Last fall, when we dissected Buffett’s taxes, we coined a  measure: the GBSR™ – “Give Back to Society Rate”

We defined the GBSR™ as the sum of taxes paid plus charitable contributions – since those are all money that’s supposed to be going to the common good, albeit administered by different organizations – divided by AGI.

We crunched the numbers and concluded that Buffett pays about $7 million in Federal taxes, about $3 million in state taxes, and about $20 million to charities … for a total of $30 million … which dived by his $63 million AGI … gives a GBSR™ of almost 50% (47.6% to be precise).

We concluded that Buffett may not be the piker that he claims to be.  And, maybe he should stop causing trouble for other folks by constantly whining about the tax code.

In Romney’s case, his release says that he made $21 million … paid $3 million in taxes … and donated $3.7 million to charities.  So, his tax rate may sound meager @ 14%, but his GBSR™ is almost 32% – and that’s not counting state & local income taxes.  My bet: add S&L taxes in and Mitt ‘s GBSR™ is way over 40%, too.

So, it just may be that the tax code is leading fat cats to do the right thing – it’s just that they’re giving much of their dough to private charities instead of the Feds.

Do you blame them?

* * * * *
Here’s the original HomaFIles post:

Squeezing Buffett’s numbers … Part 5 (and done !)
Homa Files 10/21/2011

OK, today should about do it.

After a recap, I’ll drop my conclusion on you … my very surprising conclusion

First. a recap to get everybody on the same page.

In Part 1, we looked hard at Buffett’s effective income tax rate (17.4%), and showed how he could get to that low rate by offsetting practically all of his ordinary income with $23 million in deductions.

This conclusion debunks the popular pundit point that he gets to the rate by having practically all of his income in capital gains and dividends.

In Part 2, we showed that about $20 million of the deductions are probably charitable contributions – a device that rich folks use to (1) do good things and (2) to manage down their tax liabilities.

Better to give to a cause that you believe in, right? Why give it to the government and have it waste the money?

In Part 3, we agreed that Buffett’s tax rate as a percentage of his taxable income is probably less than his secretary’s – partially due to his capital gains being taxed at a comparatively low rate, but mostly because he shelters his ordinary income with charitable deductions.

And, we showed how ordinary earners can get to a rate lower than Warren’s … just by donating a huge chunk of their income to charity. Not realistic, but mathematically possible.

In Part 4, we showed that Buffett’s tax rate as a percentage of AGI is only 11% …. about half of the estimated rate for our hypothetical secretary surrogates.

Now, my first reaction when I stared at the taxes to AGI rate was “Wow, Buffett’s right – he’s nothing but a coddled piker.”

But now, I’m not so sure.

On one hand, his paying a rate (to taxable income) that’s 5 points less than his secretary doesn’t seem fair. Especially since he gets to the rate by exploiting some dreaded tax loopholes, aka. “deductions”.

The situation seems even worse when you consider his taxes to AGI rate – a mere 11% – less than half of his secretary’s rate (I suspect).

Gotta jack up taxes, right?

Not so fast.

Let’s construct another measure: the GBSR™ – “Give Back to Society Rate”

Since I’m coining the measure, I’ll define the GBSR™ as the sum of taxes paid plus charitable contributions – since those are all money that’s supposed to be going to the common good, albeit administered by different organizations – divided by AGI.

OK, so what’s Buffett’s GBSR?

Well, based on my estimates, Buffett pays about $7 million in Federal taxes, about $3 million in state taxes, and about $20 million to charities … for a total of $30 million … which dived by his $63 million AGI … gives a GBSR™ rate of almost 50% (47.6% to be precise).

Now, let’s pretend that Buffett’s secretary profiles like our $100,000 ordinary earner above. Her charitable deductions would be at most $5,700. Otherwise she wouldn’t be taking the standard deduction, she’d itemize.

So, her GBSR™ @ $100,000 AGI is 27.5% ($5,700 + $21,709 = 27,409 / $100,0000 = 27.5%).

That means that Buffett’s GBSR™ is almost twice his secretary’s.

Hmmm.

Maybe he’s not such a bad guy and I should stop ranting about him.

And, maybe he should stop causing trouble for other folks by constantly whining about the tax code.

It just may be that the tax code is leading to the right answer.

Just have to look around the trees to see the forest.

AMEN

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Two mothers, whose daughters lost their hair due to cancer treatment, contacted Mattel to create a bald Barbie to serve as a role model for young children. 

After this initial request failed to gain traction with Mattel,  these mothers used the ultimate weapon – the F-bomb.  Facebook.  They created a fan page called ‘Beautiful and Bald Barbie’ and generated over 137,000 ‘likes.’ 

Now, Mattel is more actively addressing this idea.

* * * * *
Excerpted from brandchannel.com “Mattel Doesn’t Say No to Bald Barbie”

Back in December, two moms whose daughters had lost their hair due to cancer treatment contacted Mattel, the makers of Barbie, to see if the company would be interested in producing a bald Barbie as a role model to their own and other young girls.

Mattel sent Jane Bingham and Beckie Sypin a stock letter saying that it “does not take unsolicited ideas from outside sources.”

Undeterred, the women put up a Facebook fan page entitled “Beautiful and Bald Barbie! Let’s see if we can get it made,” and it duly received more than 137,000 “likes.” As a result, Brand Republic reports that Mattel is now addressing the issue more directly.

“We are honored that Jane Bingham and Beckie Sypin believe that Barbie could be the face of such an important cause,” a spokesperson said, according to the site. “Mattel appreciates and respects the passion that has been built up for the request for a bald Barbie doll.”

Mattel isn’t committing to get a hairless Barbie onto production lines….

“The obvious thing to do would be to release a limited edition bald Barbie with a percentage of the proceeds going to charity,” said Robin Grant, managing director at the social-media agency We are Social. “Some companies have a fear of being seen to bow to consumer pressure – but corporate marketing teams must guard against being unchanging and monolithic.”

Edit by KJM

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Hmmm.

Loyal HomeFilers know that we rail often on the indefensibly high tuitions colleges are charging.

For example, see one of our all time favorite posts:
What do b-school profs and Lady Gaga have in common? 

Many pundits are predicting that high-priced colleges will be the next bubble to burst. Students (or their parents, or their companies) have been paying an increasing amount of money to get a decreasing amount of relevant learning. That’s not a good formula.

Government subsidies, student loans and “full fare” foreign students keep pushing tuitions up to levels required to support lavish facilities, expansive athletic programs, outdated delivery methods (think classrooms vs. online), and light teaching loads for faculty journalists.

Let’s see if Obama follows through on his threat … and see if it has an impact.

I’m betting under on both counts.

Universities are hot beds of liberal thinking.

No way Obama puts them in his cross hairs.

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* * * * *
Excerpted from “Nike’s FuelBand: Game Changer or Slickly Marketed $150 Monitor?”

While the large majority of athletic gear is segmented for each specific sports market, Nike announced a product that sweeps across the entire sporting landscape and can be used by any athlete at any level.

The Nike+ FuelBand, is a foray into more technically-advanced digital monitoring 

It is a rubber bracelet worn on the wrist during exercise and sports activities to measure “steps, calories, time & Fuel metric (currency measured by oxygen kinetics).”

The NikeFuel Twitter account says:

“Not only is the FuelBand a fun way to keep you active, but you can compete, collaborate & compare your activity w/each other.”

The price is $150, “about 50% more expensive than the similar Fitbit device” .

According to Nike, “The @Nike+ FuelBand syncs with your iPhone via Bluetooth, provides on-device feedback, gives you @NikeFuel experience.” Integrating Path technology with a free iPhone app and dashboard at NikePlus.com, it’s being positioned as “the ultimate measure of activity.”

The marketing pitch: “NikeFuel is the ultimate measure of activity. It isn’t bought or sold. It’s earned.” 

Edit by KJM

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• “Investment” – Spending taxpayer money on Obama re-election constituencies such as government employee unions, teachers’ guilds, and big-city political machines.
• “Children and grandchildren” – The people picking up the tab.
• “Energy” – Something that flows from good intentions, government programs, “stimulus” spending but not pipelines.
• “Exports” – That trade – and only that trade – acceptable to union bosses.
• “I” or “Me” – Center of the known universe.
• “Compromise” – Tax hikes.
• “Sacrifice” – Tax hikes.
• “Bipartisan” – Tax hikes.
• “Fair” OR “Fair Share” – Tax hikes.
• “Balanced” – Tax hikes.
• “Small business” – Those who will pay the most under my plan to tax “the rich.”
• “Special interests” – Taxpayers who do not wish to give their money to my friends.
• “There are those who…” OR “Some” – [INSERT STRAW MAN HERE]
• “Middle class” – Those who are the target of seven tax hikes in Obamacare.
• “Deficit” – What Democrats want you to focus on when what they really want to sell you is a tax hike.
• “Regulations” – The governmental leash attached to the choke collar around the neck of the economy.
• “Recovery” – This time it’s real, I swear, not like that “Recovery Summer” we had in 2010 after spending $1 trillion of borrowed money.
• “Infrastructure” OR “Roads and Bridges” – Spending taxpayer money on those states voting Democrat in ’08.
• “Affordable” – Reality for the taxpayer only after they’ve worked 224 days to pay for the total cost of government.
• “Obstructionists” – House Republican lawmakers who have actually passed a budget – NOT the Senate Democrats who have refused to pass a budget for 1,000 days.
• “Streamline” – The pretense of dieting after an all-out spending binge.
• “Wall Street” – 1. Where your IRA and 401(k) live. 2. A bauble to distract you from noticing my bailout of Fannie and Freddie.
• “Jobs” – “You want to find work on the Keystone XL pipeline? Tough luck – I’ve got a campaign to run.”
• “Profit” – Money without which jobs would never be created.

Very useful, right?

* * * * *

P.S. Americans for Tax Reform also hit on the idea of Obama Bingo … great minds running in the same track … I didn’t jack the idea from them … I jacked it from students who told me that they sometimes play Prof Bingo in class.

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There she was … in Michelle’s box for the SOUTU address.

Well, seems that cameo appearance is sparking some scrutiny.

Is she, in fact,  a tax-abused waif living from paycheck to paycheck?

According to Forbes: Warren Buffett’s Secretary Likely Makes Between $200,000 And $500,000/Year

Warren Buffet’s secretary, Debbie Bosanek, served as a stage prop for President Obama’s State of the Union speech. She was the President’s chief display of the alleged unfairness of our tax system – a little person paying a higher tax rate than her billionaire boss.

Bosanek’s prominent role in Obama’s “fairness” campaign has finally  piqued curiosity.

How much does her boss pay this downtrodden woman?

So far, no one has volunteered this information.

We can get an approximate answer by consulting IRS data on tax rates by adjusted gross income, which would approximate her salary, assuming she does not have significant dividend, interest or capital-gains income (like her boss).

I assume the tax rate Obama refers to is from her own earnings.

Insofar as Buffet (like Mitt Romney) earns income primarily from capital gains, which are taxed at 15 percent (and according to Obama need to be raised for reasons of fairness), we need to determine how much income a taxpayer like Bosanek must earn in order to pay an average tax rate above fifteen percent. This is easy to do.

The IRS publishes detailed tax tables by income level.

The latest results are for 2009. They show that taxpayers earning an adjusted gross income between $100,000 and $200,000 pay an average rate of twelve percent.

12% is below Buffet’s rate; so she must earn more than that.

Taxpayers earning adjusted gross incomes of $200,000 to $500,000, pay an average tax rate of nineteen percent.

Therefore Buffet must pay Debbie Bosanke a salary above two hundred thousand.

At that level of income, she is scarcely the symbol of injustice that Obama wishes her to project.

While we’re at it, how about a peek at Buffett’s returns?

After all, if we’re going to revamp the entire tax code off of 2 data points, let’s at least have all the data that the points have to offer.

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Thirty-some advertisers will spend upwards of $230 million just for the airtime to fight for attention in the Feb. 5 game.

At stake: the eyeballs of more than 100 million Super Bowl viewers. And the urgent need to drive all of them online to find out more, socialize and tweet with friends and ultimately buy that beer, smartphone or luxury car.

Sexy ads are slinking back to the Super Bowl.

No company has used sexual imagery more shamelessly on the Super Bowl than GoDaddy.

“We set the standard of indecency,” jokes CEO Parsons, who takes special pride in being widely accused of single-handedly bringing down the tone of Super Bowl advertising.

Truth be told, the action in each GoDaddy ad is just a big tease to get folks to go online and find out more about the company that people use to register domain names and host websites.

The ploy, which GoDaddy has used for eight consecutive Super Bowls, works ridiculously well.

But. some researchers have found that spots with sexual imagery take a 10% hit in “likability” vs. ads without racy images.

They conclude that most viewers actually prefer to see ads with kids or animals.

Yeah, right.

Watch the vid .. then you decide.

        click to view video

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I wonder if any of O’s speech writers have either read the book  or, at least followed up on the companies cited in the book (list below).

I did, and guess what?

Built to Last has been roundly criticized because many of the companies it profiled have subsequently faltered.

According to FastCompany:

Within 10 years of the book’s publication, almost half of the visionary companies on the list have slipped dramatically in performance and reputation, and their vision currently seems more blurred than clairvoyant.

At least 7 of BTL’s original 18 companies have stumbled (8 if you’re cynical about HP)

Each has struggled, and all have faced serious questions about their leadership and strategy.

Odds are, none of them today would meet BTL’s criteria for visionary companies, which required that they be the premier player in their industry and be widely admired by people in the know.

Jim Collins – one of the authors – counters that “The book never promised that these companies would always be great, just that they were once great.”

That makes more sense.  Obama isn’t saying that his America is going to become great (again) and stay great …. just that it once was great.

Now, that’s something to rally around….

* * * * *
Here’s Collins and Porras’ BTL List
… draw your own conclusions.

3M
American Express <= TARP
Boeing  <= NLRB target <= a good thing (unless you’re Team O chasing them)
Citigroup <= TARP
Disney  <= struggling since Cap Cities acquisition
Ford <= least bad U.S. car company
General Electric  <= TARP
Hewlett Packard  <= CEO turnover
IBM
Johnson & Johnson
Marriott
Merck
Motorola  <= corporate break-up
Nordstrom
Philip Morris (now Altria)
Procter & Gamble
Sony  <= lost its mojo
Wal-Mart  <= evil empire

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* * * * *

Excerpt from AdAge: “D.G. Yuengling & Son Becomes America’s Largest Brewer”

Yuengling surged last year with shipments up 16.9% to 2.5 million barrels, placing it eighth in overall U.S. market share, at 1.2%. That was good enough to nose by Boston, which owns the Sam Adams brand.

Anheuser-Busch, owned by Belgium-based InBev, still has a firm hold on No. 1, but its market share fell from 47.7% to 47.0%.

No. 2 MillerCoors, part-owned by London-based SABMiller, saw its share drop from 28.8% to 28.4%.

Third place belongs to Corona importer Crown Imports and Heineken USA kept its hold on fourth.

Yuengling’s ranking comes with some caveats. Pabst Brewing Co., which ranks fifth overall, is U.S.-owned, but outsources its brewing.

Sixth-place North American Breweries is also U.S.-owned, but a chunk of its volume comes from the imported Labatt brand.

Edited by ARK

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Why not turn it into a game …. like students do with boring profs.

Randomly post the most likely clichés to squares on 5 x 5 game cards.

First player to score a row, a column, a diagonal or the 4 corners with “he said it” marks wins the game.

Below are the official odds on what Obama will say first.

Note My “lock” prediction isn’t even on the list: “Let me be perfectly clear” … a couple of my other favorites are bolded.

Odds   Cliché

8/1     We have more work to do
10/1     Health care reform
10/1     As I stand here today
12/1     Fundamental belief
12/1     God bless America
12/1     Crossroads of history
12/1     Defining moment
12/1     Make Washington work
14/1     Common purpose
16/1     Pursuit of happiness
16/1     Building a better America
16/1     Reduce the deficit
18/1     War on terror
18/1     It won’t be easy
18/1     Hungry for change
18/1     My civil liberties
20/1     Honor for me
20/1     I have a dream
20/1     Willing to listen to each other
20/1     Yes, we can
20/1     Don’t get me wrong
25/1     Hard to believe
25/1     I’m fired up
25/1     Withdraw our troops
25/1     There are better days ahead
25/1     Do-nothing Congress
25/1    We’ll have to make hard choices
25/1     We can be one people
25/1     A new direction
33/1     For far too long
33/1     Safe from harm
33/1     Jobs to the jobless
33/1     Reshapes our economy
40/1     Deepest gratitude
40/1     Greatness of our nation
40/1     Possibilities of this nation
40/1     Florida primary
50/1     Believe in what this country can be
50/1     Unity is the great need of the hour
50/1     In the face of despair, you believe there can be hope
50/1     We can work together to keep our country safe
50/1     Abiding faith
66/1     Brighter day will come
66/1     Publish tax returns
66/1     Washington has a long way to go
80/1     Overcome the adversity
80/1     Bloated federal government
100/1     Diversity of my heritage
100/1     Yes, we might
250/1     Life is like a box of chocolates

Source: Washington Times

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