California has declared today Steve Jobs Day. In this post I will discuss how I am concerned that we no longer have a great industrialist to lead us out of the Great Recession. Where is our Henry Ford?
But first, this seems like an appropriate time to reflect on what a great industrialist Steve Jobs was. He helped create the personal computer market with the Apple II (and I have fond memories of my Apple IIc and IIgs). He led the creation of the first mouse based graphical computer system. He helped make Pixar the great studio it is today. He helped revolutionize music with the iPod. Reinvented the phone with the iPhone (and gave what was one of the best presentations I have ever seen....the iPhone launch speech still gives me chills.....it completely changed smartphones). He helped create a new product category with the iPad, a device I use all of the time in my practice (I realize that there were Windows tablets, but those were very different devices.....really just PCs with a little bit of touch interface). I am just beginning to get the hang of iCloud, but I am certain that it is a giant leap forward in the post-pc age. It will take many years, perhaps even a century, to fully appreciate how important these changes will be.
Now about Henry Ford. No one can deny how much the automobile changed the American landscape, and how the automobile changed how America was perceived around the world (the Germans and others even used "Fordism" to describe American mass production). Henry Ford was an essential part of this great industrialization. He was also an essential part of the war effort, despite being both a pacifist as well as quite elderly. This great industrialization led America to victory in World War II. The Germans simply could not keep up with American production. Moreover, this industrialization led America out of the Great Depression.
Before Steve Jobs and his amazing "second act" (taking over control of Apple for the second time, and leading to be the most valuable company on Earth), it seemed like the coolest tech products came from other countries, such as Sony in Japan. Now, people around the world line up for these iconic products designed in Cupertino California. Although I am convinced that Apple will be fine for awhile, who else in American industry will be able to so invigorate American ingenuity? In other words, who will be our Henry Ford now, and help industrialize America, and lead us out of the Great Recession?
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I plan to post soon regarding a fellow Colby alum, Mike Daisey, and how he is completely wrong about Apple, and why you should never trust someone who hasn't run a company to comment on capitalism.
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Sunday, October 16, 2011
Wednesday, October 5, 2011
Very sad day....Steve Jobs has passed away....
I really didn't think it would come this quick since it wasn't that long ago that he did the iCloud announcement.
It's no secret that I am quite a fan of Apple products, and in this difficult economy its even more tragic to lose one of the greatest industrialists in US history.
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It's no secret that I am quite a fan of Apple products, and in this difficult economy its even more tragic to lose one of the greatest industrialists in US history.
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Saturday, October 1, 2011
In the United States, are the rich paying enough taxes?
My answer on @Quora to: In the United States, are the rich paying enough taxes? http://qr.ae/7Ps9A
Yes, the rich are paying enough taxes.
There are many on here who talk about all of the great loopholes that the rich supposedly take to avoid tax. However, most of the great tax shelters have been shut down, and there are severe penalties (look at what happened to all the Swiss bank accounts.....look at the 2011 Offshore Voluntary Disclosure Initiative).
There is no such theory as "trickle down." If you Google trickle down, you get this:
"Economist Thomas Sowell has written that the actual path of money in a private enterprise economy is quite the opposite of that claimed by people who refer to the trickle-down theory. He noted that money invested in new business ventures is first paid out to employees, suppliers, and contractors. Only some time later, if the business is profitable, does money return to the business owners—but in the absence of a profit motive, which is reduced in the aggregate by a raise in marginal tax rates in the upper tiers, this activity does not occur. Sowell further has made the case that no economist has ever advocated a "trickle-down" theory of economics, which is rather a misnomer attributed to certain economic ideas by political critics."
Trust me, it is not much fun to run a business, pay all the bills and employees, and then have nothing left over to pay yourself, or worse to have to lend money to the business to make payroll. Happens all the time with businesses.
This is a competitive world. If we tax people disproportionately higher than in other countries, people will leave. We are already starting to see this in the US...
Warren Buffett is disingenuous with much of what he is saying. For example, when he talks about paying less than his secretary, he is failing to take into account the corporate taxes he pays. When you combine the corporate taxes with the individual taxes, the US pays one of the highest rates in the world. If we didn't, then why all the effort to shut down tax shelters? Why are so many companies holding their profits offshore? Moreover, Warren Buffett had already made his money, and he likes to hold his positions for a very long time. As such, he really doesn't have much income anyway.
WIth our current rate of spending, you would have to tax people who make over 10 million dollars a year at a 700% tax rate to close the budget gap. Massive increases in tax anyway were one of the causes of the great depression (the Revenue Act of 1932 was one of the largest tax increases in history and made the Great Depression much worse).
As for borrowing our way to prosperity, Japan tried this for a couple decades, and has a lot of debt and not much growth to show for it (Google the "lost decades").
As for solutions, we need to strongly encourage economic growth through attractive tax and regulatory policies and sensible government spending. We need to make sure that investment is still flowing to the US.
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Yes, the rich are paying enough taxes.
There are many on here who talk about all of the great loopholes that the rich supposedly take to avoid tax. However, most of the great tax shelters have been shut down, and there are severe penalties (look at what happened to all the Swiss bank accounts.....look at the 2011 Offshore Voluntary Disclosure Initiative).
There is no such theory as "trickle down." If you Google trickle down, you get this:
"Economist Thomas Sowell has written that the actual path of money in a private enterprise economy is quite the opposite of that claimed by people who refer to the trickle-down theory. He noted that money invested in new business ventures is first paid out to employees, suppliers, and contractors. Only some time later, if the business is profitable, does money return to the business owners—but in the absence of a profit motive, which is reduced in the aggregate by a raise in marginal tax rates in the upper tiers, this activity does not occur. Sowell further has made the case that no economist has ever advocated a "trickle-down" theory of economics, which is rather a misnomer attributed to certain economic ideas by political critics."
Trust me, it is not much fun to run a business, pay all the bills and employees, and then have nothing left over to pay yourself, or worse to have to lend money to the business to make payroll. Happens all the time with businesses.
This is a competitive world. If we tax people disproportionately higher than in other countries, people will leave. We are already starting to see this in the US...
Warren Buffett is disingenuous with much of what he is saying. For example, when he talks about paying less than his secretary, he is failing to take into account the corporate taxes he pays. When you combine the corporate taxes with the individual taxes, the US pays one of the highest rates in the world. If we didn't, then why all the effort to shut down tax shelters? Why are so many companies holding their profits offshore? Moreover, Warren Buffett had already made his money, and he likes to hold his positions for a very long time. As such, he really doesn't have much income anyway.
WIth our current rate of spending, you would have to tax people who make over 10 million dollars a year at a 700% tax rate to close the budget gap. Massive increases in tax anyway were one of the causes of the great depression (the Revenue Act of 1932 was one of the largest tax increases in history and made the Great Depression much worse).
As for borrowing our way to prosperity, Japan tried this for a couple decades, and has a lot of debt and not much growth to show for it (Google the "lost decades").
As for solutions, we need to strongly encourage economic growth through attractive tax and regulatory policies and sensible government spending. We need to make sure that investment is still flowing to the US.
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Friday, September 30, 2011
Is the new Voluntary Settlement program for independent contractors a good idea?
Is the new Voluntary Settlement program for independent contractors a good idea?
An article at Forbes says no:
Click here for the article: Employers Beware of IRS' Illusory Worker Classification Program
Moreover, such a reclassification could lead to negative actions from other government agencies, since the amnesty only applies to the IRS. Employees could also use entry into the program as evidence of wrongdoing by the employer and thus sue for benefits that weren't provided.
However, there are risks in not entering into the program:
Click here for the article: Experts Weigh in on the IRS’s New Voluntary Classification Settlement Program
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An article at Forbes says no:
Where Section 530 of the Revenue Act of 1978 applies, reclassification of a worker from independent contractor to employee for tax purposes can only have prospective effect. There is no legal basis for assessing employment tax, penalties, or interest with respect to such worker for a prior period.
Why, then, would an employer voluntarily agree to pay any employment tax with respect to a worker classified as an independent contractor for a prior period for which the worker was classified as an independent contractor? Why, too, would the employer voluntarily agree to extend the assessment period for employment taxes with respect to such worker for each of the next three years?
Click here for the article: Employers Beware of IRS' Illusory Worker Classification Program
Moreover, such a reclassification could lead to negative actions from other government agencies, since the amnesty only applies to the IRS. Employees could also use entry into the program as evidence of wrongdoing by the employer and thus sue for benefits that weren't provided.
However, there are risks in not entering into the program:
Yet given the fact that the Labor Department has teamed up with the IRS and a growing number of states in a renewed effort to penalize businesses for wage theft, employers should weigh their options carefully. According to the Associated Press, the IRS collected $4 million in back wages on behalf of about 6,500 employees who were misclassified in 2010. With 300 new investigators in the agency this year – all of whom will focus exclusively on probing wage theft complaints – we will likely see a significant increase in those numbers, along with the fees and penalties that accompany them.
Click here for the article: Experts Weigh in on the IRS’s New Voluntary Classification Settlement Program
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IRS Announces New Voluntary Worker Classification Settlement Program; Past Payroll Tax Relief Provided to Employers Who Reclassify Their Workers
IRS Announces New Voluntary Worker Classification Settlement Program; Past Payroll Tax Relief Provided to Employers Who Reclassify Their Workers
IR-2011-95, Sept. 21, 2011
WASHINGTON – The Internal Revenue Service today launched a new program that will enable many employers to resolve past worker classification issues and achieve certainty under the tax law at a low cost by voluntarily reclassifying their workers.
This new program will allow employers the opportunity to get into compliance by making a minimal payment covering past payroll tax obligations rather than waiting for an IRS audit.
This is part of a larger “Fresh Start” initiative at the IRS to help taxpayers and businesses address their tax responsibilities.
“This settlement program provides certainty and relief to employers in an important area,” said IRS Commissioner Doug Shulman. “This is part of a wider effort to help taxpayers and businesses to help give them a fresh start with their tax obligations.”
The new Voluntary Classification Settlement Program (VCSP) is designed to increase tax compliance and reduce burden for employers by providing greater certainty for employers, workers and the government. Under the program, eligible employers can obtain substantial relief from federal payroll taxes they may have owed for the past, if they prospectively treat workers as employees. The VCSP is available to many businesses, tax-exempt organizations and government entities that currently erroneously treat their workers or a class or group of workers as nonemployees or independent contractors, and now want to correctly treat these workers as employees.
To be eligible, an applicant must:
Consistently have treated the workers in the past as nonemployees,
Have filed all required Forms 1099 for the workers for the previous three years
Not currently be under audit by the IRS
Not currently be under audit by the Department of Labor or a state agency concerning the classification of these workers
Interested employers can apply for the program by filing Form 8952, Application for Voluntary Classification Settlement Program, at least 60 days before they want to begin treating the workers as employees.
Employers accepted into the program will pay an amount effectively equaling just over one percent of the wages paid to the reclassified workers for the past year. No interest or penalties will be due, and the employers will not be audited on payroll taxes related to these workers for prior years. Participating employers will, for the first three years under the program, be subject to a special six-year statute of limitations, rather than the usual three years that generally applies to payroll taxes.
Full details, including FAQs, will be available on the Employment Tax pages of IRS.gov, and in Announcement 2011-64.
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IR-2011-95, Sept. 21, 2011
WASHINGTON – The Internal Revenue Service today launched a new program that will enable many employers to resolve past worker classification issues and achieve certainty under the tax law at a low cost by voluntarily reclassifying their workers.
This new program will allow employers the opportunity to get into compliance by making a minimal payment covering past payroll tax obligations rather than waiting for an IRS audit.
This is part of a larger “Fresh Start” initiative at the IRS to help taxpayers and businesses address their tax responsibilities.
“This settlement program provides certainty and relief to employers in an important area,” said IRS Commissioner Doug Shulman. “This is part of a wider effort to help taxpayers and businesses to help give them a fresh start with their tax obligations.”
The new Voluntary Classification Settlement Program (VCSP) is designed to increase tax compliance and reduce burden for employers by providing greater certainty for employers, workers and the government. Under the program, eligible employers can obtain substantial relief from federal payroll taxes they may have owed for the past, if they prospectively treat workers as employees. The VCSP is available to many businesses, tax-exempt organizations and government entities that currently erroneously treat their workers or a class or group of workers as nonemployees or independent contractors, and now want to correctly treat these workers as employees.
To be eligible, an applicant must:
Consistently have treated the workers in the past as nonemployees,
Have filed all required Forms 1099 for the workers for the previous three years
Not currently be under audit by the IRS
Not currently be under audit by the Department of Labor or a state agency concerning the classification of these workers
Interested employers can apply for the program by filing Form 8952, Application for Voluntary Classification Settlement Program, at least 60 days before they want to begin treating the workers as employees.
Employers accepted into the program will pay an amount effectively equaling just over one percent of the wages paid to the reclassified workers for the past year. No interest or penalties will be due, and the employers will not be audited on payroll taxes related to these workers for prior years. Participating employers will, for the first three years under the program, be subject to a special six-year statute of limitations, rather than the usual three years that generally applies to payroll taxes.
Full details, including FAQs, will be available on the Employment Tax pages of IRS.gov, and in Announcement 2011-64.
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Tuesday, September 20, 2011
Eat the Rich
Article from Roth & Company:
ONE TOO MANY TRIPS TO THE BUFFETT.
Anyone up for a 134% tax rate?
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ONE TOO MANY TRIPS TO THE BUFFETT.
Anyone up for a 134% tax rate?
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Are You Considering Law School?
Then check out this rather controversial blog about law school and the misleading statistics regarding the percentage of graduates who get jobs.
http://insidethelawschoolscam.blogspot.com/
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http://insidethelawschoolscam.blogspot.com/
What percentage of the time is still quite obscure, because we don't have good stats. Although the Law School Transparency people are doing fantastic work with the data available to them, that data is quite bad. We don't know the answer within a tolerable degree of accuracy to such basic questions as "what percentage of graduates of ABA-accredited law schools, and of particular schools, have full-time salaried (aka. real) jobs that require a law degree (i.e., law jobs) nine months after graduation, and what do these jobs pay?" We have even less information about people further down the line, which is actually even more crucial.
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