Professor Elam

Monday January 21 2013

Golfer Phil Mickelson is re evaluating  his lifestyle in golf facing an overall  62% tax rate. I am sure that Phil has employed a fine group of CPAs to advise on his tax status. Politicians believe that there is no limit to the taxes that can be imposed, that behavior will not be affected. 

The taxes in France are too high but why one would go to Russia is beyond me.

This chart shows taxes as a percent of GDP.  Take a look at how that spiked in 1945 at the end of WW II. 

Now Warren Buffet dismisses the 16 trillion in debt saying that it is no more than at the end of WW II. But that was the highest ever!  And it was a result of fighting a World War in Europe and the Pacific. Americans were working then we did not have 47 millino on food stamps Warren. And the US was a net creditor to the world. Now we are a net Debtor. The world not the US will determine the eventual US Debt Ceiling. Our unfunded off balance sheet liabilities disguise the  true amount of debt meaning that the statistic Buffet refers to is simply not accurate. For example, in last week's WSJ Susan Combs the Texas Comptroller noted that the City of Houston has an unfunded pension liability of $2.4 billion. Other major cities have the sameproblem. That number is not on the books, Warren, and you know it. 

CHuck Schumer  plans more taxes, and more debt. Note his use of rhetoric, paying the bills he calls it. Take a look at now Congress has been spending below, is this paying the bills or  a Senate out of control with no budget? AT far right note the rate of change from one year to the next is increasing. This is a parabolic increase. A parabolic increase is geometric as in x squared as opposed to x times two. All parabolic increases end in collapse. Clinton was fortunate to have an expanding economy and a Republican Senate and House, hence gridlock kept spending from increasing so quickly. The growth of the markets and economcy provided money to pay the bills so to speak. 

If all this money were being spent on infrastructure rather than entitlements, the new word for welfare, it might be different. Where is the 200 mph train from 

Downtonw Houston to Downtown Dallas to Downtown Austin to the North Loop in San Antonio, which is our real downtown. 

Instead the money goes for food stamps, social security, etc. Would this money be better spent at the local level rather than funneled through endless bureaucracy in Washington DC? I mean hey, this is your future!