Cash Piñatas and Obamacare

Posted by PITHOCRATES - October 28th, 2013

Economics 101

Health Insurance provides Financial Protection from Risk unlike Obamacare

A lot of people are talking about Obamacare.  The poor website launch.  People losing the insurance policies and doctors they liked and wanted to keep.  Higher insurance premiums.  And higher deductibles.  All of which conflicts with what President Obama had promised.

So there are problems.  And people are becoming less enamored with Obamacare now that it is personally touching their lives.  But there is a bigger problem.  Obamacare isn’t insurance.  And that’s what a lot of people don’t even understand.  Even some insurance agents.  Who may only see those higher premium prices and think Obamacare is a one-way ticket to easy street.  But if you understand insurance, economics and history you’ll see it’s not.  So what is insurance?  Here’s a definition from Investopedia:  

A contract (policy) in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. The company pools clients’ risks to make payments more affordable for the insured.

The key word in this definition is ‘risk’.  Insurance provides financial protection from risk.  Obamacare doesn’t do that.  It forces people to pay for things they have no risk exposure to.  For example, an older couple with adult children still needs pediatric coverage on their policy.  Which just increases the cost of their insurance.  While providing no financial protection from this particular risk.  Sick children.

Premiums and Deductibles are Soaring to herd the Young and Healthy into the Government Exchanges

So why is Obamacare raising health insurance premiums?  To pay for people who don’t pay into the insurance pool.  The poor.  And the very sick who can’t afford health care let alone health insurance.  The higher premiums people are paying go to them.  This is a cost transfer.  From a higher income group to a lower income group.  Or in other words, a redistribution of wealth.  From those according to ability to those according to need.

So the president wasn’t exactly telling the truth about keeping your insurance and doctor if you wanted to.  This can’t happen under Obamacare.  Because to redistribute wealth you need to take it away from someone.  And guess who that someone must be to make Obamacare work?  The young and healthy who are buying health insurance.  Those people who pay into the insurance pool for financial protection from risk.  But who are generally healthy and receive no benefits from the insurance pool.  Who President Obama and the Democrats look at as cash piñatas.  Which they can’t whack open if they have private insurance policies.

This is why these people must lose the policies and doctors they like.  And why premiums and deductibles are soaring.  To herd these cash piñatas into the government exchanges.  Where the government can collect their insurance premiums.  And redistribute it.  While those high deductibles keep those premiums going out as benefits to the cash piñatas to a minimum.

The Young and Healthy choosing Medicaid over Obamacare

Of course, there is a flaw in this grand strategy.  Arrogance.  The government believing that young and healthy people will just stand there while the government whacks them open to get their cash.  Which they aren’t.  And it’s just not because the Obamacare website is a disaster.  It’s because a lot of these people are choosing Medicaid.  The health care program for the poor.

Medicaid enrollments are far outpacing Obamacare enrollments.  By a huge number.  Which is a big problem.  Because Medicaid enrollees don’t pay insurance premiums.  And they are not subject to deductibles.  Because they are poor and can’t afford to pay anything out of pocket.  So instead of adding to the insurance pool these cash piñatas will take from the pool.  And that won’t change when they fix the broken website.  Which is why it is a fatal flaw.

Compounding this problem is the President’s economic policies that have given us the worst economic recovery since that following the Great Depression.  Since President Obama assumed office his policies have forced approximately 10 million people from the labor force.  Unemployed, it is unlikely that they will be able to afford health insurance.  And probably will enroll in Medicaid, too.  If they haven’t already.  So Obamacare isn’t going to work as-is.  The question is, what will they do next?  Other than blame the greedy insurance companies?  Whose cooperation in this redistribution of wealth scheme will lead to their own demise.  For as more and more people can’t afford those expensive insurance policies they’ll either turn to Medicaid.  Or demand national health care.  Which people don’t need insurance companies to have.

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Rich People, Lying Politicians, Capitalism and World Peace

Posted by PITHOCRATES - August 1st, 2013

Politics 101

Rich People are Cash Piñatas for Governments at all Levels to Whack Open

Politicians lie.  It’s no secret.  But because they tell people what they want to hear, the people often like these politicians that lie.  And vote for them.  Which is why politicians lie in the first place.  To trick people into voting for them.  For there is no other reason to lie during a political campaign.  For that is the one and only thing they’re trying to do.  Win.  And you win by getting as many people voting for you as possible.  But you don’t win by saying the current welfare state is unsustainable.  No.  You win by expanding the welfare state.  And taxing the rich to pay for it.

Of course, when people complain about higher tax rates politicians immediately call them greedy.  Rich selfish people who don’t want to pay their fair share.  Though these selfish rich people pay the lion’s share of all tax revenue.  Governments love having these rich people in their tax base.  From sales tax to property tax to income tax, rich people are cash piñatas for governments at all levels to whack open. To fund their public sector pensions and retiree health care benefits.  New York City LOVES having Wall Street and all those rich people in their city.  Because they pour dump-trucks of money into city coffers.

Yet these are the same people government officials demonized as being greedy and unwilling to pay their fair share.  And call them unpatriotic if they threaten to leave their high-tax locale.  Because when a few of the top 1% earners leave millions of tax revenue leaves with them.  Whereas if a few of the bottom 50% leave only a few thousand of tax revenue leaves with them.  Not even enough to notice.  No.  Rich people are a government’s best friend.  Yet governments treat them like pariahs.  And lie about them not paying their fair share.  Demonize them to gain political points.  And to trick people into voting for them.  Because their lies make it sound like they care.

There was a whole lot of Killing going on in the Americas before the Europeans first Stepped Foot in the Americas

But it’s just not politicians that lie.  Most of those on the left lie, too.  Our public school teachers, our university professors and the mainstream media lie, too.  To help the political left gain and maintain their power.  Kids today grow up learning that the greatest economic system in the world, capitalism, is the worst economic system in the world.  These educators and the mainstream media brainwash our kids.  Telling our kids that capitalism is bad.  And government intervention in the free market is good.  Like in socialism and communism.  Where they put people before profits.  And yet the mass of immigration has and always will be from nations that favor socialism and communism to nations that favor capitalism.

To help further this lie that the system that made America great is bad they teach these kids that America is not great.  Because of capitalism.  Which put profits before people.  That this nation was founded by rich white men for rich white men.  Despite this country of, and for, rich white men being the destination of choice for the tired, poor, huddled masses yearning to breathe free who left their wretched and capitalism-free shores to come to America.  It was greedy white Europeans who came to America.  Whole stole this land from the Native Americans.  And then brutally waged war against these peace-loving people.  Who were anything but.

The Native Americans were hunters and gatherers.  They didn’t raise cattle.  They traveled great distances to find and hunt buffalo.  Hunters and gatherers need huge tracts of land.  Unlike farmers who can make a small plot of land productive.  Which created a permanent state of war in the Americas.  For when these tribes bumped into each other trying to hunt the same food they fought each other.  That’s why they called the most esteemed Indians ‘warriors’.  Those who proved their courage in battle.  By killing brave warriors in other tribes.  There was a whole lot of killing going on in the Americas.  Both in battle.  And in human sacrifice.  The Pawnee practiced child sacrifice in North America.  To please their gods.  As did the Aztecs.  Who killed people wholesale on their pyramids in Central Mexico.  And the Inca.  Who drugged their children with coca leaves and alcohol before taking them to a mountain top.  Where they then strangled them to death.  Killed them with blunt force trauma to the head.  Or simply left them to die of exposure.  And all of this was happening before those greedy white Europeans first stepped foot in the Americas.

The History of the World is one of Brutal Military Conquest and State Oppression

Those on the left blame Islamist terrorism on America.  And their imperialist ways.  Often citing the 1953 Iranian coup d’état as the prime mover.  A coup executed by the British with American help.  Why?  It’s a complicated story.  The British found oil in Iran.  The British needed this oil to fuel their war machine during two world wars.  As did their ally during World War II.  The Soviet Union.  Iranian oil fueled the Red Army.  And Iran provided a corridor for American supplies to reach the Red Army.  After the war the Allies began pulling out of Iran.  But not the Soviets.  Who liked that oil.  And wanted to keep it.  Not to mention having a warm water port for their navy.  And it wasn’t the first time the Russians came south looking to take Iranian land.  The deals the Iranians made with the British before the war were in part to check the Russian advance into their lands.  The Soviet interest in Iran was what got the British to convince the Americans to join them in their coup.  For the Cold War was on and the Soviets were already in Eastern Europe.  They tried extending into Greece and Turkey but failed.  And here they were testing the waters in Iran.

The British suffered through two world wars.  She lost her empire in the first one.  And nearly lost their existence in the second one.  But they held on.  Poland, Norway, the Low Countries and France fell.  Leaving the British alone.  Until the Japanese bombed Pearl Harbor bringing the Americans into the war.  And the Nazi invasion of the Soviet Union.  Allowing the British to go onto the offensive.  Thanks to the Royal Navy.  And the sea lanes they kept open to Iran.  Allowing the free flow of oil that defeated Nazi Germany.  Oil that they invested a fortune to get.  Which brings us back to the coup.  The Iranians wanted a bigger slice of the oil profits pie.  The British refused.  Because the war had devastated their economy.  And they were struggling to rebuild.  Without ceding any ground to the new threat in town.  The Soviet Union.  So the British weren’t feeling particularly generous with the profits on that Iranian oil.  So the Iranians started whispering the dreaded ‘N’ word.  Nationalization.  One thing led to another and, well, the British put an end to all of the nationalization talk.

It may have not been a nice thing that the British and the Americans did to the Iranians.  But there’s been a lot of that going on throughout history.  A history of brutal military conquest.  And brutal state oppression.  Sumer was one of the first great civilizations.  But it’s not here anymore.  Having been replaced by the Assyrian and the Babylonian empires.  Which were replaced by the Persian Empire (Persia is present day Iran).  Which was conquered by the Greek Empire.  Which was displaced by the Roman Empire.  Which was replaced by the Byzantine Empire.  Which fell to the Ottoman Empire.  Which fell to the Allied Powers in World War I.  Which brought the British into Palestine.  Thanks to the League of Nations.  Which also called for a Jewish homeland in Palestine.  The seed of the Israeli-Palestinian conflict.  Arab nationalism.  And the Soviet Union allying with the Arab nations against the United States and Israel.  Fomenting anti-American sentiment in the Muslim world.  To help the Soviets win the Cold War.

Geopolitics is complicated.  And brutal.  Where war, oppression, slavery, genocide, human sacrifice, etc., were the norm throughout history.  Where there were but brief periods of peace.  Like the Pax Romana.  About 2 centuries of world peace under the Roman Empire.  The Pax Britannica.  About a century of world peace under the capitalist British Empire.  And the Pax Americana.  A period of world peace following World War II thanks to capitalist America’s role as a superpower.  Where they used that super power for good far more than it was used for bad.   But our schools teach our kids that Britain and the United States are just nations founded by rich white men for rich white men.  While the Native Americans and the Muslims that conquered countless people to build empires are the true peace-loving people.  And gloss over the parts of world conquest.  And human sacrifice.

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Our Favorite Athletes are Part of the 1% and try to Minimize the Taxes they pay just like those on Wall Street

Posted by PITHOCRATES - March 25th, 2012

Week in Review

Don’t think high taxes influences behavior?  Of course, no one cares about the evil 1%.  Those greedy Wall Street types that don’t pay their fair share of taxes.  But you know who else is in that greedy 1%?  Your favorite athletes.  And guess what?  They want to hold on to their earnings just like those greedy Wall Street types (see Professional Athletes’ Big-League Tax Bills by Jay MacDonald posted 3/15/2012 on Yahoo! Finance).

Behind every sports star who’s hauling down the big bucks is a keen-eyed certified public accountant quick-stepping through a maze of state and local income taxes imposed on nonresident athletes, commonly known as the “jock tax.”

Professional sports players get taxed by pretty much every city and state in which they play, says Ryan Losi, CPA and executive vice president of Piascik & Associates, a Glen Allen, Va., accounting firm that represents more than 70 professional athletes.

“NFL players typically file in 10 to 12 jurisdictions. NBA is somewhere between 16 and 20. MLB is somewhere between 20 and 26, and the NHL is between 14 and 16,” says Losi.

Professional sports players are great big cash piñatas to these city and states that chronically over spend.  They all want a piece of these guys.  To make sure they pay their ‘fair share’ of taxes.  While they can before some career-ending injury puts an end to this gravy train.  But because these players could lose millions in future career earnings because of a career-ending injury, they want to keep their money.  For they may never be able to get another job.  Sure, some may move into the front office.  Some may move on to coaching.  But few will earn the kind of money they did during their short careers.  So they want to keep as much as they earn.  To take care of their wife and kids.  And have enough for their retirements.  Which can be rather long for these worn out and injured bodies.  So they just don’t sit by passively while every taxing authority is shaking them down for everything they’re worth.

The lion’s share of most players’ income, their salary, is taxed in the city and state where the team is based. But income from other sources, including endorsements, personal appearances, dividends and interest income, is taxed in their state of residence.

This is the reason New York Giants quarterback and Super Bowl MVP Eli Manning lives in Hoboken, N.J., instead of in the Big Apple. It’s simple arithmetic, says Raiola.

“If he were a resident of New York, he’d pay 8.97 percent New York state tax and another 3.78 percent New York City tax on top of that, not only on his wage income but also his endorsements and investment interest,” he says. “In New Jersey, he only pays 8.97 percent…”

Taxes — or the lack of them — may also have had something to do with NBA all-star and 2010 free agent LeBron James’ choice to play for the Miami Heat instead of the New York Knicks. Losi points to Florida’s lack of a state income tax.

“That may have been one of the factors that led LeBron to choose Florida versus New York,” says Losi. “Ten percent of his first contract was going to be the difference. For him, it was an extra 5 (percent to) 9 percent difference in tax. That’s real money.”

New York City may be the greatest city in the world but the rich pay an enormous amount of taxes to live there.  So many chose not to.  In fact, a lot of athletes chose where they live and raise their families based on their total tax burden.

Professional golfers, tennis players and other athletes who compete on the world stage often leave a third or more of their earnings in the local coffers.

“Whenever they play in foreign countries, they have to pay taxes in that jurisdiction, and the tax liability is much bigger than the 5 (percent) to 10 percent state tax. It’s usually in the 30 (percent) to 40 percent bracket,” says Losi. “Usually it’s withheld in their prize money, and they can file a nonresident return if they think they might have a refund coming.”

Because the United States is one of the few countries that taxes all personal income regardless of source, some pro sports stars who compete internationally actually have a financial disincentive to make their home in America.

“If they’re (not U.S. citizens or green card holders) and they’re not planning to stay here more than 183 days out of the year, from a tax perspective it absolutely makes sense to not live in the U.S.,” says Losi. “All the foreign golfers who come here to play, if they want all of their foreign prize money and endorsement money to be taxed, all they have to do is hang out here for 183 days.”

Being an athlete competing at the level that makes them millionaires is not an easy life.  While others look forward to weekends, holidays and vacations to kick back and relax and recharge their batteries with copious amounts of alcohol and enormous quantities of fattening foods these athletes don’t.  They often work on weekends and holidays.  And when they’re not working they’re practicing.  Where their practice is often more intense than their competition.  This is their life.  This is how they become elite athletes.  And their reward?  To be whacked open like a cash piñatas by the taxing authorities so the politicians they serve can take their money and spend it to buy votes for the next election.  And forcing them to choose where to live based on who will penalized them the least for being really good at something.

This is not a meritocracy.  Where we reward people for achievement.  This is out of control government spending to maintain a privileged class.  Politicians.  And government workers.  Who live and feed off of taxes.  To fund their class warfare that makes these privileged few secure in their class.

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