Tuesday, January 11, 2011

End of "Good Times" In Sight? "Rich Are Shifting 'An Unbelievable Amount of Wealth' Beyond Reach of IRS" ("Flood Tide of Murder")

Bloomberg reports that Dipak Patel, who ran a five-man tech team at SAC’s Sigma Capital unit, “is winding down his portfolio and is transitioning out of the firm.”

Let us not suggest this has anything to do with anything. He might just be looking for a little “me” time.

So says our bestest source at Dealbreaker. And who wants to tangle with her?

I don't know (rhetorical opening) but maybe we're at that moment in our history where we need to pay for our "great expectations." Being literature readers we are all aware of how ridiculous it is to overexpect a bounty. And perhaps that's what the "middle class" prosperity has been since the end of World War II when the American economy grew so rapidly that unreliable (but aren't they all - by definition) religious figures began to speak of an American Exceptionalism (which was solely economically based on its being the only country to survive the conflict without major damage stateside). The Marshall Plan and many others that helped the damaged countries to recover enriched the good ole USA a thousandfold.

And perhaps we've reached the end of these "good times" due to actions of the type of literary characters with their prevailing (and secretly admired) negativities that pervade our fantasy escapes (cheap paperbacks) , having been given free reign by the envious: avarice, gluttony, pride, etc.

But what do I know? It may be just a blip on the map of more huge lottery winnings for this "lucky" populace and will only hurt for another 10 years or so before the winners come back and rebuild another exceptional American-dominated world. Hope springs eternal!

On a slightly different but common front we also read that (emphasis marks added - Ed.):

“You have just witnessed a great bank robbery,” . . . . “The doors of the Treasury have been thrown open.”

Rich Are Shifting 'An Unbelievable Amount of Wealth' Beyond Reach of IRS

Too Much: A Commentary on Excess and Inequality

January 8, 2011

Brace yourselves, young people. In 2011, you figure to face a real stinker of a year. Those of you attending America’s budget-strapped public schools are going to find yourselves packed into many more overcrowded classrooms. If you’re matriculating at the higher ed level, you’ll be laying out much more for tuition. And if you’re entering the workforce, good luck.

You’ll be competing with 15 million older - and more experienced - jobless for the fewer than 100,000 new jobs our “recovering” economy has, of late, been adding every month.

Your parents, as young people, never confronted an economic landscape this dreary. And neither did their parents. Hell of a century we have going here. But wait, things might not actually be all that bleak. Some young people figure to do quite nicely in 2011. Indeed, some young people this year will be getting richer quicker than they could have ever imagined.

To what will these youngsters owe their sudden good fortune? Give that credit to the tax cut deal that the White House and GOP leaders bargained last month. This tax deal, as finalized just before the holidays, includes a little-noticed provision that’s going to quickly enrich the young loved ones of America’s already rich.

This obscure new provision comes above and beyond the tax deal’s extension of the Bush tax cuts for the rich enacted back in 2001 and 2003. That extension keeps the tax rate on income in America’s top tax bracket at 35 percent and locks the tax on profits from trading stocks and other assets at just 15 percent.

Last month’s tax deal also drops the estate tax due from wealthy families down below the bargain-basement estate tax rates in place during the Bush years. In 2011 and 2012, wealthy couples will be able to exempt from estate tax the entire first $10 million of their fortunes - and pay a tax no higher than 35 percent on what, after various allowable deductions, remains.

In January 2009, George Bush’s last month as President, couples could only exempt $7 million of their fortunes from estate tax and faced a 45 percent rate on what remained after other deductions.

All these income and estate tax benefits in the tax deal - for the rich - have received fairly widespread media attention. But the tax deal’s ample generosity to America’s most financially favored goes even further. The deal guts a federal tax levy on wealth most Americans don’t even know exists: the “gift tax.”

Wealthy Americans, ever since 1932, have been paying taxes on any substantial gifts they pass on to family and flunkies. Why a “gift tax”? Without a gift tax in effect, the wealthy could easily sidestep the estate tax by giving away the bulk of their fortunes before they die.

With a gift tax in effect, the wealthy can still give away whatever they want, whenever they want. But if they try to pass a huge chunk of change to junior before they die, they have to pay Uncle Sam a tax on that chunk.

This gift tax has always come with exemptions. Gifts to charities have never been subject to gift tax.

And deep pockets have also enjoyed both a “lifetime” and annual exemption on the gifts they make to individuals. Since 2002, the “lifetime” exemption has stood at $1 million.

The annual gift tax exemption rises with inflation. Over the last two years, deep pockets have been able to give away up to $13,000 per person without having to report this outlay on their tax return - and without having the outlay count against their $1 million lifetime gift tax exemption.

In other words, a wealthy married couple with two kids can gift $52,000 a year and not have their lifetime gift tax exemption reduced one dime.

How does last month’s tax cut deal impact all this? In 2010 and 2011, the tax deal fine print stipulates, the lifetime gift tax exemption jumps from $2 million per couple to $10 million a couple.

Even better, the tax cut deal fine print lets stand a complicated estate planning technique known as the “Walton grantor retained annuity trust” - named after the heirs of the Wal-Mart fortune - that allows America’s wealthy to undervalue the actual worth of the assets they give away.

With a higher new lifetime gift tax exemption and a wide-open Walton loophole, estate tax expert Stephan Leimberg recently explained to Forbes, the rich will be able to shift “an unbelievable amount of wealth” beyond the reach of the IRS.

“You have just witnessed a great bank robbery,” an amazed Leimberg gushes. “The doors of the Treasury have been thrown open.”

The only saving grace: This happy state of affairs - for the Paris Hilton set - rates as temporary. In two years time, under the tax deal, the entire new tax giveaway to the wealthy will end unless Congress votes another extension.

Tax advisers to the awesomely affluent are already advising their clients to make the most of their temporary good fortune. Grand gifts to juniors will no doubt proliferate this year and next. The wealthy have no reason to wait.

How much will all this “giving” cost the federal government in lost revenue? We have no real way of knowing. We do know that the rich have already - even before the new tax deal - been stashing staggering amounts of wealth in “trusts,” a gift category that minimizes “estate tax exposure.”

One new estimate of this stash, from a leading financial planning trade journal editor, places the total value of assets currently sitting in personal trusts at $1.1 trillion.

And that brings us to the ultimate irony facing young people today. Those extra new billions now speeding to the youthful offspring of America’s rich, if taxed at the higher gift and estate tax rates once considered routine and appropriate, could help bankroll the programs we desperately need to keep classrooms manageable, college affordable, and jobs available for all America’s young.

But those programs remain nowhere in sight. With a super-sized “gift tax” exemption in effect, we simply can’t afford them.

Sounds like "Roman" times to me. Remember reading how the people who weren't rich then were herded into the circuses and given lots of goodies to eat and drink (as they watched the blood flow in the "show" and urged them on)?

And speaking of that past (and present) "time of blood" . . . .

If we want to reverse the flood tide of killing in this country, we’ll have to do a hell of a lot more than bad-mouth a few sorry politicians and lame-brained talking heads. We need to face up to the fact that this is an insanely violent society. The vitriol that has become an integral part of our political rhetoric, most egregiously from the right, is just one of the myriad contributing factors in a society saturated in blood.

According to the Brady Campaign to Prevent Gun Violence, more than a million people have been killed with guns in the United States since 1968, when Robert Kennedy and the Rev. Dr. Martin Luther King Jr. were killed. That figure includes suicides and accidental deaths. But homicides, deliberate killings, are a perennial scourge, and not just with guns.

Excluding the people killed in the terror attacks of Sept. 11, 2001, more than 150,000 Americans have been murdered since the beginning of the 21st century. This endlessly proliferating parade of death, which does not spare women or children, ought to make our knees go weak. But we never even notice most of the killings. Homicide is white noise in this society.

The overwhelming majority of the people who claim to be so outraged by last weekend’s shooting of Representative Gabrielle Giffords and 19 others — six of them fatally — will take absolutely no steps, none whatsoever, to prevent a similar tragedy in the future. And similar tragedies are coming as surely as the sun makes its daily appearance over the eastern horizon because this is an American ritual: the mowing down of the innocents.

. . . If we were serious, if we really wanted to cut down on the killings, we’d have to do two things. We’d have to radically restrict the availability of guns while at the same time beginning the very hard work of trying to change a culture that glorifies and embraces violence as entertainment, and views violence as an appropriate and effective response to the things that bother us.

Ordinary citizens interested in a more sane and civilized society would have to insist that their elected representatives take meaningful steps to stem the violence. And they would have to demand, as well, that the government bring an end to the wars overseas, with their terrible human toll, because the wars are part of the same crippling pathology.

Without those very tough steps, the murder of the innocents by the tens of thousands will most assuredly continue.

. . . For whatever reasons, neither the public nor the politicians seem to really care how many Americans are murdered — unless it’s in a terror attack by foreigners. The two most common responses to violence in the U.S. are to ignore it or be entertained by it. The horror prompted by the attack in Tucson on Saturday will pass. The outrage will fade. The murders will continue.

Can you doubt it?

We have to organize to stop this madness! Suzan ____________

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