A tax reform to support

One of the ways that the very wealthy avoid taxes is by receiving their income from tax free investments such as Treasuries. Treasuries yield much less than other investments in ordinary times, and the nation as a whole benefits from low interest rates on US debt, so it seems fair.

But what about Munis (municipal bonds)? Lowering those interest rates benefit only a locality, while often the state or even the federal government is implicitly backstopping them, reducing the risk to the bond purchaser. Why should they enjoy a federal tax break?

Capping Muni tax exemptions is one of the reforms being discussed in Washington. Patti Domm, CNBC:

While Congress isn’t yet expected to try to change muni bonds’ tax-free status, industry experts think lawmakers could take a first step by limiting how much income investors could deduct under the popular tax break, which has been around since 1913.
…
Alexandra Lebenthal, CEO of Lebenthal and Co, said … a possible outcome is that individuals will be restricted on how much muni income they can deduct.

“Basically, you would be limited in terms of the deductions you can take and in terms of your tax exempt income to at least that earlier 28 percent bracket. In the past you could have obviously had so much tax exempt income that you were in no tax bracket or in a lower tax bracket than 28. That’s what people should be thinking about now is that 28,” said Lebenthal.

The argument will be made that rebuilding after hurricane Sandy will require Muni issuance and so Congress will cave in to lobbyists doing special pleading for municipal bonds on the grounds that they need to rebuild. I think what this really means is that we ought to recognize that the federal role in insuring against disasters needs to be elevated and we should stop pretending that states can handle the large financial demands levied by a disaster of the magnitude of Katrina or Sandy.

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Google, Fresh From Destroying Journalism, Now Co-Opting The FTC

This is ominous:

President Obama announced Monday that he had nominated George Mason University professor Joshua Wright for the U.S. Federal and Trade Commission. Wright has been selected to replace a Republican on the committee, and as such, it will come as no surprise that Wright has a long track record of advocating against anti-trust enforcement and the heavy hand of government.

But what seems to be overlooked in much of the coverage of his selection is that Wright has a history of receiving funding for his work from groups supported by Google. And of course, as we know, Google has had some ongoing tussles with the FTC, and will likely have more down the road.

I first came across Wright’s name earlier this year as part of research for a column I wrote examining the various ways Google and Microsoft sought to engage third parties such as lawyers, pundits, academics, and communications firms, to influence public opinion and policy. There is little requirement to disclose the money that goes toward wielding this soft influence.

As Jane Hamsher said earlier this week, this didn’t bode well for the upcoming antitrust settlement. And she was very likely right:

Bloomberg is reporting today that the FTC may take a dive on exercising oversight of Google’s government-protected monopoly:

Federal Trade Commission officials are unsure they have enough evidence to sue Google successfully under antitrust laws for giving its own services top billing and pushing down the offerings of rivals, said the people, who asked for anonymity because the discussions aren’t public. Regulators are also looking at whether the ranking system’s benefits to consumers outweigh any harm suffered by rivals including NexTag Inc. and Kayak Software Corp. (KYAK), the people said.

Right.  Because when you push your competitors’ results (and prices) down in the search rankings, consumers always win.  (?)

Time to squawk to your local media while you still can. Also time to start using other search engines, like Duck Duck Go, Bing or Ixquick.

Why I regret not reading Scoobie Davis more frequently

Via Scoobie Davis, this gem from Rick Perlstein:

And that, at last, may be the explanation for Mitt Romney’s apparently bottomless penchant for lying in public. If the 2012 GOP nominee lied louder than most—and even more astoundingly than he has during his prior campaigns—it’s just because he felt like he had more to prove to his core following. Lying is an initiation into the conservative elite. In this respect, as in so many others, it’s like multilayer marketing: the ones at the top reap the reward—and then they preen, pleased with themselves for mastering the game. Closing the sale, after all, is mainly a question of riding out the lie: showing that you have the skill and the stones to just brazen it out, and the savvy to ratchet up the stakes higher and higher. Sneering at, or ignoring, your earnest high-minded mandarin gatekeepers—“we’re not going to let our campaign be dictated by fact-checkers,” as one Romney aide put it—is another part of closing the deal. For years now, the story in the mainstream political press has been Romney’s difficulty in convincing conservatives, finally, that he is truly one of them. For these elites, his lying—so dismaying to the opinion-makers at the New York Times, who act like this is something new—is how he has pulled it off once and for all. And at the grassroots, his fluidity with their preferred fables helps them forget why they never trusted the guy in the first place.

Don’t miss the part about an oilfield in the placenta.

And if I’d read Scoobie, I would have seen the latest Jack Chick, which ties together Catholicism, Islam, Communism, Nazism, Free Masonry, and Satanism into one neat bundle. Did you know that 1 million Southern Baptists have joined their body to the Whore of Windsor and become Masons?