Nov 27

Today’s News 27th November 2016

  • The Washington Post: Useful-Idiot Shills For A Failed, Frantic Status Quo That Has Lost Control Of The Narrative

    Submitted by Charles Hugh-Smith via OfTwoMinds blog,

    Don't you think it fair and reasonable that anyone accusing me of being a shill for Russian propaganda ought to read my ten books in their entirety and identify the sections that support their slanderous accusation?

    I was amused to find my site listed on the now-infamous list of purportedly Russian-controlled propaganda sites cited by The Washington Post. I find it amusing because I invite anyone to search my 3,600-page archive of published material over the past decade (which includes some guest posts and poems) and identify a single pro-Russia or pro-Russian foreign policy entry.

    If anything, my perspective is pro-US dollar, pro-liberty, pro-open markets, pro-local control, pro-free-press, pro-innovation, and pro-opportunities to rebuild America's abandoned, decaying localized economies: in other words, the exact opposite of Russian propaganda.

    My "crime" is a simple one: challenging the ruling elite's narrative. Labeling all dissent "enemy propaganda" is of course the classic first phase of state-sponsored propaganda and the favorite tool of well-paid illiberal apologists for an illiberal regime.

    Labeling everyone who dissents or questions the ruling elite's narrative as tools of an enemy power is classic McCarthy-era witch-hunting, i.e. a broad-brush way of marginalizing and silencing critics with an accusation that is easy to fabricate but difficult to prove.

    Such unsupported slander is a classic propaganda technique. It has more in common with Nazi propaganda than with real journalism.

    The real useful-idiot shills are the editors and hacks paid by the Washington Post, who are busy penning articles such as "Why the electoral college should choose Hillary Clinton". Isn't this fundamentally a call to over-ride the Constitutional framework of the republic's democracy?

    In other words, the ruling elite's candidate lost, so let's subvert democracy to "right this terrible wrong" that was wrought by fed-up debt-serfs.

    Substitution is a useful technique to reveal propaganda: if Trump had lost by a thin margin, would the The Washington Post publish an article "Why the electoral college should choose Donald Trump"?

    Any site suggesting such an outlandish subversion of American democracy would of course by labeled Russian-controlled propaganda by The Washington Post. In other words, it's OK for the organs of Imperial Propaganda to call for the subversion of the Constitution, but if someone else dares to do so, you know the drill: they're labeled a tool of Russian propaganda.

    Just as a reminder, this is the status quo / ruling elite's handiwork The Washington Post shills/propagandists support: a status quo of institutionalized privilege, corruption and systemically soaring wealth and income inequality:

    The institutionalized impoverishment of non-elite students:

    The institutionalized impoverishment of the bottom 99.9%:

    The institutionalized impoverishment of everyone below the protected technocrat-insider class of shills, apparatchiks and professionals:

    This is what The Washington Post is pushing: a parasitic, predatory, exploitive, ruinously corrupt and venal ruling class and its army of apologists/lackeys/factotums.

    The fundamental source of the Post's hysterical accusations is the ruling elite has lost control of the narrative. This is the source of the mainstream media's angst-tinged hysteria and frantic efforts to marginalize and discredit any dissenting narratives that undermine or question the power of a corrupted, self-serving ruling elite that has failed the nation and its citizens.

    This is why Donald Trump was routinely labeled a Russian shill by the mainstream media during the campaign. Regardless of what you think of Trump or Clinton, what can we say about a supposedly responsible media that so cavalierly spews fact-free accusations of foreign control? This is the height of irresponsible propaganda being passed off as "journalism."

    Free speech implicitly carries the responsibility of the reader/listener/viewer to make a critical assessment of the content, its source and its aim: who benefits if we accept the narrative being pushed?

    The delicious irony of The Washington Post's hysterical campaign to smear dissenters as tools of Russian propaganda is that it only serves to discredit the Post itself. For my part, I invite you to read all ten of my books and make your own critical assessment of the content and answer these questions:

    1. Did you find even a single passage in the thousands of pages that favored Russian policies?

    2. Did you find any passages that favored domestic resilience and self-reliance, localized economic development, and the promotion of innovations that favored the many rather than the few?

    3. Don't you think it fair and reasonable that anyone accusing me of being a shill for Russian propaganda ought to read my ten books in their entirety and identify the sections that support their slanderous accusation?

    If they can't support it, then isn't their accusation the very propaganda they claim to be identifying?

    Just as a reminder: here's my chart of the Ministry of Propaganda (from 2007):

    When Does "Managed Perception" Become Reality? (May 1, 2011)

    *  *  *

    Join me in seeking solutions by becoming a $1/month patron of my work via patreon.com. My new book is #8 on Kindle short reads -> politics and social science: Why Our Status Quo Failed and Is Beyond Reform ($3.95 Kindle ebook, $8.95 print edition) For more, please visit the book's website.

  • College Students Demand Police Investigate "Suck It Up, Pussies" Post-It Note As Hate Crime

    Today we learn of yet another campus full of disaffected Hillary snowflakes who were triggered by a post-it note suggesting that they should stop whining about the election and just “suck it up, pussies.”  This latest example comes to us from Edgewood College in the ultra-liberal bastion of Madison, Wisconsin via Campus Reform.

    Apparently the simple post-it note was determined to be a “hate crime” by the college’s “diversity offices” and students with knowledge of the incident were encouraged to contact campus police.  To our complete shock, a message from Edgewood’s Vice President for Student Development pinned the blame for the “hate crime” on Trump, saying that it is part of a growing trend of “covert micro-aggressions and overt macro-aggressions” that have “taken on new fervor in higher education since our national election.”

    “Over the past week, there have been increasing reports of hateful acts on college and university campuses across the country.  Covert micro-aggressions and overt macro-aggressions appear to have taken on new fervor in higher education since our national election.  The frequency, boldness, and severity with which hateful acts have been occurring has, for many, signaled a new era of intolerance, fear, and mistrust in higher education.”

     

    “A great deal of fear, sadness, and anger among students, faculty, and staff resulted, especially for those that gather in the [office space].  The message was hateful and harmful toward members of our community. It violated every value that this institution considers to be at its core.”

    Here is the full letter sent to Edgewood students:

    Post iT

     

    In conclusion, we would simply say:

    Suck It Up

  • Even Obama Slams Stein's Recounts: The Results "Accurately Reflect The Will Of The American People"

    Jill Stein’s credibility seems to be sinking fast as both the Obama administration and the Clinton campaign have released statements this morning indicating they’ve failed to uncover a single shred of election hacking evidence.  The Obama administration confirmed their confidence in the election results via comments made to the New York Times saying that the election was “free and fair from a cybersecurity perspective” and that votes “accurately reflect the will of the American people.”

    The Obama administration said on Friday that despite Russian attempts to undermine the presidential election, it has concluded that the results “accurately reflect the will of the American people.”

     

    The statement came as liberal opponents of Donald J. Trump, some citing fears of vote hacking, are seeking recounts in three states — Wisconsin, Michigan and Pennsylvania — where his margin of victory was extremely thin.

     

    In its statement, the administration said, “The Kremlin probably expected that publicity surrounding the disclosures that followed the Russian government-directed compromises of emails from U.S. persons and institutions, including from U.S. political organizations, would raise questions about the integrity of the election process that could have undermined the legitimacy of the president-elect.”

     

    That was a reference to the breach of the Democratic National Committee’s email system, and the leak of emails from figures like John D. Podesta, Hillary Clinton’s campaign chairman.

     

    “Nevertheless, we stand behind our election results, which accurately reflect the will of the American people,” it added.

     

    The recount efforts have generated pushback by experts who said it would be enormously difficult to hack voting machines on a large scale. The administration, in its statement, confirmed reports from the Department of Homeland Security and intelligence officials that they did not see “any increased level of malicious cyberactivity aimed at disrupting our electoral process on Election Day.”

     

    The administration said it remained “confident in the overall integrity of electoral infrastructure, a confidence that was borne out.” It added: “As a result, we believe our elections were free and fair from a cybersecurity perspective.”

    Hillary

     

    The statement from the White House was followed by a statement from Hillary’s general counsel, Marc Elias, who confirmed that they too “had not uncovered any actionable evidence of hacking or outside attempts to alter the voting technology.”

    Because we had not uncovered any actionable evidence of hacking or outside attempts to alter the voting technology, we had not planned to exercise this option ourselves, but now that a recount has been initiated in Wisconsin, we intend to participate in order to ensure the process proceeds in a manner that is fair to all sides. If Jill Stein follows through as she has promised and pursues recounts in Pennsylvania and Michigan, we will take the same approach in those states as well. We do so fully aware that the number of votes separating Donald Trump and Hillary Clinton in the closest of these states—Michigan—well exceeds the largest margin ever overcome in a recount.

    Of course, while Stein reiterated numerous allegations of foreign
    hacking that were well circulated, yet never officially linked to a specific source, before the election, her petition didn’t offer a single shred of actual, tangible evidence that the election results in Wisconsin were in anyway tampered with. 

    In August 2016, it was widely reported that foreign operators breached voter registration databases in at least two states and stole hundreds of thousands of voter records.

     

    Around that time, hacker infiltrated the e-mail systems of the Democratic National Committee and a campaign official for Democratic presidential candidate Hillary Clinton.  These e-mails were then published online. 

     

    On October 7, 2016, the Department of Homeland Security (DHS) and the Office of the Director of National Intelligence on Election Security issued a joint statement regarding these breaches.  The statement reads, in pertinent part, as follows:  “The U.S. Intelligence Community (USCI) is confident” that there have been “recent compromises of e-mails from US persons and institutions, including from US political organizations.”  It also states that “[t]here thefts and disclosures are intended to interfere with the US election process” and that “similar tactics and techniques [have been used] across Europe and Eurasia…to influence public opinion there.”  In the statement, DHS urges state election officials “to be vigilant and seek cybersecurity assistance” from that agency in preparation for the presidential election.

     

    In Wisconsin, there is evidence of voting irregularities in the 2016 presidential election that indicate potential tampering with electronic voting systems.  Specifically, there was a significant increase in the number of absentee voters as compared to the last general election.  This significant increase could be attributed to a breach of the state’s electronic voter database.

     

    The well-documented and conclusive evidence of foreign interference in the presidential race before the election, along with the irregularities observed in Wisconsin, call into question the results and indicate the possibility that a widespread breach occurred.

    Jill Stein

     

    Even her so-called “computer science expert” offered up nothing more than baseless theories on “plausible” explanations of how the Wisconsin results may have been hacked.  Sure, because it’s just so impossible to believe that a flawed candidate with multiple ongoing FBI criminal investigations may have simply lost the election.   

    WI

     

    So, the question becomes how will Jill Stein respond now that the establishment seems to be turning on her and what exactly will happen to the $5.8mm she raised if recount efforts are suspended?  Somehow we suspect the disaffected Hillary donors won’t simply get their money back.

    JS

    * * *

    As an update, after coming under attack from almost everyone today for her unfounded recount crusade, Jill Stein has lashed out against her critics with a tweet storm of her own.  Among other things, Stein vowed to file recount petitions in any state where the applicable deadlines had not passed and lashed out at the other parties for not participating amid “so many questionable results.” Might we respectfully suggest, Ms. Stein, that more people may take an interest in your efforts if you could offer up a single shred of evidence to support your wild accusations.

     

    Apparently, suggestions that Stein is merely serving as a pawn of the Clinton campaign also struck a nerve.

     

    Finally, perhaps the following tweet sums up the whole ludicrous situation the best:

  • More Lies From The 'Experts': "Get Trump At All Costs"

    Authored by Paul Craig Roberts,

    As flyover America has been suffering economically for many years, these Americans were immune to the oligarchy’s anti-Trump propaganda. However, everyone else in the country was taken in by the propaganda – liberals, progressives, the remnant of the leftwing, and even Patrick Martin of the World Socialist Web Site who normally writes intelligent commentary.

    Like Green candidate Jill Stein, Patrick Martin wants a vote recount that could be manipulated to put Hillary in the White House. Apparently, Martin is unfamiliar with Hillary and her record of war crimes. Instead of expressing relief that the agent of the military/security complex, who has threatened military action against Russia and demonizes the Russian president as “the new Hitler,” was not elected, Martin unloads on Trump who has stated his goal of reduced tensions between nuclear powers. Trump’s government, Martin writes, “will undoubtedly be the most reactionary, militaristic and dictatorial government in American history.”

    If war and dictatorship aren’t enough, Daniel Altman tells us that Trump will bankrupt us as well. We are on our way to debtors’ prison, says Daniel Altman in Foreign Policy:

    Americans already know what happens when this strategy comes to Washington. Reagan and the younger Bush let the nation live beyond its means, too, stealing from legions of unborn Americans to fund their grand ideas. They also stole from as-yet unelected presidents; whoever followed them in power would be the ones to pay the piper. Their own party would return when times were good again.

     

    A combination of rapidly rising deficits and higher interest rates could make the nation’s debt unsustainable even within Trump’s four-year term — and that’s if his stimulus works. If he stays true to his record in business, another bankruptcy could be on the horizon. This time, though, there won’t be any second chances, and all Americans will be left holding the bag.

    Altman doesn’t seem to know any more about his subject than Martin knows about Hillary. Altman writes as if the tax and spending policies of Ronald Reagan and “the younger Bush” are responsible for the national debt by letting the nation “live beyond its means, stealing from legions of unborn Americans to fund their grand ideas.”

    As economist J.W. Mason has shown, Reagan did not increase the national debt. During the Reagan years, the growth in the national debt was due to the high interest rates imposed by the Federal Reserve (in my opinion in the Establishment’s attempt to wreck the Reagan program).
    Mason shows that it was the Fed-imposed increase in interest rates on the debt that raised the national debt.

    The standard historical narrative about President Ronald Reagan's budgets goes like this: He slashed taxes for the rich, spent a ton of money on the military, and the national debt exploded.

     

    Now, that is a fair description of his policies. But it turns out Reagan may have gotten a bad rap on the debt charge.

     

    In fact, the major culprit was another, often overlooked player: interest payments. Just why exactly this happened is extremely interesting, and also carries very important lessons for budgetary and monetary policy today. Put short, the conventional wisdom about debt and monetary policy is almost entirely wrong.

     

    So when centrist types argue for austerity or greater interest rates as some kind of self-evident proposition, remember Reagan's bum rap. Remember, too, that the whole point of all this budget and monetary policy is to facilitate the business of human life, and not the other way around.

    In contrast, despite the Fed’s accommodation of the Oligarchy’s puppet, Obama, with zero interest rates, holds the record for the greatest increase in US national debt.

    Obama added $8 trillion dollars to the national debt…:

    One way to measure the debt by President is to sum all his budget deficits.

     

    That's because the President is responsible for his budget priorities. Each year's deficit takes into account budgeted spending and anticipated revenue from proposed tax cuts or hikes.

     

    But there's a difference between the deficit and the debt by President.

     

    That's because all Presidents can employ a sleight of hand to reduce the appearance of the deficit. They can borrow internally from other government sources. For example, the Social Security Trust Fund has run a surplus since 1987. That's because there were more working people contributing via payroll taxes than retired people withdrawing benefits. The Fund invests its surplus in U.S. Treasury notes. The President can reduce the deficit by spending these funds instead of issuing new Treasuries.

     

    *  *  *

     

    Barack Obama – The national debt grew the most dollar-wise during President Obama's two terms. He added $7.917 trillion, a 68 percent increase, in seven years. Obama's budgets included the economic stimulus package. It added $787 billion by cutting taxes, extending unemployment benefits, and funding job-creating public works projects. The Obama tax cuts added $858 billion to the debt in two years. Obama's budget included increased defense spending to between $700 billion and $800 billion a year.

     

    Federal income was down, thanks to lower tax receipts from the 2008 financial crisis. He also sponsored the Patient Protection and Affordable Care Act. It was designed to reduce the debt by $143 billion over ten years. But these savings didn't show up until the later years. For more, see National Debt Under Obama.

     

    George W. Bush – President Bush added the second greatest amount to the debt, at $5.849 trillion. But that was a 101 percent increase to the debt. It was $5.8 trillion on September 30, 2001. That's the end of FY 2001, which was President Clinton's last budget. Bush responded to the 9/11 attacks by launching the War on Terror. That drove military spending to record levels of between $600-$800 billion a year. It included the Iraq War, which cost $807.5 billion. President Bush also responded to the 2001 recession by passing EGTRRA and JGTRRA. These were known as the Bush tax cuts and they further reduced revenue. He approved a $700 billion bailout package for banks to combat the 2008 global financial crisis.  Both Presidents Bush and Obama had to contend with higher mandatory spending for Social Security and Medicare. For more, see President Obama Compared to President Bush Policies.

     

    Franklin D. Roosevelt – President Roosevelt increased the debt the most percentage-wise. Although he only added $236 billion, this was a 1,048 percent increase over the $23 billion debt level left by President Hoover's last budget. Of course, the Great Depression took an enormous bite out of revenues. The New Deal cost billions. But FDR's debt major contribution to the debt was World War II spending. He added $209 billion to the debt between 1942-1945. For more, see FDR Economic Policies.

     

    Woodrow Wilson – President Wilson was the second largest contributor to the debt percentage-wise. Although he only added $21 billion, this was a 727 percent increase over the $2.9 billion debt level of his predecessor. Wilson had to pay for World War I. In fact, the Second Liberty Bond Act was enacted during his Presidency, giving Congress the right to adopt the national debt ceiling.

    So, simply put, the leftist lies continue in their effort to besmirch the president-elect "at all costs."

  • These Are The 48 Organizations That Now Have Access To Every Brit's Browsing History

    Last week, in a troubling development for privacy advocates everywhere, we reported that the UK has passed the “snooper charter” effectively ending all online privacy. Now, the mainstream media has caught on and appears to be displeased. As AP writes today, “after months of wrangling, Parliament has passed a contentious new snooping law that gives authorities — from police and spies to food regulators, fire officials and tax inspectors — powers to look at the internet browsing records of everyone in the country.”

    For those who missed our original reports, here is the new law in a nutshell: it requires telecom companies to keep records of all users’ web activity for a year, creating databases of personal information that the firms worry could be vulnerable to leaks and hackers. Civil liberties groups say the law establishes mass surveillance of British citizens, following innocent internet users from the office to the living room and the bedroom. They are right.

    While Edward Snowden previously blasted the law, none other than Tim Berners-Lee, the man credited with inventing World Wide Web, tweeted news of the law’s passage with the words: “Dark, dark days.”

    Coming at a time when the mainstream media is lashing out at non-traditional websites, which it brands either with the derogatory “altright”, or simply slams as “Russian propaganda” to deflect from the fact that the MSM has been exposed as being a PR arm of the ruling establishment, the Investigatory Powers Bill-  called the “snoopers’ charter” by critics –  was passed by UK Parliament this month after more than a year of debate and amendments, and with its passage shifts “1984” from the fiction to the non-fiction section, as the formation of the surveillance police state is now effectively complete.

    The charter will become law when it receives the formality of royal assent next week but – as AP notes – big questions remain about how it will work, and the government acknowledges it could be 12 months before internet firms have to start storing the records.

    “It won’t happen in a big bang next week,” Home Office official Chris Mills told a meeting of internet service providers on Thursday. “It will be a phased program of the introduction of the measures over a year or so.”

    The government says the new law “ensures powers are fit for the digital age,” replacing a patchwork of often outdated rules and giving law-enforcement agencies the tools to fight terrorism and serious crime.

    In a move right out of the Soviet Union’s darkest days (which never even imagned central planning to the extent that modern “developed market” central bankers have unleashed this decade), the law requires telecommunications companies to store for a year the web histories known as internet connection records — a list of websites each person has visited and the apps and messaging services they used, though not the individual pages they looked at or the messages they sent.

    The government has called that information the modern equivalent of an itemized phone bill. But critics say it’s more like a personal diary. Julian Huppert, a former Liberal Democrat lawmaker who opposed the bill, said it “creates a very intrusive database.”

    “People may have been to the Depression Alliance website, or a marriage guidance website, or an abortion provider’s website, or all sorts of things which are very personal and private,” he said.

    Officials won’t need a warrant to access the data, and the list of bodies that can see it includes not just the police and intelligence services, but government departments, revenue and customs officials and even the Food Standards Agency. “My worry is partly about their access,” Huppert said. “But it’s much more deeply about the prospects for either hacking or people selling information on.”

    Even worse, the new law also makes official — and legal — British spies’ ability to hack into devices and harvest vast amounts of bulk online data, much of it from outside the U.K. In doing so, it both acknowledges and sets limits on the secretive mass-snooping schemes exposed by Edward Snowden.

    * * *

    Which government agencies have access to the internet history of any British citizen? Here is the answer courtesy of blogger Chris Yuo, who has compiled the list:

    • Metropolitan police force
    • City of London police force
    • Police forces maintained under section 2 of the Police Act 1996
    • Police Service of Scotland
    • Police Service of Northern Ireland
    • British Transport Police
    • Ministry of Defence Police
    • Royal Navy Police
    • Royal Military Police
    • Royal Air Force Police
    • Security Service
    • Secret Intelligence Service
    • GCHQ
    • Ministry of Defence
    • Department of Health
    • Home Office
    • Ministry of Justice
    • National Crime Agency
    • HM Revenue & Customs
    • Department for Transport
    • Department for Work and Pensions
    • NHS trusts and foundation trusts in England that provide ambulance services
    • Common Services Agency for the Scottish Health Service
    • Competition and Markets Authority
    • Criminal Cases Review Commission
    • Department for Communities in Northern Ireland
    • Department for the Economy in Northern Ireland
    • Department of Justice in Northern Ireland
    • Financial Conduct Authority
    • Fire and rescue authorities under the Fire and Rescue Services Act 2004
    • Food Standards Agency
    • Food Standards Scotland
    • Gambling Commission
    • Gangmasters and Labour Abuse Authority
    • Health and Safety Executive
    • Independent Police Complaints Commissioner
    • Information Commissioner
    • NHS Business Services Authority
    • Northern Ireland Ambulance Service Health and Social Care Trust
    • Northern Ireland Fire and Rescue Service Board
    • Northern Ireland Health and Social Care Regional Business Services Organisation
    • Office of Communications
    • Office of the Police Ombudsman for Northern Ireland
    • Police Investigations and Review Commissioner
    • Scottish Ambulance Service Board
    • Scottish Criminal Cases Review Commission
    • Serious Fraud Office
    • Welsh Ambulance Services National Health Service Trust

    In other words, everyone.

    * * *

    While privacy groups unsucessfully battled to stop the new legislation, and now will challenge it in court, public opposition has been largely muted in part because the bill’s passage has been overshadowed by Britain’s vote to leave the European Union and the scandalous upheaval that has followed.

    How did that old saying go… “don’t let a crisis go to waste.” Well, the UK is now independent from Europe, and in the process its population quietly lost all of its internet privacy.

    Renate Samson, chief executive of the group Big Brother Watch, said it would take time for the full implications of the law to become clear to the public.

    “We now live in a digital world. We are digital citizens,” Samson said. “We have no choice about whether or not we engage online. This bill has fundamentally changed how we are able to privately and securely communicate with one another, communicate with business, communicate with government and live an online life. And that’s a real, profound concern.”

    It remains to be seen if the UK’s citizens will be able overturn the law once it does become clear to the public what has just happened.

  • Who Pays What Taxes In The US

    Every presidential election brings with it a renewed debate on taxes: should tax rates be increased or decreased (which in turn forces economists to break out their textbooks to brush up on their Laffer curve definitions)? Traditionally, the question eventually boils down to one thing: what should the tax treatment of the “rich” be: should the wealthy pay more or less in taxes?

    Why the particular focus on the rich? The answer is simple: while those American who declare $500,000 and above in income represent less than 1% of total tax returns, they account for a quarter of taxable income and – more importantly – are responsible for 37% of government revenues collected through individual income taxes.

    And with approximately $1.55 trillion in individual income tax expected to be collected in 2016, this means that less than 1% of US taxpayers will be responsible for more than a third, or roughly $575 billion in government revenue, nearly double what corporate income taxes ($300 billion) are expected to bring in.

    To any readers surprised by this, here are further details from the St Louis Fed’s Fernando Martin and his recent note “A Closer Look at Federal Taxes“

    * * *

    The first table provides a snapshot of revenues collected by the U.S. federal government for fiscal year 2016. Total revenue was $3.3 trillion, or roughly 18 percent of gross domestic product (GDP). Almost half of this revenue comes from individual income taxes. About one-third comes from payroll taxes, which are collected to fund Social Security, Medicare, and other social insurance benefits. Only 9 percent of total revenue comes from corporate income taxes, while another 9 percent comes from various sources (e.g., excise taxes, estate and gift taxes, and custom duties). These proportions have been stable in recent years.

    Given the prominent role individual income taxes play in financing the federal government, this essay inspects these taxes in more detail. The second table breaks down individual income taxes by adjusted gross income brackets and four categories. The first three are relative to total filings: the share of returns; the share of taxable income generated (note that about one-third of returns report zero taxable income); and the share of tax revenue collected. The final category is the implied average tax rate. The data are for fiscal year 2014, the latest available for tax revenue by income levels. Notably, the data do not distinguish between single or joint (filed with a spouse) tax returns.

    The differences in individual income tax collection at the extremes of the income distribution are striking. Filers earning less than $50,000 annually account for nearly two-thirds of all tax returns but contribute 7 percent of total revenue. Around half of the filers in this group report zero taxable income4; for those with taxable income, the average income tax rate is 12 percent.5 In contrast, filers making at least $1 million annually account for 0.3 percent of all tax returns and contribute 27 percent of total revenue. Their average tax rate—31 percent—is almost triple that of filers in the lowest income bracket.

    Due to the progressive nature of the U.S. income tax code, average tax rates increase up the income ladder. Each income group’s contribution to total revenue, however, depends not only on their tax rate but also on the number of filers in the group and how much income they generate. For example, tax filers earning between $100,000 and $199,999 annually face an average income tax rate of 17 percent but contribute 22 percent of revenue, very close to the proportion contributed by those earning $1 million or more. The reason is that there are many more filers in the former group (12 percent versus 0.3 percent), who together generate about one-quarter of total taxable income (versus 17 percent for the highest earners).

    These properties of the income distribution have profound implications for the likely effects of tax reform. For example, tax cuts for the middle class, even minor ones, would imply big declines in revenue; and collecting significantly more revenue from the rich would necessitate large tax hikes.

    To illustrate this point, consider a simple back-of-the-envelope calculation. Suppose the desire is to cover the deficit by increasing the tax rates of the top income earners. The current deficit estimate for fiscal year 2016 is $590 billion. Income taxes collected from filers earning $500,000 or more annually (the top 1 percent) add up to roughly the same amount as the deficit. The tax rate of this group would need to double to collect enough revenue from the group to cover the deficit. Specifically, their average tax rate would need to increase from 30 percent to around 60 percent. A tax increase of this magnitude, however, might decrease the incentives for high-income earners to work as hard and encourage them to seek new ways to shield their income. Hence, in practice, the tax rate may need to be raised further and even then might not be enough to raise all the additional revenue.

    Individual income taxes only partially reveal how the burden of federal taxation is distributed among different income groups. For low-income earners, payroll taxes constitute a significant portion of tax liabilities. The current Social Security and Medicaid withholding rates are 6.20 percent and 1.45 percent, respectively (in addition, employers must also match these contributions). Thus, the average tax rate faced by an individual making less than $50,000 annually and reporting positive taxable income is 12 percent in income taxes plus 7.65 percent; that is, almost 20 percent of income. Since wages contribute less to total income for higher-income earners, payroll taxes play a less significant role at the top. In other words, payroll taxes are regressive. Note, however, that the benefits they provide are progressive, as-high income earners rely more heavily on other sources of funding for retirement and healthcare (e.g., a 401(k) retirement plan).

  • Iran Loses Nuclear Device, Sparks GCC Concerns

    The Gulf Cooperation Council (GCC) is concerned over a missing radioactive device from Iran’s Bushehr nuclear reactor, Saudi-owned Arab newspaper Asharq al-Awsat reported on Thursday.

    Furthermore, as OilPrice.com's Tsvetana Paraskova notes, aside from the security concerns, at the forefront in the GCC’s mind is what impact the radioactive device – wherever it may be today – could have on water supplies.

    According to the newspaper, the device went missing after the car transporting it was stolen. Thankfully, the vehicle was recovered, but the radioactive nuclear device was not so lucky.

    The GCC has contacted the International Atomic Energy Agency (IAEA) over the incident – both organizations are concerned that Iran’s nuclear program may pollute the waters in the Gulf, Asharq al-Awsat quoted GCC Emergency Management Center chairman, Adnan al-Tamimi, as saying.

    Most members of the GCC – which includes Saudi Arabia, Kuwait, the UAE, Qatar, Bahrain, and Oman – desalinate sea water from the Gulf. If contamination from the device were to reach desalination stations, an already critical situation becomes even more critical.

    The missing device is set to lose half of its power after 74 days of inactivity, Tamimi said, noting that it still should be handled with care even after that period.

    Speaking to Asharq al-Awsat, the Arab official criticized Iran’s low security and safety levels at the Bushehr reactor, adding that the lack of Iranian transparency about its nuclear program adds further concerns and anxiousness for the Arab Gulf states.

    Iran’s nuclear program has recently entered the spotlight again after Donald Trump won the U.S. presidential election. In March of this year, Trump said in a speech addressing the American Israel Public Affairs Committee:

    “My number-one priority is to dismantle the disastrous deal with Iran.”

    If Trump were willing and able to deliver on that promise by tearing up the deal, Iran would once again impact the oil market, dragging down Iran’s oil exports from the near-pre-sanctions levels it has almost reached in recent months.

    Last week, the U.S. House of Representatives voted overwhelmingly in favor of extending the Iran Sanctions Act (ISA) from 1996 through December 31, 2026. The act—adopted long before the most recent international sanctions against Tehran—was aimed at punishing investments in the Iranian energy industry and deterring the country from pursuing the development of nuclear weapons.

    Last week’s bill to extend the ISA after its expiry next month still needs Senate approval and President Obama’s signature to become law.

  • Towards An 'America First' Trump Trade Policy

    Submitted by Patrick Buchanan via Buchanan.org,

    Donald Trump’s election triumph is among the more astonishing in history.

    Yet if he wishes to become the father of a new “America First” majority party, he must make good on his solemn promise:

    To end the trade deficits that have bled our country of scores of thousands of factories, and to create millions of manufacturing jobs in the USA.

    Fail here, and those slim majorities in Michigan, Pennsylvania and Wisconsin disappear.

    The president-elect takes credit for jawboning William Clay Ford to keep his Lincoln plant in Louisville. He is now jawboning Carrier air conditioning to stay in Indiana and not move to Mexico.

    Good for him. But these are baby steps toward ending the $800 billion trade deficits in goods America runs annually, or bringing back factories and creating millions of new manufacturing jobs in the USA.

    The NAFTA Republicans tell us the plants and jobs are never coming back, that we live in a globalized world, that production will now be done where it can be done cheapest — in Mexico, China, Asia.

    Yet, on Nov. 8, Americans rejected this defeatism rooted in the tracts of 19th-century British scribblers and the ideology of 20th-century globalists like Woodrow Wilson and FDR.

    America responded to Trump’s call for a new nationalism rooted in the economic principles and patriotism of Hamilton and the men of Mount Rushmore: Washington, Lincoln, Jefferson and Theodore Roosevelt.

    The president-elect has declared the TPP dead, and says he and his negotiators will walk away rather than accept another NAFTA.

    Again, good, but again, not good enough, not nearly.

    The New International Economic Order imposed upon us for decades has to be overthrown.

    For the root cause of the trade deficits bleeding us lies in U.S. tax laws and trade policies that punish companies that stay in America and reward companies that move production overseas.

    Executives move plants to Mexico, Asia and China for the same reason U.S. industrialists moved plants from the Frost Belt to the Sun Belt. Given the lower wages and lighter regulations, they can produce more cheaply there.

    In dealing with advanced economies like Japan, Germany, and the EU, another critical factor is at work against us.

    Since the Kennedy Round of trade negotiations, 50 years ago, international trade deals have reduced tariffs to insignificance.

    But our trade rivals have replaced the tariffs with value-added taxes on imports from the USA. Even to belong to the EU, a country must have a VAT of at least 15 percent.

    As Kevin Kearns of the U.S. Business and Industry Council writes, Europeans have replaced tariffs on U.S. goods with a VAT on U.S. goods, while rebating the VAT on Europe’s exports to us.

    Some 160 countries impose VAT taxes. Along with currency manipulation, this is how European and Asian protectionists stick it to the Americans, whose armed forces have defended them for 60 years.

    We lose at trade negotiations, even before we sit down at the table, because our adversaries declare their VAT nonnegotiable. And we accept it.

    Trump has to persuade Congress to deal him and our trade negotiators our own high cards, without our having to go to the WTO and asking, “Mother, may I?”

    Like this writer, Kearns argues for an 18 percent VAT on all goods and services entering the United States. All tax revenue raised by the VAT — hundreds of billions — should be used to reduce U.S. taxes, beginning by ending the income tax on small business and reducing to the lowest rate in the advanced world the U.S. corporate income tax.

    The price of foreign-made goods in U.S. stores would rise, giving a competitive advantage to goods made in America. And with a border VAT of 18 percent, every U.S. corporate executive would have to consider the higher cost of leaving the United States to produce abroad.

    Every foreign manufacturer, to maintain free access to the U.S. market of $17 trillion, greatest on earth, would have to consider shifting production — factories, technology, jobs — to the USA.

    The incentive to produce abroad would diminish and disappear. The incentive to produce here would grow correspondingly.

    Inversions — U.S. companies seeking lower tax rates by moving to places like Ireland — would end. Foreign companies and banks would be clamoring to get into the United States.

    With a zero corporate tax, minority businesses would spring up. Existing businesses would have more cash to hire. America would shove China aside as the Enterprise Zone of the world.

    Most important, by having Americans buy more from each other, and rely more on each other for the necessities of life, U.S. trade and tax policies would work to create a greater interdependence among us, rather than pull us apart as they do today.

    Why not write new tax and trade laws that bring us together, recreating the one nation and people we once were — and can be again?

  • Risk Parity Funds Suffer Worst Month Since 2015 As Breadthless, Fearless Stock Market Soars

    The market moves since the US elections have been both big and surprising, and as JPMorgan notes, fund managers have been either too slow or too reluctant to jump into the Trump trade. However, algo-based Risk-Parity funds suffered the most with their biggest loss since Dec 2015 as market 'fear' tumbles to 9 month lows (and stocks are the most overbought in 13 years).

     

    Risk Parity funds were hurt as their equity gains were not enough to offset the sharp selloff in bonds on which Risk Parity funds are typically exposed by four times as much as equities. Correlation between stocks and bonds has normalized thanks to this huge post-Trump divergence (but we note the last time the regime shifted like this was ahead of August 2015's equity plunge)…

     

    U.S. stock markets are signaling calm waters ahead. As Bloomberg reports, the Credit Suisse Fear Barometer has tumbled 25% since the day before the presidential election, while the S&P 500 Index reached an all-time high. The gauge that compares bearish options prices with bullish ones three months from now has dropped to its lowest level since February.

     

    So 'Fear' is absent, and as CNN notes, Greed is on the rise…

     

    Greed indeed – with Small Caps up and almost unprecedented 15 days in a row. The last time they were this overbought (in 2010), the Russell 2000 fell 21% in the following two months…

     

    Bonds are the most oversold since 2007 (after which they exploded higher in price, lower in yield)

     

    And equity market breadth certainly not supportive…

     

    Of course, with The Fed about to hike rates (with certainty) and financial conditions tightening drastically, what could possibly go wrong?

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