Tax Tipping Point?

Today, I saw a couple different stats on the current state of federal taxation. A whopping 47% of 2009 tax returns show no net income tax . Stated differently, 53% of the population is paying all the taxes. We have seen these numbers before but after a little digging I found that only 3 years ago the 47% was 37%. The top 10% of the population pay 73% of the tax. Lots of talk lately about "fairness". With tax day one week away seems like we are close to a tax tipping point.

First Quarter

The quarter that ends today marks the first 1st quarter in 3 years where the broad stock market has shown gains. The S&P 500 Index is up almost 6% for the quarter and the smaller stock indices are up more than that. The NASDAQ Index has been up for 4 straight quarters. From the March 9,2009 lows the S&P is now almost 73% higher. Sadly, many investors have missed this and stayed on the sidelines waiting for the "right " time to buy.

Old Fashioned Investment Advice

A very good article on John Bogle-Vanguard founder in LA Times. His homespun credo- diversify, watch taxes and costs, don't waver. Simple enough and matches what we have preached for 28 years. It all comes down to behavior. We want to micro-manage, out-guess, follow short term trends etc. that take us off the proper path. A good read for uncertain times.

Capitalism& Markets

An excellent article/interview in WSJ today on Professor Gary Becker. He is considered the co-father , along with Milton Friedman of the Chicago School of Economics (at the U of Chicago). In a week where many have been dour and sanguine about the future , Becker is more upbeat. About midway in the article a paragraph that starts "Capitalism has produced..." is the essence of his philosophy.

VAT and other trends

A good piece on VAT particularly the end where the author (Charles Krauthammer) points out that in the U.S. this is likely going to be on top of existing taxes. Little doubt in my mind this is the trend.

Just saw an expose of the student loan nationalization that is a part of the new health care law. Before Tuesday there were 2000+ lenders...now just 1- Uncle Sam. The upshot is students are in effect paying a new tax (by virtue of higher interest rates) to pay for the new law.

One more time

Here is the correct article mentioned in the post below on Social Security. Mea Culpa!

Social Security turns negative

The NYT has a piece on Social Security and how expenditures will exceed receipts this year...6 full years earlier than the most recent appraisal done by the Congressional Budget Office ( in 2008 when Peter Ortzag -now aide to President Obama, headed the office). Seems the economic variables have moved around just too much since then. Doesn't give one much comfort in the numbers coming from these vaulted sources and underscores the depth of financial issues facing the U.S.