Capital Gains Trouble, Wealth Taxes and Nat King Cole

"Moments, springtime, Eiffel Tower... Funny taxis, kids at play." "Azure-te" as performed by George Shearing and Nat King Cole

A new proposal calls for unrealized investment gains to be taxed annually, based on how much they've grown in value each year. Investment gains are currently taxed only when assets are sold, so if enacted, this proposal would mark a major departure from the methods currently used to tax wealth. The burden on investors, and the negative impact on markets, would be significant.

A dollar earned through investing has traditionally been taxed preferably to a dollar earned through employment income. Additionally, the gains on investment appreciation remain untaxed until the asset is sold. The new proposal would not only eliminate this unrealized “carry,” it would tax those paper gains at ordinary income tax rates which cap out at 37%, not at lower capital gains rates.

Boomers, Migrating Millennials and Student Debt

"It's not that we don't care...We just know that the fight ain't fair." "Waiting on the World to Change" as performed by John Mayer

Recently someone shared a comedy skit with me, one that poked fun at both millennials and baby boomers. Stereotypes abounded. The millennials were portrayed as self-involved, resentful, interruptive and angry. Boomers were cast as selfish, entitled and dismissive of the economic plight facing younger citizens.

Comedy often reflects deep divisions in our culture. Many of the conflicts between these two age groups are rooted in economics. Millennials are saddled with massive student loan debt due to the skyrocketing costs of college tuition and a largely unaffordable starter housing market. Many came of age during the Great Recession and believe the boomer generation has usurped an unfair share of government benefits and society’s wealth.

The Springtime of Our Nonagenarian Years

"If we're dead we can't do much. But as long as we’re alive, we can still tap dance, we can still crack a joke, we can still sing a song, we can still tell a story.” — Filmmaker and comedian Mel Brooks

Carl Reiner knows a few nonagenarians (people aged 90 to 99). At 96, he's one himself. It's not unusual for people aged 90 to know others their own age. But the ones Reiner associates with are witty, active and engaged. I learned this watching a documentary Reiner hosts entitled "If You're Not in the Obit, Eat Breakfast." Reiner interviews Mel Brooks, now age 92; Betty White, age 97; Dick Van Dyke, age 93; and Norman Lear, age 96.  Reiner also interviews Ida Keeling, now 103, who began running at age 67 to combat depression after two of her children were killed.Watching Dick Van Dyke dance and listening to Reiner, Brooks and Lear harmonize through an old show tune is inspiring. Ida Keeling's workout regimen is uplifting. (And even includes push-ups). "You've got to be the boss of your body," she says. Not all of us can enjoy the health and vitality that these folks do. Chronic pain, dementia, strokes, heart attacks and physical limitations are only too real.  That said, there's life out there for all of us, at any age. To embrace it, we need the right mindset.

Retraining, The G.I. Bill and The Beatles

"If you get too cold I’ll tax the heat... ‘If you take a walk, I’ll tax your feet.""Taxman" as performed by The Beatles

If a business owner or entrepreneur can become wildly wealthy, good for him or her. Applying overly aggressive tax rates to the 0.1% or even the 1%, many of whom are new arrivals in this elite income category, makes no sense for our economy. How, then, do we deal with wealth and income inequality?

Economic Growth and Tax Law Correlations

"Tax the rich...feed the poor... ‘Til there are no rich no more?" — "I'd Love to Change the World" as performed by Ten Years After

Should we soak the rich to solve wealth and income inequality?  European nations attempted to and found their tax policies ineffective. Seeking more friendly tax havens, many of their wealthier citizens simply moved their businesses and residences abroad. Levying a wealth tax on Americans would likely produce similar results. In an era when the U.S. is struggling to keep businesses operating here at home, tax law changes which drive them elsewhere will likely prove counterproductive to our national economic goals.

Shutdown - Markets Crave Stability and Certainty

"Houston, we have a problem." — from Astronaut Jim Lovell (Tom Hanks) speaking to Flight Director Gene Kranz (Ed Harris) in the movie “Apollo 13”

While rewatching this Ron Howard classic recently, I was reminded of the bold initiatives that characterized our space program and inspired Americans everywhere. As most know who followed the flight of the Odyssey in 1970 or watched the movie, our engineers, scientists and astronauts brought the damaged spacecraft home utilizing less amperage than is used by a small kitchen coffee maker. That Lovell, Haise and Swigert returned to splashdown safely is a miracle, a true milestone in the annals of American ingenuity.

China has now successfully landed a "rover" on the far side of the moon. So while we are still ahead of China in space exploration, it's obvious that they're making headway.

Seinfeld, The Diner Bill and Gregg Allman

"These days I seem to think a lot... about the things that I forgot to do... for you... And all the times I had the chance to." — from "These Days" as performed by Gregg Allman

George Costanza is in a diner and he thinks he's having a heart attack and tells Jerry and Elaine. Right about then the bill comes and George looks at it. There's a mistake and he's been overcharged. The trio delay rushing George to the hospital so he can complain to the waitress about the erroneous amount.

This genius episode of "Seinfeld," written by Larry David, tells us a lot about our relationship with money. It's something we care deeply about, even when we think we're dying.

Winter, SAD and the January Effect

"Ain't it foggy outside... all the planes have been grounded; Ain't the fire inside... let's all go and stand around it."
— from "Sandman" as performed by America

All four of our seasons enthrall me. Sometimes, though, I love winter just a little less than the others.

Days are shorter. Outdoor activities take a backseat to indoor gatherings. Last year's national winter flu epidemic was historic. More folks pass away in winter than in other seasons, especially older citizens. There's even an illness associated with winter and decreased sunlight and lowered serotonin levels: Seasonal Affective Disorder (SAD).

So why do stock prices traditionally increase in January, right in the heart of cold, depressing weather? Or does the January Effect actually exist?

The Challenge of Income Inequality

“Some folks are born into a good life; And other folks get it anyway, anyhow…”
— from “Darkness on the Edge of Town” as performed by Bruce Springsteen

If Warren Buffett and Jeff Bezos and Mark Zuckerberg knew their personal annual income was limited to $2 or $3 million, would they have studied and innovated and worked

Here in America, we are limited in how wealthy we can become only by our imagination, creativity, drive, persistence and ambition. Putting limits on CEO compensation or individual wealth isn’t the way to deal with income inequality. If we limit CEO pay to 50 times what the average employee in the company makes, say $50,000 a year, CEO compensation in that company would top out at $2.5 million annually. Now that's a very nice salary, but this type of "cap" violates what we know about incentives and motivation. Huey Long and others advanced this “limit the top earners” concept during the Great Depression. It failed then, and it should fail now.

How Hunger, Income Inequality Hurt Us All

“And I’ve gone to bed hungry many nights as a lad...” — from “In The Good Old Days (When Times Were Bad),” as performed by Merle Haggard

One of the most famous photos in American history is that of a starving mother during the Great Depression. The woman is gaunt and thin, her countenance worried. Then, hunger was commensurate with soaring unemployment.

The face of hunger in America has changed, but the problem is growing more severe. Many families suffering from a lack of food today are headed by employed adults who still can’t afford life’s essentials. And this is not only bad for those suffering families, it’s bad for the wealthy, too, in ways in addition to obvious humanitarian concerns.