Rocky just realized that Randy Newman’s 1977 hit “Short People…got no reason to live” is actually a politically-charged parable about income tax policy.
Harvard Economist Greg Mankiw’s paper “The Optimal Taxation of Height: A Case Study of Utilitarian Income Redistribution” [click here] argues that tall people earn more money, and so fairness dictates that they should pay more in taxes than short people. He uses a Utilitarian analysis of the sort favored by 19th century philosophers Jeremy Bentham and Francis Edgeworth. (Jeremy Bentham’s auto-icon declined Rocky’s repeated requests for comment.)
Given President Obama’s zeal to “spread the wealth around,” Rocky (whose height is below average) is looking for a new box to check on his 2010 Form 1040.
The Form 1040 has a box to check for the blind person credit. It has a box to check for the qualifying child credit. But it has no box to check for the short person credit.
Rocky plans to discuss this issue with Rep. Charlie Rangel (Chair of The House Ways & Means Committee and a representative from NY’s Washington Heights neighborhood.)
Rocky sadly notes that it’s now more profitable to invest with a BIG crook, than to invest in a BIG company.
Bloomberg News reports that Representative Gary Ackerman (D, NY) introduced a bill giving preferential tax treatment to de-frauded investors in Bernie Madoff’s Ponzi Scheme.
“The bill would extend to 13 years the time for which investors may obtain refunds on taxes tied to the phony profits,” the New York Democrat said in a statement. Current rules limit investor refunds to the past three years.
Rocky highlights the economics of this new Government bailout:
Investors who bought $1,000,000 of stock or preferred shares in:
(1) Washington Mutual
(2) IndyMac Bank
(3) Fannie Mae
(4) Freddie Mac
(5) Lehman Brothers
have been COMPLETELY wiped out.
These investors receive no tax credit for any retained earnings reported by these companies. It’s a 100% capital loss. Gone. Zilch. Nada. Diddly-squat. Zip. Goose egg. Hill of beans. ZERO!
In contrast, investors who gave $1,000,000 to Bernie Madoff, will receive a $500,000 insurance payment from the SIPC. They also keep any income received before the Bankruptcy Preference Claim period. And, they get an unlimited tax deduction for qualified “theft” losses. (This is under the current law. Rep. Ackerman wants to give a special new tax hand-out to Bernie’s investors.)
Rocky’s suggestion to Rep. Ackerman: Go ahead and change the tax code — but eliminate the current $3,000 per year capital loss limit for EVERYONE.
If the Government wants to be Rocky’s partner on 100% of the profits, it should be his partner on 100% of the losses too.