Tuesday, July 15, 2014
Why the Rich Will Not Be Paying Higher Taxes Under the Proposed Obama Tax Plans
Why the Rich Will Not Be Paying Higher Taxes Under the Proposed Obama Tax Plans The US Tax Code is Amazingly Complex and is Filled with Deductions Exclusions that Benefit Well Healed Special Interests Lex Loeb Contributor Network . There is good reason that a lot of the super rich in American were overly excited to have the Obama administration come to power. Nothing better than having an attorney in charge because these people are hoping that government will raise barriers to new competition for the industries they control. Nothing works better to accomplish this than non-retroactive regulatory legislation. A lot of the hopelessly forever middle class really do not understand the real rich or how their financial game is substantially different from that of the rest of us. For some of the super rich there are circumstances when a disastrous market decline is a great benefit because it can create tax losses carried foreword. Just a few days ago there were stories in the financial media about John Malone, The big media tycoon, speculating that one reason he wanted to buy a large interest in Sirius radio which happens to be an overly in debt corporation was to grab hold of the impairment of the company so as to grab hold of the tax losses and carry them foreword. John Malone made an amazing fortune investing in the early explosion of cable televsion when it became a sudden major industry. He generated one of the most astounding compound rates of return, ever, in world financial history. The coupling of the technology and modern finance made this his reality. Find a chart showing Malone's compounded rate of return on his investments and immediately it becomes clear why he is looking for tax losses to carry foreword on quality assets that can be purchased at an extreme discount to intrinsic value. This is another way of saying he is interested in avoiding having to pay taxes on his over all long term financial compounded gains. For a number of years Malone has spun off a variety of different sub sectors of his media empire including the various Liberty units. He had even gotten his company is bed with ATT a bit prematurely. The main reason for most of this strange corporate behavior has been the legal avoidance of paying taxes with the best legal and accounting advice that anyone can buy. Malone is not the only billionaire with the need to minimize taxes using losses carried over even if having to purchase them for what otherwise might seem to be better quality assets or borrowed money. With the Stock Market and other assets falling in value there is plenty of reason to believe that most of the very rich , under the present tax code, will not be paying much in the way of taxes anytime soon. The story from Washington is that the Obama administration tax experts are predicting that the US will have a 20 trillion dollar value of annual production national economy in a few years and that the US government will want at least half of that to pay for whopping big new programs like national health care and "stimulus" programs. The consensus is that entitlements will have to take a much larger share of the gross national product. This only means that with the super rich comprising only around 1000 families in the country and some not even being US citizens such as controlling interests of companies like NESTLE that sells you your Purina dog chow that they collectively have assets of maybe two trillion dollars and earn at most 5% on their assets a year leaving only some percentage of 100 billion dollars to tax. That is a huge discrepancy for government to be getting 10 trillion dollars per year to run all of the desired programs including entitlements . This simple math tells you that Obama is lying about taxing the rich and that everyone in every transaction will be paying much more in taxes. The rich who own large corporations that have some of the smallest profit margins on sales of any businesses in the country. Some large stores you shop at like Walmart or Kroger have margins of less than 2 percent. If the taxes on the rich force them to raise margins to 3 or 4 percent or more you will be paying more. The rich are favored in the tax code and will continue to be so such that they will find a way to pass the higher taxes on to the consumers and that means you will be paying them. With steep asset declines it actually seems likely unlikely that many of the rich will be paying any real taxes for the foreseeable future. Clever lawyers and accountants have structured the system to favor big corporate organizations and this passes though to the biggest closely holding owners most. The lack of taxation on the rich is best illustrated by looking at what happened to the Newhouse family that owns advance publication. The billionaire founder of the company died and the family almost had to pay huge estate taxes. With two senators from Oregon in the family's back pocket including one on the ways and means committed a special law was drafted and passed in congress that allowed just two or three families in the entire country to have the objective to pass on tax deferrals to a second generation of heirs to essentially prevent the families from having to pay any estate taxes that would have been due and payable in your family. Most of the newspapers including the Oregonian rallied for the cause of preventing the elimination of the inheritance tax for the rest of us when the republicans tried to repeal it permanently and they still do! The 2000 richest families in the country are extraordinarily happy with their special deals when it comes to taxes they often have to pay for what they get from congress. For them and congress it is a win win situation . The rest of us will be paying their "higher" taxes. You may have wondered why so many of the richest families in the country seem to support some of the most radical of politicians running for election and this is one of the primary reasons. It is not as if President Obama can't do the math he is just a pitchman. Anyone seen the commercial no television with the J. Gordon Liddy selling gold bullion? That commercial runs over and over again so people must be willing to buy from someone with the notorious Watergate crime background which is why they will buy a sales pitch where they end up paying a lot more in taxes because they are scammed into thinking the rich will be paying it for them. .