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Bulls & Bears
This past week's Bulls & Bears: Gary B. Smith, Exemplar Capital managing partner; Pat Dorsey, Morningstar.com director of stock research; Scott Bleier, HybridInvestors.com president; Gary Kaltbaum, Kaltbaum & Associates president; Bob Olstein, The Olstein Funds president, and Laura Schwartz, White House Strategies principal.
Trading Pit: Politically Correct Police Bust Imus: Good or Bad for Business?
Don Imus fired. No radio show. No TV show. Is it good or bad for business if the "PC" police are calling the shots?
Gary B: It's terrible for business! This kind of censorship acts like a tax on all businesses. The proof is in the money. Imus brought in millions of dollars a year for CBS. Now that money goes away. Whether or not Imus should have been fired based on ethics and morality is a whole different story. Strictly from a business perspective, this is a tax, and that is terrible!
Scott: It's great for business! A situation like this gives a company an opportunity to show it has a soul. If a business responds to the public's opinion there is an opportunity to get a lot of free publicity. Yes the money Imus made is lost, but CBS will make it up with someone else. The bottom like is that this is good for business because corporate America looks responsive to what the public wants.
Gary K.: Not good for business! Al Sharpton has said that this is only the beginning and he will go after more and more businesses. I'm worried about how this moves forward. If this movement becomes more aggressive, a lot of businesses will be in a lot of trouble if they act the wrong way, look the wrong way, or say the wrong thing. This is not a good thing for business.
Laura: All publicity is good publicity. Controversy invites an audience. The risqué Abercrombie & Fitch catalogue that was too hot to send through the mail, caused kids to flying into the stores. The same thing happened with the Donald Trump and Rosie O'Donnell feud. It created more viewers and better ratings on The View. Wal-Mart forbade Christmas for a year a few years ago. There was a public outcry, the company brought Christmas back, and now is doing better than ever. This keeps everyone on their toes, and controversy creates an audience.
Bob: Businesses always react to pressure. In the case of Imus, this was a shock jock radio program, which made a lot of money for CBS. But it doesn't impact all businesses, just CBS. If Imus didn't do what got him into trouble, CBS wouldn't have made all this money over all these years.
Pat: This is a non-event for business. Think of Don Imus as an entrepreneur who takes risks. They take risks, it pays off, and the business succeeds. But eventually they take a risk that doesn't work out, like what happened with Imus. Imus pushed the envelope and it worked, so he got an audience. But this time he pushed the envelope a little too far and his employer fired him.
Dems' Housing Bailout Disaster?
U.S. Senator Charles Schumer, D-N.Y., and other members of a key banking committee said the federal government should bail out subprime mortgage borrowers facing foreclosure. But should homeowners who bought houses they couldn't afford get a bailout from American taxpayers?
Laura: Democrats aren't choosing a government bailout. They are making a choice between foreclosure and refinancing, because preventing foreclosures is more cost effective. I've got to be honest I really thought only the borrower and the lender lost money. But a foreclosure costs on average eighty thousand dollars. However, if you refinance a property it's only thirty-three hundred dollars. It's cost effective and people get to keep in their homes.
Bob: The government cannot interfere in this. This is a three hundred billion dollar problem. How about the people that lost nine trillion in the Internet bubble?
Gary B: The government should stay out. The government should not have bailed out companies like Chrysler and the Airlines. At some point, someone must accept personal responsibility!
Gary K: This is ridiculous. We live in a country where if you take a risk there are consequences. These people took risks and have to eat the consequences. You can't put it on the government all the time.
Pat: Creditory lending is regulated pretty well at the state level. If an unscrupulous mortgage broker duped you into something, you have the right to take legal action at the state level. This way, the federal government does not get involved. If the government gets into the business of bailing out stupidity, our country is going to go broke in a hurry.
Scott: I would like to see the government sue Alan Greenspan for creating a housing bubble and taking interest rates so low. The government has no right in bailing out people that took these loans.
"American Idol's" Sanjaya. You hate him—but he keeps on performing! Now get Sanjaya stocks: unpopular… but profitable.
Bob: Citigroup (C )
Gary B: AMR (AMR )
Scott: Merck (MRK )
Pat: Lennar (LEN )
Gary K: Carolina Group (CG )
Gary B's prediction: Imus goes to Sirius (SIRI)! Stock up 20 percent in 3 months
Scott's prediction: Censor this! Websense (WBSN) up 40 percent by next April
Pat's prediction: Buy big banks and make big bucks; JP Morgan (JPM ) up 30 percent
Bob's prediction: Sears Holdings (SHLD) becomes the next Berkshire Hathaway
Gary K's prediction: streetTRACKS Gold (GLD) gains 20 percent by mid-summer
Cavuto on Business
On Saturday, April 14, Neil Cavuto was joined by Charles Payne, wstreet.com; Adam Lashinsky, Fortune Magazine; Tracy Byrnes, New York Post business writer; Todd Schoenberger, USAA Brokerage; Cheryl Casone, FOX Business correspondent; and Stuart Varney , FOX Business correspondent.
Bottom Line: Al Sharpton Wins. Imus Lo$e$: Good or Bad for the Economy?
Neil Cavuto: Al Sharpton wins. Don Imus loses. Is that good or bad for America and our markets?
Charles Payne: I don't think America wins. And I don't think black people win. I gotta tell ya, as a black person, we have these windows of opportunity to talk about real issues that really make a difference. If I had an audience with Les Moonves, I would have said, "How come we have Flavor of Love? That show is destroying more black people than a million Don Imuses." There are a whole lot of problems we have to deal with. The real issue of race in this country hasn't been taken care of yet. And all we have at the end of the day is one jerk without a job.
Neil Cavuto: Just desserts?
Tracy Byrnes: When did Al Sharpton and Jesse Jackson become judge and jury? If they actually want to help, there is so much more they should be doing. They should be getting rid of all the rap music. I mean, even my kids hum the tunes to those songs! They should be getting rid of the movies that are denigrating women and African Americans. If Sharpton and Jackson want to be taken seriously, they have to continue the crusade. If not, they're hypocrites.
Neil Cavuto: So Cheryl, are we getting mixed reads? Is corporate America getting mixed reads? Or is corporate America providing the mixed reads?
Cheryl Casone: Corporate America isn't looking to fund anyone who appears to be a racist. That's why they pulled away from Don Imus. I'm not a black American, but I am a woman. And I'm sick of hearing the word "ho." I don't want to hear that word again. The public airwaves are not a place for anyone to say anything that would insult anybody. I think we've made a nice turn here. The line got crossed, and now that line is a lot clearer now. I don't agree with everything Al Sharpton does or what Jesse Jackson does, but I think this week was a nice turning point.
Neil Cavuto: Well, this week wasn't a nice turning point for the bottom line at CBS. A year-and-a-half ago, they lost all that revenue from Howard Stern. Now, tens of millions from Imus. So I'm wondering if there's corporate hell to pay for this.
Todd Schoenberger: Well, there could be corporate hell to pay. But, here's the thing: When you look at a guy like Don Imus, his termination is good for America. I think corporate America is sending a message that these one-line jokes are not going to be tolerated. However, and I'm waiting for a response from everyone, I do find it disappointing that it took CBS and NBC a little while until they saw what the ad revenues were going to do.
Neil Cavuto: Well, that's exactly right. Stuart Varney, this would not have happened had companies like Procter and Gamble, Bigelow Tea, and Staples not started to wander.
Stuart Varney: That's absolutely right, Neil. The fact is that Al Sharpton is a racial arsonist who loves to throw racial gasoline on any convenient fire. But, I contest the premise that he's a winner. In the long term, this man is going to lose because the tables have been turned. The focus is now on him. Why is it that Imus is finished for saying pretty much the same thing that Sharpton, Jackson, and rappers have been saying for years? America will be the ultimate winner if we can isolate these racial arsonists and expose them.
Adam Lashinsky: Stuart, I completely disagree with you. In America, we believe in free speech, but we also believe in civility. And the beauty of our country is that you can say pretty much anything that you want. Tracy was right earlier. The corporations were complete hypocrites when it came to Don Imus. They're complete hypocrites on everybody! They let them go until they've gone too far. The beauty is, when somebody goes too far the way Don Imus did, he's finished! If Al Sharpton goes too far, he'll be finished.
Stuart Varney: Wait a minute. Wait a minute. Adam c'mon. Get real here. You don't think Al Sharpton hasn't gone too far in the past? May I remind you of Tawana Brawley? Also, of the gentleman who owned a clothing store in Harlem who was described as a "white interloper." The store was burned down and several people died. He's gone too far! Now look, the focus is now going to be on CBS and its ownership and control of BET.
Charles Payne: As far as Sharpton is concerned, the thing is he's a leader. Let me tell you, the big loser this week is Barack Obama. He tried to become a leader in black America by bypassing Jesse Jackson and Al Sharpton. Believe me. Sharpton is number one in black America.
Neil Cavuto: Why would you gather that?
Charles Payne: Barack Obama came out late. He came out soft. His initial comments were very political, down the middle. It wasn't the type of rhetoric black people wanted to hear. They wanted fire and brimstone. The real problem with rap isn't the lyrics. It's the notion that a kid can drop of out school in 8th grade, smoke weed all day, and still get rich. That's what MTV's "Cribs" tells you. I speak at schools all the time. There is nothing more dangerous to black kids right now than certain rap music in the hip-hop culture. We put Russell Simmons out there like he's a hero, but he really isn't! You know what? I hate what Don Imus said, but there are so many instances…
Stuart Varney: That's why the racial arsonists are the losers!
Cheryl Casone: But Stuart, you're putting these rappers and Sharpton and Jackson in the same grouping. I think that's a little unfair. I don't think you can do that.
Stuart Varney: They talk about the same situations on a very frequent basis. They use the same, very hurtful words.
Cheryl Casone: So Sharpton and Jackson are out there calling women "hos"?
Tracy Byrnes: No, they're calling Jews "hymies." Sharpton's been out there calling white people "crackers" for the longest time. If we're going to hold one standard for one person, we have to hold it across the board.
Charles Payne: The reason why Sharpton will always have power is because there's a lot of racism in this country. I think the technique that he uses is wrong. With these advertisers, they placated us. I want to know how many black people work at Procter & Gamble. I want to know how many black executives are there. You know what? I want you to put money into all the charter schools in the south Bronx. I wouldn't have gone there to get one man fired.
Cheryl Casone: I have to say Charles, Procter & Gamble pulled their advertising on Friday.
Charles Payne: Pulled advertising on Friday?! What does that mean? They're placating me!
Neil Cavuto: Todd, do you think that if you're a big conglomerate and you were late to respond, that the message is don't wait so long next time?
Todd Schoenberger: You're looking at $8 million that NBC's going to be losing. Fifteen-million dollars-plus at CBS. And that was the bottom line. They looked at the bottom line. They knew that once those ad dollars were going out the door, they had to fire the guy.
Neil Cavuto: But, did they think they were permanently going out the door?
Tracy Byrnes: What did they gain by doing that? Whether they stayed or they went, am I going to stop buying Tide? I don't understand what they were trying to say.
Neil Cavuto: Adam, what were you trying to say?
Adam Lashinsky: What I was trying to say is no one's going to disagree with what Charles said a few minutes ago. The behavior of the rappers is just atrocious. The beauty of our country for both good and ill is they make a lot of money. They create a terrific business. Everybody applauds them for it. We admire them for it, until we think they've gone too far.
Charles Payne: Adam, the problem is the kid who thinks he's going to be a rapper. He drops out of school and can't get a job and then society hates this guy when he's homeless and jobless. For the few people who are making it, millions aren't. And as far as what you were saying about corporations being late, it's the same type of arrogance the Republicans had going into the mid-term elections. And I think that's what America is rejecting. Imus should have apologized immediately. People want to see corporations react a little sooner.
Stuart Varney: Neil, there is a radio talk show host in Kansas City. He's black. He begins his program every morning by saying, "Thank you, Don Imus for allowing us black folks to take our problems and forget about them." That's what he says. He's putting the focus on the real problems in black America.
Head to Head: America's CEO?
Neil Cavuto: Rudy Giuliani wants to run America like a business and give more money back to taxpayers, but, can he put more money in your pocket? It's time to go "Head to Head."
Cheryl Casone: You go, Rudy! I would love to see government run as a business. Get a nice accountant in there and just start slashing whatever. I mean, clean up the over-spending. Also, Rudy did an Op/Ed in the Financial Times and he was talking about tort reform. Thank you! I mean, these people who are bringing in these multi-million, multi-billion dollar lawsuits against corporations… just write a couple thousand pink slips the next time you decide to sue some company. Some are valid lawsuits, but do you really need $50 billion? Come on.
Charles Payne: Well, guess what Cheryl. Someone else is saying the same things Rudy is saying. A guy named Bush. And his ratings are down around 20 percent.
Charles Payne: It's a lot harder running this country than it is running New York City. I think the bottom line is we're just too greedy. Individual politicians are never going to say, "You know what? I'm going to sacrifice my constituency for the greater need of the entire country." It's just not going to happen.
Adam Lashinsky: I'm all for Rudy Giuliani bringing a business mindset to the government. But boy would he be up against something no CEO is up against. Neil, 40 percent of the budget goes to entitlements, Social Security, Medicare, Medicaid, and there's nothing he can do about it. It's like the problem that the auto company CEOs have with their health care costs.
Neil Cavuto: Well, you could try to address those entitlements.
Adam Lashinsky: I think a president could spend 7 –8 years trying. But the question is what does he do with his budget in the interim? Taking a CEO approach alone won't work.
Neil Cavuto: You know, Stuart, I've heard a lot of people say we've got to run this country like a business. And a lot of people say, "you know Neil, you gotta think like salads and vegetables." But, I avoid the salads. I avoid the vegetables. And we don't get anywhere.
Stuart Varney: The analogy is you should run the country more like a household. If you're running a household, you gotta get things done. You have to execute. You have to have a plan. You have to budget. And occasionally, you have to indulge difficult family members. Mr. Giuliani has a lot of experience doing that.
Neil Cavuto: But, we over-indulge certain family members. And that's the problem, right?
Stuart Varney: To be serious, you are absolutely right. We do indeed over-indulge. But look, you can't run America like a business because the presidency is a political position. Politics involves compromise, not just profit or loss. You have to compromise, except on security. And I don't think Mr. Giuliani would compromise there.
Todd Schoenberger: Stuart, 25 years ago there was a guy named Ronald Reagan who ran the country like a business and it worked out well. But it cannot happen this time. We have too many "tax and spend" Democrats on Capitol Hill. It's just not going to work.
Stuart Varney: Anybody who kicks that terrorist Yasser Arafat out of his seat at Lincoln Center gets my vote.
More For Your Money: $tocks of Glory!
Neil Cavuto: "Blades of Glory": A huge winner at the box office. Now get our "stocks of glory." They could slide you into a whole new tax bracket!
Tracy Byrnes: Crocs (CROX )
Todd Schoenberger: MGM Mirage (MGM )
Adam Lashinsky: MGIC Investment (MTG )
Charles Payne: Comverse Technology (CMVT )
FOX on the Spot
Tracy Byrnes: Rosie implicated U.S. government in 9/11. Hello sponsors!
Adam Lashinsky: Chevron goes green; leaves Exxon Mobil in dust!
Todd Schoenberger: The end is near for ethanol; corn too expensive.
Cheryl Casone: Not even FCC can stop cell phone use on planes!
Charles Payne: Imus will be making more $$ on SIRIUS a year from now!
Neil Cavuto: Imus joins SIRIUS, but after XM merger approved
Forbes on FOX
In Focus: Imus Debacle: Bad for Dem Fundraising?
Mike Ozanian, senior editor: The aftermath of what happened to Imus is horrible for the Dems. It takes away a platform and it sheds light on this huge hypocrisy of the Democrats that they are for minorities. They go after Imus and ignore the root of the problem, which are the music companies and Hollywood that constantly produce material that is anti-minority.
Steve Forbes, editor-in-chief: Instead of barking into a microphone Imus is now barking at the moon. Democratic fundraising will still continue and won't be hurt by Imus's firing.
Quentin Hardy, Silicon Valley bureau chief: Imus had a song about Hillary's menstrual cycle. He called Al Gore the phoniest bastard on the planet. His defenders were Giuliani and McCain. His absence from the airwaves will hurt both parties.
Dennis Kneale, managing editor: To argue that Imus losing his job is going to hurt democratic fundraising is ridiculous.
Lea Goldman, associate editor: It doesn't matter if he was an equal opportunity insulter. For the voting public, they're going to get the solicitations from the GOP in the mail that are going to have Imus with various democratic contenders slapped on a mailer asking for money. The GOP will use this to their advantage.
Michele Steele, associate editor: Advertisers were pulling out like nobody's business this week. His influence is completely overblown. He did everything he could to get Harold Ford, Jr. elected as a senator in Tennessee and that didn't work. He's irreverent and now he's irrelevant.
Flipside: CEO Pay Hikes Drop 42 percent: Bad News for Investors!
Dennis Kneale: A few fat cats are overpaid, but most of these guys earn their money. Of the largest 500 companies, the average revenue per year is $18 billion. The average compensation for a CEO is $10 million. That's one penny for every $10 of sales. This is bad for stocks because we could lose these guys to private equity.
Michele Steele: This is bad for stocks. Whenever you see a CEO making an outside salary, like Bob Nardelli's golden parachute to leave the company, it's great for the shareholders. Because it shows the stocks that you don't want to be in at all. CEO salaries continue to go up and a lot of time to the chagrin of shareholders.
Mike Ozanian: The danger here is that now you have the Democrats who want to take charge of CEO pay. That will hurt investors because it will take incentive out of the marketplace.
Victoria Barret, associate editor: The numbers we're talking about are a little misleading because the average CEO pay raise was up 10 percent last year. Even thought that's a big drop from the 16 percent increase the year before, the 10 percent wage hike is what the average American has gotten over the past seven years combined. So CEOs should be grateful. They're doing better than the rest of us.
Steve Forbes: It's not going to hurt the stock market because the market works. If you don't pay a CEO enough, they'll go to an equity fund. The real thing they should do to get a full market in CEO pay is to get rid of poison pills. So if you're not doing a good job, hostile shareholders can throw you out.
Lea Goldman: The fact is CEO pay rose 10 percent last year. No it wasn't the 16 percent rise we saw the year before but it still rose. Why was it tempered? Because more shareholders and board of directors are tying pay to performance.
Fight Global Warming With Nuclear Power?
Victoria Barret: If you believe that global warming is an imminent threat then nuclear power is the only viable solution. Coal burning power plants produce the largest amount of pollution. Nuclear power can make a difference.
Dennis Kneale: Nuclear power produces 20 percent of the power in the U.S. In Brazil 20 percent of the their power comes from corn, from ethanol. So nuclear power isn't the only way. There also is the nuclear waste problem. This is not the sole answer.
Steve Forbes: It's sugar-based, which is better than corn based. Politicians are trying to fix that with subsidies. A gallon of ethanol is only 80 percent as much as a gallon of gasoline. Nuclear is the way to go. As for nuclear waste, countries like France and Japan have showed that spent fuels can be recycled. It works, why not go with it?
Quentin Hardy: All that spent fuel is an issue. No one wants it. Why don't we take some of those tax breaks we give to oil companies and put it towards trying to decontaminate that fuel?
Mike Ozanian: I think corn is for eating. Nuclear is the way to go. It's the cheapest and most efficient form of energy.
Informer: Stocks for Dannielynn
Lea Goldman: Mentor (MNT )
Victoria Barret: General Electric (GE )
Michele Steele: NutriSystem (NTRI )
Mike Ozanian: ST. JOE (JOE )
Our Cashin' In crew this week: Wayne Rogers, Wayne Rogers & Co; Jonathan Hoenig, CapitalistPig Asset Management; Jonas Max Ferris, MaxFunds.com; Dagen McDowell, FOX Business News; Jerry Bowyer, National Review; and Angela McGlowan , "Bamboozled" author.
Stock Smarts: Imus Gets Fired: Proof Capitalism Works?
Don Imus fired this week from both MSNBC and CBS Radio. Many were outraged over his racially charged remarks. Is his firing proof that capitalism works?
Jerry: Yes, Don Imus' firing is proof that capitalism is at work. The pundit class was hemming and hawing all this week about whether he should go. The creative class in Hollywood was strangely silent. Who moved decisively to take racism off the air? It was Wall Street. It was American Express and P&G. Before the regulators were even thinking about this and Congressman were having press conferences, the market was moving to deal with the problem.
Dagen: Ultimately, the root of the decision-making by those corporations was driven by moral outrage over what Imus said. It was outrage from the employees and consumers. Employees from Sprint were speaking out. All this anger pushed those corporations to pull those dollars.
Jerry: That's right, moral outrage from the marketplace. The moral outrage was more efficiently and quickly expressed by the market than by the government.
Angela: It was more so expressed by the government. Even though congressional members didn't have press conferences, Al Sharpton and Jesse Jackson were the catalysts. A coalition has already been built through the Rainbow Coalition, the National Action Network, and the Federal Communications Commission. Congress listens to these coalitions and companies became afraid. This is why they pulled the ads, not because of capitalism or the marketplace.
Wayne: It's so ridiculous listening to Al Sharption being morally outraged, who perpetrated one of the worst racial frauds in history with the Tawana Brawley case. Yes, it was right for the marketplace to decide. Imus was out of line and the market made a decision.
Jonathan: Where I think Rev. Al Sharpton and Rev. Jesse Jackson are wrong is that it has nothing to do with the sanctity of the public airwaves. This is a business decision. Every day CBS and MSNBC ask themselves, "Is this the guy we want to represent us?" Advertisers ask themselves, "Is this who we want to put our money behind?" Imus crossed the line and each of them said, "This isn't our guy anymore." Absolutely each moved successfully. I think they made the right move.
Jonas: I would think that if capitalism were all-powerful, Imus would be on the air this coming week. A lot of money is being left on the table by getting rid of this guy. This will eventually blow over. A lot of ad dollars were lost, but this show made a lot of money. A lot of books were promoted through it and there was a lot of business done through this show. Executives don't get a lot of credit, but sometimes they make decisions that aren't just about the bottom line. Don Imus could make money somewhere else, just not right now.
Jerry: We're missing that this is a corporate branding thing. In the short run, it could be a decent financial decision to keep Imus, but this is a matter of long term wealth building and branding. Corporations care about their branding. Imus is a personal brand. You destroy his personal brand; corporate brands then didn't want to be associated with him. It wasn't Sharpton and Jackson.
Angela: It did start with Shapton and Jackson. Minorities add billions of dollars into our economy. After Al and Jesse, Susan Taylor from Essence Magazine, several state senators, and Hazel Dukes from the New York NAACP all came on board. Other people joined the bandwagon and advertisers became afraid.
Dagen: It is worth noting that Procter & Gamble started discussing pulling those ad dollars and quietly started doing so before the big rallies led by Sharpton and Jackson. They were thinking of their customers and the outrage among them.
On a money level, Imus' show only pulled in $20 million for CBS. It will only lose about 1 percent of revenue for CBS radio. That's nothing. He was not worth it on so many levels.
Does America Need to Spend More Money on Defense?
Mitt Romney claims he will spend more money on defense if he wins the White House. Is this a good idea?
Jonathan: It is. The military is a proper function of government. The only problem is not how much you spend, but how you spend it. George Bush has spent billions and billions of dollars on basically what has become a Peace Corps mission. Our soldiers are building sewers and passing out medicine and fixing the roads. What about flattening militant Islam? What about bombing every mosque that has insurgents hiding in it? Where is the shock and awe? That's what our soldiers should be doing, not being some international goodwill commission.
Jerry: I'm one who believes that military spending is a form of wealth preservation. You don't increase the value of a financial asset of a factory or something by shutting down the alarm system and selling it off and firing the security staff. Our whole system depends on property rights and a government that's there to protect us. Military spending is a wealth-creating tool.
Wayne: Military budget could go up in the next several years. Jonathan hit the nail right on the head. It's not how much you have, but how you spend it. How that budget is allocated. If you are going to allocate it and waste it, like we are doing in Iraq to a great extent. That's crazy. There's a lot of things that the military can do, like pushing forward technology. We have learned the things and the fallout of everything we have done in the space program, military and our everyday life.
Jonas: Creating a faster more technologically advanced army hasn't worked according to plan. Throwing more money at it isn't going to help. 10 percent increase to what is already the biggest defense budget in the world. Bigger than every other country.
Dagen: Whoa! We're at about 4 percent of the entire size of this economy in terms of defense spending. That is below the historical average and below where we were in the 80's, and it is about half of what we were spending during the Vietnam War. There's a lot more room on the upside for us to increase our spending.
Jonas: Why are we measuring it against World War II and Vietnam? Why are other countries safe without spending as much as we do on defense? The government wastes money no matter how much it is. This is just another example of it.
Does America Have the Worst Tax Code in the World?
Jerry: France might be worst. But the worst thing about our code is that many documents contradict other parts. I used to be a tax accountant for a living and would frequently run into situations where I had to ask the IRS which to follow. They said, "We don't know. Just do your best." That, in turn, could trigger an audit. The tax code is a dead weight on the U.S. economy and should be destroyed.
Jonathan: it's not only practically wrong, it's morally wrong. The system is a highly progressive tax that penalizes the wealthy. The top 1 percent pay about one-third of the taxes and the bottom half pay virtually nothing. This system is set up to redistribute wealth from those who earned it to those who haven't. The real shame is where does the money go? It goes to ethanol research and farm subsidies.
Dagen: Our tax code is so complicated that it is unfair to lower income Americans. The rich can hire super tax accountants to figure out the loopholes and take advantage of the complicated code. Those on the low end can't take advantage of some deductions that they might get.
Jonas: The code is definitely closer to the worst than the best. I've paid some taxes in Russia, so it's hard to say that it is the worst in the world. The problem really lies in deductions. Every politician in the last 100 years has created some things that you can deduct that is good, children, houses, etc. That's what has really made a mess out of it.
Wayne: The alternative minimum tax is a problem, where many in the upper middle class get hit hard by it. The biggest problem, though, is Congress. The code is so thick because the complications allow Congress the power to earmark. If you take that power away, it will never have any left. I don't think that will never happen because Congress likes it complicated.
Jonathan: Those countries in Europe that have imposed a flat tax have booming economies right now. There is a real practical reality that you shouldn't need a Harvard MBA just to understand your taxes. It should be objective and pretty easy to understand. If we moved to a consumption-based flat tax, our economy and currency once again become the strongest in the world.
Best Bets: Get Rich From Your Tax Refund
Jonathan: Cellcom Israel (CEL). Friday's close: $19.40
Wayne: Harsco (HSC). Friday's close: $46.72
Jonas: Janus Global Technology Fund (JAGTX). Friday's close: $13.74