I Love Satellite Radio

My satellite radio introduced me to this today:


I love satellite radio. Worth every penny.

Tax Refunds: More Americans Plan to Save Rather Than Spend

Spotted this today on CNN Money:

Of those expecting a refund, 44% said they plan to stash some of it in savings, up from 42% last year, according to a survey of more than 8,700 consumers by the National Retail Federation. That marks the highest percentage in the survey's nine-year history.

Generally speaking, I consider that to be good news. The bad news is that the rate of return on plain vanilla savings accounts is negative. If you put your return toward paying off the right kind of debt, however, the return can be quite high.

Dividend Taxes, Collateral Damage

Great article on WSJ this morning on President Obama's proposal to drive up dividend tax rates:

Obama's Dividend Assault: A plan to triple the tax rate would hurt all shareholders.

Mr. Obama is proposing to raise the dividend tax rate to the higher personal income tax rate of 39.6% that will kick in next year. Add in the planned phase-out of deductions and exemptions, and the rate hits 41%. Then add the 3.8% investment tax surcharge in ObamaCare, and the new dividend tax rate in 2013 would be 44.8%—nearly three times today's 15% rate...

...Who would get hurt? IRS data show that retirees and near-retirees who depend on dividend income would be hit especially hard. Almost three of four dividend payments go to those over the age of 55, and more than half go to those older than 65, according to IRS data.

But all American shareholders would lose. Higher dividend and capital gains taxes make stocks less valuable. A share of stock is worth the discounted present value of the future earnings stream after taxes. Stock prices would fall over time to adjust to the new after-tax rate of return. And if investors become convinced later this year that dividend and capital gains taxes are going way up on January 1, some investors are likely to sell shares ahead of paying these higher rates.

Maybe that will make Buffett happy. Or, watch for Warren to be mysteriously silent on this one.

I don't expect the President's budget proposal to become the budget. Budgets are supposed to originate in the House, so after they are done laughing at his proposal, they'll come up with something else that the Senate won't approve.

I Wish Buffett Would Just Shut Up, Too

I used to like Warren Buffett. Now I only appreciate his approach to investing (and even that's a stretch since his love of estate taxes help to explain his returns...).

I'm in agreement with Gov. Christie on this one..

To the extent that Buffett's claim about his secretary is even true, it has to do with dividend versus wage income. Most of Buffett's personal income is in the form of dividends, not salary, so he can pay a lower effective rate than his secretary.

Or, put another way (and this is why the rates are such), most of Buffett's income is derived from having capital at risk - he could lose everything - and so the income from it is taxed at a lower rate to encourage going ahead and taking that risk. His secretary's wage income is taxed higher because it's a trade for her time only. She does not have to put up capital to have her income, and thus pays a higher tax on that income, which does not come from having anything at risk.

What it boils down to is that Buffett is a liar. He's got lots of people swooning over his "soak the rich" siren song right now, but in the end, he will still pay a lower tax than most. It might also come to pass that the additional burdens will overwhelm someone's business and force them to sell it. Guess who will be around looking to buy...