Through explicit policies, as well as tax laws never reported in the news, Congress now literally takes money from those making $30,000 to $500,000 per year and funnels it in subtle ways to the super rich—the top 1/100th of 1 percent of Americans.
One 1985 law, promoted in the Senate as relieving middle class Americans, gave a huge tax break to corporate executives who make personal use of company jets. CEOs may now fly to vacations or Saturday golf outings in luxury for a penny a mile. Congress shifted the real cost of about $6 per mile to shareholders, who pay two-thirds, and to taxpayers who suffer the rest of the cost lost as a result of reduced corporate income taxes.
Something to think about as you are doing your last minute tax preparations. On the flip side though, about those lear jets:
This paper studies perquisites of major company CEOs, focusing on personal use of company planes. For firms that have disclosed this managerial benefit, average shareholder returns under-perform market benchmarks by more than 4 percent annually, a severe gap far exceeding the costs of resources consumed. Around the date of the initial disclosure, firms' stock prices drop by an average of 2 percent. Regression analysis finds negative associations between CEOs' personal aircraft use and their compensation and percentage ownership, in accord with Jensen-Meckling (1976) and Fama (1980), but both relations have small magnitude.
I wonder if we'll be seeing a rise in civil court actions by shareholders? Again, something to think about as you fill out your 2003 Form 1040 …
Even though today is tax day there is one good thing about today—The Kids' father arrives today to take them on vacation.
Thus giving us a vacation.
It will be a quiet week.