As anxious as I am for the release of the iPhone 5, I'm even more anxious for the release of Rmoney tax records on September 28th.

Today, CNN reported that Price Waterhouse Cooper's (PWC) Franklin, TN, the Republican Campaign and the Democratic Campaign offices received a package from an anonymous person who claims that Mitt and Ann Romney's tax records were stolen from the PWC office and will be released to the Public on September 28th.  PWC is an accounting firm that is often used for complex tax returns.

Some of the details of this break-in are reported by the group or person who claims responsibility on the website called "pastebin.com" which you can find here. 

Although CNN claims that the group is holding the data ransom for $1,000,000, there is no mention of this in the letter posted to the paste bin site.  Perhaps this info was included in the package left with PWC, or perhaps was just made up.  This was not clear as of this writing.

The Secret Service is reportedly involved in an investigation.

It was not certain if this was a scam or a real incident, but the Republican and Democratic Campaign offices both did report receiving the package which they purport to not have opened.

I guess time will tell.

Republican optimism is so refreshing it's like drinking soured milk

Mean old white men taking their football and walking off the playing field.  That's how I'm seeing the Republican Party lately.  It doesn't matter to them that the economy is in the dumps and that the American people who they are sworn to represent are suffering.  They will obstruct progress on economic improvement by simply refusing to play.

Many authors have written about this do-nothing Congress that we have been saddled with during this administration's term but writing about it doesn't help.  President Obama, in giving them the benefit of the doubt said that he believed Republican obstruction would end if he were re-elected.  His reasoning included the assumption that there would be no longer any reason to block legislation in his last term because there would be nothing for the Republicans to gain by it.  Now the Republicans, by way of Mitch McConnell have said they won't cooperate with Obama even if he wins the upcoming election.

America should be outraged.  Once again they are throwing America out the window for their own selfish reasons.  This Party does not represent you America.  They are a bunch of angry old white men who think that they are above the Americans they represent.  How many of you voted for your Republican leaders so that they could do nothing but obstruct progress and prevent resolution of problems?  These fools say that if a coach doesn't have any wins in three years, you'd boot him out.  So it follows that if the players all sat down on the playing field during every game in spite of their coach, you should be looking for better players.  

These worthless idiots are showing you how little they care about you.  They are all nice and cozy with their high paying government sponsored jobs with terrific insurance plans and excellent retirement plans.  They are already taken care of.  They do not care about you.

Republican leaders have proven that they are liars.  They have proven that they are obstructionists.  They have proven that they do not represent you.  What are they still doing in office?  

Your vote is the key.  Don't waste it.  Vote Democratic in all elections and let's get this country back on the right path.

Deciding factors that create jobs

Republicans advocate reducing taxes on the job creators as a viable means to grow jobs.  They claim that burdening job creators with additional costs will reduce the likelihood that they will hire.  I like to call this the "job creator lie" because it is nothing more than a Republican empty threat.  Greed is the source of the lie.  It is intended to prevent government taxes on the wealthy, ruling class who apparently are teetering between great wealth and possible financial ruin and taxes would make all the difference.

Are taxes really the major determining factor preventing job creation?  Certainly not.  Studies have shown that there is absolutely no correlation between taxes and job creation.  In fact, some have reported that in times where the rich have had to pay higher taxes, more jobs have been created.  You can rest assured that taxes are not the reason that Republicans spread this job creator lie.

So let's assume that greed is the main reason for the lie.  What then are the factors that really play a part in job creation?  Some factors like supply and demand appear obvious.  There are many theories behind how these two factors interact.  But which is most important?  And are there any other factors like cost of labor or business owner's wealth?

When a business is started, it is assumed that markets have been evaluated and the product or service is something of value which consumers will purchase.  Some estimate of the demand and the profits are made in a business plan and start-up funding is found.  Eventually people are hired to operate the business and the first jobs are created.  In some large businesses there is a choice of hiring from an American workforce or a foreign workforce.  Because patriotism is not a belief of many profit motivated businessmen, where it is possible it is an easy choice to hire cheaper labor from foreign sources.  So even when a new business is started, American job growth is not guaranteed.  In that way, business owner's wealth and cost of labor is an important factor determining where jobs will be created.

Simply stated, job growth usually happens when a business has a product or service which has demand that exceeds the supply or when the demand for a greater number of products or services offered exceed the capacity of the existing workforce.  The important word is "demand."

When we talk about demand sources, we are talking about the consumers who mainly are also the workers in America.  The major factor which affects consumer demand is consumer pay.  Pay comes from jobs.  When Americans do not have jobs or when those that have jobs are not paid well, American demand for products will decrease.  This decrease in demand cannot be overcome by making more products.  It cannot be overcome by reducing taxes of the wealthy business owners.  It cannot be overcome by producing cheaper products in a foreign country or by foreign workers in America.  It can only be overcome by finding new markets or sources of demand.

For many businesses this is not an option.  As demand decreases, so do the profits of that business.  Without new sources of demand, the business is forced to take drastic actions.  Perhaps first trying to increase demand by reducing the price of products and then by reducing the workforce to be more in line with the decrease in demand.  Eventually it may mean the business is sold off to a venture capitalist or becomes bankrupt and fails.

Businesses need consumers.  The loss of demand is a bigger threat to them than any increase in taxes.

There should be a synergy between the executives and the workers in a business where both parties are aware of the importance each has for the other.  In recent years workers wages have stayed stagnant while executives wages have increased 300 percent.  The greed that is implied in these statistics is as much a cause for the loss of demand and resultant loss of jobs than anything else unscrupulous business owners have done.

It is time that American workers have been made whole again and received the importance they deserve  in this relationship with business.  President Obama's policies are the greatest hope we have to restore jobs to Americans, revitalize the economy and return demand to businesses.

If Romney's speech is all it takes to convince America that he should be President, then America isn't listening

After three days of self indulgent speeches by Republican Governors and repeated lies about the out of context words 'you didn't build that' and false statements about Obama's hidden agenda to screw the elderly by stealing from medicare,  I was actually looking forward to Romney's speech.  I wanted to hear for myself how this potential President of the United States would explain how he plans to make things better for the people of this great country.

But, if you're someone who is not easily impressed, a thinker, or use to dealing with facts, then you were probably disappointed by Romney's address to the Republican National Convention.

After getting by all the fakery about being concerned that Obama was unsuccessful and that America deserved better, Romney started getting into the complaints about the current administration.

Romney's explanation of Obama's failure is based on the fact that he does not have business experience.  It may seem reasonable to ordinary Americans that a CEO would be a good person to fix our struggling economy, but is this necessarily true?

The most important thing driving the actions of a Corporate businessman like Romney is to make a profit through the sale of goods or services.  A government not only does not sell goods or services, it also does not have a profit motive.  A government is driven by concern for all members of it citizenry.  Sometimes that concern is in the form of social programs to help Americans through times of hardship.  Sometimes it means building an infrastructure of roads, bridges and technology that benefit society and provide citizens and businesses a means to accomplish more.  In Corporate America, times of economic difficulty usually mean that a Corporate CEO takes actions to reduce those elements of cost that he believes are not indispensable.  Interpreting this into a CEO-President Romney terms, this means cutting those social programs that the government provides.  As expected Romney was short on explanations of how his business experience at Bain Capital would help him be a better President than Obama.  How much he believes the importance of business experience may have been exposed today when he mis-spoke and called America a "Company" instead of a "Country."

Romney dismisses the idea that the economic problems we have been experiencing were the result of the Bush Presidency.  He simply states that Obama should just accept the blame for it because he hasn't gotten us out of it yet.  This is as anti-intellectual as stating that the person sent in to help fix a mess confess that he created the mess because he wasn't done cleaning up yet.  People have to realize that the  recession we are in is the worst economic disaster since the Great Depression.  That disaster took nearly fifteen years to get resolved.  Instead, Romney would return to Bush era practices that caused our present economic situation.  Additionally, Romney would not mention that there are many signs that the economy is improving and has been since Obama came into office.  Obama's policies are working despite all the obstruction that Republicans in Congress have caused in order to prevent him from being successful.  As they have stated themselves, Republicans in Congress had a most important objective to obstruct everything Obama proposed in order to make him appear to be impotent and unsuccessful.  They did this in the midst of the economic disaster and they did it to the detriment of the American people they are sworn to represent.

Jobs under Bush (red) vs Obama (blue)

Romney claims that Obama crushed the middle class because there are no jobs.  He does not admit that since Obama has been in office new jobs have shifted their negative trend from the Bush era and have been on a constant increasing trend.

Romney says that Obama hates small business and intends to increase taxes on small business.  He does not admit that Obama has only reduced taxes on small business since he has been in office.  Obama's newest proposal for taxes does not increase tax on small business.  Government programs such as the Small Business Administration are strong and helping small businessmen and women everyday.

In his speech Romney continues the lie about Obama stealing 716 Billion dollars from medicare to fund Obama-Care.  I hope everyone knows that this lie which has been disproved by numerous independent sources will not become true simply because the Republican leadership re-states it over and over again.

His speech took on a very militaristic character at one point.  I thought for sure he was against cutting the military budget because he has plans to start a war with Iran if he was elected.

Romney concluded his speech with promises to the American people.  Romney gave no detailed explanation of how these promises will be accomplished so I guess he just wants us to trust him.  He promised:

1. Twelve million new jobs.  It has been estimated that we are currently on a path to accomplish this without any new Romney actions within four years, so I guess this one is possible, but still an empty promise.

2. Energy independence by 2020. This claim is made even though Romney is critical of Obama's interest in  funding research on new forms of energy.  Romney has signed onto the Oil and Coal coalition as well, so I guess he intends to drill and dig more in America.  We have been told many times by the oil companies when they increase gas prices, that oil is in limited supply.  So over the long term how does Romney expect to become energy independent?

3. Create new trade agreements and punish any country that cheats.  Which countries and how punishment would be carried out was left to our imagination.

4. Assure that the "job creators" investments won't vanish.  Romney will also cut the deficit and balance the budget.  None of this is explained, but protecting the wealthy  investors sounds like tax law reform and Wall Street regulation is not high on Romney's agenda.

5. Reduce taxes on business.  I guess this is to support the job creator lie or maybe to give more credence to the possibility that the job creators really will turn away from American workers as an effective threat against having their taxes raised.

6. Repeal (and now replace) Obama-Care.  I can't believe Romney thinks taking health insurance away from the American people will be seen as a good thing to anyone except die-hard (and healthy) Republicans.  Again Romney gives no explanation on any of this.

In concluding his speech, Romney's additional unexplained rhetoric included statements that seemed intended as a band-aid to cover what has recently become controversial about Republicans.  He vows to care for the sick, statements apparently made to soften the view that he intends to repeal Obama-Care.  He claims that he will respect the elderly, seemingly trying to change the popular view that Republicans like he and Ryan have plans to change Medicare into a voucher program.

Empty promises claiming certainty of success may sound good but without details give us no factual information to evaluate whether they will ever be achievable.  I guess we'll need to listen closely to Romney's explanations if they exist in future appearances.

I'm so looking forward to the Presidential debates in October.  Perhaps by then Romney will have better explanations for his promises.  If not, President Obama will walk all over him.

Romney's head will be spinning and he'll probably have to admit that his Party really was not only responsible for the current  economic disaster, but also responsible for blocking  progress on resolving it.




       

How to shelter $100,000,000 in an IRA

Recent controversy over Mitt Romney's tax returns has included questions over his IRA (individual retirement account) which is reported to contain well over $100,000,000.

For those of you who do not have an IRA, it is important to note that regulations impose a $5000 limit to the annual contribution that an individual can make to it and even less than this was allowed in the years before 2012.

If Mitt Romney worked at Bain Capital for 25 years, then at the current allowable deposit amount and excluding interest, Mitt's principal would grow to $125,000 in that time.  Yet Romney has nearly 1000 times that amount in his IRA.  So let's say that the investments made by the IRA gave Romney a 15% return each year.  After twenty-five years that IRA should contain about $1,600,000.  Still a far cry from $100,000,000.

So how could Romney's IRA contain so much more?  Allow me to speculate.

When Romney founded Bain Capital, it was created as a Private Corporation.  Legally, Private Corporations do not have the financial transparency that Public Corporations have.  The stock of the Private Corporation is not sold to the public and usually remains under the ownership of the partners of the Investment firm.

The United States Treasury Office began to see a phenomenon occurring with Private Corporations around year 2000.  In increasing numbers, Private Corporations began to find tax shelters to protect their profits from United States taxes.  Additionally, certain stock based compensation plans did not comply with what IRS called "deferred compensation" tax rules.  For example, certain individuals were given stock options with an exercise price that was less than the fair market value of the company's common stock.  To block this practice after year 2000, regulations were adopted to add an additional 20% tax on these transactions.  The idea was to discourage evading taxes by writing regulations that made it less profitable to do so.

In certain companies (Bain may be one of them), under-priced stocks were given to the owners and directly deposited into their IRA accounts.  So let's say the $5000 limit on the IRA deposit was achieved by under-pricing these stocks by a huge amount.  For example, let's speculate that the per share fair market value of the stock was $50.00 but the owners got shares deposited into their accounts at $0.10.  In that case, the number of shares at the fair market value is 100, but at the reduced price is 50,000.  For reporting to the IRS, the Individual Retirement Account meets the regulations and only $5000 is reported as being deposited.  Yet in reality, the true value of the number of shares is 50,000 shares x $50.00 per share = $2,500,000.  

Repeat this year after year and you will soon have $100,000,000.  Even if you do not reduce the price of the stock as much as in my example, you will still be there in no time.

If the individual has a Roth IRA, then the situation is even more favorable.  With a Roth IRA, the taxes are paid on the deposit amount and are not taxed upon withdrawal at retirement.  So in our example above, the Roth IRA owner would pay taxes on $5000 up front and not on the $2,500,000 withdrawn during retirement.

So if you want to shelter $100,000,000 in an IRA, open a Private Corporation, setup a Roth IRA and give yourself stock options at a seriously reduced price.  Pay taxes on $5000 and enjoy the tax-free high life at retirement.