April 14, 2005
Evil Dr. Bush and his Tax Cut for The Wealthy
I recently saw yet another claim that Evil Bush's Tax Cut gave the "average schmo" $300 and saved "the wealthy" Billions and Billions.
Not all that long ago, I heard another individual saying "The average guy got one month's car payment on his Chevy, the Wealthy got a free brand new Lexus..." (Note: Not an actual quote -- those quote marks are really paraphrasemarks)
So, I decided to waste a half hour and do the research so that my rebuttal could be more accurate (and therefore meaningful). Here's what I found.
Let's assume for the sake of argument that the definition of "the wealthy" is any family who earns more than $320,000 per year. (I am using the "Married Filing Jointly" status for this comparison. There are significant differences (unmarried individuals can earn $320,000 before entering the highest bracket, but married couples can total no more than the same $320,000 -- or about $160,000 each))
Let's also assume that the "average schmo" is family earning, oh... $58,500 per year. (Remember, that's the couple's total, not the individual -- for this calculation, individual is $29,050)
I am using 1999 as the standard for "before the tax cut" and 2004 as "after the tax cut". For the purposes of this calculation, I am assuming income to be the taxable income, if only to simplify calculations. I am aware that there were a myriad of little credits and deductions added to the tax code in the last several years, and that ignoring them decreases the accuracy of my comparison.
Feel free to do more in-depth research to get more-accurate numbers.
The Wealthy:
in 1999, they earned $320,000 of taxable income, and were taxed as follows: (calc from the 1999 IRS Form 1040 Instructions)
Income over $283,150: Tax 90,200.50 + 39.6% of all income over $283,150.
$90,200 + (.396)*(320000-283150) = $104,793 in taxes.
In 2004, they earned the same $320,000:
Income over $319,100: Tax: $86,328 + 35% of all income over $319,100.
$86,328 + (.35)*(320000-319100) = $86,643
$104,793 - $86,643 = $18,150 in tax cuts, a 17% decrease in income tax.
That's right, the family earning $320,000/yr pays 17% less now than before! Let's check out our "average schmo" family.
1999:
If you make less than $100,000 you use the tax table instead of the rate schedule. In 1999, the tax table said married couples earning $58,500 in taxable income owe: $10,791
2004:
Same rules apply, in 2004 the married couple owed: $8,106.
That means the tax cut saved them
$10,791 - $8,106 = $2,685. This means that they owe 24.8% less tax today than they did before the tax cut.
That means the average couple saved over 24%, the wealthy couple saved about 17%. Not quite so unfair-to-the-average-schmo as you might think.
If you disagree with my definitions of average and wealthy, feel free to plug in your own numbers. I used these because they were near the cutoff points for different tax brackets, and I assumed that the government's definition of average and wealthy were based on those numbers.
---There will be an immediate response of "bah, percentages, average-guy saved under $3k, wealthy-guy saved over $18k!" to which I can only say, you can hardly consider it fair to decrease taxes on the average individual so far that they are being *paid* by the government...
— The Shelanman
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November 07, 2004
Post-Election Ruminations
Today it is my turn to be demystified. About the reasons behind the Kerry campaigns continuing statements about reinstating the draft....
Five days ago the United States re-elected President George W. Bush to a second term in office. If this is still news to you, please promptly remove your head from the sand.
The purpose of today's rumblings has little to do with the election itself, however. My all-time favorite author Orson Scott Card recently wrote an article entitled Emotions, the Draft, UnBush, Black Voters, and Local Candidates, giving his final thoughts about the War on Terror prior to last week's election.
Card got his wish, Bush was re-elected, but that is not the interesting part...
Do you remember all the rumblings about Bush re-instituting the draft if he were re-elected? Since I am most definitely in the draftable demographic, my head came up sharply at every news story that mentioned the draft.
I am infinitely thankful for each of the millions of members of the U.S. Armed Forces, and for all the work that they do to help keep America, and the world, free. I do not, however, have much interest in joining their ranks -- especially against my will.
Card claims that while Bush would not institute the draft, Kerry's policies would require it. Why? Card explains that under Kerry enlistments would decrease; He makes a comparison to Nixon and the Vietnam war... apparently, he once told a college professor that he would not serve in Vietnam if he could help it. Why not?
"Because we've already decided to lose. Why should I risk my life for that?" Nixon had been elected partly on the basis of a promise to get out of Vietnam. Having made that promise, he was no longer capable of negotiating a peace with the North Vietnamese that differed in any significant way from our complete surrender.
While I'm not convinced that Kerry would have instituted the draft, I find Card's essay thought-provoking as usual. I frequently disagree with him, but his War Watch essays are always well thought out.
— The Shelanman
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October 28, 2004
Is It Really Better To Give Than To Receive?
Today's demystification is directed to blogger Chris Westley over at mises.org, who is attempting to find the value and meaning in a little book called The Giving Tree by Shel Silverstein. Chris is trying to figure out why married couples so frequently receive multiple copies of this book as wedding presents, and is analyzing it for meaning. He seems unable to come up with anything he likes. The Ludwig von Mises Institute Blog features his treatise, you can read what he has to say. (source: The Ludwig von Mises Institute Blog).
This seems like a job for The Shelanman, so here's my $0.02 on The Giving Tree. Chris Westley talks about the stupid tree who gives and gives and gives to the selfish man until he has nothing left, in a manner that leaves them both "impoverished." I hate to say it, but he has missed the point...
There are several important themes in this fable. Like many fables, myths, and other stories, the important character traits are exaggerated for emphasis. I may be wrong, but I suspect that Shel Silverstein would not want everybody to give of themselves to the point that they no longer could be anything but a stump. Instead, I feel, the point is to emphasize the value of friendship, and the great lengths a true friend should go to preserve such a deep friendship as the one between the tree and the boy.
Before you go running off repeating Chris' statements, remember I said that the important trait (in this case, friendship) is exaggerated.
One other important point. The tree-boy relationship was much healthier than the later tree-man relationship; another message in this tale is the cost involved in abandoning a friend. After all, the boy grew into a man, and he abandoned his tree-friend. This led them both down a path where the man became old, lonely and tired, and the tree became a stump; hardly a happy ending.
In my opinion, however, the reason this book is given at weddings (is it really a wedding gift? That might explain how I came to read the book when I was about 4... my parents might have had the book since their wedding, who knows) has more to do with this simple message: When both partners truly share everything with each other, they can have a deep happiness together that erodes rapidly when they become distant.
Chris? That help any? Hopefully I have demystified yet another confused author.
Either way Chris Westley, your blog entry on The Giving Tree was interesting, and got me to think about this book, one that I haven't so much as seen in at least a decade... Feel free to comment with your own thoughts.
— The Shelanman
P.S. If you've never read the book, or if you need to pick up a wedding gift for someone, here's the trusty amazon link:
The Giving Tree
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October 22, 2004
The Purpose and Usefulness of Science
With increasing frequency "Religion Vs Science" debates go on -- people well versed in science squealing that anybody who could believe in X is silly, and people with strong religious beliefs shouting that anybody that doesn't believe X is going to hell.
I don't pretend to have the Ultimate Answer to this question (other than the obligatory 42). Instead, I have to offer up what I think is the most insightful comments about the role science can play in our understanding of the nature of the world that I have encountered in a long, long time.
808140 a Slashdot member, recently discussed science's fundamental inability to grant [some of] the answers we desire. Writes 808140:
You see, science (especially in popular consciousness) is seen as the discipline which endeavors to answer the question "why?" with respect to various observable phenomena. These questions have been at the center of human thought for well, ever. We created religion in its various forms to answer this very class of questions.
I think the post is an interesting read. Find the rest here . (source: Slashdot)
-- The Shelanman
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August 26, 2004
What's up at the Pump
This week there was an article in the Los Angeles Times (no link, since registration is required) that talks about gasoline prices this summer.
LA Times writer James Peltz started off his confused little story as follows: "A funny thing happened on the way to $2.50-a-gallon gas this summer. It didn't get there." He goes on to write, in an apparently mystified tone, that instead, as oil prices have risen, gasoline prices have inexplicably fallen. Indeed, oil reached as high as about $49 per barrel! Yet, in recent weeks, (ending about 4 days ago) gas prices have been falling... very slowly, but falling all the same. Well, its The Shelanman to the rescue, as I present three plausible theories as to what's up at the pump...
Theory #1: Oil Companies Are Making a Killing
Most of the companies that I buy gasoline from do not buy their oil on the market, they drill it themselves. As an example, consider Shell. The Royal Dutch/Shell Group drills for oil all over the world, including Russia, the Philippines, Nigeria and the United States. (source: Shell).
Why does this matter? Simple. If Shell is going to drill for oil, refine the oil into gasoline, and then sell me the gasoline, at what point does it need to buy oil on the open market? As far as I can tell, never. In fact, oil companies are making an absolute killing -- they are the ones who have oil to sell on the market... at nearly $49.00 a barrel, I might add.
This theory might explain why gasoline prices have not rocketted up as oil prices have, but something is missing.
Thoery #2:It Takes Time to Refine Oil
This theory is very simple, and I believe the most plausible of the 3. It goes as follows: Oil cost about $49 a barrel last week. So, over the course of the next 4-6 weeks, gasoline will be made and sold that used this expensive oil. Thus, over the next 4 to 6 weeks, we should expect to see a huge spike in prices at the pump as the gas that cost a fortune to make is finally sold.
About 2 months ago, oil was falling, it reached a relative low of about $36 a barrel -- and thus, recently we have been paying a bit less for gasoline -- the (comparatively) inexpensive-to-create-gas was still available.
Now, however, the cheaper gas is running out, and all that is left is the gas from nearly $50 oil, so we will pay more. Additionally, demand is creeping up again, Memorial Day and Labor Day are two of the highest-demand days of the summer.
Theory #3: Oil Companies are Co-Conspirators
You know how this theory goes... it is the most popular one, for some reason. There are only a few oil companies, and it is very difficult and expensive to enter the oil business. Thus, an artificial, government-created oligopoly exists. Since this oligopoly has complete control over gasoline prices, especially in California which has different gasoline formulation laws than the rest of the country, means that oil companies can charge whatever they want -- so long as they do it in a way that prevents consumer backlash in the form of lawsuits (price gouging). This explains why when gasoline prices fall, they do so at a rate of $0.03 - $0.06 per week, yet rise at $0.05 - $0.15 a week when they are on the upswing.
Indeed, Shell oil recently closed a functioning gasoline refinery in California. They did not sell it. They have no plan to repair or rebuild it -- they simply closed it down. There are debates as to whether or not the refinery was profitable. Shell claims it was not, that it was old and outdated and nearly worthless. The conspiracy theorists claim that it was a very modern profitable refinery. I have no information one way or the other, however there are no plans to build a replacement refinery, and yet oil companies insist that there is simply not enough refinery capacity to meet demand... smells of rotting fish, eh?
I am of the opinion that a mixture of these three theories is in play. I tend to lean strongest on theories 2 and 3, I know too little about international oil dealings to be certain my analysis in theory #1 makes sense... Well, Mr. Peltz. Here you are, now perhaps you will be less confused. Feel free to mention my theory in your next column, but do give me a mention if you do? Thanks!
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