Financial Samurai

On Wednesday, January 18th large internet companies such as Wikipedia blacked out their sites in protest of the Stop Piracy Act Bill (SOPA).  The nice-sounding bill threatens to destroy creativity and freedom of speech on the Internet by allowing the US Department of Justice and copyright holders authority to attack sites who enable or facilitate copyright infringement.

Imagine Financial Samurai sharing a piece of useful information on how to prevent credit card theft online, and the original creator is from some giant corporation who has a propensity to sue despite linking back and giving credit.  I will probably never bother to share this useful content in fear of having some overly paranoid lawyer sue me for SOPA infringement if this bill passes.  Our society is already litigious enough!

I’m proud of the Internet community for speaking out against SOPA.  The government, despite all its “good intentions” should not be in the business of regulating what we can share and say online.  Sure, there is a limit to what we can and should do, especially if someone is being untruthful, but for the government to get involved with what I can and cannot say on my own site is wrong and I am fiercely against SOPA and more government regulation!

You would think that those who are against big government would also be against big government who discriminates based on income, gender, and sexual preference, but you’d be mistaken.  To many, discrimination is OK, so long as they aren’t being discriminated against.

THE HYPOCRISY OF INCONSISTENCY Read more…

In my fiscally irresponsible state of California, Governor Jerry Brown (D) is proposing raising taxes on people making over $250,000 a year.  According to the SF Chronicle, 65% of those polled believe this is a great idea.  Well No Duh useless poll and uninsightful newspaper.  Most people or households don’t make more than $250,000 a year so of course they’d be for raising taxes on those income earners!

In fact, less than 5% of the population makes more than $250,000 a year, so why don’t 95%+ believe this is a great idea?  The reason is because Jerry Brown has also proposed raising the sales tax by another 0.5%!  Uh oh, suddenly since everybody has to pay for an increased sales tax, not everybody is for it!

Hey, what’s a 10.5% sales tax rate from the 10% now?  At least you have a choice in paying taxes, whereas if you are making above a certain income level, you don’t.  Let’s just raise sales taxes to 20% since rich people have a lot of money and buy way more things they don’t need anyway!

WHY ISN’T THERE PENSION REFORM? Read more…

There’s a tremendous battle in Congress regarding balancing the budget.  The Democrats want to raise taxes and remove deductions for the highest income earners while the Republicans want to just cut spending without raising taxes on the richest Americans.  There has to be a combination of higher taxes and lower spending in order for there to be an agreement, otherwise the US economy will fall back into a recession since nobody will have any confidence to spend.

Given it’s the holiday season, one of the most perplexing issues is why the President and his party wants to remove charitable deductions for those in the highest two income tax brackets: 33% ($212-$380,000) and 35% ($380,000+).  There’s no doubt that the main reason why people give is to help people, however, the elasticity of giving is not vertical mind you.  There will be incremental negative consequences.

It’s estimated that roughly $300 billion of charitable contributions happen each year, with the large majority of donations coming from the wealthiest citizens.  The top 10% of income earners pay 70% of all taxes, despite earning 46% of all income.  The statistics for contributions are roughly the same for charity.

With the enactment of asymmetric policy against high income earners, some have estimated there will be a decline of roughly 2%, or $6 billion in charitable contributions per year.  2% sounds quite conservative, but regardless of the amount, there will be a decline in charity exactly during a time when charities need the money the most!

The poor have already suffered enough, let’s not make them suffer even more.  With the economy growing at an inadequate pace to soak up the ever increasing number of unemployed, we will see an increase in those falling under the poverty line.  More people needing assistance increases the financial burden on the government and a negative cycle ensues.

What the government needs to do is incentivize people to give even more, not less.  Individuals are much more efficient at identifying causes that need the most help, not big organizations.  I urge everyone to write, call, and speak up for the poor by denouncing the removal of charitable deductions for those who donate the most.

We should fight for the less fortunate always, and not just during the holidays.  Give what you can give to what you believe in.  We never know when we’ll need help, so until that day arrives, we fight for them.

Happy Holidays,

Sam

PS: Having issues containing your shopping beast?  I just wrote a new post on Yakezie.com called, “Controlling Spending The Fun And Easy Way“.  Go check it out!

I’m against big government.  Politicians are wasteful with our tax dollars and like to propose empty promises to maintain power. From that ding dong Congressman who sent pictures of himself in his underwear on Twitter, to Elliot Spitzer’s indecencies – when people have too much power, they let us down.  Given this view, I am perplexed why there are those out there who vote for more government!  Do you really want XYZ government agency controlling your every move and stealing from you?

60 Minutes recently did a terrific 15 minute spot about how Congressional lawmakers can freely trade stocks based on non-public information and the very bills they are voting on!  For example, if you are on the Healthcare Committee which is about to pass a law that requires all hospitals to provide the first $5,000 in expenses for free, you can actually short hospital stocks on this information even though nobody has a clue this bill will pass!

TELL ME WHY, WHY, TELL ‘EM THAT IT’S HUMAN NATURE WHY, WHY… Read more…

The debate rages on whether the top income earners who pay most of the federal taxes or the bottom 47% who pay little-to-none of the federal taxes, should pay more taxes and help our country.  Clearly, the answer is that everybody should pay some federal taxes, since everybody is benefiting from the federal government.

Have you ever stopped to think who is really being screwed here?  If you are paying little-to-no federal taxes, is the government, rich people, and corporations really screwing you?  If you are in this situation, are you hoping to pay more taxes so you can get screwed more?  You can’t have it both ways now.

Perhaps the people really being screwed are the “HENRYS”, the Higher Earners Not Rich Yet folks who are in the top income tax brackets (33%/35%), and who don’t make the majority of their income from dividends and long term capital gains which are taxed at 15%?  This is something to really think about here, because for some reason, people equate the Top 1% with the Top 0.1% who are indeed like Warren Buffet paying a lower tax bracket than many of us middle class citizens.

Here’s a quote from Edward which sums up the point quite well: Read more…

You’re mistaken if you believe the 99% will just rage against the 1%.  They won’t stop until they protest against half of America, and then they will turn on themselves.  After reading all the “We Are The 53%” submissions, I was inspired to write my own. The 53% figure refers to the percentage of working Americans who pay for 100% of all federal taxes in our country. The 53% blog is a response to the “We Are The 99%” Occupy Everything movement, which also shares some moving posts about people who are having trouble getting ahead.  Unfortunately, there are also some incredibly misguided posts that put blame on others for their own mistakes.

The 99% movement doesn’t represent all 99% of us because the 99% isn’t one big pity party that we’re being made out to be.  Some of the reasons for protesting are down right embarrassing.  If you have student debt and can’t get a job, please protest your school’s career service office.  If you are against corporations, please don’t use an iPhone and then go charge it at McDonald’s.  If the damn insurance company is denying you benefits, protest right outside their corporate headquarters and at the homes of their execs!  There are thousands of first generation legal immigrants who come to the States, don’t speak English, and find a way to live a better life.  We at least have a head start with the English language!

The 99% movement might represent 10% of Americans who are fed-up and outraged by the super wealthy and our inept politicians and want to protest. For the rest of the 99%, we aren’t complaining.  Instead, we’re focusing on making ourselves better. We’re not depending on the wealthy or the government for anything.  We’re depending on our own initiatives to make things happen.  You do realize that we taxpayers made money bailing out the banks to the tune of $10 billion dollars right? Thanks Wall St!  We’re still waiting for GM to give us our money back.

Stop thinking about yourself and what the country and the government can do for you.  Start thinking about how you can add value to society and help someone before you help yourself.  Being selfish gets you nowhere because nobody will want to help you, especially if you are protesting the very people who donate to charity, provide students scholarships, help fund cures for cancer, and provide employment opportunities!

Here is my note. I hope you can share your own.

REPRESENTING THE 53% Read more…

I have a confession to make.  When I was 19 and 20 years old, I was a paid protester.  I remember walking around the mall during vacation one day and getting approached by a guy who offered me lunch, a t-shirt, and a $10 gift card if I would protest outside a Macy’s store.

“What are we protesting?” I asked him.  “Oh, just the fact that we aren’t getting paid enough and don’t have enough hours,” he responded.  “We deserve to make more money!”

“Sounds like an excellent cause, sign me up!” I told him as he gave me all the goodies so I could walk around for 1.5 hours shouting a slogan in front of the store.  I was oblivious to what I was protesting since I was not one of them.  I just pretended to be a victim so long as I got a free meal and the $10 gift card to spend at Footlocker.  We didn’t have iPhones and iPads like all the protesters today.  We kinda had nothing.

DO IT AGAIN FOR THE EXPERIENCE Read more…

We have a culture of blaming others for our problems and Main Street is now on a tear with this “Occupy Wall Street” movement that’s gathering steam.  The thesis is that financial institutions and anybody who has anything to deal with financial institutions are bad.  The government and the media help fuel the fire against Wall Street and make them scapegoats for the economic decline.  That way, they’ll hopefully deflect the blame away from themselves.

One man from one Wall Street firm stood up and had enough.  In 2010, he penned this letter below which started slowly circulating the web until it finally caught my eye.  The letter is just as appropriate today as it was last year.  He probably had nothing specifically to do with credit default swaps and other exotic instruments that helped cause our decline.  “Wall Street” is a catch-all phrase that leads to a lot of unwarranted stereotypes.

Just because you work at Bank of America as a teller doesn’t mean that you are to blame for Ken Lewis’ empire building when he bought Countrywide Financial and Merrill Lynch for prices nobody in their right mind would pay, which is now leading to massive layoffs.  Just because someone is a Latin America investment banker at Goldman Sachs doesn’t mean they are responsible for you buying 3 condos with minimal money down in Florida to try and get rich.  No, the guy buying the 3 condos is responsible………… or is he?

Just because you have massive student loans and can’t find a job, that doesn’t mean the US economist working at JP Morgan had anything to do with your situation.  Maybe it’s because you borrowed more than you could afford?  Or maybe it’s because you didn’t do well enough in school or go to a better school for that matter.  Why protest an irrelevant economist when you could protest right at your very own school!

If you are a raging populist, who is easily offended, and complains a lot, perhaps you shouldn’t have a read.  But, if you’re a normal rational person who likes to see both viewpoints, take a look and let’s discuss!  Remember, this letter is a retort against the media and the protesters who’ve attacked him, his family and his industry for months.

“WE ARE WALL STREET” EMAIL Read more…