ERICOPOLY

My only objection is that during periods when inflation is very high this gets illogical (we should in theory only be taxing real income). The CPI-U is already available -- we could be fair and tax people (regular income rates) only on REAL capital gains. To demonstrate how stupid it is to tax people on inflationary gains, the principal adjustment from TIPS is fully taxed (under present law) as regular income. So if there is a 100% inflation rate you wind up losing 17.5% of your real principle value -- the yield on the TIPS isn't high enough to reimburse you for this. Wouldn't be opposed to that. This would of course imply that you could take a $5 tax-loss if you sell a stock today for $10 per share that you purchased for $10 per share ten years ago (if the inflation-adjusted cost basis is $15). That's very fair.

My only objection is that during periods when inflation is very high this gets illogical (we should in theory only be taxing real income). The CPI-U is already available -- we could be fair and tax people (regular income rates) only on REAL capital gains. To demonstrate how stupid it is to tax people on inflationary gains, the principal adjustment from TIPS is fully taxed (under present law) as regular income. So if there is a 100% inflation rate you wind up losing 17.5% of your real principle value -- the yield on the TIPS isn't high enough to reimburse you for this.

I pointed out earlier though that under a dividend franking system we could give US corporations the ability to pay tax-advantaged dividends out of after-tax income (so the individual doesn't pay tax twice on the dividend). The individual would then only pay tax if his personal tax rate were higher than the corporate tax rate. I find it surprising that I've never heard this kind of system discussed anywhere in the US media. Scenario A: A corporation that pays no tax will be one where the owners need to pay up to the highest marginal income tax on any dividend. Scenario B: A corporation like Berkshire that is a good corporate tax citizen (pays up to 35% marginal rate) will be able to distribute tax-advantaged dividends that are not taxed twice (individual only pays tax if the personal income tax bracket is higher than the tax rate paid by the corporation). Pretty straightforward solution to this long running argument. Perhaps the players aren't actually looking for a solution? The Republicans likely want a 0% individual tax rate, even if the corporations also paid nothing. The Democrats likely want to tax the dividends twice if they can.

The article also pointed out that mobility is greater in Australia vs the US. However we spend more per student on education than does Australia. Our tax policies are (I believe) more punitive on wealth accumulation (inheritance tax for example). So what is going to improve mobility in the US -- does tax policy really have much to do with it? It is sort of assumed to be so, but we have Australia to show that maybe that's not the case.

Isn't the rejoinder here that if you do what you're talking about (and you're not LUK, who never seems to pay tax), your "look through" earnings get taxed thrice? JNJ pre-tax income gets reduced by corporate tax rate. Dividends to insurance sub get taxed, though not at full 35% rate. Finally, to personally realize the benefits from the JNJ income, which in theory should be reflected in stock price appreciation, you must sell some stock and pay another 15% on the appreciation associated with the JNJ income. Or am I wrong here? You are right that there is extra tax if Berkshire pays a dividend or if you sell some stock. However if you live on the income from the tax-free munis and treat Berkshire as a family wealth asset (to be passed to heirs) then there is no second tax (step up in basis when you die). Wealthy families can benefit greatly from this terrific tax shelter that Warren runs for them. Ok, agreed. I hope to benefit from that tax shelter someday. Not happening anytime soon, though. Buffett ought to shift his personal portfolio to 100% muni bonds and then give Debbie a raise to $100,001. He would then have roughly 1% in bonds, 99% in equities, and pay no personal income taxes whatsoever except for his $100,000 Berkshire salary. Then he can claim that Debbie pays more tax than him on an absolute basis.

He is following the example of past tycoons -- Andrew Carnegie pushed for the inheritance tax, for example. JP Morgan stepped up in a big way to temper the financial crisis of 1907 -- this time around, it's Buffett injecting large sums into financial institutions and making big media appearances to instill market confidence: "Buy American, I am", for example. I guess with all that time on his hands he is reading his history -- how to be a text book tycoon of change.

Isn't the rejoinder here that if you do what you're talking about (and you're not LUK, who never seems to pay tax), your "look through" earnings get taxed thrice? JNJ pre-tax income gets reduced by corporate tax rate. Dividends to insurance sub get taxed, though not at full 35% rate. Finally, to personally realize the benefits from the JNJ income, which in theory should be reflected in stock price appreciation, you must sell some stock and pay another 15% on the appreciation associated with the JNJ income. Or am I wrong here? You are right that there is extra tax if Berkshire pays a dividend or if you sell some stock. However if you live on the income from the tax-free munis and treat Berkshire as a family wealth asset (to be passed to heirs) then there is no second tax (step up in basis when you die). Wealthy families can benefit greatly from this terrific tax shelter that Warren runs for them.

There should be less economic divide once the boomers have substantially died off. Wealth is skewed towards the 50+ demographic. Aging boomers have made the headline inequality worse. As they die things will get better in terms of the rich vs poor.

Really? http://www.dailymail.co.uk/news/article-2092021/Australian-PM-dragged-safety-crowd-aborigines-protesters-ambushed-restaurant.html Somehow they've managed to have the following policies: 1) No inheritance or gift taxes 2) No double tax on dividends Without demonstrations in the streets! Of course their unemployment level is under 5%. The system of having the tax paid either by the corporation or the individual ensure that the tax is actually paid. People can't stand the "no double tax" argument here in the US because we're not even sure if the corporation has paid any tax! Many do not pay much if any tax and still distribute dividends that get taxed at only 15%. I think people could relax a bit regarding corporate jet tax deductions and everything if they knew that the dividend recipient would be paying the full tax one way or the other. You want the big corporate tax deductions? Fine, then pay the personal income tax on the dividend instead. You've already paid the big corporate tax? Great! We'll reward you by giving you a credit towards your personal income tax on the dividend.

I have a Motorola SurfBoard. It's certainly Apple's issue to fix. They either need to figure out how to work with Motorola's bug (a workaround) or fix their own.

It might be a lemon, but in my house there is a hatch of flies buzzing around this fruit. My MacBook Pro crashed (full system crash) twice in the first few months (though not again in the past year). My IPhone constantly "forgets" my WiFi password (frequently after I walk out of range of the network). I have to keep typing it in again (happens a few times a month or so). The ITunes app on my PC will hang when I try to sync to it. My wife's IPod needs to be reformatted sometimes after she syncs with ITunes (that was the only solution I found on the net as there are plenty of people complaining of this). When the Apple TV stops "working" (my wife's words) I just walk in there and pull the power -- that usually fixes it. Otherwise, the problem is that her IMac on her desk (wireless) needs to have the "Airport" turned off and then turned back on again -- it just drops off the network and doesn't rejoin unless you refresh the Airport. And that happens also on my MacBook Pro (same issue with the airport). But it never happens on my Windows Vista laptop! "Stink" Different -- that's my impression.

Add Apple to that list too (the first post-Jobs era back in the 1990s).

From the CC transcript: Our period end FTE is down about 7,000 people in the fourth quarter compared to the third quarter. This is over and above the 2,500 people we added in this quarter for our legacy asset services. - Moynihan This means they are already (in one quarter) 31.6% done with phase I of New BAC head count reduction. Any hints on when the next big purge is?

Perhaps it wasn't quite clear, but the dividend franking system eliminates double taxation only on US corporate profits. Taxes on profits paid in foreign lands will be assessed a second time in the form of income taxes when distributed to US shareholders. So it just makes it a bit cheaper from a US taxpayer's perspective to keep manufacturing operations here in the US, if you take into account the tax savings upon getting that dividend in hand. Well, it would be one way for Obama to make US based investment more attractive -- and that Republicans may actually agree with (getting rid of double taxation on US corporate profits).

Try an Apple TV if you want a change of pace -- I have to reboot it (unplug the power) time and again to fix it when it stops responding.

Let's put it this way. Restore the dividend tax to regular "income" rates and watch them squirm and resist. Would you support that with an elimination of corporate taxes? No, the corporations need to pay tax. I have 1/2 of my money in a Roth IRA -- if the corporations don't pay any tax then I've got it a little too good. Corporations need roads to drive their trucks on -- it's in their best interest to have at least some form of government provided infrastructure. I'd be happy to eliminate the double taxation per the Australian dividend franking system. There is no rioting in Australia.

Obama really ought to look at Australia's dividend franking system. Australian investors in Australian companies don't pay personal income taxes on after-tax profits from Australian corporations. This is because the corporation has already paid Australian tax. You might pay a little bit of tax on the dividend if your personal tax rate is higher than the corporate tax rate, but their highest personal tax rate is 45%. So some people might pay 15% or so tax on the dividend income, but others in lower tax brackets will pay nothing extra on the individual level. Now you bring that rule in here to the United States and investors will be more interested in companies that have paid on-shore corporate taxes. Obama could call it a jobs package, a reason to make onshore operations a bit more attractive. Takes a bit of the advantage away from offshore operations. And it wouldn't upset the Republicans of course.

Let's put it this way. Restore the dividend tax to regular "income" rates and watch them squirm and resist.

You are sampling the wrong population. The top 1% is not the right category to draw statistics from. Too many people in there work for a living. Instead, focus on the individuals who don't -- those people who have it so good that they live on investment income. They're the ones who got the tax cut. Start your search for truth in the top 1/10 of the 1%.

Apple should return the extra cash to shareholders. Apple is a technology company not an investment firm. In theory it might sound good but I have very little faith in a technology company buying bunch of unrelated companies. Most tech companies have bad record in buying companies even in their related field. Shareholder's can use the cash to invest themself but Apple should continue doing what they do best. The investment manager should allocate the excess produced by the operating company. In this case, the manager of the fund that owns the AAPL shares is the investment manager. Berkshire doesn't let it's railroad subsidiary allocate the excess into non-related businesses. It requires it to be returned to Buffett (the investment manager) who then makes the allocation decision. The structure of having an investment manager be the capital allocator works pretty well.

Windows is a platform, it is mean to run other things and is useless if you don't run applications on it. A Coke can (filled with Coke) is a complete product in itself and is not a platform. Monopoly is decided by marketshare. What was Window's share of PC OSes during the antitrust suits? Well I'm not a lawyer and such. This is probably why I'm more driven by "spirit" of the law rather than letter of the law. So whether you define a monopoly by the term "marketshare" is your choice, or perhaps it's letter of the law. My "spirit" of the law is based around barrier to entry. Can a competitor create a competing personal computing platform. Of course! Apple. Google. Case closed (based on spirit of the law).

Oh, and of course the name "Canberra" was given to the capital city of Australia. The place from which this name was derived says a lot about the permissive culture of the country, and perhaps speaks to the divine beauty of the country: Alternatively, the name was reported by Queanbeyan newspaper owner John Gale in the 1860s to be an anglicisation of the indigenous name 'nganbra' or 'nganbira', meaning "hollow between a woman's breasts" http://en.wikipedia.org/wiki/Canberra

Too cold in winter :) Brrr...

Maybe Obama should just bring the tax rates back up to the Reagan years if Reagan "does it for you": After all, for seven of Reagan’s eight years in office, the top tax rate was higher than the current 35 percent. In six of those years, it was 50 percent or more. And every year that Regan was in office, the bottom tax bracket was higher than the current ten percent. http://thinkprogress.org/economy/2011/06/01/233526/taxes-lower-reagan/?mobile=nc

How do you compare living in Aus vs US? There was a pretty insightful comparison earlier from dwy, I was curious about your thoughts. Some history helps understand the differences; America got the puritans and Australia got the convicts. Much less of the "born-again" American Taliban clones! I love Australia. There are so many weird things about it. It sort of feels like a throwback in time. Imagine going into a downtown in an American city and finding a green grocer and a "chemist" (pharmacy) a butcher, a baker, etc... only they are all in separate independent stores! Okay, that is just like America... in the 1950s!!! Basically I just feel like it's really laid back and literally "no worries mate". It's just a cool relaxed place. However I've never lived there -- it's always been on a vacation or a visit. So we'll see whether my perception was tainted by lack of responsibility and change of routine.