Inevitably, however, the good ol’ value-added tax, or VAT, has resurfaced. In this tax scheme, a tariff is assessed each time a value is added to a product–when it’s made, when it’s shipped and when it’s bought or consumed. Some 130 nations currently employ VATs, and one wag even argues that a VAT of 24 percent (!) would enable the federal government to balance the budget and drop all income taxes to zero for those earning $100,000 or less and to 25 percent for high-earners.

Of course, it would also horrifically raise the cost of everything from eggs to excess consumption–and everything in between.

Now, if Congress would actually incorporate a VAT in the name of ending most income taxes, I’d say it’s worth a look, but I doubt you could get many Democrats to go along in the face of a) “lost” revenue from income tax and b) constituent outrage over soaring living costs. Plus, Republicans, theoretically at least, are opposed to all taxes, especially those proposed by donkeys. (Not that the elephants have much power anymore.)

The most commonsensical and best approach is, as always, an across-the-board flat tax on all incomes above…, well, fill in the blank. Or we could revisit Richard Nixon’s plan for a guaranteed income for all and thus end the welfare debacle.

However, things that make sense can never make it past Democrats, whose sole purpose in life is to create constituencies that will be indebted to them forever and therefore always vote Democratic–even if the world is falling apart around them.

The Democrats, after all, have a program for everything–and a solution for nothing.


NOTE: The details in this blog are provided for informational purposes only. All answers are general in nature and do not constitute legal advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The author specifically disclaims any and all liability arising directly or indirectly from the reliance on or use of this blog.
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Countrywide Leads the List of Top 25 Bandits


I don’t usually agree with AlterNet, which is generally a left-leaning (to say the least) site, but The Center for Public Integrity has a well-reasoned piece on “The Bad Guys of Subprime Lending Are Raking in Bailout Billions.”

The article details the woeful and sordid spectacle of non-banks (for the most part) dishing out $1.4 trillion in subprime (paradoxically, actually meaning higher than prime rate) loans that could never be repaid, with ever-lowered standards of loan qualification.

Now, with 20 of the top 25 lenders either out of business or swallowed up, many of the worst culprits are now zinging Uncle Same to bail them out. I’m reprinting the chart that lists the top 25 bandits at right (click on image to enlarge).

Interesting, but how did $1.4 trillion in bad loans cause $3 trillion of federal expenditures in response? Wouldn’t it have been easier just to buy up the foreclosed homes and take them off the books?

Answers: Government never takes the easiest or most sensible route since the goal is to buy support and votes, not necessarily to solve any problem.


NOTE: The details in this blog are provided for informational purposes only. All answers are general in nature and do not constitute legal advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The author specifically disclaims any and all liability arising directly or indirectly from the reliance on or use of this blog.
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Heritage Foundation Asks, ‘What Employer Advantage?’

James Sherk, writing for the Heritage Foundation, has challenged the assertion that current union organizing laws favor the employer over the organizers. He makes these points, and I’m taking the liberty to quote his text directly:

In fact, as I have written before, labor law heavily tilts the scales in favor of unions during organizing drives:* Unions control the election timing, so workers do not vote until union support peaks.

* Employers rarely learn of the organizing drive until unions ask for an election, so unions have months to build support while employers have just one month to present the other side.

* Employers may not ask employees if they support the union. Unions may ask employees how they will vote and focus their efforts on persuading undecided workers.

* The law severely restricts employer speech while allowing unions to say almost anything they want. Employers may not promise to improve working conditions if workers vote down the union. The union may promise anything it wants, even if it knows it cannot keep those promises.

* Employers may not even ask workers what problems they have in the workplace and why they want a union. Unions can ask workers about anything they want.

* Unions may not campaign while workers are on company property and on company time. However the company must give unions the addresses of every worker and unions can visit workers at their homes. Employers are legally prohibited from visiting workers homes to campaign.


NOTE: The details in this blog are provided for informational purposes only. All answers are general in nature and do not constitute legal advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The author specifically disclaims any and all liability arising directly or indirectly from the reliance on or use of this blog.
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British Doctor Warns of Human Toll from U.S. Health Care Reform

The British organization going by the acronym of NICE is anything but when it comes to its role in policing health care in the United Kingdom. It routinely denies the use of drugs that the United States and European nations rely on to prolong and save lives from chronic diseases such as cancer.

NICE stands for the National Institute for Clinical Excellence, Britain’s model for what Obama and crew want to accomplish here in nationalizing and then rationalizing (and rationing) health care–true cost effectiveness.

As British oncologist Karol Sikora points out, however, NICE manages cost effectiveness by keeping the nation in the medicinal dark ages. “If it costs too much, it can’t be any good” seems to be NICE’s motto when it comes to drugs.

Writing in the Manchester Union-Leader, Dr. Sikora notes that Obama wants a similar mechanism for holding down costs and warns that it will cost thousands of Americans their lives in premature deaths and suffering:

As a practicing oncologist, I am forced to give patients older, cheaper medicines. The real cost of this penny-pinching is premature death for thousands of patients — and higher overall health costs than if they had been treated properly: Sick people are expensive.

Sadly, the model upon which Obama is building is based on Tom Daschle’s book, which praises NICE and slams old people for hanging on to their lives too long and costing taxpayers too much money (which presumably could be spent elsewhere in buying votes).

The thing about bleeding-heart liberals (see Obama, Barack, Kennedy, Ted, and Baucus, Max, et al.) is that they only bleed for taxpayer dollars and for systems they can run–not for real people in suffering.

“Build them a system, and they will be happy–and we can take credit for it forever.” Or at least until the “happy” citizens die at 67 instead of 81.


NOTE: The details in this blog are provided for informational purposes only. All answers are general in nature and do not constitute legal advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The author specifically disclaims any and all liability arising directly or indirectly from the reliance on or use of this blog.
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EFCA Sponsors Says Card Check May Go Bye-Bye

Senator Tom Harkin, D.-Iowa, says compromise is in order to save the Employee Free Choice Act, specifying that the card check provision will no doubt have to be dropped.

"Compromises are going to be made," said Harkin, 69. "It probably won’t be card check [as part of the final law], because too many people are opposed to it now."

Card check allows organizers to unionize a company by merely getting 50-percent-plus-one of the employees to sign off on the idea. No election need be held, but the union (har de har har) could still ask for one.

Business is unilaterally opposed to it, with the U.S. Chamber of Commerce calling the EFCA "Armageddon." (New York Governor David Paterson has already created card check in his state by fiat–executive order. Henceforth, all businesses receiving government assistance in just about any form in his state will be subject to card check unionization.)

Harkin said he’s hoping that the compromise bill he’s negotiating with fellow senators will win the "grudging support" of both labor and "some business." For its part, labor says card check is non-negotiable and absolutely essential, and from the business side comes the stance that, even with card check gone, the EFCA is still Armageddonish with its binding arbitration provision.

The proposed law mandates a two-year binding contract be imposed if the company and union fail to agree upon a contract after 90 days of direct negotiations and another 30 days of mediation. In the words of Rodney King, "Can’t we all just get along?" Evidently not.


NOTE: The details in this blog are provided for informational purposes only. All answers are general in nature and do not constitute legal advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The author specifically disclaims any and all liability arising directly or indirectly from the reliance on or use of this blog.
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Peering into Our Future? Spain’s Unemployment at 17 Percent

Actually, I’m not referring to the level of unemployment when I say “Peering into Our Future.” If you follow Shadow Stats, you’ll know that we’ve already gone well past that figure (into the 20-percent range).

What I’m referring to is the black market that developed in response to the recession, which has become a major source of income for the unemployed.

Also, a spate of labor laws make it easier for people to be unemployed in Europe (while offering almost no chance for advancement or career change during normal times).

So, if you want to know our future under Obama, read “Spain Largely Avoids Unrest Even as Economy Slumps.”


NOTE: The details in this blog are provided for informational purposes only. All answers are general in nature and do not constitute legal advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The author specifically disclaims any and all liability arising directly or indirectly from the reliance on or use of this blog.
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Obama Billionaire Backers Nix EFCA–Surprised?

Warren Buffett, the sage of Omaha, was the first Obama-aire to come out against the EFCA (Employee Free Choice Act) and its card-check unionization. Now he’s been joined by three other Obama-backing billionaires (did you realize that the Democratic Party has a much higher concentration of voters who make more than $100,000 a year than the GOP has?). The three nay-sayers all hail from Chicago.

One, Penny Pritzker, a Hyatt zillionaire, actually ran Obama’s campaign finance committee, the one that racked up about $750 million (with nine-figure contributions from unions) for the presidential campaign and another $53 million just for the inauguration.

Neil Bluhm, founder of the private equity firm Walton Street Capital and gatherer of $160,000 for the Obama campaign, just says no as well, and is joined by another billionaire, Lester Crown, who runs an eponymous investment firm. Crown gave the max personal contribution allowable under the law to Obama.

What took them so long, or did they just notice Obama’s true stripes?


NOTE: The details in this blog are provided for informational purposes only. All answers are general in nature and do not constitute legal advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The author specifically disclaims any and all liability arising directly or indirectly from the reliance on or use of this blog.
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History of At-Will Employment: Created Out of Thin Air?

I‘d always heard about how Major League Baseball’s exemption from antitrust law was based on a long-ago Supreme Court decision that ruled the sport did not (catch this one: DID NOT) engage in interstate commerce. Funny thing is, no Supreme Court decision since that one nearly 90 years ago has ever overturned its obviously false finding.

What I didn’t realize until I just read a Personnel Concepts white paper was that at-will employment–the arrangement under which employer and employee are free to part company for any reason at all (except discrimination, which is covered by several laws)–was similarly created by court fiat.

(At will, of course, is the concept employers use to keep the fear of termination fresh in their employees’ minds, while it provides employees with the cover to quit at any time. Some exchange of equal benefits, huh?)

Now, common law at the time held that jobs were agreed to last a minimum of one year both here and in Great Britain, but along came a guy named Horace Wood who wrote a treatise on how the courts had long held that employment was at will, subject to termination at any moment for any reason (no one worried too much about racism and discrimination back in the 19th century). Though Wood pretty much made up his interpretations of case history on employment, after that courts high and low ruled that all employment was at will.

Cute achievement by Mr. Wood, this. And the title of his treatise was…

Master and Servant.

“Get to work, you servants, or I’ll fire your asses!” is a concept now enshrined in our nation’s jurisprudence.


NOTE: The details in this blog are provided for informational purposes only. All answers are general in nature and do not constitute legal advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The author specifically disclaims any and all liability arising directly or indirectly from the reliance on or use of this blog.
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Lesson of Japan: Maybe We Do Need EFCA

Japan’s dirty little immigration secrets are starting to come to light, and they’re not pretty.

A little history from The Japan Times: Back in the 1980s, “official” Japan became worried that labor was getting too expensive, threatening its manufacturing and exports. Importing cheap labor was at first ruled out as a solution because it would debase Japan’s “homogeneous” racial stock, but that proved to be tatemae, a facade, as the nation began importing workers from China as “trainees.” Not being citizens, they didn’t have to be paid the minimum wage and they could be worked long, long hours.

Later, Japan also starting inviting Nikkei, foreigners of Japanese descent who mostly do not speak Japanese, to work in the country. Like the trainees, they are not citizens and thus not subject to any labor laws. Reports of working both of these groups as many as 16 hours a day and paying them just $400 a month abound, which you can read about in more detail in the article.

Now, with a severe economic downturn hitting Japan, the trainees and Nikkei have been the first to be fired. The trainees have no choice but to return home, where they face disgrace and possible prison time for not being able to repay their sponsors for sending them over. The Nikkei are being offered “golden parachute” payments of $3,000 for each worker and $2,000 for each dependent to return home and never come back!

The Japan Times concludes, and this sounds eerily like America:

It’s epiphany time. Japan’s policymakers haven’t evolved beyond an early Industrial-Revolution mind set, which sees people (well, foreigners, anyway) as mere work units. Come here, work your ass off, then go ‘home’ when we have no more use for you; it’s the way we’ve dealt many times before with foreigners, and the way we’ll probably deal with those Indonesian and Filipino care workers we’re scheming to come take care of our elderly.

Wow, I truly feel sorry for these people. It’s even making me reconsider my opposition to unions and the Employee Free Choice Act (EFCA). The phrase “mere work units,” in particular, sticks in my craw.

The article is truly eye-opening, a must read.


NOTE: The details in this blog are provided for informational purposes only. All answers are general in nature and do not constitute legal advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The author specifically disclaims any and all liability arising directly or indirectly from the reliance on or use of this blog.
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American Dream Destroyed by…Real Estate?

I‘ve always thought of the American Dream as including home ownership. You know, having your own place to tool home to and relax after a hard day’s travail.

Now, two economists at Chapman University (which is actually fairly near the American Dream abode to which I retire each evening) have asked a serious, intriguing question–and come up with a penetrating answer.

Steven Gjerstad and Vernon L. Smith ask why the collapse of the $10-trillion Dot-Com Bubble at the turn of the century had nary a ripple effect on the economy, while the recent collapse of the $3-trillion Housing Bubble sank the world.

The answer is, simply, that the Dot-Com losses were all absorbed by individuals and institutions and were not, like the Housing Bubble, encased in weird investment instruments and sold to banks and investment houses the world over. (To say nothing of their then being insured by AIG, which is now on the hook for most of the worldwide losses.)

One caveat here: It’s $3 trillion in lost equity to date, but we don’t yet know the final amount, so the comparison may be incomplete.

However, and here’s where it gets interesting, while virtually everyone blames our current downturn on the housing bust, the Great Depression–the only other period with similar devastation to the world economy–is usually attributed to a stock market crash and a tight-money policy by the Federal Reserve and other world banks.

Throwing orthodoxy out the window, Messrs. Gjerstad and Smith pin the blame for both catastrophes on housing and consumer debt (while saying more research needs to be done on the Great Depression). To be precise, they note that total mortgage debt outstanding grew from $9.35 billion in 1920 to $29.44 billion in 1929, eerily similar to recent trends. They write:

It appears that both the Great Depression and the current crisis had their origins in excessive consumer debt–especially mortgage debt–that was transmitted into the financial sector during a sharp downturn.

So, the authors answer their own question by asserting that consumer debt “can be transmitted quickly and forcefully into the financial system” and was both in 1929 and in 2008.

So if you want to live the American Dream, don’t go into debt. Pay cash for that house, dammit! (I only wish I could.)


NOTE: The details in this blog are provided for informational purposes only. All answers are general in nature and do not constitute legal advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The author specifically disclaims any and all liability arising directly or indirectly from the reliance on or use of this blog.
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