Profits – How much is too much?

[chm2023]

Yeah, those damn poor people are sucking the country dry...



Billionaire Gives a Big Gift but Still Gets to Invest It
By STEPHANIE STROM
Boone Pickens, the often controversial and always colorful Texas oilman turned investor, took advantage of a temporary tax break to make a gift that propelled him into the ranks of the nation's top philanthropists last year.

But what Mr. Pickens gave away with one hand he continues to control with the other.

At the end of the year, he gave $165 million to a tiny charity set up to benefit the golf program at Oklahoma State University, reaping Mr. Pickens a tax deduction. Records show that the money spent less than an hour on Dec. 30 in the account of the university's charity, O.S.U. Cowboy Golf Inc., before it was invested in a hedge fund controlled by Mr. Pickens, BP Capital Management.

"It's all his money, and he's on the investment committee" of Cowboy Golf, said Mike Holder, the university's athletic director and former golf coach, who is on the board. "If a person's making a gift of that size, he can stipulate what he wants it invested in."

Asked whether investing in BP Capital had been a condition of Mr. Pickens's gift, Mr. Holder said no. "That was my decision," he said.

Lawyers said that even though Mr. Pickens still had investment power over the gift, the transaction appeared to be legal under federal law.

"Sadly, it's another case of a rich man manipulating charity for his own benefit," said Marcus Owens, a lawyer who formerly headed the division of the I.R.S. that oversees tax-exempt groups.

To some, the question is whether a wealthy person should get a tax break now for money that has essentially not yet been put to charitable use. By giving the money before 2005 expired, Mr. Pickens was able to take advantage of a provision in Hurricane Katrina relief legislation that allowed him a deduction for a charitable gift equal to 100 percent of his adjusted gross income, double the normal limit of 50 percent. If he does not have that much income in 2005, he can carry the deduction into future years.

Mr. Pickens, an Oklahoma State alumnus, is on the board of the university's golf charity, which had previously invested its cash with him. The charity was created to benefit the golf program, but it is now being turned into a charity to benefit athletics at large, something previously done by the university's foundation.

Bruce R. Hopkins, a lawyer in Kansas City, Mo., said Mr. Pickens's position on the Cowboy Golf board looked bad.

"It's obviously right up to the edge of what's permissible, but the fact that he's on the board of the charity that is using his company's services isn't a violation," said Mr. Hopkins, who has written several textbooks on tax-exempt law. "Is it a conflict of interest? Well, probably."

But Jay Rosser, a spokesman for Mr. Pickens and BP Capital, said, "We've waived all fees and our share of the profits on their investments, so how is it a conflict?"

Mr. Owens, the former I.R.S. official, noted that Mr. Pickens could still reap rewards from having the money invested in his hedge fund.

"He still retains the ability to use the assets in a way that may return benefit to him, for instance by making investments at a magnitude his fund might not otherwise be able to make," Mr. Owens said. "There may very well be a dollar benefit even if no fees are being paid."

Mr. Pickens announced the gift on Jan. 10 and disclosed the investment in his fund at that time.

"We will manage the money, but don't leave here thinking that I gave it and they gave it back," he said at a news conference at the university, as reported in The Tulsa World. "I gave it, and we're investing it for them."

In a phone interview, Mr. Holder said his decision to invest the money with BP Capital was based on Cowboy Golf's previous experience.

Cowboy Golf was split off from the O.S.U. Foundation roughly two years ago because, Mr. Holder said, he wanted greater flexibility to invest money for his golfers and assure control over the golf course, Karsten Creek, owned by the university.

The university transferred ownership of the golf course to Cowboy Golf, along with about $6 million in cash, which Mr. Holder invested in Mr. Pickens's fund. At the time, Cowboy Golf's board was composed of Mr. Holder, Mr. Pickens and David J. Schmidly, the university president. It has since grown to nine members, and the cash Mr. Holder entrusted to BP Capital has quintupled.

"I may not be the smartest person around, but when you've invested $6 million with someone and they've turned it into $31 million, it makes you feel confident enough to have all your investments with that person," said Mr. Holder, who has also invested some of his personal wealth with Mr. Pickens.

Cowboy Golf's accountant ordered the transfer to BP Capital in an e-mail message in which "This wire must take place today" was underlined. The rush was to make sure the investment started producing returns as soon as possible, Mr. Holder said.

The charity hopes the investment will nearly double in value to the $300 million that its board intends to spend on athletics. Mr. Holder described years of neglect of the university's athletic facilities. Among other things, Mr. Pickens's gift will underwrite a new equestrian center, new track and field facilities and completion of the football stadium, which bears his name. The university's golf program was not described as a beneficiary.

Mr. Holder said lawyers were working to recast Cowboy Golf as Cowboy Athletics, supporting all the university's sports programs. He said the decision to expand was made after Mr. Pickens made his gift.

The O.S.U. Foundation, which has been raising money for the stadium, has also invested a small part of its assets in Mr. Pickens's hedge fund.

"Monkey see, monkey do," Mr. Holder said.

[Spexvet]

Profits – How much is too much?

Income should be limited to $150 million over a lifetime. That's $3 million/year over an anticipated 50 year working life. Certainly more than anyone "needs" to survive. If you can make it in one year - go for it, then retire, or work merely for the satisfaction you'll get. Maybe sports ticket prices would be affordable, again. :cheers:

[Spexvet]

“What's troubling about the economic recovery that we've been in is that all of the traditional indicators of employment, household income and poverty levels are lagging behind prior expansions,” said Jean Ross, director of the California Budget Project, an economic think tank in Sacramento.

“The only indicator that is doing better than in prior expansions is corporate profits, which indicates that businesses aren't passing on what they are gaining to their workers,” she said.

http://www.signonsandiego.com/news/n...n24income.html

[spartus]

http://www.signonsandiego.com/news/n...n24income.html

I still maintain that the truest barometer of how the economy's doing is the financing they offer in new car commercials. If it's 72 months no interest, $1500 cash back, and free gas for a year, the economy ain't doing too hot.

[rinselberg]

Income should be limited to $150 million over a lifetime. That's $3 million/year over an anticipated 50 year working life. Certainly more than anyone "needs" to survive. If you can make it in one year, go for it; then retire, or work merely for the satisfaction you'll get. Maybe sports ticket prices would be affordable again.

Talk about a "modest proposal" ... I'm no economist, but I think that would be an almost unfathomably radical change to the dynamics of entrepreneurship and the control of potential venture and investment capital. We'll never see it. I can't imagine any serious national economy implementing that unilaterally. But for those who want to engage this line of thought, there was a time when the marginal income tax rate for those in the $200,000 bracket and up was 94 percent - the most progressive income tax rates in all of US history. I offer a web page authored by a published advocate of a cap on exceptionally high personal incomes:
http://www.tompaine.com/articles/sha...ared_glory.php

Re: chm2023's post about T. Boone Pickens ... it wasn't his first act of philanthropy. See Johns Hopkins, Boone Pickens Professorship of Ophthalmology. Should we condemn the whole program because of one little $165 million slip-up? Does sound rather thick-headed of Congress, though, to pass legislation to encourage hurricane relief without limiting it to a list of specific recipients for the donations, like the Red Cross, etc; thick-headed of the President to sign off on it.



It's D-U-B-A-I, not D-U-B-Y-A ... rinselberg's latest OpEd post is available online at Laramy-K Optical's professional forum.

[chip anderson]

Where does the logic begin that limiting one man's income will somehow increase the income of another?


Chip:hammer:

[chm2023]

Where does the logic begin that limiting one man's income will somehow increase the income of another?


Chip:hammer:

Taxation policy can increase/decrease net income of different groups. The administration is determined to shift wealth from the many to the few and from individuals to corporations.

[chip anderson]

Taxation can only decrease income, productivity and commerce.

Much as raising the minimum wage will not increase buying power for the poor, it just makes the base from which prices begin go up.

[spartus]

Much as raising the minimum wage will not increase buying power for the poor, it just makes the base from which prices begin go up.

If this were still a country where things were manufactured, you'd be (I can't say "more correct", since you're not.) less wrong.

If you look at this very simply, I could see you drawing that conclusion. But just because the minimum wage doubled doesn't mean that Sally Jones is going to buy two loaves of bread instead of one this week, thereby justifying a doubling of the price of a loaf of bread, since she clearly got by with just one before. It means that Sally Jones gets to start buying the bread that isn't full of high fructose corn syrup (ever read the ingredients on Wonder Bread?), making her children less likely to be obese. Maybe she buys a new car and can get that better job the next city over. Maybe she starts to save a little bit, so the next time she gets sick, she won't need to take out a payday loan to cover the rent.

It's really simple. People that don't make very much money spend very near to 100% of what they make. Probably over 100%, when you factor in savings accounts (few) versus credit cards (many). People that make a lot of money spend a much lower percentage of their income, even though the dollar amount is significantly higher. This non-spent income goes toward investments, savings, retirement...whatever. It's not put directly back into the economy--some of it is, certainly--but I think we can all agree is what makes economies work is when the money is spent, putting it back into circulation.

The simplest way to put money into circulation is to spend it. The people likeliest to spend it are those that don't currently have enough to meet their needs.

[Spexvet]

Where does the logic begin that limiting one man's income will somehow increase the income of another?


Chip:hammer:

It begins where your forethought stops.

Imagine that I came up with the idea of the pet rock. In three years, I make $100 million. I sell the business to you for $50 million, and max out my lifetime income. I leave the business world. Over the next three years, you make $100 million in the pet rock business, and sell the business to Dr. K., for $50 million, who makes $100 million and on down the line. After 9 years, I would have made $300 million ($100 million every three years) and Dr. K. and you would continue making what you make now, or the business would turn over three times and the three of us would each have $150 million.

Why would it be better for me to have excessive wealth and you two have moderate wealth, than for all of us to have more than enough wealth, without being profit pigs?

[chip anderson]

Haven't you noticed that many (other than the Kennedy's) who have excessive wealth are very good about giving it away to noble causes at a rate much higher than your increased tax rates would have "redistributed" them? Not to mention without the wastefull overhead and pork that the government seems hell bent to excise?

What is to make us think that the second man coming by to run this excesssive profit machine will be capable? He may just be a T.Bone Pickens that stripps the wealth from the company and destroys it in the process so that the productivity and jobs are gone. Bill Gates may be the perfect head of Micro-soft (and he does give away a lot of money, as well as pay a lot of taxes). Someone else would possibly not be able to maintain his empire in a state of profitiabily and productivity.

Your logic just ain't real world.

Chip

[For-Life]

A wealth cap is a bad idea. We need wealth. Wealth improves everyones standard of living because it encourages us to try to gain that money. It is one thing to have a progressive tax system, but to cap the wealth is a bad idea.

In contrast, there is the need for social programs, because social programs do create good business. For instance, if everyone in the nation is guaranteed a good education and a good health care system then no one will be left behind, because as we noted, the poor cannot buy things.

I have a businessman in town that was complaining to me about a minority group in town that will be like half of our city's population in X amount of years and since this group is poor it will kill the economy. I then said that maybe we should be making efforts to help this group gain better education and become less dependent on the government and thus when they become half of the population they can contribute.

The fact is most people do not like living on welfare. IT IS TRUE. Welfare pays poor and you do not have the resources to do anything with it. For instance, in Ontario for a single person with no kids welfare pays $7800 a year. But if you work full time at minimum wage you gain $15,600. So it is better that you work than you not working. Even right now that income bracket is taxed 15 percent the payment is $13,260.

Now for those of you who hate a progressive tax system keep this in mind. The idea of a flat tax system here would bring the taxes here to around 22 percent, thus $12,168. Now there is less incentive to work and more incentive to go back to welfare, which will just raise the taxes for everyone.

I strongly believe in a mix of social programs and untapped wealth.

You have to think about it this way, sure that person may be a loser and does not contribute to society. However, his or her kid may not and may become the next Bill Gates and we should not stop that from happening.

[rep]

Is there something about being a Republican that prevents one from reading the cover pages of reports? (You know, like "Bin Laden Determined To Strike U.S.")?

This one read, "FEMA's Control Weaknesses Exposed the Government To Significant Fraud and Abuse."

I suggest you actually read the report - you obviously haven't; your rightist news source to the contrary, the report says nothing about the local response to the disaster.

What the response to Katrina demonstrated (and continues to demonstrate) is the extent to which the Bush administration is like a Potemkin village - while marketing itself as the protector of American security, it is vacuous; it does nothing. Had those levees been bombed by terrorists, the federal response would have been no different (Brownie's protestations to the contrary), because it had no capacity to be different. It still has none. Feel safer?

What is perfectly clear is that these people could commit no feat of sufficient incompetence that you would not excuse them. Honest evaluation, indeed.

Which is here and has the references to local officials here. http://katrina.house.gov/

I read your entire report, that's were I picked up my reference to "booze, condoms and adult entertainment". Which is pretty obvious to everyone that I did read the report, which is more than I can say for you regarding the house report.

I also caught the summary which has none of the outrageous accusations you put forth above regarding the Bush administration.

Conclusions

FEMA has a substantial challenge in balancing the need to get money out quickly to those who are actually in need and sustaining public confidence in disaster programs by taking all possible steps to minimize fraud and abuse. Based on our work to date, we believe that more can be done to prevent fraud through validation of identities and damage addresses and enhanced use of automated system verification intended to prevent fraudulent disbursements. Once fraudulent registrations are made and money is disbursed, detecting and pursuing those who committed fraud in a comprehensive manner is more costly and may not result in recoveries. Further, many of those fraudulently registered in the FEMA system already received expedited assistance and will likely receive more money, as each registrant can receive as much as $26,200 per registration.

Another key element to preventing fraud in the future is to ensure there are consequences for those that commit fraud. For the fraud cases that we are investigating, we plan to refer them to the Katrina Fraud Task Force for further investigation and, where appropriate, prosecution. We believe that prosecution of individuals who have obtained disaster relief payments through fraudulent means will send a message for future disasters

Vendors

Location

Nature of Transaction

Amount

Elliot’s Gun Shop

Jefferson, LA

.45 caliber pistol

$1,300

D Houston

Houston, TX

Gentlemen’s club

1,200

Friedman’s Jewelers

Plano, TX

Diamond engagement ring

1,100

Argosy Casino

Baton Rouge, LA

7 ATM withdrawals within one day at a gambling institution

1,000

Tim Fanguy Bail Bonds

Houma, LA

Partial bail bond payment

1,000

Department of Public Safety

Baton Rouge, LA

Payment of prior traffic violations for driver’s license reinstatement

700

Cat Tattoo

Addison, TX

Tattoo on arm

450

Swedish Institute

Irving, TX

Massage parlor

400

Tiger Beer and Wine

Dallas, TX

Alcohol beverages

200

Condoms To Go

Dallas, TX

Adult erotica products

150

I also stated in post 497 that the response after Katrina was poor. Which is, for most people of average inteligence, affirming that the administration did a poor job.

Now lets see if you can come up with any post, any where on Optiboard where you have supported the adminstration regarding anything.

If you can't then how about being more honest about who really has blinders on and only supports one side of liberal conservative discussions.

Rep

[rep]

My wealthy family? You mean the school teachers in Portsmouth, VA? Whose combined salaries when I graduated from high school in 1968 was $17,000? That wealthy family? They must have been holding out on me.

My late ex-husband's family was wealthy enough to help him elude child support payments for 10 years until I remarried and Keith adopted Heather.

"I survived because I was not raised in poverty."

This is the quote that I questioned. What did not being raised in poverty have to do with you surviving?

Rep

[rep]

Rep,

I may not be "poor" now, but we certainly aren't rich either. I have a family of three, and take 4 federal exemptions. Know what? I still get a refund every year federal, but I OWE on state taxes.

The poor don't have the luxury of putting money into 401ks, IRAs, Health Savings accounts, etc.. to avoid taxes!

The poor are a target market. Come on, I don't know where you all live, but we have PayDay loan places on just about every corner. Have you ever had need of these services? I unfortunately have, and it is highway robbery. Your car breaks down. With out your car, and having no real public transportation in this town, you have to have a car to get to work. To fix it takes more money than you have by $200-300 bucks. You go to a place, and they loan you the $300 for 2 weeks, and you pay them $360 on payday! If you can't pay it all back, you have to pay the $60 "service fee" and take out another loan for that $300, and pay that fee again. So to borrow $300 for a month till you costs $120 in fees. Plus you are short everywhere else do to the initial costs of repairs anyway.

Predatory lending. I had a friend who's car was beyond repair, and she had to buy another. She could only qualify for new (car value worth more, high risk) and they charged her 21% interest! She was paying over $350 a month on a Kia Rio. For a car that costs less than 12 thousand doallars!

Property taxes were reconfigured here in Indiana, and now instead of it being based on how much the property was purchased for, it is based upon how much it is worth. More equitable.. yes, but for the seniors who bought that property in the 40's and 50's when they were working and the cost of living was much less, and now finding out their homes bought are worth 10-20 times the amount they initially paid for when they are living on fixed incomes makes it really difficult to stay in the homes they have lived in for 60 years...

There are young families that get taken in by the easy financing of homes. Sure, we can qualifiy you, charge you a billion in points for a buy down, take advantage of zero down loans, charge you only interest up front.. and you can move in this 1800sq ft home for $545/month. Wow, that's cheaper than rent! Till next year when the interest rate goes up, along with property values, so it is $800 a month, then the next year, goes to $1200/month... and the homes get forclosed on.

Pay off your credit cards! Get a home equity loan and we will give you up to 125% of your homes worth to use to pay down your debts! Till the person doesn't control their spending habits anyway, and they can take your home...

It is insane the number of businesses there are out there to take advantage of the poor....

Cassandra

The poor continue to do things that make them poor.

Rep

[rep]

If this were still a country where things were manufactured, you'd be (I can't say "more correct", since you're not.) less wrong.

If you look at this very simply, I could see you drawing that conclusion. But just because the minimum wage doubled doesn't mean that Sally Jones is going to buy two loaves of bread instead of one this week, thereby justifying a doubling of the price of a loaf of bread, since she clearly got by with just one before. It means that Sally Jones gets to start buying the bread that isn't full of high fructose corn syrup (ever read the ingredients on Wonder Bread?), making her children less likely to be obese. Maybe she buys a new car and can get that better job the next city over. Maybe she starts to save a little bit, so the next time she gets sick, she won't need to take out a payday loan to cover the rent.

It's really simple. People that don't make very much money spend very near to 100% of what they make. Probably over 100%, when you factor in savings accounts (few) versus credit cards (many). People that make a lot of money spend a much lower percentage of their income, even though the dollar amount is significantly higher. This non-spent income goes toward investments, savings, retirement...whatever. It's not put directly back into the economy--some of it is, certainly--but I think we can all agree is what makes economies work is when the money is spent, putting it back into circulation.

The simplest way to put money into circulation is to spend it. The people likeliest to spend it are those that don't currently have enough to meet their needs.

Then how do you account for all the "Spreewells" rotating around on cars in federal housing projects and other low income housing areas. Those suckers cost a bloody fortune but you see thousands of them on Cad's, Nav's, and other pimp mobiles.

Could it be that they do have disposable income? No Way!!


By the way you need to go back to basic economic theory - more money is made by investments than by spending. Once it is spent it is gone. If it is invested it too is spent and yet has this neat little thing called "Return on Investment. It's called the multiplier effect.


Rep

[Judy Canty]

"I survived because I was not raised in poverty."

This is the quote that I questioned. What did not being raised in poverty have to do with you surviving?

Rep

Huh? First you said I came from a wealthy family and now I am guilty of not being raised in poverty? Why not slow down and read for a change? Solidly middle-class, college-educated parents, married young into a rather wealthy family, dropped out of college, started a family, grew-up and was out on my own taking care of my own the best way I could, but with the help of some friends, got out of a system designed to keep me at the poverty level because I knew I could.

Perhaps I should provide you with a bit of insight on the system as it was in the early '70s.

1. Couldn't have a car. I had a job that required a car. I lived in Portsmouth and worked in Norfolk and then the lab moved to VA. Beach. Boyfriend bought me a car (1963 TR4, got the seats for it at the junkyard and I sewed my own carpeting. Personal property taxes maxed at $4.00 per year. Hardly a "Spreewell").
2. Couldn't have a job that paid too much without losing medical benefits and child care assistance. A delicate balance when offered a pay raise.
3. Qualified for food stamps, but needed a day off during the work week to collect them. It was an all-day process.
4. Had to lie to qualify for federally assisted housing in a new development. A friend of my father's notarized a bogus income statement so I could have a decent place to live.

Fortunately for me, there were more folks out there like my Dad's friend than there were like you.

You're cutting into my sewing time. Buh-bye.

[rep]

I survived because I was not raised in poverty and because I had a good education and a few people along the way who cared.

Go back and look at what you posted! Post # 57 in this thread. It was a simple question as to why you felt that way? Nothing more, nothing less.


Rep

[spartus]

Huh? First you said I came from a wealthy family and now I was raised in poverty? Why not slow down and read for a change? Solidly middle-class, college-educated parents, married young into a rather wealthy family, dropped out of college, started a family, grew-up and was out on my own taking care of my own the best way I could, but with the help of some friends, got out of a system designed to keep me at the poverty level because I knew I could.

Don't bother. He's clearly nuts.

[rep]

Don't bother. He's clearly nuts.

the land of ____ and nuts.

[Jubilee]

The poor continue to do things that make them poor.

Rep

HOw do they do that? By borrowing money to fix a car to go to work in? How about they just not show up and get fired! That really helps them out of the system, doesn't it?

Have you ever spent anytime in the system, or working with those that are? Please tell me how the majority of the people in the system knowingly screw themselves?

Cassandra

[spartus]

the land of ____ and nuts.

Classic rep! Ignore all context and distort meaninglessly! Bravo! Bravo!

[Spexvet]

...
Now for those of you who hate a progressive tax system keep this in mind. The idea of a flat tax system here would bring the taxes here to around 22 percent, thus $12,168. Now there is less incentive to work and more incentive to go back to welfare, which will just raise the taxes for everyone.
...

How about a flat tax for all income over $40,000, even for millionaires?

[Spexvet]

BTW, my proposal really has nothing to do with taxation or the welfare system, although I think a byproduct would be more - and higher paying - jobs, which would, in fact, reduce the number of welfare recipients.

[For-Life]

I would really have to look into the tax rates for each bracket. Therefore, I will try to get back to you on that.

However, we do have to remember that there are some regressive taxes out there. Things like the income trust break that only benefit higher wealth individuals. I am not saying that these are wrong, nor am I saying that they should be removed. Just saying that they are there.