Kevin O. Woghiren

Kwoghinomics

Kevin Woghiren

There is no need to worry, my ideas are not as ridiculous as the above nomenclature I have designated to describe my economic and tax policy recommendations. But then again, I’ll take “Kwoghinomics” over “Pratikonomics” any day. Although my recommendations do not follow specific policies such as the FairTax or the FlatTax, I do believe that, with the economy decreasing at an increasing rate, this is not the time for theoretical experimentation and thus, I will only work within the current tax structure.

Given the status quo of the worsening financial environment at the federal and state levels, I thought it’d be appropriate to bring onboard a good friend of mine and burgeoning economist, Pratik Desai, to discuss ways to improve and stimulate government revenue, which is comprised almost entirely of tax revenue. Before I make my argument, I will allow for the following to set the tone: A “D” rating by the American Society of Civil Engineers to America’s infrastructure (roads, bridges, schools, etc); Budget deficits in the billions for several largely populated states including California, Illinois, Michigan, New York, and Massachusetts; Trillions of dollars in deficit for the world’s largest ponzi scheme, Social Security; The current excessive annual military expenditure used primarily to maintain our imperialism abroad; A growing 7.6% unemployment rate; 10 bank failures and well over 600,000 jobs lost to date since January 1, 2009.

To combat unemployment and the increasing financial strain on government resources, several state governors such as Deval Patrick of Massachusetts and David Patterson of New York have proposed introducing new taxes and policies that will significantly affect alcohol and soft drink prices, Registry of Motor Vehicles fees, and other government services fees. On the state level, and for a state currently in a deficit, I would slightly increase the state personal income tax rate (adjusted for inflation and cost of living), but significantly decrease the state’s sales tax rate to a fair correlation in order to re-invigorate America’s consumer culture.  Taxes on tobacco, alcohol, and city fuel prices will significantly increase and all internet sales transactions performed in the state, regardless of the company’s headquarters, will be charged according to the state’s sales tax rate.

My ideas for maximizing government revenue at the federal level are to completely erase pork barrel expenditures, significantly decrease our military installations and spending abroad, lessen trade sanctions on countries like Cuba, North Korea, and China to encourage more exports only, decrease the highest tier corporate income tax rate to 20%, from about 35%, and apply it only to companies making over $5 million annually in net income, while only charging a capital gains tax to companies making under $5 million in net income annually. To continue, I would retain the current federal personal income tax rate structure and the Medicare tax, but will remove Social Security taxes. To counter this action, I would still require for employers to match the Medicare tax for employees and this matched amount will be used to accumulate Treasury Bills for the individual that will be available for liquidation by a new Medicare eligibility age minimum of 59 and 1/2  instead of 65.

To briefly elaborate on my ideas, I believe that a lower federal corporate income tax rate would increase business operations on American soil and curtail the number of companies that go abroad seeking “tax havens”. Since corporate income tax revenue accounts for little government revenue, it is not beneficial for the U.S. Government to continue to maintain its incomprehensible high rate. Social Security is a failed program and we do not need any more IOUs from the federal government, so it is best that the program becomes defunct, thus slightly reducing the tax burden on employers and employees alike.

Pratikonomics: Solutions for the American Economy and A Case for FairTax Reform

Pratik Desai (pdesai4@luc.edu)

 Loyola University Chicago undergrad 2010; expected B.B.A. in Finance

I have a solution that can put America back on the path of strong economic growth and save our economy. It involves scrapping our 70,000 page tax code in its entirety and replacing it with the FairTax. The current system creates an inefficient drain of over $300 billion on our economy wherein we pay tax professionals to make sure we don’t get audited. It also discourages innovation, growth, and productivity in many respects. Our nation needs a tax system that treats all economic activity as fairly as possible.

The FairTax proposal would eliminate the need for TurboTax (or other tax preparation software) and reduce corporate dependence on tax specialists. It would eliminate all federal taxes (income and corporate taxes included)and replace them with a national sales tax of 23%. April 15th would be just another sunny Spring day, and tax revenues would remain the same as now. Imagine a world where Americans took home every penny they earned and only paid taxes at retail stores. Businesses wouldn’t have to pay a dime in taxes, thus making America the biggest tax haven in the world. Many foreign companies would move their operations here because of the lack of corporate taxation, thus creating countless high paying jobs. This proposal is based on the notion that businesses don’t pay any taxes at all; that they pass on the amount of tax they bear to the consumer in the form of higher prices. By taxing retail consumption (70% of our $13.8 trillion GDP), Americans also share their burden with underground economies and foreigners. Whenever a drug dealer or tourist in America wants to buy anything at the grocery store, he or she pays the 23% tax embedded into the price of the good. All goods would cost the same as they do now because 22-25% of embedded federal taxes are eliminated, and a 23% sales tax is added in its place to produce a no net change in prices. There would also be an incentive to buy used homes and automobiles as they would be tax-free.

For those concerned with burdening the poor with the high national sales tax, note that the FairTax proposal also includes a provision that would send each family of four or more a check of roughly $5000 or more annually, accounting for the amount of taxes they would pay on the federal poverty level of income, thus, allowing families of four or more to spend up to $22,000 or more tax-free.

Those who spend millions of dollars get taxed for those millions and there would be no taxes on savings, investments, dividends, or inheritance. America could finally be free of a brain drain and encourage wealthy and skilled individuals across the world to come live, work, and invest here in America. Of course, this requires a change in immigration and naturalization policies, but the FairTax would be a step in the right direction for a nation struggling to maintain its sole superpower status. Experts estimate that the FairTax would immediately provide a stimulus to the economy upwards of 10% GDP growth (over $1.34 trillion in one year alone), which is much more significant than the billions of dollars that Washington wants to spend on the current stimulus bill. This growth would continue for about a decade until America’s economy settles on a normal, yet high growth rate. Call your local Congressperson or Senator and tell them to support the FairTax proposal. For more information on the FairTax proposal, go to www.fairtax.org.

2009 World Economic Forum's Annual Meeting

February 1, 2009 marks the conclusion to America’s 2008 National Football League season via the SuperBowl and most notably our leadership in the recovery of the global economy. The playing field is leveling drastically and the tones of the world’s public leaders in Davos-Klosters, Switzerland and America’s almost nonexistent presence there was a blunt reminder.

With about 40 heads of states present at the Annual Meeting from all over the world, America’s current administration was represented only by the Director of the National Economic Council, Larry Summers, and the National Security Advisor, James Jones, Jr., both of whom were passive participants. The addresses presented by Prime Minister Vladimir Putin of the Russian Federation, Prime Minister Taro Aso of Japan, German Chancellor Angela Merkel, and “The State of Africa” panel were my highlights of the Annual Meeting. The set agenda for 2009 was unanimous and clear: Restoring responsibility and accountability in governments and regaining the public’s trust.

Unlike the Great Depression and past deep recessions, globalization and a credit crisis did not play such a significant role, and thus, this current economic crisis requires a global effort and cooperation in order for progress to occur. President Hans-Rudolf Merz of Switzerland reminded the world in his welcome address of Swiss author Max Frisch’s quote, “A crisis is a productive state. You simply have to get rid of its aftertaste of catastrophe.” German Chancellor Angela Merkel and President Taro Aso of Japan reiterated this by pledging to continue their aid to developing countries amid the status quo and stressing the importance of fulfilling the UN Millennium Development Goals. The consensus between both leaders was the importance of not missing the opportunity masked by the crisis that could lead to “better living on this planet”, as Chancellor Merkel succinctly put it.

Although the current global economic crisis was at the forefront in the Forum, other topics such as human rights, Zimbabwe, the Middle East peace process, food and energy security, financial empowerment for women, and global poverty were discussed. Going forward, if the recession worsens and leads to a global depression, my major concern: The fall of capitalism and democracy in developing countries and coups by radical socialists and militants.

The Annual Meeting offered a great deal of optimism to the global community and acted as a great predecessor to the G20 Forum, which will convene in April of 2009. I look forward to hearing more on the topic of micro financing in developing countries, which I think will be a significant stimulus for global economic growth in the near future.

Dear Mr., President, Commander-in-Chief, Prime Minister, Top Dog, Barack Obama,

Congratulations on your inauguration as the 44th President of the United States of America (As of noon Eastern time today)!

You are assuming the position of Chief Executive Officer of that failing corporation known as USA, LLC., with one of the highest initial approval ratings since Ronald Reagan.

Your most recent predecessor leaves the White House with one of the lowest approval ratings in history, an ego-busting 22%. Just about eight years ago, former President George W. Bush achieved the highest approval rating (92%) of any Presidency shortly after the September 11 attacks and this enabled him to push his neo-conservative and partisan policies that for the most part have gotten us in the status quo. The test that stands before you: How will you utilize your high approval rating? As Bush, Clinton, Kennedy, and countless other “great” former Presidents have proven to America: the “top” is also the place where you can “hang” from. Will you repeat history?

Your inauguration as Commander in Chief is without a doubt an historic and monumental one but your decision making and actions during the time period since your election as President-elect have coerced me into being pessimistic about your first term and whether or not you will be a centrist or the elitist, hyper-liberal, and quixotic hypocrite that will further divide this great country in all social and political aspects. Below are a list of some events that have fueled my pessimistic attitude:

1) Blackberry…Really??

Get over the BlackBerry addiction Mr. President. I was once a “CrackBerry” addict and I know how you feel, but you are the most important man in the world at this moment and you do not need any data compromised, whether official or personal! Also, during your campaign, you stressed “buying American”, I did not know that you meant ”buying North American.” If the President could have a cell phone, he or she should set an example and buy from an American manufacturer and not a Canadian one.

2) Chief Performance Officer…Really? 

After reading the job description for your newly created administration post, I couldn’t help but smile at the irony. The position was created to clean up the federal budget and create fiscal responsibility through a business efficiency model. Pardon my reference to the United States of America as USA, LLC. earlier but a country can not be run as a business. It is to serve the people in whatever way it must and not have to worry about the “bottom line” as do corporations. Yes, there are federally-funded programs that need to be cut outright or for the short-term, but creating a new and unnecessary administrative position that will be paid via taxes is contradictory to fiscal responsibility. Besides, the government already has the Office of Management and Budget that comes with its own director.

3) William Lynn, Deputy Secretary of Defense and Ron Klain, Chief of Staff for VP Joe Biden…Really?

Former Lobbyists, need I continue?

4) Timothy Geithner…Really?

He may be the right guy for the United States Secretary of Treasury position; but the man who you picked to run “America’s Treasury” is under scrutiny for non-payment of taxes and for continuing to employ an housekeeper whose visa status was expired?

5) Retracing Abraham Lincoln’s journey from Philadelphia to Washington, D.C. via a train…Really?

This is only a sure way to further use up more public resources and tax dollars to protect you as if the job wasn’t difficult for the Secret Service already. I understand the political (and historical) implications of the journey but honestly why? Are you proving your elitism and hubris, by seeking attention, or showing your intimate connection and appreciation to some of the people that helped elect you into office? Lincoln took the trip in order to communicate 101 speeches to everyday people before his inauguration because communication was restricted to public speeches in 1861. You took the lengthy trip in order to make stops in three cities but yet affecting over forty jurisdictions.

President Obama, you represent a new direction for America and your Administration obviously faces many challenges, both domestic and international. Although the economy, Guantanamo Bay, national security, and the Middle East are your top priorities in your first 100 days in Office, but, if i can offer you my opinion for your first action in the White House, it would be: Sell the new imperialistic half a billion dollar behemoth of a U.S. Embassy in Iraq to the Iraqi Government and build a more hospitable, humble, and diplomatic one to represent America’s ideals, or rather, its new found ideals.

I wish you and your Administration the best!

Your loyal subject,

Kevin Woghiren

So, I’m in Boston taking a short break from the city of Chicago and I’m pondering about the coming new year: 2009.

2008 has been full of anguish and excitement on both the political and economic scene and I thought it would be a good idea to end a very historic and eventful year with a recap via the help of the Internet.
Although the global financial crisis from 2007 and violence plagued much of 2008, there was still much to be content with in some of the following highlights:

January

Crude oil futures hit $100 per barrel for the first time
    -The national weekly gas price on average in January was $3.09 per gallon
    -July had the highest national weekly gas price average at $4.11/gal

February

Iran opens its first space center and launches a rocket to space

Fidel Castro resigns from position as President of Cuba and his brother, Raul, is elected as his successor

March

Rising oil and food prices triggers riots in the Third World
    -The rise in prices was presumed to be caused by the effect of speculators on the commodities market

Bhutan holds its first ever elections
    -Bhutan is landlocked by India and the People’s Republic of China
    -The tiny country transformed from an absolute monarchy to a constitutionaly monarchy in 2008 and has been rated by Business Week as the happiest country in Asia

David Paterson becomes the first legally blind governor in the United States and the first African American governor of New York

Presidential elections are held in Zimbabwe

April

The Taliban failed in an attempt to assasinate Afghan President Hamid Karzai in Kabul, Afghanistan

India sets a world record by sending 10 satellites into orbit in a single launch

May

Over 200,000 people are killed in Burma and China by a cyclone and earthquake, respectively.

NASA’s Phoenix becomes the first spacecraft to land on the northern polar region of Mars. The spacecaft later confirmed that frozen water existed on Mars.
     -This was NASA’s sixth successful landing on Mars and the mission ended in November due to a lack of contact

June

Robert Mugabe is re-elected as President of Zimbabwe in the second round of the controversial Presidential election
     -A power sharing deal was later brokered between Mugabe’s administration and his opposition and complications between both parties still linger on

Bill Gates steps down as Chairman of Microsoft to concentrate on his philanthropic foundation

July

Ingrid Betancourt and 14 other hostages are rescued from the Revolutionary Armed Forces of Colombia by Colombian security forces after six years in captivity

112 people are killed and over 620 people are injured in a series of bombings in Instanbul, India, and Iraq

August

Summer Olympics take place in Beijing, China

Georgia and Russia engage in a 10-day war in South Ossetia after Georgia invades the tiny territory

Musharraf resigns from position as President of Pakistan under impeachment pressure

September

Asif Ali Zardari is elected as President of Pakistan

The world’s largest and highest energy particle accelerator, the Large Hadron Collider, is activated underground in Geneva, Switzerland

China becomes the third country ever to conduct a spacewalk

Largest daily point loss of 777 points in the Dow Jones Industrial Average

October

As the global financial crisis worsens, the Bush Administration approves $700 billion for the Treasury to puchase failing bank assets

World’s largest commercial carrier is formed after the merger of Delta Air Lines and Northwest Airlines

Largest daily point gain of 938 points in the Dow Jones Industrial Average
     -October had the two largest daily point gains in the history of the Dow Jones Industrial Average

November

Barack Obama becomes the first African-American and “self-recognized” bi-racial President-elect
     -On January 20, 2009 he will be inaugurated into the Presidency

Series of terrorist attacks kills 164 people and injures over 250 people in Mumbai, India

December

Riots spread in Greece after a 15 year old student was shot and killed by a Greek policeman during a demonstration against government corruption and the global economic crisis

Bernard Madoff, former Chairman of NASDAQ , is indicted on charges of financial fraud that could cost investors up to $50 billion

**If you have any other notable events of 2008 please feel free to include them via comments**

Happy New Year to all!

“The point is, ladies and gentleman, that greed — for lack of a better word — is good.
Greed is right.
Greed works.
Greed clarifies, cuts through, and captures the essence of the evolutionary spirit.
Greed, in all of its forms — greed for life, for money, for love, knowledge — has marked the upward surge of mankind.
And greed — you mark my words — will not only save Teldar Paper, but that other malfunctioning corporation called the USA” (The movie, Wall Street).

There is not a more accurate definition of greed to date than this one provided by the fictional multi-millionaire and corporate raider, Gordon Gekko, in Oliver Stone’s 1987 classic, Wall Street. Greed is often associated with money or wealth by the hoi polloi in terms of money laundering by chief executives or the widening income gap between the rich and the poor; but, nobody ever wants to talk about the positives. Why should you be greedy? According to Gekko, you should be greedy because it is innate and your very survival and social advancement depends on it. We’ve all heard, at some point, the ideology, ‘survival of the fittest’; this ideology becomes more relevant today as globalization becomes more of a reality.

Globalization is the reason why the richest man in the world is no longer an American, a title Bill Gates, the founder of Microsoft, held for over a decade. Globalization is the reason why we all have friends online from all over the country and worldwide and yet we continue to seek more on popular websites such as Myspace.com and Facebook.com. Globalization is the reason why greed is here to stay and Gordon Gekko’s quote is still relevant after twenty years.

You should be greedy because you already are. Our greed for more friends to increase our friends’ list online, greed for achieving the American Dream, greed for love, greed for achieving good grades, and greed for power, are all healthy and required for humanity’s continued growth and increasing global competition. The critics out there may wonder about the effect of greed on social injustice, but I ask, isn’t greed for social justice a type of greed? For the sake of my argument, let’s forget that greed belongs to the nomenclature of vices referred to as the ‘Seven deadly sins,’ or that it carries a negative connation, or that it even exists in any lexicon. What we are left with is a classless, stateless, pseudo-utopia. This new pseudo-utopia can now be referred to as a communist or socialist entity.

The absence for the need to be greedy only creates an opportunity for the human spirit to become greedy as in the case of pre-WWII Europe and the likes of Adolf Hitler and Joseph Stalin. I perceive greed as being on both ends of a spectrum and in the middle is motive. One has the choice to travel right or left (or in this case, good or bad) with one’s motive but no matter the choice there will always be equilibrium, but that’s not to imply that there is equality in power distribution. Greed is like the internet, it is nowhere but everywhere or vice versa; in other words, no one claims to be greedy but we all are; as opposed to if we all acknowledged our innate greed then no one would be “greedy”. If success is supposedly 100% attitude, who’s to say greed should not be incorporated into one’s attitude?