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June 22, 2011

Comments

How can we raise this guy's taxes without killing the golden goose?

1) Stop making state and local taxes deductible. Then his outsize NYC taxes can't be written off.

2) Get rid of the mortgage deduction. Then his outsize NYC mortgage is no longer deductible.

3) This guy probably doesn't pay income taxes, he gets his income as capital gains. How about aligning capital gains and income tax rates?

Well done, HS. This is a very concise analysis of the liberal elitist malaise.

You're on fire again lately.

if rich people want to give more of their money to the gov't, they can--talk is cheap.

[HS: No, because if one individual rich person gives money to the govt, that makes him poorer than other rich people. But if everyone is forced to contribute, no one's relative status changes.]

HS,

Hence "cheap". "I'll only do it if every else is," isn't a strong moral foundation.

"[HS: No, because if one individual rich person gives money to the govt, that makes him poorer than other rich people. But if everyone is forced to contribute, no one's relative status changes.]"

And if the rich person already made their wealth, then their relative status increases if other people are prevented by income tax of becoming as rich as they are.

H1-Bs are indentured servants. At every company I've worked at they are low paid and abused by management. They don't fight back because they are scared to death of losing their job and getting deported.

We recently had an open position that they couldn't fill because they were offering enough money. In H1-B land its a "job American's won't do", but in the real world its a job plenty would do for a salary more in line with the market rate.

Some will say they do the shit work, but nearly everyone has to start out doing shit work. No matter how prestigious the firm or job, if you are an EL straight out of college you have to do a lot of shit work. You learn the basics of the industry that way before moving on to higher stuff. So if your shouldering Americans out of lower level jobs they are preventing them from getting the experience necessary to one day have higher level jobs.

"were offering enough money"

should be "weren't offering enough money"

Some will say they do the shit work, but nearly everyone has to start out doing shit work. No matter how prestigious the firm or job, if you are an EL straight out of college you have to do a lot of shit work.

If you've ever tried to hire an entry-level programmer, you'll find that not everyone wants to do "shit work". I've had some recent computer science graduates ask about extensive perks and their desire to move in management and be the next Steve Jobs within 1 year... during their initial job interview.

This is why there's a market for H-1B's.

When Wilson, Bloomberg, et. al. speak of those wonderful immigrant entrepreneurs they probably have Reddy and Padma Allen in mind. You know, the klepto-duo who swindled NYC out of close to $600 million.

Considering that this fraud developed entirely on Bloomberg's watch I don't see how anybody, ever again, can take him seriously on any matter of policy or governance. But such are the times. If Wall street can have a second act, then I guess anybody can.

H1-B,

ELs don't want to do ONLY shit work. Then you are an EL forever. And they are right not too, there lies the path of a terrible career. The employer does owe it to them to actually teach them a thing or two while they do some of the grunt work. Even I sit down with my report and explain why I just had him do some repetitive task for 10 hours.

And I hate to break it to you, but the best comp sci grads do get extensive perks. Just look at google EL. There is a market for excellence, though maybe that isn't your market.

"I've had some recent computer science graduates ask about extensive perks and their desire to move in management and be the next Steve Jobs within 1 year... during their initial job interview."

Was the interviewee's name Ian Restil? =)

http://en.wikipedia.org/wiki/Stephen_Glass_%28reporter%29#Scandal_breaks

Eliminating the tax deduction for mortgage interest would be far worse for the middle and working classes than for the wealthy.

"Immigrants without capital pose no threat to himself."

But upper middle class (presumably mostly white) business owners / entrepreneurs do. That's why the ruling class actually likes high income taxes, not because they pay those rates themselves, but because it erects another non-regulatory barrier to entry and competition. Using the tax code to keep potential competitors from acquiring capital and the resources to compete is not exactly a new idea.

The GOP is stupid, because they allow the left to demagogue this issue. Voters hear "tax the wealthy" and think "great idea." But if you re-frame it as punishing achievement and success, maybe a few people might say "hey wait a minute, I'd like to be successful some day."

The truth is that punitive taxes on a few billionaires or high-income celebritards aren't going to solve our problems anyway. High taxes on those people are just the camel's nose under the tent; higher taxes on the middle class is where this logically leads, because the middle is where the greatest amount of money is found - just ask Walmart.

Higher taxes may not even take the form of income taxes, in fact, I'd bet against that. We'll get a VAT on top of income taxes, a "miles driven" tax, sin taxes, soda tax, fatty food tax, you name it, which the ruling class will find highly attractive, because those type of taxes also have a behavior modification aspect to them.

Have any of you tried sending a business plan to Wilson to get financing? Does he actually put his money where his mouth is?

If Margaret Cho votes for a democrat then all asians deserve affirmative action regimes that harm them.

If Bristol Palin votes for a repub then all females deserve diminished abortion rights.

>>Eliminating the tax deduction for mortgage interest would be far worse for the middle and working classes than for the wealthy.

No it wouldn't. Eliminate the deduction and the prices of houses would drop accordingly. In fact, the prices of houses would drop to point that the purchaser would precisely reclaim this spurious "benefit" in the form of lower capital investment and lower financing costs. It would be a net wash for the purchaser.

[HS: It depends on whether houses are assets that can be built as demand increases (tax break benefits buyer), or whether there is a fixed supply (tax break benefits seller by causing price increase), and the answer is a little of both.]

Wilson is one of those whose success has been mediated by education. Therefore, he is not only smart but also obedient and probably cannot think for himself about political issues.

I scored 770 on the GMAT the one time I sat for it, but I couldn't possibly get into to Wharton like Wilson.

If house prices drop because the tax deduction is eliminated it won't be so good for existing homeowners with mortgages. Which is a very high percentage of the population.

"Some will say they do the shit work, but nearly everyone has to start out doing shit work. No matter how prestigious the firm or job, if you are an EL straight out of college you have to do a lot of shit work. You learn the basics of the industry that way before moving on to higher stuff. So if your shouldering Americans out of lower level jobs they are preventing them from getting the experience necessary to one day have higher level jobs."

A major factor behind the IT outsourcing is H1B. When H1B and L1 visa holders return home, they use their acquired knowledge to set up their own businesses and bid for contracts from US firms. With their technical know how and lower prices, they take a lot of work that would've gone to American programmers.

I used to be on an H1-B visa before I became a citizen. I got paid what everyone else got paid, and was not a slave. Maybe it's industry related (I was in pharma).

Peter, the various tax deductions mostly benefit those who itemize their taxes, which is overwhelmingly the upper middle class and higher.

You can mess around with Turbotax a bit, and determine what value of mortgage/ taxes you need to be bigger than the standard deduction. It is not a trivial mortgage, well over $150k at today's interest rates. $100k is a lot of house in flyover country.

I'm not sure if I'd agree that the typical homeowner doesn't itemize, but the bigger point is that if repealing the deduction causes a significant drop in house prices it could be a real hardship for people with mortgages. Our economy needs more upside down homeowners like a hole in the head.

I doubt Fred Wilson's daughters have high IQs. Even with his wealth and connections, they couldn't get into Ivy League schools. They also seem to be vacuous, fashion-obsessed girls.

Fred is smarter than them, but I don't think he's actually that smart. He seems more lucky than smart. He writes his blog at an 8th grade level, and is unable to debate anyone intelligently in the comments.

He got into MIT when there was a lot less competition (American life was less of a zero-sum game and there were fewer foreign applicants) and then he had the good timing to get into Internet venture capital before the first dot com bubble.

Now he doesn't have to be smart; his reputation gives him momentum. It doesn't really matter what he invests in during a bubble. His blog can give hundreds of thousands of dollars of free advertising to any company he invests in, which can make an otherwise marginal business successful (maybe not in making money, but in getting someone else to pay more for it than Fred did, which would make it a successful investment for Fred).

I agree that people should pay the taxes they vote for.

High income earners who lean Democratic rarely have to pay for the fruits of their folly since Republicans are always there to bail them out. Obama got 3 Republican senate votes for his stimulus by agreeing to re-adjust the AMT tax for that year, and of course re-adjusting the AMT was part of the Obama's tax cut deal that renewed the Bush tax cuts.

The Alternative Minimum Tax is the ONE tax that I've actually heard Chris Matthews bitch about. Why? Because it's the one that could affect him personally.

Republicans throwing themselves on the hand grenade of tax increases during a Democratic administration is just crazy. They damage their own political fortunes by protecting Obama supporters from the effects of their own policies, making it that much tougher to make a case to elect them for 2012.

If Republicans had sat back and called Obama's bluff and had let the Bush tax cuts expire, the pain would have caused the scales to fall from many currently blind eyes, making any Republican look better to Obama in 2012 when everyone could easily compare their new tax burdens by election time.

Half Sigma, how come you don't post your anthropological photography anymore?

You and Asian of Reason were the only HBD bloggers that did that.

[HS: Thanks but there was a lot of negative feedback about the propriety of posting photos of strangers who didn't know their photos were being taken.]

"so she has her photography 'career' which is really a hobby."

Gore Vidal said of photography:

"For half a century photography has been the 'art form' of the untalented. Obviously some pictures are more satisfactory than others, but where is credit due? to the designer of the camera? To the finger on the button? To the law of averages?"

Sgt.Joe Friday: "That's why the ruling class actually likes high income taxes, not because they pay those rates themselves, but because it erects another non-regulatory barrier to entry and competition."

Well said! One can never underestimate the elites' need for barriers that keep people from competing with them, the most obvious of which are government regulations.


"High taxes on those people are just the camel's nose under the tent; higher taxes on the middle class is where this logically leads, because the middle is where the greatest amount of money is found - just ask Walmart."

A major problem with Walmart is that it opened an office on Fifth Avenue to spot new fashions, and the stylish being copied in a low-end store is enough to kill and devalue a fashion. Low-income rural shoppers have traditionally been Walmart's core demographic. The actual middle class shops at mid-market stores such as Macy's. Walmart also reduces property values because wherever they appear.

Most of the wealth is actually held by the economic elite:

"In terms of wealth rather than income, the top 1 percent control 40 percent."

-http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105

"Most scholars agree that wealth inequality in the United States is at historic highs, with some estimates suggesting that the top 1% of Americans hold nearly 50% of the wealth, topping even the levels seen just before the Great Depression in the 1920’s (Davies, Sandstrom, Shorrocks, & Wolff, 2009; Keister, 2000; Wolff, 2002)."

-http://www.people.hbs.edu/mnorton/norton%20ariely%20in%20press.pdf

He's also raising his kids jewish for some reason.

The key point to remember is that there is a big distinction between income and assets. The entire progressive tax system is built almost entirely on income while leaving assets untouched. This benefits the rich liberal by creating the illusion of a populist agenda while leaving the vast majority of the rich's assets alone. This is why we have some many limousine liberals.

The Republican focus on income taxes is actually right, because any income tax eventually migrates down to the middle and working classes no matter how high it may start. A tax above $250,000 does not affect John Kerry the same way as it effects someone actually $250,000 a year.

I would like to see a 20% tax on all net worth greater than $10 million, including unrealized capital gains. That will get rid of the liberal rich.

Wilson called for immigration reform in relation to STEM fields last year too. Again, the most popular comments are hostile to Wilson's suggestion.

"I hope and suspect that will include visas for science, technology, engineering, and medicine (STEM) grads. I hope and suspect that will include the startup visa. I hope and suspect that will include a lot more H1B visas."

http://www.avc.com/a_vc/2010/07/immigration-reform.html

Wilson does at least appear acknowledge a distinction between high skill and low skill immigration here:

"fredwilson, I am a VC

we educate them and send them back home

we do that because people confuse a brilliant engineer from India with a poor Mexican trying to climb a fence in your neck of the woods"

"For half a century photography has been the 'art form' of the untalented."

Damn straight. I considered photography for a little while because I have "unsteady hands" unsuitable to fine movements (painting, guitar) and asthma (wind instruments). Photography is a way to say you are artistic if you either don't have the talent or work ethic to have a genuine art hobby.

"He's also raising his kids jewish for some reason."

The reason is that his wife is Jewish.

Posted by: The Engineer
"3) This guy probably doesn't pay income taxes, he gets his income as capital gains."

Here's a joke:
-- You know you're middle class if you have a large income but small capital gains.
-- You know you're rich if you have a small income but large capital gains.

Posted by: The Engineer
"How about aligning capital gains and income tax rates?"

That would require 51% of the voting public to understand my joke. That will NEVER happen.


Terrific post, HS. You surprised me. I didn't think you had it (sympathy and wisdom) in you. I especially liked the line about "flies to be swatted." Captures their mentality perfectly. Bravo!

PS Off topic, re: Bachmann. She is saying tired neocon crap about Afstan so I no longer support her. She's proven that she's just a Republican fembot. But I still don't think Giuliani is going to go anywhere. I want, on principle, two white men to be the Presidential and veep candidates.

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