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DeSaulnier announces legislative effort to end poverty

Original post made on Jan 10, 2014

Fifty years ago, President Lyndon Johnson declared a war on poverty. Now, State Senator Mark DeSaulnier (D-Concord) is firing some new shots in that old war, recently creating the Ending Poverty and Inequality in California (EPIC) Caucus.

Read the full story here Web Link posted Thursday, January 9, 2014, 12:21 PM

Comments (20)

Posted by Sandee Wiedemann, a resident of San Ramon
on Jan 10, 2014 at 6:50 am

Sounds great, Mark! I assume that means that you will drastically reduce regulations and fees on California businesses, so they can create more jobs and more income for the State. Some companies may even come back to CA and less might flee.


Posted by Tracy, a resident of Alamo
on Jan 10, 2014 at 8:28 am

So if you can't afford to live in California, it is now our responsibility to make sure you that you live beyond your means? Ill agree to a one way bus fare to Oregon and maybe something off of the dollar menu at McDonald's.

I am sick of all the handouts and freebies that we are forced to participate in. We do our own charity work and it seems as though its never enough.

I'm not opposed to helping people, but at some point they need to take some responsibility for their own situation.


Posted by spcwt, a resident of Danville
on Jan 10, 2014 at 8:40 am

Big government to the rescue!

The war on poverty has been an epic failure. But who knows, maybe it will work this time.


Posted by Linda Andrews, a resident of Walnut Creek
on Jan 10, 2014 at 9:45 am

Another lib joke of wanting to "help" the dregs while stealing from others. Income redistribution will be the name of this old rotting game. Enough. I see third generation welfare everyday running to their FREE/ subsidized school food program after climbing out of a late model car!! The "poor" are the first to have the season passes to Great America!! And bet Mark and his cohorts can't wait to legalize the uneducated Mexicans to add to out social services!!!! Idiot!


Posted by Julia, a resident of Alamo
on Jan 10, 2014 at 10:36 am

Senator Mark Robin Hood DeSaulnier and all your followers are total idiots.

Oh yes you simple minded self serving Senator...keep them coming to the free watering trough, and of course remind them to vote for Robin Hood DeSaulnier.

Thank you, Julia Pardini from Alamo


Posted by spcwt, a resident of Danville
on Jan 10, 2014 at 1:51 pm

I've disliked DeSaulnier ever since his cronies put up tons of campaign signs all over Danville during an election many years ago, which was an eyesore, and then they just left them there long after the election!

I also dislike most Democrats, especially our current president. I hate to even write his name, as the thought of him makes me sick.

The poor, of course, pay no taxes, and receive tax refunds due to tax credits. They cry about paying payroll taxes, but the poor receive hundreds of thousands more in social security and Medicare benefits than they put into the system. The sales & property taxes they pay are a pittance compared to the benefits from schools, roads, law enforcement, and other benefits they receive. In short, around half the country receive more hand-outs than they put into the system.

Moderately wealthy people, like many in Danville, who make a decent living (~$500,000 yr.), pay high taxes (~50%) on their wages and business income. People who earn between $150,000 to $1 million / year in wages and business income are the ones getting squeezed in order to pay the country's bills.

The super rich have it best, of course. It is possible for rich Americans to legally pay very low taxes (~5% or less) on investments. It's possible to set up a trust that can supply you and your heirs an almost limitless amount of low-taxed investment income, in perpetuity. And neither you nor your heirs pay any estate or gift tax, ever. In other words, the party never has to end. Imagine amassing $100's of millions and paying a tax rate of 5% or less on all that wealth. Here's how:

Suppose you're a moderately wealthy person with around $50+ million in assets. You might be one of the folks who recently made some money in a tech IPO here in the Bay Area. You and your spouse can each contribute $5 million to a family trust without incurring gift tax. Through various valuation techniques that every estate planner is familiar with, it is possible to contribute much more than that to the trust and still fit within this $5 million window. For example, you and your spouse could reasonably each contribute $25 million, or $50 million total, and still have it qualify for the gift tax exemption.

You put the money in a trust in South Dakota. Why South Dakota? Because first of all, South Dakota doesn't have an income tax. Second of all, South Dakota is one of only three states in the country that has done away with "the rule against perpetuities." That rule limits the duration of a trust to the lifetime of a living heir, plus 21 years. With that rule gone, it is possible for a trust to be never-ending, providing low taxed wealth for you and your family for generations to come. You pay capital gains taxes only on what you spend, while the rest of the money grows. You and your heirs pay no estate tax and very limited federal income tax or California income tax. Best of all, you can still live in California. They call these "Dynasty Trusts," and hundreds of family have put over $120 billion in these trusts, especially since Obama and congress made the $5 million estate and gift tax exemption permanent during last year's budget compromise. (Thanks Obama!!!).

You may be asking yourself how these trust funds can be subject to only ~6% income tax when the federal capital gains rate is 23.8% and the California income tax rate is 12.3%. That's because you only pay tax on what you spend, not on what your investments earn.

For example, suppose you live on $2 million per year, which is quite modest if you're worth $100 million. $2 million / year should allow you to enjoy a decent SF apartment or a nice 10,000 sq. ft. home in Danville and still travel regularly to Europe, scuba dive in the Galapagos and other essentials. During the course of 25 years, you will have withdrawn $50 million from the trust and paid around $15 million of Federal and California income tax. But during that 25 years, the trust's assets will have grown by over $250 million, assuming a modest return of 8%. So, you've had a $250 million net ascension of wealth but paid only $15 million of taxes on it, or around 6% tax rate, because you pay taxes only on the taxable distributions, not the appreciation.

And the good times can be passed on to your kids, grand kids, and great grand kids, tax free, because the Dynasty Trusts go on forever.

This is just one example of how the rich can shelter their income from tax, of course. If you want to read about how Romney got $100 million into his tax-deferred IRA, click here: Web Link

It's nice to be rich.


Posted by Dave, a resident of Danville
on Jan 11, 2014 at 12:09 am

You said it, Tracy! When are we going to stop all these handouts and freebies by the government to big corporations and the wealthy?

I'm tired of having to subsidize Walmart's labor costs, just so it can make bigger profits!

I'm tired of my wages being taxed at the full rate, while those who take the bulk their earnings as capital gains on their stock options slide by at only 15%.


Posted by spcwt, a resident of Danville
on Jan 11, 2014 at 11:32 am

Dave,

The capital gains rate is now 23.8% (20% + the new 3.8% Obamacare tax). Capital gains are also subject to 12.3% California income tax.

But you're missing the big picture by focusing on the statutory capital gains rate. The truly wealthy can amass great fortunes without paying hardly any tax--AT ALL--on much of their wealth.

Let's use Bill Gates as an example. At the start of 2013 he was worth around $60 billion. At the end of 2013, he was worth $78 billion. In other words, in 2013, his wealth increased by $18 billion.

How much taxes did he pay? No one knows for sure, but he need only pay taxes on his taxable income amount. He doesn't owe taxes on the rest of the $18 billion he made.

For example, suppose he decides he can live on a measly $1 billion per year. He sells $1 billion of Microsoft shares, pays $23,800,000 capital gains taxes. But he pays no tax on the other $17 billion he made last year. So if you look at the amount of taxes he paid ($23.8 million) relative to the $18 billion he earned, his effective tax rate isn't even 1%.

Bottom line, Obama and Democrats get poor Americans addicted to welfare in order to get their votes. Then, they cozy up to big business and the wealthy to keep them wealthy.

The entrepreneurs, who make less than $1 million per year, who create lots of new jobs and threaten to disrupt big business's gravy train, they get hammered by Obama and Democrats.


Posted by fed up with thieving government, a resident of Danville
on Jan 13, 2014 at 9:33 am

Thanks, De Saulnier, for getting us even closer to being a third-world economy. Government workers have life-time job security, great pensions, and 40-hour weeks. Private sectors workers, supporting the rest like ants with elephants on their backs, have to work long weeks with no guaranteed retirements, and get taxed like heck. Vast numbers get government aid in one form or another. A few at the very top pay capital gains taxes at low rates and live like potentates.


Posted by Sue, a resident of Danville
on Jan 13, 2014 at 12:08 pm

There will always be poor ... and the rich & middle class freely DONATE & volunteer to help. The federal (& most state) government can't manage anything - it needs to get out of that 'business' and, if anything, support local organizations to deal with this. So, Mark De.- how about this: 1) close the borders (north & south), 2) start reporting all illegal aliens identified or detained in our CA prisons to ICE for deportation (as you're supposed to), 3) see how many poor Americans are left in CA - and come up with a joint plan, with private industry, to create JOBS for those who can work. I'm ok with a safety net while that's happening or for those who truly cannot work, but the number of folks who have graduated from unemployment to disability benefits (because unemployment ran out & they got used to 'liking' not working) needs to be addressed. Fraud in social services is high & no one is fixing it. I came to CA with $500 to my name & found a job. No one gave me a thing. I have my own business & work 7 days a week. I DONATE to & volunteer with a lot of charitable organizations. I don't need or want the government in my pocket, anymore than it already is. I'm already considering a move outside of CA - that's the result of what our great legislators have done for this state ... run it into the ground & cause anyone who contributes to leave. When I came here, CA was a shining star in the country, re: education; now, it's at the bottom. Unfortunately, I don't see this changing anytime soon and the cost of the 'great weather' is definitely losing its appeal.


Posted by Dave, a resident of Danville
on Jan 13, 2014 at 12:35 pm

Awwwww, spcwt, you know that those tax rates you quoted are misleading. For most people, the long-term capital gains rate remains at a very sweet 15%. The 20% rate, plus the 3.8% Medicare tax, apply ONLY to to high-income earners: those with income that would place them in the top (39.6%) tax rate for ordinary income in the former case, and those with incomes f
Greater than $250,000 (for married taxpayers filing jointly) for the Medicare surcharge.

My larger point is that, if we are going to object to government hand-outs, then we have to recognize the ENORMOUS hand-outs that are given to the wealthy and to corporations.

For example, government subsidization of housing costs benefits the wealthy the most. The total value of mortgage interest deductions,which flow disproportionately to the wealthy, greatly outweighs the value of public subsidies for housing for the poor. We can argue about policy; but, those are just the facts.

And it's not surprising that the wealthy and corporation are the biggest beneficiaries of government largess. The have the most political power.


Posted by Rufous, a resident of Alamo
on Jan 14, 2014 at 8:56 am

Are there any viable candidates that can challenge and defeat DeSaulnier?


Posted by spcwt, a resident of Danville
on Jan 14, 2014 at 9:14 am

The bottom 50% receive many $100,000's more benefits than they pay in taxes, the super-rich, like Bill Gates, pay taxes at a low rate like 5% or less, and the ones in the upper-middle get squeezed the hardest, some of us paying more than 50% taxes on our wages.

Dave says we shouldn't complain, because we get to reduce our taxes a little bit due to the mortgage deduction. But even with the mortgage deduction, the government still confiscates around 50% of our wages. It's like being asked to pay for dinner for everyone and then getting a called a cheapskate because we used a 5% discount coupon. We're still getting squeezed for the bill.

And it's not just taxes. Upper-middle class people pay more to send their kids to college so that poor people can get a tuition break. Here's how it works: Universities raise the price of tuition. Upper-middle class must pay full price. Universities give poor people discounted tuition. Poor people also get Pell grants. We pay more so the poor don't have to.

We also pay high utility rates to subsidize the poor. California law lets PG&E charge you $0.34 per kWh for electricity. That's higher than what people pay in Norway! It's a higher rate than almost anywhere except Hawaii. It's around TRIPLE the national average of $0.12 per kWh. They use the difference to give subsidized electricity to the poor and to pay for various "green" initiatives. If you have a family size home, like most people in Danville, you get hosed.

We also get less money for our schools than poorer school districts. SRVSD gets around $6,000 per student, while poorer school districts in the Bay Area get $10,000 per student or more. Parents in the SRVSD are asked to make "donations" each year to help fund our schools. We have also had to pass various local property tax measures to help SRVSD remain solvent.

These are just a few examples.


Posted by Derek, a resident of Danville
on Jan 14, 2014 at 10:56 am

Gosh SPCWT, I thought you were a big fan of that Invisible Hand of the Free Market Guy, no? PG&E is just doing what what the Kato Institute (for the criminally insane) says they should. And here you are complaining!

I promise though, I am going to break out my Stradivarius as soon as I get new strings and play a little tune to go with your sad story.

50% tax? You must be a whole lot crappier tax guy than you pretend to be on these message boards. Or you are way, way up at the top end of the "upper middle class".
My wife and I clearly aren't as wealthy as you. Between us we make about 185K a year, plus or minus $5,000 Running my own business with its' associated write-offs & various scams, and after refunds, we rarely pay more than 28 or 29% total, for all deductions. I wonder what you are doing wrong? Maybe my tax lady is just a lot sharper than you are? Or maybe your idea of upper middle class is a bit skewed.
BTW, I don't count sales tax, even though I know you always like to throw that in to the total just to confuse people. It's called a consumption tax for a reason.


Posted by Conservator, a resident of Danville
on Jan 14, 2014 at 11:03 am

Dear Spcwt,

It becomes clearer with every post that you offer, that your life's passion is the possession and retention of money. While you've consistently raised the performance bar for any self-proclaimed (or serving for that matter) cynic, my initial response to your very intellectualized 'article' on how to efficiently launder your assets of unnecessary taxation was, frankly, to be taken with shock and awe (GWB-style). It seemed that you had found a sweet-spot on the racket of monetary idolization whereby you characteristically chastised the poor for there lack of foresight but castigated the ultra-rich for figuring out the rules of the game better then the average 'bear' (who makes the equivalent of MLB league minimums).

With that perspective, it seemed that you must have been reading Dickens over the holidays. I would not presume that you shame your intellect with watching any of those classics tales retold by the Hallmark channel but rather you read it to better appreciate the notions of the story. Sadly, that must have not been the case.

To highlight the plight of one who can pay full fare by challenging the societal tools (education from K-12 to the University level and the power provided to their homes?) that those in a lower economic bracket utilize to pull themselves up to another is not truly mean. It's so far to the right of callous and disheartening, that words fail to fully characterize the depravity and soulful corruption that your written word evokes.

I finally get the acronym you use. I do believe that should you have been around and in awareness for the great 19th century novelist, he would have changed his holiday classic from a fictional story to one of autobiographical fact.


Posted by spcwt, a resident of Danville
on Jan 14, 2014 at 11:45 am

Derek,

I make north of $500,000 per year in wages, which are nearly impossible to shelter from income tax. Unlike you, I can't shelter that via various business deductions and other tax scams. I also have other sources of ordinary income which ensure that my wages always get taxed at the highest possible rate.


Posted by Louise, a resident of Danville
on Jan 14, 2014 at 4:08 pm

DeSaulnier is a left wing liberal who does everything to support those who don't pay taxes but make up a majority of his consituency. He is a huge union supporter and a bleeding heart for anything that taxes wage earners and redistrubutes it to those who don't work but will vote for all the freebies the government hands out. He wanted to increase the percentage of affordable housing to 20% for every project built in California from 10%. The next time around he will try to implement an even higher percentage. The only way to eliminate poverty is to increase job creation, and control illegal immigration. All of which he could care less about cause he would lose his voting base. He said he was a business man but really he was a teacher first and teachers lean left. We are a one party state and more people realize it now with idiots like him.


Posted by Derek, a resident of Danville
on Jan 14, 2014 at 8:27 pm

I'm tunin' up the fiddle right now SPCWT, or at least I would be if my tears would only stop flowing. I'll try to come up with with a slow piece that won't clash too much with that whining sound.


Posted by Middle-income resident, a resident of Diablo
on Jan 14, 2014 at 8:52 pm

De Saulnier is for a free-spending, dictatorial government that exempts the uber wealthy (ah, campaign contributors!) just like Miller. Isn't there anyone with the middle-classes' interests at heart willing to run? How about someone that wants to create jobs instead of wanting to create more government-dependents?


Posted by Dave, a resident of Danville
on Jan 16, 2014 at 11:33 am

Louise -

I'm all for more job creation. But, how many years (decades??) must we wait for the "job-creators" ( wealthy) to start making some jobs for those people trapped in poverty, whom you seem to so disdain for having the audacity to ask for a hand up. After all, we've been giving the wealthy massive tax breaks for 12 years now, all based on the premise that they were going to use that free cash to hire more workers -- not just take another vacation to Fiji or stash that surplus in a Cayman Islands account.

BTW, the majority of those in poverty are not people who aren't working. They are kids (1 out of 3 Americans living in poverty are kids), and they are the working poor -- busing your table at that fancy restaurant, stocking the aisles at Walmart, mowing your lawn. Basically, busting their butts for a below-poverty wage.

And a few thousand more jobs flipping burgers at McDonald's isn't going to eliminate poverty -- no matter how much extra wealth we piously transfer to the already wealthy while paying homage to their magical job-creating powers.


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