How a Million Dollars in Annual Taxable Income Does Not Necessarily Make One a Millionaire

If a person earns a million dollars during a year, many people, especially liberals seeking to raise income taxes on higher income earners, call such a person a “millionaire.”  But earning a million dollars, even counting only taxable income after deductions and exemptions, does not necessarily make one a millionaire, for he who earns a million dollars is not necessarily rich, just as he who earns nothing or loses money is not necessarily poor.

As I have posted previously (See my post from January of 2012, The Corbett Administration is Right to Include Assets in Measuring Wealth, http://williamcinfici.blogspot.com/2012/01/corbett-administration-is-right-to.html), wealth is measured in terms of assets, not income.  A millionaire is commonly defined as one who has a net worth of a million dollars, regardless of his annual taxable income.  

A person could have so much debt that a million dollars does not even raise him out of poverty.  For example, if a person has two million dollars in debt and earns a million dollars, he is still in debt, although by half as much.  Only if a person has debt less than a million dollars does he earn a net income, no matter how government calculates his taxable income.  Any debt or other liabilities less than a million dollars must be subtracted from his annual income in order to generate positive net worth, in addition to the value of any other assets.  Conversely, a person could earn far less than a million dollars in taxable income a calendar year, or even earn nothing or lose money, and remain a millionaire. 

Studies of income in the United States have demonstrated that class (e.g. defined by annual income quintiles) is not static.  A significant number of people move up for down from one income quintile to another from one year to the next, depending on a wide variety of circumstances.  The “rich” of this year are not the same of next year, just as the “poor” of this year are not the same of next year.  Thus, the rich as a class remain rich and the poor remain poor, but the individuals whom these groups comprise are not the same.  The individual “rich” do not necessarily get richer and the individual “poor” do not necessarily get poorer.  

In fact, one of the many reasons that some people enter the highest quintile, (the “rich,”) is through the sale of the family farm or business or of bonds or other securities.  In other words, they report a high annual income only because of one-time events.  These people are not necessarily “rich,” but have one good year, just as a billionaire who makes one bad deal in a year is not “poor,” though he loses money and reports such a loss in annual taxable income.  They do not “earn” a half million or more dollars “a year,” but only “earned” such a sum within a particular calendar year, regardless of whether they had any debts.  These people may or may not be millionaires in terms of assets, but not in terms of annual income, except for one year.  I daresay it would be unfair to tax such individuals as if they are “millionaires” or the “rich” at a substantially higher income tax rate for only a one-time windfall, just as it would be unfair to tax someone at the highest rate who is hundreds of thousands of dollars in debt because of unfortunate circumstances.  

I call upon the United States Congress, as well as States or other entities that tax income, to consider a system whereby income is more fairly calculated, such as over a two-year period, and that takes debt more into consideration, such as beyond mortgages. Regardless, I urge my fellow conservatives not to fall into the habit of using the Left’s language in regard to class and instead to start identifying the wealthy or poor by their assets, not by income.

The United States Honors Constantino Brumidi, Artist of the Capitol

The United States Mint has issued bronze medals for 2012 that are duplicates of the Congressional Gold Medal awarded posthumously to Constantino Brumidi, the artist of the U.S. Capitol. 

Congress passed the commemorative coin act authorizing the Mint to strike the medal in 2008 and was signed into law by President George W. Bush.  The obverse of the medals features a portrait of Brumidi.  The central scene of his masterpiece, The Apotheosis of Washington, the fresco that adorns the eye of the rotunda of the Capitol, is engraved upon the reverse.

Brumidi immigrated in 1852 from Rome, which was united into Italy in 1870, and was naturalized a U.S. citizen in1857.  Known as the “Michelangelo of America,” he honored the new land of his citizenship by painting the Capitol from 1855 to 1880.  Brumidi’s frescoes cover the walls of the rotunda, both chambers and other important rooms.  His fresco of the Boston Massacre honors Crispus Attacks, the first such tribute to a black American in the Capitol. 

View images of the small version of the Brumidi medal here: http://catalog.usmint.gov/webapp/wcs/stores/servlet/ProductDisplay?catalogId=10001&storeId=10001&productId=16037&langId=-1&parent_category_rn=10200.  The medal is also struck in a larger size.  

Several Italian-Americans have been engravers of circulating, commemorative or bullion U.S. coins, as well as medals, but the honoring of an Italian-American with a medal is rare. 

Monti Resigns, But Could Head a Government of Centrists

Prime Minister Mario Monti, who took office in 2011, resigned Friday after the passage of the 2013 budget and dissolution of Praliment by President Giorgio Napolitano, as the Premier had promised.  Meanwhile, Monti remains in office as caretaker premier. 

Although not officially declaring himself in the field as a candidate for premier in the parliamentary elections February 24, Monti offered an agenda for centrist parties who would invite him to head the next government, although he would not technically stand for election because he is not eligible as a Senator for Life.  The former European Commissioner had been appointed life Senator by Napolitano in order to be eligible to form a technocratic government after Prime Minister Silvio Berlusconi resigned during the fiscal crisis.

Monti’s pro-Europe plan includes a continuation and strengthening of his austerity program, which combines spending cuts with increased taxes, as well as additional labor reform.  The labor reform for which he had won parliamentary approval had been diluted.  Monti’s lists electoral reform as parliament’s priority.  Other planks in the professor’s platform include cracking down further on tax evasion and political corruption and eliminating conflicts of interest.  The unelected Prime Minister also proposes a dramatic reduction in public funding of political parties and caucuses, as well as campaign contribution limits. 

The Italian news agency ANSA reports that a centrist coalition of major Italian figures endorses Monti’s agenda.  Currently, the center-left leads in the polls, followed by Berlusconi’s center-right and a populist movement.  No party is close to a majority, however, which would necessitate a coalition, as usual.

Monti was successful in restoring market and European confidence in Italy by cutting spending and pension reforms that reduced Italy’s borrowing costs through lower interest rates, but his tax increases have harmed the economy.  Italy’s resultant slow growth has delayed the balancing of the budget from 2013 to possibly 2014 through decreased tax revenues.  Although the austerity measures have been unpopular, Italians have generally accepted them as necessary, albeit begrudgingly.  

As I have noted previously, Italy, as the eighth largest economy in the world, is recognized as the European Monetary Union’s firewall against fiscal contagion from the Union’s weak periphery, and thus, as a bulwark against further European and global economic decline.

Conservatives Win Elections in Japan and South Korea

Conservatives won elections in both Japan and South Korea this month. 

In Japan, Shinzo Abe will be prime minister for a second time after the conservative party won parliamentary elections in which the liberals were ousted.  He was prime minister from 2006-2007.  Abe is taking a tough stance against Communist China in regard to the disputed Senkaku Islands claimed and occupied by Japan, but also claimed by an increasingly aggressive China.  He is resented in other Asian states for his attitude regarding Japan’s war of imperialism in the Twentieth Century.

The incoming South Korean leader, Park Geun-hye, won presidential elections to maintain conservative leadership in the Republic of Korea.  Conservatives also hold a majority in parliament.  She has taken a hard line against Communist North Korea, as opposed to the failed appeasement policies of the Hermit Kingdom by the previous liberal administrations.

Both Abe and Park are both expected to maintain good relations with the United States, upon which they depend for security in this increasingly tense region.

Report Confirms Benghazi Attack Was a Repeat of Nairobi and Dar-es-Salaam

The United States Department of State’s own investigation into the September 11, 2012 murders of four Americans at the U.S. consulate in Benghazi, Libya, including Ambassador Chris Stevens, reportedly confirms the suspicion based upon earlier media reports that the attack was a grim repeat of al-Qaeda’s attacks on the American embassies in Nairobi, Kenya and Dar-es-Salaam, Tanzania in 1998, in terms of the failure to provide adequate security.  Those simultaneous attacks in East Africa killed 12 Americans, among the 200 dead and several hundred wounded. 

The attack on the U.S. consulate in Benghazi during the Obama Administration, like the attacks on the American embassies in Nairobi and Dar-es-Salaam during the Clinton Administration, were preceded by pleas for more security against terrorist threats by the U.S. Ambassadors that were ignored by Secretaries of State Hillary Clinton and Madeline Albright, respectively.  The consulate in Benghazi had even been attacked previously.  The facility was not as adequately defended as diplomatic facilities in less dangerous places, such as by Marines, despite the continued civil war in Libya after the fall of dictator Muammar Qaddafi.  The Libyan guards, upon whom the U.S. depended, were on strike at the time, according to the report.

Furthermore, the State Department report, which resulted in the resignations of several officials, disproves the claims the Obama Administration made insistently that the attack was part of a spontaneous protest to a video offensive to Muslims.  The act of jihad was pre-planned by al-Qaeda and timed on the anniversary of the September 11, 2001 Terrorist Attacks by the same terrorist organization.  There was no protest occurring at the time of the attack.  The report thus confirms that the Obama Administration was eager to avoid admitting the attack was committed by Islamists, specifically, al-Qaeda, as an act of jihad.  During the presidential campaign, the supporters of the Democratic Obama-Biden ticket boasted that al-Qaeda had been defeated and the threat of terrorism diminished because of their policies.  An admission by the Administration or its supporters of the truth about the attacks would have called into question those assertions.

In Spain, the conservative party lost the parliamentary election, in which it had been leading in the polls, because the outgoing conservative prime minister had labeled the separatist left-wing Basque terrorist organization, the ETA, as suspects of the March 11, 2004 Madrid train bombing which, it soon became apparent, were committed by al-Qaeda.  The Obama Administration’s obfuscations and misleading statements, together with a sympathetic liberal media, allowed President Barack Obama and Vice President Joe Biden to escape unscathed politically.  The report by the Obama Administration’s own State Department, however, assures that they and Hillary Clinton will not escape the judgment of history.

Conservatives Must Oppose Kerry's Nomination for Secretary of State

       
          Conservatives must oppose United States President Barack Obama’s nomination of Senator John Kerry (D-Massachusetts) to be Secretary of State.

           Kerry’s long liberal record of being wrong on most foreign policy matters is sufficient reason to give pause to conservative Senators considering confirmation of their colleague for the most senior cabinet post, as is his highly dubious military record, in which he claimed to have been injured three times in just a few months during the Vietnamese War by enemy fire, which likely included being grazed by ricocheting bullets from his own firing.  The three Purple Hearts he won allowed him to be sent home early.  Note: my father served in the military in Vietnam and was aware of some soldiers shooting themselves in their toes for this reason, which makes the allegations against Kerry’s fitness to receive these medals that were raised during his campaign for president in 2004 as the Democratic nominee seem plausible, as do the doubts raised about his fitness for his other medals.

           The main reason to oppose Kerry for Secretary of State is because of his actions after the war.  He led a group of protesters that infamously tossed their medals over the White House fence (although he did so only symbolically) in repudiation of their own service – a fact that did not prevent the senior Senator from Massachusetts from later boasting about his service when he sought the office of Commander in Chief.  The so-called “anti-war” movement worked with Communists who did not want peace, but wanted the U.S. to lose the war to their Vietnamese comrades who were backed by the Soviets and Communist Chinese.  The Communist takeover of South Vietnam led to the imprisonment, torture and execution of multitudes of people, as well as the fall of the other Indochinese dominoes, Laos and Cambodia, to the Reds.  Over a million Cambodians alone were slaughtered or starved to death by the Communists.  To this day, no one is fully free in Indochina.

           Moreover, Kerry testified under oath before Congress about heinous crimes he alleged were committed by U.S. servicemen in Vietnam.  He had little first-hand knowledge of these events and was  proven to have falsely claimed in addition to have been off the Cambodian coast.  Much of Kerry’s allegations of atrocities have been proven to have been exaggerated or false.  Like his war protests, his testimony gave aid and comfort to the enemy by improving its morale, while hurting American morale and also allowing the enemy to use such events to wear down the resistance of American prisoners of war who were being tortured to make false propaganda statements against the U.S.

           For the same reasons that John Kerry was not fit to be President, he is unfit to represent the United States as the head of the Department of State and thus be fourth in the order of succession to be Commander in Chief.  Conservatives must oppose his nomination and urge all conservative Senators to vote against his confirmation as Secretary of State.

Berlusconi's Party Withdraws Support of Monti

The center-right PDL (People of Liberty Party), the largest party in the Italian Parliament, withdrew its critical support for the technocratic government led by Prime Minister Mario Monti.  It did so by withholding votes on two votes of confidence, but technically did not trigger a loss of confidence because it did not vote in the negative.  Monti informed the Italian President that he would stand down as soon as the 2013 budget were approved. 

The move coincided with PDL leader Silvio Berlusconi’s announcement that he intends to stand for election for a fourth tenure as premier, and sets up snap elections, probably in March, which likely would have occurred by April anyway, as the unelected Monti had previously announced he would not stand in the election.

The PDL praised Monti’s patriotism and honesty, but criticized his increases in taxes that have been a drag on the Italian economy, which, in turn, have reduced government tax revenue and delayed the balancing of the budget.  Berlusconi expressed opposition to those policies that have caused economic recession and increased the debt.  The former prime minister accused his successor of being “Germano-centric” by following the financial diktats of the German government, which he observed was acting in a self-interested manner.  According to CNBC, The PDL also cited Italy’s vote in the United Nations General Assembly to recognize Palestine as a state.

The media repeats that Berlusconi had resigned as prime minister because of the financial crisis, but, as it did during his premiership, neglects to report the considerable austerity measures his government enacted that put Italy, despite its massive debt, on track for a balanced budget by 2013 (since delayed by the current government until the following year).  Monti did acknowledge the reforms that began under his predecessor.  The lack of confidence that markets had in Italy under its center-right government was in its political stability, not in its policies, in addition to concerns that the Italian people, like the Greek, would not accept significant austerity measures.  Despite the unpopularity of the austerity program, the Italians have, in fact, generally accepted the necessity of the measures.

The impending end of Monti’s executive shook world financial markets, which Berlusconi dismissed as yet another manufactured opportunity for foreign speculators, until they considered that the three-time premier is unlikely to win, according to opinion polls.  Also, an effort by the leading center-left party and the main centrist Christian party is underway to persuade Monti to stay on for a time, instead of resigning immediately after the passage of the budget.  Regardless, both the main center-left and center-right parties support austerity in terms of spending cuts, despite their difference over taxes.  No party is close to being favored by a majority, which would necessitate a coalition, as usual.

Berlusconi created a new wrinkle in this developing story by offering to support Monti if the incumbent stood for the election by leading a broad center-right coalition with the PDL, the Christian centrists and his former coalition ally, the Northern League, which had opposed Monti.  Monti, who, according to Italian news agency ANSA, received the support of several European heads of state who lead the center-right European Peoples’ Party at its meeting in Brussels, Belgium attended by both Monti and Berlusconi, did not announce whether or not he would run, as opposed to his previous insistence that he would not.  ANSA reports that the main center-left party, although it would prefer Monti not run, would support him if he does.

I shall continue to post updates on this matter.  As I have noted during the fiscal crisis in the European Monetary Union, Italy, even more than Spain, is the firewall for the eurozone against the contagion of default on sovereign debt that could lead to the end of the single currency.  The crisis, which has contributed to Europe’s recession, which has, in turn, exacerbated the debt problem, has also been a drag on the global economy.

Fourth Anniversary of My Blog; Blogger Hit Report

Between my last two posts, I observed the fourth anniversary of the launch of this blog.  Thank you for your patronage, which has made this endeavor worthwhile.

Also after Thanksgiving was the second anniversary of my observation of statistical tracking by the blog host, Blogger.  As I have noted previously, Blogger tracks far more pageviews than StatCounter (an average of 16 per day vs. 6 per day), for a total of more than 12,000 hits, not including my own, although the latter is far more specific.  The blog host’s statistics are nonetheless interesting. 

Blogger has continued to track pageviews of my blog on every day and on every post over the last two years.  It has tracked pageviews of 70 more posts than StatCounter, including several from the first two years, which were posted before the blog host began tracking.  For example, many more pageviews were tracked by Blogger than StatCounter especially of my posts in October and November about the United States general election.  The former has also tracked visits from 16 more foreign states from all six inhabited continents over the last two years than have ever been tracked by the latter since April of 2009.  I am thus aware of visits from at least 122 foreign states between the two trackers, as well as from other territories, as well as every American state and several U.S. territories.  Blogger continues to track far more visits especially from Europe than StatCounter, with Russia being the source of the most pageviews outside the U.S., with well over a thousand, followed by the Netherlands and Germany.

            Again, thank you for visiting, especially those of you who follow my blog or post comments.  Please continue to visit and comment.  

European Fiscal and Economic Notes

Europe has now plunged back into economic recession, despite the efforts of the European Monetary Union to end the crisis in the eurozone.  However, the promises by the European Central Bank to lend to member states that are reducing their debt significantly has continued to decrease the spread between the yields on Spanish and Italian sovereign bonds and the benchmark German bonds, thereby reducing interest payments for the governments of Spain and Italy.  

France’s credit rating has been downgraded, in a reflection of its new Socialist government’s policies of abandoning austerity by increasing spending.  The French government is also dramatically increasing taxes on businesses and the wealthy while threatening to nationalize businesses.

There was progress towards a new deal for Greece for its next tranche of bailout funds from the European Monetary Union and other institutions supporting it, as the Greeks have been agreeing to additional austerity measures (e.g. spending cuts).  Meanwhile, the Hellenic Republic cut a deal with its bondholders reducing the amount of debt it would default on and cause the bondholders to have to write off.

Italy is enjoying some success in cutting down on tax evasion, according to CNBC, something Greece needs to do more.  Apparently, not only did many southern Europeans receive much government largesse while not having to work many hours and days and while retiring early, some of them also did not pay their share in taxes.  It is shocking to many observers that they would react violently against austerity, which was necessitated because of their sloth and greed, but once people get accustomed to a lifestyle, it is apparently difficult to sacrifice even such ill-gotten gains.  Encouragingly, more Italians are informing on their fellow countrymen, especially business owners whom they suspect are evading sales taxes, in recognition that tax evaders cost everyone else, according to CNBC.  

The British newspaper, The Telegraph reports that after the United Kingdom’s liberal government raised its tax on million-pound earners to 50% in 2009, the number of millionaires decreased by two thirds, either because they fled the U.K. or found ways to reduce taxable income, according to a government report.  The paper reports, however, that the announced reduction by the Conservative-led coalition government, to 45% has already increased the number of millionaires significantly.  The report bolsters the government’s argument that the report proves that increasing taxes reduces revenue, The U.K. is a member of the European Union, but not of the Monetary Union.