I found this column highly dissappointing . Among my issues with his rant:
1. Drug cos- The point is that drug companies essentially get a limited monopoly on new drugs, and they are allowed to charge whatever they want, and the govt agrees to pay whatever they want, and the govt is not allowed to negotiate price at all, so its all just a big subsidization to the drug companies. The fact that he did not address this particular point makes him either dishonest or ill informed.
2IExxon - I guess this tells me that Will really doesn't understand company financials. Profit as a percent of revenue is not terribly meaningful. Profit as a percent on investment is more meaningful, and their ROE's are in the 30's, which is very high. Only other industry's with that kind of ROE I can think of are Pharma (due to monopoly and govt subsidizaton) and Microsoft (effective monopoly) As far as ownership of mutual funds, a vast majority of that ownership is upper income folk.
3.Increase in per capita income - the MEDIAN FAMILY income has only increased about 1% year since 1970, and most or all of that increase can probably be attributed to more females entering the work force, so effective individual MEDIAN incomes have been flat or declining for almost 40 years. To throw out per capita income, which is a function of a mean/average does not address the point that "most americans lives have gotten worse". Also, I have seen statistics that over the past 30 years, the median retirement savings, when you take into account personal savings, pensions, and social security has also gotten worse. In terms of the size of the american home, how much of that is just due to borrowing more?
4. Cap gains -Over the long run capital gains tax cuts don't typically increase revenue. There is little evidence to suggest a 20 or 25% cap gains tax rate would hurt govt revenue or the economy. Even Greenspan has said as much.
5. FICA Issue - When I first saw the print edition, where Will Asserts that a married couple making a combined income of about $140K would end up paying more FICA. I thought at the time surely he is not so ignorant as to realize that the FICA cap was PER PERSON, not per couple, but I guess he was wrong (he IS that ignorant).
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Questions for Obama
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• During the ABC debate, you acknowledged that when the capital gains rate was dropped first to 20 percent, then to 15 percent, government revenues from the tax increased and they declined in the 1980s when it was increased to 28 percent. Nevertheless, you said you would consider raising the rate "for purposes of fairness." How does decreasing the government's financial resources and punishing investors promote fairness? Are you aware that 20 percent of taxpayers reporting capital gains in 2006 had incomes of less than $50,000?
• This November, electorates in four states will vote on essentially this language: "The state shall not discriminate against, or grant preferential treatment to, any individual or group on the basis of race, sex, color, ethnicity or national origin in the operation of public employment, public education or public contracting." Three states—California, Washington and Michigan—have enacted such language. You made a radio ad opposing the Michigan initiative. Why? Are those states' voters racists?
• You denounce President Bush for arrogance toward other nations. Yet you vow to use a metaphorical "hammer" to force revisions of trade agreements unless certain weaker nations adjust their labor, environmental and other domestic policies to suit you. Can you define cognitive dissonance?
• You want "to reduce money in politics." In February and March you raised $95 million. See prior question.
But coming next, questions for John McCain.
CORRECTION (published May 19, 2008): This column originally stated that Obama favors elminating the cap on earnings subject to the 12.4 percent Social Security tax. The tax (currently limited to the first $102,000 at 12.4 percent) of the couple cited in the column's example was assessed on their combined income. But because the Social Security tax is assessed individually, and the couple each earns less than the current cap, any elimination of that cap will not have an effect on their tax burden. NEWSWEEK regrets the error.
© 2008
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