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My newest follower on Twitter is Black Tie Magazine, dedicated to high profile philanthropy (like this.)

In a lengthy article by one Jaime Dermody on how to fix our current financial mess, he says the following:

(E.) Congress accommodates (B.) above by amending the Mortgage Forgiveness Debt Relief Act of 2007 to waive recognition of ordinary income for debt forgiveness on primary residences only if:

(E.1) borrower obtains consent of a servicer or substantial holder of the mortgage, or a bankruptcy court, associated with the debt in question; or

(E.2) demonstrates to the IRS that he or she was the victim of any predatory lending.

This will remove the incentive to misuse SCICS described in Subsubsection (2.1.3) above, except where it is part of a resolution or untoward lending.

This mention of a waiver illustrates a little-known aspect of our internal revenue code: as a general rule, if a debt is forgiven, the amount of the forgiveness is taxable income to the beneficiary!  Other people’s forbearance (irrespective of the motive) becomes your penalty!

Our government at work.  And yes, you need to see your tax professional if you think you’re subject to this.  (Other terms and conditions of this site are here.)

I’ve seen this elsewhere in the conservative blogosphere, but it’s good when someone who really knows what they’re talking about points this out:

In 1960, only 3% of tax filers paid a 30% or higher marginal tax rate. By 1980, after the inflation of the 1970s, the share was closer to 33%. In 1981, Congress realized the inequity in these “stealth” tax increases by requiring tax brackets be indexed for inflation. Without such indexing, lower income persons are eventually subjected to higher marginal rates of tax as their income rises with inflation, even though they have not really increased their income on after-tax basis. Similar “bracket creep” has occurred in the context of the alternative minimum tax, which once-upon-a-time only applied to 1% of U.S. taxpayers.

The current House health bill has not indexed two main tax features for inflation: the $500,000 threshold for the 5.4-percentage-point income tax surcharge, and the payroll level at which small businesses must pay a new 8% tax penalty for not offering health insurance. Therefore, as time (and inflation) march on, more and more taxpayers will be subject to these new taxes without any real increase in income level.

Also worthy of note is that the surcharge will apply to capital gains and dividends. Thus, the capital gains tax rate that is now 15% would increase in 2011 to 25.4% with the surcharge and repeal of the Bush tax rates. The tax rate on dividends would rise to 45% from 15% (5.4% plus the pre-Bush rate of 39.6%).

The increase in taxes on capital gains and dividends is what it is, and is being discussed here only because this point is not widely known. The lack of indexing for the new taxes and penalties, however, is a dishonest method of raising taxes, since it effectively raises taxes each year without a new Congressional vote or presidential approval. (emphasis mine)

Looks like we’re back to 1960’s and 1970’s style bracket creep and “soak the rich” taxation.  This is another disincentive for diligence and entrepreneurship.  It is the real core problem with Obama’s economic vision.  He and those of his idea think that people will continue to take risks and work so their new social programs (and the deficits that go with them) will be funded.  But if people simply slack off, all of this will be unfundable, and we will have a crisis of unprecedented proportions.

One wonders what he or his advisors were thinking:

Yesterday, however, stark reality of a very different sort intruded: News broke out of the shooting at the Fort Hood Army post in Texas. Soon enough, the full impact of the horror became evident: 13 dead, another 30 injured. The full details and investigation of the shooting — evidently by a base Army officer — will become clear in the days ahead.

It’s President Obama’s reaction to it that is disturbing. Networks reported that the White House had been notified of the early afternoon shooting. By late afternoon, word went out that the president would speak about the incident prior to a previously scheduled appearance. At about 5 PM, cable stations went to the president. But, instead of what might have been expected — a somber chief executive offering reassuring words and expressions of sympathy and compassion — viewers saw a wildly disconnected and, inappropriately “light” president making introductory remarks. At a Tribal Nations Conference hosted by the Department of Interior’s Bureau of Indian affairs, the president thanked various staffers and offered a “shout-out” to “Dr. Joe Medicine Crow — that Congressional Medal of Honor winner.” The president eventually spoke about the shooting — in measured and appropriate terms, but how could anyone have advised him to begin in this manner?

One thing that he could have noted is that Native Americans are disproportionally represented in the military.  But that kind of fact isn’t very politically correct, although it honours those who were here first.

City Journal’s article concerning Westchester County’s (NY) election of a Republican county executive (news in and of itself) highlights one of the American left’s long-term goals: the complete levelling of people relative to location, so that you don’t have “good neighbourhoods” and “bad neighbourhoods” any more.

Although the right is usually diligent in documenting the radical agenda of the Obama Administration, this is one aspect that generally gets overlooked.  However, on a day-to-day level, it would have the most profound impact on daily of life of anything the current occupant of 1600 Pennsylvania Avenue (zip code 20500) could accomplish.

The overturning in Westchester County is a result of a settlement the county reached with the federal government to require the construction of Section 8 housing in affluent towns.   At the time this was reached, HUD Deputy Secretary Ron Sims was noted as follows:

“We are going to say [that] areas have an obligation in greatest sense of word to provide choice,” Ron Sims, the deputy secretary of the Department of Housing and Urban Development, said in an interview Tuesday.

Mr. Sims, who served as the executive of Washington’s King County, which includes Seattle, before joining HUD, said that demographic data showed how ZIP codes had become “big predictors of illnesses, life expectancy, long-term job earnings of children as well as adults.”

Consequently, the department said it would do more to ensure that established surburban neighborhoods that accept HUD money to provide “opportunity of choice,” he said. “When you can predict the illnesses people can get by ZIP code, there’s something wrong. It’s time to remove ZIP codes as a factor in the quality of life in America.”

Taken to its logical conclusion, this idea would eliminate any income or housing quality distinction between different parts of town.  That means the following:

1. It would eliminate the distinctions in culture that brought those who live in a more expensive part of town to where they’re at (or leaves those who are in the poorer part of town where they’re at, take your pick.)
2. It would eliminate the incentive to work towards upward social mobility, since what you’d be looking at when you’re done would be the same as what you’re looking at now.

That, boys and girls, is profound.  That would put us closer to making the fifty square metre apartment the norm.  (I know people laughed when I posted this, but now the laugh’s mine.)  But that’s been a long-term goal of the American left since at least the 1960’s, and using Section 8 housing as leverage to get there is a pretty big weapon in their arsenal.

There are a couple of practical implications that should be noted:

1. How is HUD going to come up with “market value rents” in really affluent places?  Take the case of the zip code I grew up in (Palm Beach, 33480.)  What kind of deficit spending are the feds prepared to do in a place where property that sells for under US$750,000 is at the bottom of the market?
2. This kind of development has the most impact in places where the urban structure is “balkanised,” i.e., you have a centre city and many surrounding suburbs.  That’s the case in most of the U.S. except for the “Old Confederacy,” where annexation laws have favoured the expansion of the central city rather than the formation of a ring of suburbs.  For relatively large cities such as Charlotte or Nashville (or even Atlanta or Houston) that have taken Section 8 money, with the wider range of income levels within the municipality, they have more flexibility in locating the Section 8 housing than, say, a Palm Beach or a Birmingham, MI.

Although a complete levelling in income disparities by geography has been a goal (expressed or implied) of socialist states for a long time, it’s never been achieved, even in the old Soviet Union, with its special places for those high in the Communist Party.  But that won’t keep the American left from trying, and trying they are.

I wonder what they would have done if his comeback was that he thought civil marriage itself was wrong.