A tax increase on private equity and hedge fund executives

From the Financial Times:

A tax increase on private equity and hedge fund executives was passed by the House of Representatives on Friday as part of a package to fund middle class tax relief, but faces a likely veto by President George W. Bush.

The $50bn (€34bn, £23.89bn) tax increase was approved by a vote of 216-193 with all Republicans voting against the package and threatening to block the legislation in the Senate.

The passage of the bill is a setback for the private equity and hedge fund industries and makes it more likely that executives will in time see their tax rate doubled, depending on how Democrats fare in election campaigns next year.

The revenue raised has been earmarked to pay for relief for more than 23m middle-class families who would otherwise be caught by the alternative minimum tax.

The AMT is an archaic levy that was originally designed to catch 200 wealthy families that paid little or no tax, but has expanded stealthily because it was not indexed for inflation.

For a start, I don’t see that a tax increase on executives of specific industries should fairly face a tax increase – why not, say, oil or weapons industries? Their products are actively harming people. Of course this is not the case: the Financial Times is just doing a bad job. The tax is on carried interest, that thing executives of these industries use as income, call capital gains, and scam a lower tax rate on. Rather than fix the problem, the government has decided just to tax the problem (it’s an Austrian kind of day, all told). The tax also does apply to any other industry – whose executives are pulling this scam on the American people.

Second, how archaic must the Alternative Minimum Tax be, if it was designed to catch 200 households but is going to catch 23 million households, now? Call me an idealist, but those numbers tell me of a government that hasn’t been doing its job.

Third, of course – why in God’s name does a government with a budget the size of this one need any new taxes to pay for things? I think carried interest is a scam, as I said, but it should be fixed for that reason – not because the government is too chicken to, say, stop handing over money in tens of billions to the Pentagon.

Finally, the story’s punchline was Secretary Paulson demonstrating, as is his wont, the difference between an elected official, an appointed official and – particularly these days – a competent official:

Treasury secretary Henry Paulson called on the Senate simply to extend tax relief but “not raise other taxes”.

Priceless. They say he’s in charge of the economy, you know.

The 13 ounce rule

Spotted today (huzzah for the camera phone):

(a) “mailpiece”?

(b) What if it’s 13 ounces and doesn’t have a stamp? What if it’s anything and doesn’t have a stamp, or postage otherwise paid? Do those just get delivered now, since we’re too busy being insane? Are the costs of that insanity so great, now, that whether or not the postage was even paid becomes a minor affair?

(c) Was the recent postage increase undertaken to pay for this nonsense, or were this distributed using some other public money that could have been used to do some actual good, instead?

Official warnings are always the best (especially as we go around becoming ever more paranoid).

(d) Is this the result of mere idiocy, or has somebody undertaken a study that demonstrated that, with statistical significance, only parcels over 13 ounces are likely to contain some manner of threat? If not: warning to would be doers-of-wrong: if you’re going to post something bad, make it less than 13 ounces. Postal workers don’t make much, and it would appear that there is now a mandated threshold for giving-a-crap.

Go figure. Just know that now you can’t even put your mail in a post-box without the government reminding you that they’re crazy and moronic and have a nice day. I feel more sympathy for the Austrian school every day.

Three people were killed and 31 injured at the weekend in a stampede for low-priced cooking oil

A 20 per cent discount on five-litre bottles of rapeseed oil at a Carrefour supermarket had people lining up from 4am on Saturday. A stampede ensued four hours later when the doors were opened to the shopping mall where the French hypermarket is located.

…

Wholesale vegetable oil prices in China have jumped more than 40 per cent in the past year and increases accelerated in October, with weekly price rises of about 3 per cent at supermarkets in Beijing.

Prices of other foodstuffs such as milk, pork and eggs are also rocketing, contributing to annual headline inflation of more than 6 per cent – the highest level for more than a decade.

Hoarding is, apparently, also part of the problem:

Adding to concerns were reports over the weekend of renewed fuel shortages across the eastern seaboard, a week after the government raised tightly controlled pump prices by 10 per cent for the first time in 17 months.

There were also reports that some retail outlets have started hoarding supplies, particularly of diesel, in the expectation the government will raise prices again as global crude oil prices flirt with record $100-a-barrel levels.

This is a problem that probably arises more with government regulation – like betting on interest rates increases/decreases. When those increases are discrete events, they become more clearly signalled – and significantly more important. This, too, is an Austrian school problem: the more the government intervenes in the market, the more it has to re-intervene in the market, until it ends up controlling everything (and most things badly).

Hoarding, however, is particularly problematic. When we expect a future price increase, demand shifts outwards. Think of the demand curve being the market demand by today’s demanders. When we expect a price increase tomorrow, tomorrow’s demanders will enter today’s market instead – pushing out the demand curve, driving up the price, forcing a run on supplies and contribution to a/the future shortage. A run on banks serves the same daft function.

FreeRice.com

I recommend to you one of the bloody entertaingingest (that was deliberate) ways to waste spend your time.

Originally found over at the Rolling Stone National Affairs blog, FreeRice.com is an advertiser-sponsored site that donates money to the United Nations World Food Program according to page views – you get page views (and accumulate donated rice) by cycling through vocabulary words. How can that not be fun?

They did ask me what Kohl was, though, which seemed a bit unfair – I’m a boy.

Who pays for the donated rice?

The rice is paid for by the advertisers whose names you see on the bottom of your vocabulary screen. This is regular advertising for these companies, but it is also something more. Through their advertising at FreeRice, these companies support both learning (free vocabulary for everyone) and reducing hunger (free rice for the hungry). We commend these companies for their participation at FreeRice.

If FreeRice has the rice to give, why not give it all away right now?

FreeRice is not sitting on a pile of rice―you are earning it 10 grains at a time. Here is how it works. When you play the game, advertisements appear on the bottom of your screen. The money generated by these advertisements is then used to buy the rice. So by playing, you generate the money that pays for the rice donated to hungry people.

Who distributes the donated rice?

The rice is distributed by the United Nations World Food Program (WFP).

The World Food Program is the world’s largest food aid agency, working with over 1,000 other organizations in over 75 countries. In addition to providing food, the World Food Program helps hungry people to become self-reliant so that they escape hunger for good. Wherever possible, the World Food Program buys food locally to support local farmers and the local economy. We encourage you to visit the United Nations World Food Program to learn more about their successful approach to ending hunger.

Jump right in. I’m clearly performing like someone who’s been at their various economics degrees for 10 years – my vocabularly is not what it used to be.