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04 Mar 2013

Spartan Senate > Roman Senate > Galactic Senate > Imperial Senate > Romulan Senate > US Senate > Carthaginian Senate.

Cicero attacks Catiline

The debt tax bias is smaller than you might think

02 Mar 2013

Matthew Yglesias:

Under prevailing American tax law, a firm that wants to pay a dividend to its shareholders needs to pay with after tax dollars while a firm that wants to pay interest on a loan gets to pay with pre-tax dollars. Since the statutory corporate income tax is pretty high at 35 percent, this is a pretty big deal.

The difference in the tax treatment of interest and dividends is, of course, not 35 percentage points.

If a US corporation pays $100 out of operating profit in interest, that money is not taxed at the corporate level. The debtholder, however, has to pay ordinary income tax on the money, at a top rate of 39.6% for individuals making more than $400,000 in 2013, so the debtholder gets $60.40.

If it is instead retained as profits and eventually paid out as a dividend, the profit is taxed at a top rate of 35% at the corporate level, so $65 is paid out. That income is in turn taxed at a top rate of 20%, so the stockholder ends up getting $52, for an overall tax rate of 48%.

This means there’s an 8.4 percentage point difference between debt and equity in how a dollar of profit is taxed from when it is made until an individual capitalist can receive it. That’s still a hefty subsidy for debt, but not as high as a naive reader of Matt’s post might think.

The figure is different for people in different tax brackets. It gets really complicated if debtholders and stockholders tend to be in different tax brackets or if you consider investors such as pension funds that are taxed in weird ways.

GMT is dead

25 Feb 2013

Greenwich Mean Time, or GMT, is mean solar time at the observatory at Greenwich. “GMT” is also often used, especially by British media, to refer to winter civil time in the UK, or to indicate times for events outside Britain. I’ve even seen it be used as shorthand for UK civil time in the summer.

“GMT” is a natural choice because mean solar time at Greenwich was the basis for civil time for a majority of the history of widely coordinated timekeeping. GMT is still perfectly well defined, but it is no longer the basis for civil time. Instead, civil time in almost every country, whether by law or in practice, is based on Coordinated Universal Time (UTC), a time standard based on atomic clocks. If you think that’s too long, just say “Universal Time”, that’s close enough.

What’s worse, GMT is no longer precisely measured. Nobody can tell you what the time is in GMT right now with any precision, unless you happen to operate an astronomical observatory, while millions of clocks around the world, including Internet connected computers, GPS receivers and “atomic clock” wristwatches, can tell UTC.

Conclusion: Don’t say “GMT”. It makes you sound old, unscientific and imperialist. Say UTC, Universal Time, Coordinated Universal Time, or Zulu time.

Mailbox reservations forecast

12 Feb 2013

Current rate estimate: 1,080 places per hour.

People in front of you:

At the current rate, you will get Mailbox access at

which is in

NB: I now have access to Mailbox, so I don’t know what the pace is. Contact me if you would like to contribute data. Thanks to Marlena C and Ricco F for providing their data.

Data

24 @ProfJeffJarvis tweets that actually make sense

09 Feb 2013

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