May 22^nd

A letter to the Record-Eagle editor this morning deserves comment. It spouts the usual right wing talking points without a shred of original thought. The writer maintains that if you invested a million dollars in the stock market you could have lost it all rather than making 87 thousand dollars as a previous writer had posited. True enough, but it would have required either incredible stupidity or the willful desire to lose money.

This writer suggests the market is a gamble and it is; if you lose money in this gamble, unlike other gambles, you can deduct up to 3 thousand dollars of your losses each year from your income for tax purposes and you can carry forward any additional losses to succeeding years. Very neat if you confine your gambling to the stock market. You can’t do that with other gambles.

Then the writer tells us that “near 50% of all tax filers paid no income tax.” The writer doesn’t understand that the country was in a deep recession and incomes for many people who were out of work simply disappeared. Then there were many retirees living primarily on Social Security an amount too low it incur any tax liability.

The writer apparently does not know, or is not willing to admit, that more than 15 thousand households with incomes over 200 thousand dollars a year also pay no income tax. How is that possible? Just put your capital in municipal bonds. That income is not subject to any federal income tax. Indeed if you buy municipal bond funds investing only in your state, you’ll pay no federal or state income tax. If you invest 10 million dollars (hard earned by going to the office every single day) in muni bond funds you’ll get about 350 thousand dollars a year totally tax free. Then, with the absence of any meaningful inheritance tax, you can pass this fine lifestyle on to your children and grandchildren. Is this a wonderful country or what?

Of course many poorer people pay no income tax as well. In addition to retirees there are breadwinners out there who are earning $12.50 an hour. (This is substantially more than the minimum wage for Michigan which has generously been raised to $8.15 an hour.) A family of four, mom dad and two young children, with the father earning $12.50 an hour and working 40 hours a week for 52 weeks a year will earn 26 thousand dollars a year. That family will pay no federal income tax. They will even qualify for 238 dollars a month in food stamps. Thus does the taxpayer subsidize the businesses paying low wages and many pay much less than $12.50 an hour.

The Republican led legislature apparently thinks $8.15 an hour is plenty for a living wage. They’ve already recommended cuts in the food stamp programs as well.  Parents can just feed their kids sawdust sandwiches; think of all the wholesome fiber they’ll get.