RFK

Digby reminds us of this, from 1968:

Too much and for too long, we seem to have surrendered personal excellence and community value in the mere accumulation of material things. Our Gross National Product, now, is over eight hundred billion dollars a year, but that GNP — if we judge the United States of America by that — that GNP counts air pollution and cigarette advertising and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for the people who break them. It counts the destruction of the redwoods and the loss of our natural wonder in chaotic sprawl. It counts napalm and it counts nuclear warheads, and armored cars for the police to fight riots in our cities. It counts Whitman's rifle and Speck's knife, and the television programs which glorify violence in order to sell toys to our children.


Yet the Gross National Product does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country; it measures everything, in short, except that which makes life worthwhile. And it can tell us everything about America except why we are proud that we are Americans.

When I was in law school I made my own personal pilgrimage to the Ambassador Hotel in LA, because I wanted to see the place where RFK was assassinated.  I was nine when that happened, and lived 3000 miles away, and didn't know at the time what a devastating blow that was to our country.  But by the time I was in law school at UCLA, it was all too clear to me how we as a country had changed direction in those years. 

From time to time over the years I have reflected on the question:  what would the world be like if Bobby Kennedy hadn't been gunned down?  I can't imagine any politician of national ambition speaking those words today. 

The Miracle of America

Well, I finally finished this book: Albion's Seed: Four British Folkways in America.

I have mentioned this book before.  It is a fascinating look at the migration of the British to the the American colonies in the 17th and 18th centuries, how those migrations originated from different regions of Britain and how those regional differences embedded themselves in the American colonies.  And really, one cannot read the book without constantly reflecting how those differences continue to inform the cultural and political processes we see in America today.

We tend to view Britain now as a kind of single culture - maybe divided along the lines of English, Welsh, Scottish and Irish.  But in reality, the history of Britain is very similar to our own, one that has developed by waves of migration and conquest over centuries:  first the Celts, then the Anglo-Saxons, the Vikings and the Normans.  It too was divided by various cultures battling each other over the centuries in a series of invasions and civil wars.   The migration to America happened in the context of a great civil war when the king was deposed and the country ruled as a republic for twenty years before the restoration.  In a way, the waves of migration to England can be seen as movements by parts of these conflicting cultures to come to America to set up their own separate polities where they can live in peace without having to deal with people on the other side of those conflicts.  And it's kind of ironic that, as the strength of imperial Britain grew and threatened the freedom of all of these polities, they bound themselves together to protect what each of them saw as incursions into their own freedoms, creating a single country where those conflicts were renewed.

After reading this book one has to marvel at the miracle that is the United States.  There have been so many occasions on which the union could have failed and yet it endured and, indeed, became the most powerful nation on earth.

The VSPs are Getting Worried

Both Digby and Atrios have linked to this in the German magazine Der Spiegel today:

Striking statements were made by one of Europe's most powerful men on Monday night, when European Commission President José Manuel Barroso said the strict austerity measures thus far imposed on the EU's beleaguered economies may have reached their political limits.

Although this policy is "fundamentally right," it has nevertheless "reached its limits," he told a conference in Brussels. "A policy, to be successful, not only has to be properly designed, it has to have the minimum of political and social support," he added.

To which Atrios responded:

Translation: a policy which increased prosperity and caused much less economic suffering would be wrong, but have more support.

And Digby added:

There have been a few VSPs and institutions that have rethought their belief in the cleansing and purifying ritual of human sacrifice (notably the IMF) but for the most part the only thing they seem to be worried about now is that they've "purges so much rottenness" that the plebes might just start rebelling.

To which, may I add:  Is it any wonder that gun control is so high on their minds right now?

People are really upset about Newtown, and rightly so.  But the real reason Newtown "changed everything" is that it's largely populated by VSPs.  Heck, even the perpetrator was the son of a GE tax lawyer that makes 7 figures.

What the VSPs have suddenly realized is that they have a population of plebes that is armed to the teeth.

No wonder they are pushing gun control.

It's Not The Arm-twisting

There's been a lot of talk about the idea that the reason background checks failed is that Obama isn't a sufficiently tough arm-twister.

Booman is right - it's not the arm-twisting.

It's the lies.

Look, we have seen in this go-round how people who have opposed this measure are willing to deliberately lie to get their way.  The President directly called them on it after the vote.

And, unfortunately, in places like Arizona and Alaska, a lot of people are likely to believe the lies because it fits with how they view the world.

So it doesn't matter that polls show strong support for background checks.  What matters is that when the elections come around, there will be an awful lot of lying going on by people (gun rights groups) with big megaphones.

The answer to that is to make sure people like Begich and Flake have just a big a megaphone supporting them for their vote on the gun issue.

Are you listening Mike Bloomberg?

Obama Meets with His Bosses UPDATED

Digby reports.

I love this part.

Just yesterday the president was said to be anxious because "entitlements" were crowding out all the things he wanted to do.

Anxiety, not ideology prodded Obama to push for entitlement savings, people close to the president say. Obama has told people in his orbit that he feels “squeezed” by the rise of entitlement spending and sees it as a threat to getting anything else done, especially his plans for increased education and infrastructure spending.

Well guess what?

Read the whole thing.

This has got nothing to do with anything other than responding to the Bosses.  It's all Washington exists for at this point.

Charlie Pierce has more.

Yikes! - It Ain't Over in Cyprus

Yves reports.

At this point, I'm pretty much convinced the Germans want to blow up the Euro, and they've decided to do it by imposing

Great History

I tend to read a lot of history books, and there are a handful of them that, when I am finished, I find have really fundamentally altered my understanding of things.  Among them are "How the Irish Saved Civilization" by Thomas Cahill (is it really 17 years since that book came out?), "A World Lit Only by Fire" by William Manchester (20 years!) and "George, Nicholas and Wilhelm, Three Royal Cousins and the Road to World War I" by Miranda Carter (much more recent, thankfully).  [I also read a lot of books about early Christianity, with my favorite authors there being John Dominic Crossan and Elaine Pagels].

This book, which I am just about finished, tops them all:

The book describes the waves of migration from Great Britain to the American colonies in the 17th and 18th centuries, how these waves originated in different geographical areas of Britain, each with its own distinct culture, and the resulting transplantation of that culture to the colonies.  As a thesis it's easily understandable and in fact not really that remarkable when you think about it.  But the book is mesmerizing in its detailed descriptions of the cultural, political and religious aspects of the societies from which the migrants originated and which they brought with them to America, and you can't help but be struck by how so much of those cultural traits prevail in today's America. 

I wrote not that long ago about this topic, reflecting on how difficult it is to achieve changes in cultural attitudes and behaviors. It's a long slow process.  When you read this book you are struck by that.

The next book on my list is "The Cousin's Wars" by Kevin Phillips.  It's been on my shelf unread for a while, and seems to me to be an appropriate follow-up to this work.


P.S.: Between it being busy season for me, and spending what little spare time I have engrossed in this book, that kind of explains the silence of late.....

This Week's Interesting Tax Items

A few of the more interesting things I saw in the advance sheets this week:

1.  Apparently, American stockbrokers are up in arms about financial transactions taxes, which are being imposed by many EU countries.  The countries are imposing the tax on trades in stock of their companies.  So, for example, if  stock of an Italian company traded on an exchange in the US, the FTT applies.  The tax is paid by the buyer of the stock, but if a financial intermediary is involved - in other words, a broker - the intermediary is required to collect the tax from the buyer and pay it over to the government.  This makes US brokerages into collection agents for the tax.  Needless to say, they are not happy.

2.  Expedia, Hotels.com, and Travelocity and other online travel services have been sued by states and municipalities all over the country for unpaid hotel occupancy taxes.  Over the years, these companies have adopted a different model than the traditional travel agent, who gets paid a commission by the hotel.  These companies typically contract to book rooms at a discounted rate, then turn around and sell them to their online customers at a mark-up - the difference being their profit, the equivalent of the travel agent's commission.  In other words, they buy the rooms at "wholesale" and re-sell them at "retail."  Unfortunately, that means they are the ones renting the rooms, and should be paying tax on the "retail" prices they charge their customers.  They've won some cases, and lost others.  Yesterday a court in Texas ruled that they have to pay $55 million in back taxes to San Antonio and other cities in Texas.

3.  A municipality in Sweden passed a rule that it won't hire contractors unless they meet the requirements of their code of conduct, which includes a provision that the contractor have "no connections to tax havens."  Unfortunately, a Swedish regulatory authority dealing with fair competition has ruled that the code of conduct provision is not valid because it is discriminatory.  The municipality has not decided whether it's going to appeal the ruling. 

Apparently this is now becoming the rage - the cities of Malmo Sweden and Helsinki Finland have passed similar laws.  Helsinki is a big deal - it is the largest purchaser of goods and services in Finland.

Good for them.  Hopefully Kalmar will challenge the ruling....

4.  AIG just lost its motion for summary judgment against the IRS relating to tax shelter transactions it entered into in the years 1993 through 1997.  Yes, that's right, 1993.  This is a summary judgment motion - meaning that the case still hasn't gone to trial, some 19 years after the tax return for 1993 was filed.  Yikes!

5.  Finally, a little tidbit that just popped up.  The Tax Court has recently ruled that the limitation on the deduction of home mortgage interest applies to the property, not to the individual.  The home mortgage interest deduction is limited to interest on debt of $1 million.  In a recent case, an unmarried, same sex couple in California jointly owned a property with a mortgage of $2 million.  They claimed that each of them was entitled to the $1 million limitation.  The Tax Court disagreed. 

The homeowners filed their appeal today. 

It's a good thing they weren't married - they would have lost for sure, since the $1 million limitation clearly applies to married couples (the limitation is $500,000 each if a married couple files separately).

And I swear, I never heard of Charles Sophy, psychiatrist to the stars, until today. 

Obama's Legacy and the Village

Digby:

If his legacy is the signing a private sector style health care plan while cutting "entitlements", lowering the deficit, allowing the Bush tax cuts to expire for those making more than 400k a year, reversing Don't Ask Don't Tell and turning Bush's Global War on Terror into a Global Covert War on Terror, he will have succeeded in mostly pleasing people who hate him and disappointing those who placed their hopes and dreams in his hands --- which by Village standards is the ultimate accomplishment.

I just have three things to say:

First, don't look to the Village to judge your legacy. In the long run, the Village is always wrong.

Second, think about who we consider to be among our greatest presidents (aside from Washington and Jefferson, who just by serving when the nation was young set important precedents):  Lincoln, the two Roosevelts, Truman, Andrew Jackson.  The one thing they all have in common - they took on the Village and they won.  Wilson, who is usually listed in the top 10 as well, took on the Village and lost (if he had won, well, who knows what the world would be like today).    A president that doesn't take on the Village will, in the long run, be viewed as a weak and ineffective President.  And Obama is not taking on the Village.  On the contrary, it's almost as if he is following their orders.   Fifty years from now, that will be his legacy.

The Race to the Bottom Continues

Cameron proposes cutting the UK Corporate Tax Rate to 20%.

Note that everything I've seen indicates that in the UK, as in the US, corporate profits are soaring while the economies as a whole are stagnating.

Surely the answer to that conundrum is to lower the corporate tax rate!

Interesting Tax Items

A couple of things that I missed over the last few days:

1.  Last Thursday, the NY Court of Appeals (our state's highest court) upheld a NYS Tax Department regulation that requires out-of-state vendors making internet sales to NY residents to collect sales tax.  This has been a perennial issue over the last 10 years or so, and will only grow as internet sales become a larger and larger portion of the way we shop and sellers do business.  Essentially, the sellers (in this case, Amazon and Overstock) take the position that since they are not physically present in the state, they are not required to collect sales tax (in the same manner as, say, Kohl's and Target). 

This is a hot topic.  Since (other than California) continue to cut income tax rates and increasingly rely on sales taxes as sources of revenues, sellers will in turn try to find more and more ways of getting out from under their obligation to collect those taxes.  Indeed, one of the selling points of shopping online is the fact that many online retailers don't charge sales tax (although, admittedly, you do have to pay a shipping charge).  States will be under increasing pressure to go after online retailers in these circumstances. 

I would not be surprised to see the US Supreme Court take up this issue.  Nor would I be surprised if they reversed the NY court.

2.  A report in the Daily Tax Report today (sorry can't provide a link) says Central and South American goverments are increasingly likely to enter into FATCA agreements with the US.  This are agreements to exchange information regarding bank accounts maintained by Americans in their countries.  The reason they are warming up to it:  They'd like to know what their residents have in the US!

Given the widely publicized money laundering revelations involving HSBC and others, I'm not surprised.

3.  Chutzpah Report No. 1.  Apparently a taxpayer is making the claim that he in entitlcd to treat separation payments as eligible expenditures for the R&D credit.  Just so you understand this, you're entitled to a credit for R&D if you increase your expenditures over what they were over a base period.  In this case, the taxpayer laid-off the people in its research operations made severance payments to them.  As a result, for the year when they paid the severance, their overall costs of the research division were higher than usual, and they tried to claim a credit.  Thankfully, the IRS said no dice.

4.  Chutzpah Report No. 2.   One of the things that happened in the fiscal cliff deal is that the exemptions for the estate tax were enlarged and rates reduced, with the result that it is projected to raise much less revenue than in the past.  Now a new movement is arising to repeal the estate tax altogether.  While in the budget debate last week the Senate rejected an amendment proposed by Thune to repeal the tax outright, they passed a nonbinding resolution to repeal the tax and replace it with other revenue on an 80-19 vote (amendment No. 693).  The reasoning?  Well, it raises so little revenue it's hardly worth having anymore.....