Frank Cerabino, Palm Beach Post

 I entered a discussion with Frank Cerabino an award winning columnist here in Florida with the Palm Beach Post.  It has been obvious to me from his writing that he is most definitely of the Liberal slant.  Frank is a former military person and graduated from the Naval Academy (1977) and later obtained a Masters Degree in Journalism from Northwestern University.  (It is too bad he didn’t spend that time studying economics.)

Frank said something in a column HERE that I took as more of the same tired left wing diatribe about “tax cuts for the rich” where he stated that these funds were coming from the have-nots and going to the rich, and he framed the discussion around the Megayachts that regularly sail in and out of the Palm Beach area.  He went on to conclude his article by stating (as an anchor to his overall conclusion) that “more tax cuts for the rich are in the pipeline.”  I know better than that so I wrote him asking him to point to his back up for these statements.  This launched quite a number of exchanges throughout the day where he would simply dip to an ad hominem belittling of me and totally avoid the “merits” of his own thesis.  (If you read the exchange you will clearly see why).  As you read below you should note that the comments in Red are by me and the comments in Black are by Frank.

Read this for a real life illustration of how influential people in the media want to level charges but not deal with metrics of a discussion about them.  I think Frank is a nice guy, but misguided by his own self-assumed brilliance like so many other liberals in the media that they expect you to accept their “pronouncements” and basically resent being questioned about them…….steve

————————————-Frank, In your article Megayachts prove not everyone is in the same boat, you mentioned tax cuts for the rich twice and the second time when you were wrapping up and summarizing your article you mentioned that tax cuts for the rich were in the pipeline.  You article didn’t actually reference these, could you elaborate.  I would be very interested to learn of what you are referring.
 
Thank You,  Steve————————————–Hi  Steve:
   These tax cuts, as you can see from story, run through 2010.
   Thanks for reading.
   Tax Cuts Offer Most for Very Rich, Study Says —FrankNOTE: For the sake of space Frank pasted a long article by another columnist regarding the Bush tax cuts that are set to expire in 2010 in response to part of my initial question.——————————-Hi Frank, Oh those tax cuts.  I believe that those tax cuts skewed the income tax burden to the upper end of the tax spectrum, not to mention delivering us from the Clinton recession.  But you mentioned additional tax cuts in the pipeline, which are those.  You really don’t do yourself service discussing tax and matters that you aren’t really up to speed on and to do so with such a bias spin as though somebody is doing something wrong, but I suppose it sells newspapers.   I am sorry to sound somewhat hostile here, I really am not, but really encourage you to look deeper into tax policy and consequences since you are in a position of influence. Steve——————————————The consequences of our tax policy, my dear FoxNews hound, is that the people who need relief the least are the people who get the biggest break. Yes, wealthy people pay a lot of taxes. But the percentage drop in the taxes they pay is the highest of any income group during the Bush years.  In other words, the burden was shifted more to the bottom, not the top, as you somehow managed to think.
     In fact, the tax cuts favoring of the rich have been touted by the administration as a wise move, because giving money to the rich is supposed to result in magically making everybody’s life better, through investment in the economy. But what it has done has widened the gap between the haves and the have nots.
   Clinton recession? I seem to remember a budget surplus, a booming economy, and the recent praises of Alan Greenspan, who in his new book, has the highest praise for Clinton’s stewardship of the economy. (By the way, Greenspan regrets being a cheerleader for those Bush tax cuts that haven’t panned out as advertised.)
     You don’t sound hostile, Steve, you just sound like somebody who has been conditioned to believe that we all do well when government takes from the poor to give to the rich.
     – Frank  

————————————————-

Frank,  (I have interlined his  statements above with my response in red)

 

    The consequences of our tax policy, my dear FoxNews hound, is that the people who need relief the least are the people who get the biggest break. Yes, wealthy people pay a lot of taxes. But the percentage drop in the taxes they pay is the highest of any income group during the Bush years.  In other words, the burden was shifted more to the bottom, not the top, as you somehow managed to think.

You seem to confuse rates with burden.  You are errant about this.  The burden of tax receipts shifted more to the upper bracket after the tax cut.  This is unequivocal.  If you are so sure would you like to pick up an easy $1,000? I put that up against yours and then I’ll prove my point.

Fox News Hound?  A little ad hominem don’t you think? …..I am a tax practitioner and specialize in tax and fiscal policy.  And since you are talking about the Bush Tax Cuts let me say that the people you say need relief don’t actually pay income taxes…at all….cummon, you know that.

     In fact, the tax cuts favoring of the rich have been touted by the administration as a wise move, because giving money to the rich is supposed to result in magically making everybody’s life better, through investment in the economy. But what it has done has widened the gap between the haves and the have nots.

Tax cuts always favor the people that actually pay them.  The important question is impact on the economy.  History is rife with examples of this and you might want to get off your Democratic “talking points.”  Do they do much of your writing?  By the way, economic policy is not magic and history points to the soundest course of action.  Nothing will make everybody’s life better.  The goal is to deliver the best for the most at the least (cost).  That is where egalitarianism misses the boat (no pun).  You wouldn’t want to live in the decaying society where all were equal once you realize what the least common denominator would be. Clinton recession? I seem to remember a budget surplus, a booming economy, and the recent praises of Alan Greenspan, who in his new book, has the highest praise for Clinton’s stewardship of the economy. (By the way, Greenspan regrets being a cheerleader for those Bush tax cuts that haven’t panned out as advertised.)

BTW you obviously haven’t either read Greenspan’s book or listened to his rebuttal to the point you and others are trying to make.  He does not claim that the tax cuts didn’t pan out, but that the spending should have been curtailed.  That’s his gripe.  Bush was wrong here, but I am sure his loose spending was applauded by you and the Democrats at that time.  I personally believe it was a misguided strategy to endear himself to the Democrats in Congress in the spirit of compromise……..I could be wrong………but Tax Policy and Spending Policy are separate issues and you won’t get away with trying to blur that distinction with me.

The Budget Surplus followed the people that control the spending in Congress, which came into office in 1994 and you know who that is, and I’ll add that the single biggest contributor to low inflation and economic growth was technological advancements resulting in productivity gains in that evil concept called “private enterprise.”  (of course you know this I’m sure) I suppose you didn’t realize that the 1st quarter of negative growth in the US economy nearly occurred in the 3rd quarter of 2000 the final year of the Clinton administration (still not the classical definition of Recession) and slightly rebounded in the 4th quarter of 2000 (Christmas impetus).  Any armature can look at the graph (see below) and see the economic growth was clearly headed down throughout all of 2000 while bottoming out after the 1st quarter of 2001.  By the time the recession was confirmed in March of 2001 Bush had been in office two months.  Are you telling me that you don’t know that it takes many month for economic activity to be affected by fiscal or monetary policy.   The stock market began its plummet approximately 13 months before Bush and that is typically the most common leading indicator for the economy.  Again, you aren’t suggesting that the fiscal policy of Bush during February and March of 2001 is what Greenspan is hanging his hat on for the recession are you?  In short it actually is a the Clinton/Greenspan era recession and many believe that Greenspan’s slow response to a contraction of the economy was in part responsible.  He’s isn’t going to make that eminently clear do you suppose. Common……tell it to the masses, but you can’t blow that by me.  This canard that you and others in the media try a propagate that it was a Bush recession (I’ve even heard some Democratic elected officials say “made worse” with the tax cuts……how preposterous, but I suppose it only matters in the context as to who they lying to, anything to stir up the base) is nonsense and shame on you and others.You don’t sound hostile, Steve, you just sound like somebody who has been conditioned to believe that we all do well when government takes from the poor to give to the rich.

I believe the facts will bear out your pre-conditioning, not mine. So, how about that $1,000 wager.  I’ll even accept the burden of proof to establish that the burden of income taxes (not rates) has shifted even more progressively under the Bush tax cuts, after all your argument is about fairness not mathematics.  If you are interested further in my explanation that taxes policy should be established to optimize federal revenue and not to fund pet programs (or social goals) you can check the latest post in my blog (and there are others). http://nextstoplauderdale.com/  B-T-W immediately following that particular blog post is another that criticizes of one of those fearful FOX pundits, Bill O’Reilly. One further point…..  Since your original article was about Yachts, you might be interested to know that the last time the official powers that be (Democratic Congress with Clinton) and not newspaper columnists tried to settle the score with the rich and add big taxes to yachts and airplanes they essentially killed both industries (this is not in dispute) in the USA yet these same evil rich people purchased their yachts and planes overseas without said tax.  The Democrats had to relent and reverse this tax after costing tens of thousands of blue collar jobs.  Is your objective to optimize federal revenues and economic stability and growth or merely a evnious and fool hard attempt to balance outcomes in society?   And ……….. you still owe me an explanation of what “additional taxes” where the have-nots give to the rich are “in the pipeline” as you claimed in your article or do I sense a retraction? –Steve   

————————————

Oh, my.  You’re also one of those people who don’t want to face up to global warming.  I’ll say you’re for “free enterprise.”   (Frank)

———————-

Oh I believe in global warming, just not necessarily the nonsense you’re amen chorus is buying into.  To bad you aren’t for free enterprise.  It probably has made you what you are.  What about that retraction………is it coming? Steve——————————-Steve, we could go round and round forever. Just this last message is enough to tie up another chunk of time to set you straight. But I’m calling it quits here. Good luck to you.   ———————Frank, Ok, and good luck to you, your loss not mine.  I was looking for a way to put a cool grand in your pocket, but I understand that this is not without risks.  I’ll go back to the books and look up those forthcoming tax cuts (in the pipeline) for the VERY RICH since you clearly don’t want to let me know the basis of the following statement that anchors the concluding comments of your article: 

Sure, you may be anxious over keeping your finances afloat, but the megayacht business is booming, more tax cuts for the very rich are in the pipeline, and you have a ringside seat to the grand parade.

 This is not only indefensible, but obviously so recognized by you.  :)  I will conclude by stating that you would be well served to re-read my comments here and at NSL with more of an open mind and a less an ad hominem attitude especially in your position as a public commenter.  I think you have a duty to your readers to be better informed.  It is clear that you don’t want your facts challenged and when they are you refuse to discuss the merits (or lack) of those points.  I know it is easier that way, but that is for people outside the public arena…….. Anyway, good luck and try to keep an open mind. Steve

October 27, 2007 | Filed Under Economics, Taxes 

comments

7 Responses to “Frank Cerabino, Palm Beach Post”

  1. Erston on October 27th, 2007

    Wasn’t a part of the “robust economic activity” at the tail end of the Clinton era the upward
    slope of the dot.com bubble? I’ve always wondered what part of the projected surpluses were made up of projected taxation of this $$$. I’ve seen estimates of $5 trillion vanishing in the bubble and $1 trillion in paper wealth that fell with the Twin Towers. The loss, in future taxes, (income,estate,capital gains)on $6 trillion must be huge.

    Hey Erston……..Yeah, I find it interesting how Frank was hanging his hat on the Bush recession doctrine. I sort of chumed the waters and he took the bait. Hope you looked at that graph. I almost put another up that graphed the peak and fall of the Stock Market. The stupidest person in the world would say that the policy of anyone that came into office on Jan 20th of 2001 could be responsible for a recession that officially started 1st quarter of 2001 (i.e. 1/1/2001). It isn’t stupid people that scare me, but the stupid ones that don’t know it and think their smart…….steve

  2. matt on October 27th, 2007

    when taxes are discussed, when will both parties discuss fairness.

    as an ex. pretend a flat tax of 10% is in effect. this is just for approx. not an implied real world us policy.
    living on 18,000 if you earn 20,000 is much more difficult than if you have 180,000 out of 200,000. granted the responsibilities of one who makes 20k vs 200k is relevant as well.
    my point is just to say that it is necessary to look at both sides. ones ability to live reasonably based on earned income is essential to consider.
    i dont think that there is a perfect system, but nobody would be foolish to say that someone who does not pay any taxes should get a tax break.
    an area i would take exception with frank on i his position on earned income credit. if he keeps this for the legitimate poor, great, if he takes it away, i think this is irresponsible. his working poor and real poor need this more than they need tokenisms.

    Hi Matt………I don’t know if I am disagreeing or agreeing, but you know my philosophy. That sort of precludes the goal of solving the tax conundrum based on “fairness.” I don’t think it is economically smart set taxes so it is fair to one preferred voting block without considering the impact on the economy and the effect it has on employment and those zero K earners. Otherwise you lose track of those guys while we try to determine if a guy on 18K is so much worse off than a guy with 180K (of course he is) but to me that is not the question. It only serves to confuse the issue. My point is set tax rates at the level that optimizes federal revenues on a stable basis. Otherwise you play political games with rates to favor the low end workers (18K) versus the high end workers (180K) and end up with creating too many $0K people.

    All is is based on relativism and doesn’t take into consideration that you can reduce rates for all and increase revenues or increase revenues for one out of favor group and reduce revenues because of dynamic scoring. The alternative is to utilize what the Democrats use and Cerabino apparently subscribe to, which is static scoring. I think many of the opponents of Bush would accept lower Federal Revenues if they could successfully tag the evil rich. No doubt about it, because it sells well with their constituency. And under the current Bush tax structure (you know, the unfair one) families that earn 18K as in your illustration of course pay no income taxes.

    Just like Frank, he starts his criticism by pointing to the slothfullness of the sucessful. You can always tell when someone “economics” is lead with a diatribe against the people that are doing most all the lifting. You notice his comments and articles simply deal with inflamatory class dividing comentary and when asked to defend the particulars of his philosophy he is only left with ad hominem attacks (its classic) …….steve

  3. Steve on October 29th, 2007

    comments working

  4. M2 on October 29th, 2007

    Capital gains? Are the codes abused by the wealthy?

    Where are you on corporate welfare?

    M2……Capital Gains? (help me out here). Are the codes abused by the wealthy? Not sure what you mean here either. I assume you mean Tax Codes? If you are within the parameters of the Tax Codes you are not abusing it. If you are outside the parameters of the Tax Code you are committing more than abuse, you are committing a crime. That is just a verbal plenary reading of the law. I admit that some may think that availing yourself to certain provisions of the tax codes may be abuse, but I am a little more black and white than that. In short, I think society would be much better off if the fruits of capital investment (Capital Gains) were not subject to income tax at all. It is just another deterrent to investment and risk taking. [Sort of you if win the govt. says we were partners, and if you lose they say, you’re on your own. Something’s wrong with that.] Certainly long-term Gains (3-6 months holding to shake out traders like Matt—-sorry Matt). Capital Gains should be tax free. You’d be surprised how prosperous that would help make the country top to bottom. Traders provide a valuable role in adding liquidity to the operation of the markets and I don’t scoff it one bit, but not the same value as the entrepreneurs and risk takers.

    Corporate Welfare…..I am not for or against any politically inflammatory innuendo. I’d consider each tax line item on its own merits. ………..steve

  5. Matt on October 30th, 2007

    Steve,

    No apologies required. The tax structure is one reason i can use the stock market for income generation, not wealth creation (big difference in holding periods). I once read a fantastic article by a mathematics guy that was searching the psychology of short term trading. His thesis was essentially there is 2 ways to get rid of short term holders (lower cap gains to 0%, or raise taxes on personal income). Since 0% cap gains will most likely not occur soon, he said that most short term holders occur in the 25-35% bracket. (in order to be a trader, one needs startup funds, and most in lower brackets live “day to day” on their paychecks and cant afford to risk income necessary for speculation). This differential between cap gains and their income is small enough to generate a risk/reward potential favoring short term holding. However, you loose the first standard dev (2 out of 3) by making this 30-40% bracket because the difference between 30-40 and 15% is now significant compared to 25-35% to take out the next standard dev (approx 19 out of 20 traders) make it 40-50% vs. the 15% cap gains. The primary reason short term traders exist is that whether or not you are long or short, one can be rewarded for enterprising moves because the liquidity access between ones effective bracket and the requirements for cap gains (1year plus one day) justifies the risk.

    I can’t deny though that a 0% cap gains would only create a larger gap between the have’s and have not’s. Most people do not have a balance favorable or a startup fund necessary for such a strategy of wealth creation. Anyone who is already sitting on a sizable cap gain would then have the opportunity for a “freebie” sale from the government that puts all money back in their pocket. The only silver lining for regular folk would be if this was relaxed for retirement accounts. Then almost everybody holding an investment would benefit. The only ones who would not would be the ones who have not reached the min age for distribution, and then they qualify. Matt

    Hi Matt………..I pretty much agree with this, I commented up the page somewhere that the “traders” provide a critical liquidity function for supporting the overall viability of the equity, debt and commodity (and I guess now derivative) markets. I do want to comment on one point. I mentioned to M2 above that I felt LT Capital Gains should be best taxed at a Zero Percent rate. I further qualified that saying that the “definition of Long-Term” should be 3 to 6 months. There is no magic in the 3-6 month period other than serving the role of putting space between the traders and the investors if you want to properly insure the liquidity role that traders provide in the marketplace.

    You mentioned that you that a Zero Percent Cap. Gains Rate would put additional space between the haves and have-nots. There is a lot to be said about this, but let me say that I don’t know if that is true or if it is true to what degree it is so, but if you understand my economic viewpoint you should know that I don’t really care. It is not the point. I don’t think we want “policy” to be targeting some type of cap on the upper end of society relative to the non-producers in society. I hope everyone realizes that this would stunt growth big time.

    You characterized the matter as affording the people holding deferred capital gains as getting a “freebee” with more cash going into their pocket. In the typical wealth analysis spectrum, this in itself does not change the spread between the have’s and the have-nots. It simply changes the form and enables a very large capital pool in the country to chase a higher and better (economically) use of the funds. This will better facilitate what I think even the people with the benefit of Economics 101 understand which is capital grows when it chases the highest and best uses and hence the economy is strengthened.

    I know for sure that there is a lot of capital sitting out their precisely because its’ holders are wealthy and the capital gains tax issue retards them from releasing it to be “re-deployed” in a more sound and competitive manner. The reduction of the LT rate to 15% improved upon this from the previous 28% and as predicted, yet denied by the Democrats in face of the blatant truth, this actually “increased tax receipts” by freeing that capital to chase a higher and better use. You might say that moving that rate to zero certainly wouldn’t result in higher federal revenues and I’d say true, but only if you measure that narrowly as revenues from capital transactions.

    When that capital is released into the economy it must be deployed and it will be deployed even if it is put into passbook savings and it will be deployed in a manner the market sees as the highest and best use. This will create construction, production, research & Development and etc. All this together will produce greater technology and efficiency which are the two most powerful drivers (productivity) for low inflationary economic growth along with its commensurate jobs and overall increase standard of living.

    So in conclusion to this point of widening the gap, this is a misplaced concern. It only leads to social engineering that is doomed to failure. If it does happen it is so not because the producers and investors are benefiting the economy, but because the non producers aren’t. Society is much better served by the producers producing and not limiting their potential outcomes due to some (even if) heart-felt consideration of the have-nots. [I’ll add that this viewpoint is not as cruel hearted as one might think after a cursory reading. If the other end of society is doing much better than the lower end, it still better empowers the country to provide for the “truly deserving needy.” I’d draw some lines here differently as to the definition of “truly” than the political arena might, and as a nod to M2 if some of that was directed at what others call Corporate Welfare and it didn’t make “economic” sense, I’d target that too…………steve

    P.S. One other point is you mention “retirement accounts.” Capital Gains “within” a retirement account are not taxed at all under the phenomena understood to be “tax free capital growth.” Now I grant you that when these funds are emancipated (paid out to the account holder) they are taxed and at an ordinary income rate. I don’t know how a fund could possibly keep track of the growth of their own capital as to what portion is LT or ST. Compound this further by the allcoation to the account holders and their withdrawals out of the account for those after 59.5 yrs and Rollovers. This of course only applies to 401-k (type) accounts and Traditional IRA’s. As you know the concept of Capital Gains Tax (ST or LT) looses its meaning alltogether in the “Roth” accounts.

  6. matt on October 30th, 2007

    wanted to clarify one point. when i approach the widening gap between the have and have not’s, it is purely from a resonable fascimile of being a Christian, not as an economist, politician, scientist, etc. i feel a strong tug from the gospels that if i sacfirice some of what i have for the benefit of others, my reward will be in eternal life. this might be a debatable subject, but i want to be clear that it is a metaphysics arguement, not a social-scientific one.

    also, by no means am i sayng my plan is right, or even the best. deployment of capital is a sensitive subject, and the media loves the guns vs. butter scenarios. i am quite sensitive to the perceived need of others vs. wants of others. of course, i would love to have the resources of the buffett family, but i would not want the responsibility that goes with it. sadly, warren buffett is now considered a curmudgeon because he thinks the very policy that made him fabulously wealthy was not in the best social and financial interests of our country. i think this is why he, soros, and other billionaires thumb their nose at conservatives and align with the far and radical left to ease guilt-like feelings.

    I pretty much agree with you comments as to individual Christian chairity but also see that as separate from national policy where corporately we strive to (I’ll say it again) provide the best to the most for the least (which I see as consistent to individual Christian mandates.

    Matt……….As to these aging billionaires, Without specificially knowing their personal theology it might be that as they look towards their own demise they reconcile their metaphysical concerns with their economic success and a “grace by works” viewpoint is synthesized. Further, such views, though nobel, certanially would not jeapordize their personal security, but maybe they think it will balance the scales somewhat in the hereafter. Of course you know that is not the measure of eternal happiness…….steve

  7. bob agard on November 4th, 2007

    Nice try! You made some great points.

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