A picture is worth a thousand words …
Thanks to MKH for the heads-up
* * * * *
Want more from the Homa Files?
Click link => The Homa Files Blog
Archive for October 28th, 2008
Steps towards bipartisanship … Dancin’ with the stars ?
October 28, 2008Reprise: Under Obama, Tax Payers Will be a Minority !
October 28, 2008
Note: This analysis was originally posted on July 31, 2008. It’s the post that has gotten the most hits, and the topic is ‘hot’ this week on the talk shows. So, here’s a flashback .
..
* * * * *
Despite the drumbeat of warnings from various sources, the prospects that a minority of voting age Americans will be paying Federal income taxes under the Obama tax plan doesn’t seem to arouse much visible public anxiety.
Why?
First, for those in the emerging majority that won’t pay any income taxes – or may even be getting government checks for tax credits due – the deal is almost too good to be true. To them, Obama’s plan must make perfect sense. So, why rock the boat?
Second, some people argue that low-earning people who don’t pay income taxes shoulder a regressive payroll tax burden to cover Medicare and Social Security. Yeah, but these programs – which are most akin to insurance or forced savings plans — offer specific individual benefits that are directly linked to each wage earner’s contributions.and the benefits phase down quickly as qualifying income increases. That is, they’re not as regressive as many people argue.
Third, most of the energetic criticism of Obama’s plan has centered on its redistribution intent — taking over $130 billion of “excess” income from undeserving rich people, and giving it directly to those who earn less and need it more.
Fourth, most folks just don’t believe that the numbers will really shift enough to create a voting majority of citizens who don’t pay income taxes. They’re wrong. Very wrong.
Here are the numbers … and why they should bother you.
* * * * *
Today, 41% of voting age adults don’t pay Federal income taxes
Based on the most recent IRS data, slightly more than 200 million out of 225 million voting age Americans filed tax returns. That means that 25 million adults – presumably low income ones – didn’t file returns and, of course, didn’t pay any income taxes. See notes [1] to [4] below
Of the 200 million voting age filers, approximately 68 million (33% of total filers) owed zero income taxes or qualified for refundable tax credits (i.e. paid negative income taxes). [5]
Add those 68 million to the 25 million non-filers, and non-payers already total 93 million – 41% of voting age adults.
* * * * *
Obama’s Estimates – Make that 49%
Not Paying Federal Income Taxes
Obama says (on his web site) that he will give tax credits up of $1,000 per family ($500 per individual) that will “completely eliminate income taxes for 10 million Americans”. And, he says that he will “eliminate income taxes for 7 million seniors making less than $50,000 per year.” [6]
Taking Obama’s estimates at face value, the incremental 17 million that he intends to take off the income tax rolls will push the percentage of non-payers close to 49% of voting age Americans — within rounding distance to a majority. [7]
* * * * *
And, Obama’s estimates are probably low,
so make the number 55% (or higher)
Since Obama’s basic proposal is for tax credits ($500 per person or $1,000 per family) – not simply deductions from Adjusted Gross Income (AGI) — they will have a multiplier impact on the amount of AGI that tax filers can report and still owe no taxes.
For example, a childless married couple that files a joint return can currently report about $17,500 in Adjusted Gross Income (AGI) and owe no income taxes. [8]
Under the Obama Plan, that couple’s zero-tax AGI is bumped up to $27,500 since their new $1,000 tax credit covers the 10% tax liability on an additional $10,000 of AGI. And, married couples filing jointly can keep adding about $10,000 to their zero-tax AGI for each qualifying dependent child that they claim. [9]
click table to make it bigger
Based on the 2006 IRS data, approximately 25 million tax returns were filed that reported AGI less than $27,500 (the post-Obama zero-tax AGI) and required that some income taxes be paid. [10]
Assuming that 45% of those were for couples filing jointly, they represent over 22 million adults. For sure, these 22 million will come off the tax rolls — and they alone will be enough to create a non-taxpayer majority (51% of voting age adults),
click to make table bigger
And, there are more folks being pushed off the tax rolls. About 4.7 million childless individuals earn less than $13,750 (the post-Obama zero-tax AGI for childless individuals), and currently pay some Federal income taxes. This group will shift to non-payer status.
So would several million joint filers who can take advantage of the Child Tax Credit to report more than $27,500 and not pay Federal income taxes.
And, some portion of the 7 million Seniors that Obama says will have their taxes eliminated — that is the Seniors couples earning more than $27,500 (but less than $50,000) — and Senior individuals earning more than $13,750 (but less than $50,000).
So, post-Obama, the percentage of non-taxpayers will easily exceed 55% of voting age adults — a solid majority. It won’t even be close.
* * * * *
The Bottom Line – Why You Should Worry
An income tax paying minority of voting age adults isn’t just a possibility. Under Obama’s plan, it’s a virtual certainty. Based on the hard numbers, Obama’s plan will create a new majority — a powerful voting block: non-tax payers. UH-OH.
Again, for those in the emerging majority that won’t pay any income taxes – or may even be getting government checks for tax credits due – the deal is almost too good to be true. To them, Obama’s plan must make perfect sense. Count on their perpetual support for the plan.
But for those in the new minority, watch out if the new majority decides that more government services are needed, or that $131 billion in income redistribution isn’t enough to balance the scales.
The Tax Foundation — a nonpartisan tax research group – has repeatedly warned that “While some may applaud the fact that millions of low- and middle-income families pay no income taxes, there is a threat to the fabric of our democracy when so many Americans are not only disconnected from the costs of government but are net consumers of government benefits. The conditions are ripe for social conflict if these voters begin to demand more government benefits because they know others will bear the costs.” http://www.taxfoundation.org/research/show/1111.html
* * * * *
Sources & Notes
[1] The Census Bureau reported 217.8 million people age 18 and over; as of July 1, 2003.
http://www.census.gov/Press-Release/www/releases/archives/population/001703.html
http://www.census.gov/popest/national/files/NST-EST2007-alldata.csv
[2] The IRS reported 138.4 million personal tax returns filed in 2006.
http://www.irs.gov/pub/irs-soi/06in11si.xls
[3] The IRS reported that in 2006, approximately 45% of filed returns were by married couples filing jointly (i.e. 2 adults per return); 55% for individual filers (including ‘married filing separately’ and ‘head of household’). http://www.irs.gov/pub/irs-soi/06in36tr.xls
[4] Calculation: 138.4 million returns times 1.45 (adults per return) equals 200.7 million adults represented on filed returns
[5] http://www.irs.gov/pub/irs-soi/06in01fg.xls http://ftp.irs.gov/pub/irs-soi/06inplim.pdf
[6] http://www.barackobama.com/issues/economy/#tax-relief
[7] Analytical note: 93 million plus 17 million equals 110 million divided by 225 million equals 49%.
[8] Analytical note: $17,500 less a $10,700 standard deduction, less 2 exemptions at $3,400 each, equals taxable income of zero – so no federal income taxes are due.
[9] Analytical note: $27,500 less a $10,700 standard deduction, less 2 exemptions at $3,400 each, equals taxable income of $10,000, which at a 10% rate is a $1,000 tax liability that gets offset by the $1,000 Obama credit, reducing the tax liability to zero.
* * * * *
Want more from the Homa Files?
Click link => The Homa Files Blog
Have it your way … from Sirius-XM
October 28, 2008Excerpted from AP: “Sirius offers custom, a la carte packages”, 10.02.08
* * * * *
Sirius XM Radio unveiled customized satellite radio programming packages and a pay-per-channel, a la carte option for customers.
The company is offering “Best of Both” packages where former XM customers will be able to get select Sirius channels, and vice versa. The package costs $16.99 a month. Most subscribers can add the channels without buying a new radio.
XM subscribers will be able to add Sirius personalities and channels such as Howard Stern, Martha Stewart Living Radio, Sirius NFL Radio, Sirius Nascar Radio and Playboy Radio.
Sirius subscribers can add Oprah Winfrey, The Virus featuring Opie and Anthony, XM Public Radio, the PGA Tour and select NBA and NHL games.
Sirius also offers a pay-per-channel option, a first in pay subscription media.
The $6.99 per month package lets consumers pick 50 channels, but does not include live games, races or Howard Stern. Premium channels cost extra and online listening is not available. The monthly rate for the a la carte package is capped at $12.95.
The $14.99 per month a la carte plan includes 100 Sirius channels and select XM channels. Online radio listening is not included but premium channels do not cost extra.
Full article:
http://www.forbes.com/feeds/ap/2008/10/02/ap5501169.html?partner=alerts
* * * * *
Ken’s POV:
Bottom line: a very confusing price plan — probably intentionally so — that bumps prices up about $4 per month.
* * * * *
Want more from the Homa Files?
Click link => The Homa Files Blog
Wendy’s Changes its Target, Leaving the Red Wig Behind
October 28, 2008Excerpted from the Wall Street Journal “Wendy’s Comes Up With a New Strategic Recipe” by Janet Adamy, September 29, 2009
* * * * *
Wendy’s plans to target older customers, change its value menu and improve items like its french fries as its new owner takes over.
Wendy’s new chief executive, Roland Smith, says the chain plans to market to older customers…Wendy’s has struggled to increase sales and profit since Mr. Thomas died six years ago, and that led directors to put the chain up for sale last year.
In an interview, Roland Smith, president and chief executive of the new Wendy’s/Arby’s Group Inc., said executives plan to reverse the previous’ management team’s strategy of courting 18- to 24-year-olds and will instead aim its marketing at customers ages 24 to 49. A new marketing campaign that focuses on the quality of the chain’s food “is a breath of fresh air from the red-wig campaign,” a more offbeat series of commercials that Wendy’s ran last year featuring young men wearing red wigs, Mr. Smith said.
Mr. Smith said that, like rivals McDonald’s Corp and Burger King Holdings Inc., Wendy’s plans to change its value menu, which includes three items for 99 cents, as it faces higher ingredient and labor costs. He said Wendy’s is considering higher price points for some items and looking at putting different items on the menu…
Mr. Smith acknowledged that Wendy’s hasn’t done a good-enough job of creating products to bolster sales and fend off competitors. After talking to franchisees, he decided that the chain also needs to improve the quality of existing items and emphasize a message of freshness in its marketing. In particular, he wants Wendy’s to offer better french fries, sandwich buns and bacon.
For Wendy’s, one of the keys to increasing its sales and profit will be breaking into the breakfast business…Wendy’s has been serving breakfast at some locations but has yet to hit on a successful strategy. Mr. Smith said the company needs to reformulate some of its breakfast items and improve its coffee, which is made by Procter & Gamble’s Folgers. Wendy’s also is testing espresso drinks in some stores.
Another key to improving sales will be remodeling thousands of Wendy’s restaurants…The credit crunch is likely to make that more difficult for franchisees who need to borrow money to fund the renovations. “It’s going to be tougher to get money to buy stores and rebuild stores”..
Edit by SAC
* * * * *
Full article:
http://online.wsj.com/article/SB122270629158386159.html
* * * * *
Want more from the Homa Files?
Click link => The Homa Files Blog
The Homa Files 