In the January 16, 2012 debate in South Carolina Romney said he didn’t believe that people who have committed violent crimes should be allowed to vote again – Santorum responded with while Romney was Governor of Massachusetts the law was not only could violent felons vote after their sentences were exhausted but they could vote while they were on parole and on probation. The crowd liked Gingrich’s proposal for poor kids to earn money (see December 28 blog, Republicans – November & Early December) and didn’t like Paul’s position on foreign policy.
On January 17 Sarah Palin endorsed Gingrich and we heard that according to the tax center, the average American making $50 - $75,000 a year pays 15% of their income to IRS; those earning $75 - $100,000 pay 17% and $1+ million pay 29%. Romney said he’s been paying 15% because most his income doesn’t come from ordinary income but from investments (they’re taxed at the capital gain rate of 15%). Romney also said he gets some income from speaking but not very much, ABC News found out that last year he made $374,327 from 8 speeches. At this point in the game, Romney still said he won’t release his tax returns until April when most primaries are over; it was pointed out that Romney’s father (George) started the tradition of releasing tax returns in 1967 and he released 12 years worth.
On January 18 I heard Elisabeth Hasselbeck on the View explain that capital gains are taxed at 15% to give people an incentive to invest because if they don’t the market will crash and take down our economy. She pointed out that the money invested was already taxed (so is my savings) but people are looking at when you work for a private equity fund - you earn carried interest when a transaction is complete and that’s where the loophole in our tax code is. Joy Behar pointed out that poor people don’t have the money to invest and Social Security is taxed at 35% and Romney’s plan will cost low income families more and not the middle or upper class people (she also said she didn’t understand someone who would strap his dog on the roof of the car when going on vacation). The website for the Citizens for Tax Justice in November 2011 reported that in 1921 capital gains were taxed at 73%, in 1922 it dropped to 12.5% and remained there until 1934 when it went up to 31.5%; in 1936 it went to 39% and bounced between 25% and 39% until 1978; in 1979 it dropped to 28% and bounced around in the 20 percentiles until 2003 when it dropped to 16.1% and gradually dropped to the 15% it is today.
I decided to trace the roots of the New York Stock Exchange (NYSE) to its beginning. Many consider the stock market to have started out as a dirt path in front of Trinity Church in East Manhattan a little over 200 years ago; no paper money was changing hands and the idea of stocks didn’t exist; they traded silver for papers saying they owned shares in cargo that was coming in on ships every day. During the American Revolution (1775 – 1781), the Colonial Government needed money to fund its wartime operations; one way they did this was by selling bonds (pieces of paper a person bought for a set price, knowing that after a certain period of time they could exchange their bonds for a profit). Along with bonds, the first of the nation's banks started to sell parts or shares of their own companies to people in order to raise money; in essence they sold off part of the company to whoever wanted to buy it and this was the start of the modern day stock market. Wall Street was becoming a major center of these transactions and in 1792 twenty-four men signed an agreement that started the NYSE; they agreed to sell shares or parts of companies between themselves and charge people commissions, or fees, to buy and sell for them. They found a home at 40 Wall Street in New York City; as they grew, they later moved into what is currently the NYSE Building. The 1900s brought the Industrial Revolution and along with it a boom in Wall Street. Everybody wanted a piece of the action, and Wall Street grew. The NYSE was not the only way to buy stocks at that time; many stocks were deemed not-good-enough for the NYSE and were traded outside on the curbs and this "curb trading" has now become the American Stock Exchange (AMEX).
Personally, I think the market was the beginning of the end for the world because it drives people’s greed. And I believe that this got worse when hedge funds came into play in 1983. Bruce Kovner founded Caxton Associates, the first global macro hedge fund that did an analysis of worldwide economic trends and identified investments of the global markets. I think this is how we all got intermingled in each other’s economies and major tax evasion (Reagan’s era). By January 18, 2012 ABC News had tracked 12 funds, approximately $30 million, of Romney’s money to investment funds set up at PO Box 908 in the Cayman Islands (notorious for secrecy and helping foreign investors to avoid US taxes); to which the Treasury Department said it loses $100 billion a year.
It’s time for the rich to start paying their fair share (not have a zero tax like Gingrich said). Perhaps they should go to 28% or 33% as when Reagan was in office since they like to tout his politics. I also believe our government needs to correct the past failures and continue to prosecute those participating in Ponzi schemes, illegal trading, and tax evasion via the Dodd-Frank Act that Romney wants to repeal.
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