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EOG Resources is one of the top companies in the fracking industry, and thanks to the new tax bill passed by Republicans and President Donald Trump at the end of last year, EOG had an exceptionally strong year compared to 2016.

In 2017, the company reported a net income of $2.6 billion. The previous year? A loss of $1.1 billion. That financial turnaround seems very impressive until you realize that $2.2 billion, or about 85 percent, of its 2017 income was the result of the new tax law. Without that gift from the GOP and Trump, EOG would have lost approximately $700 million between those two years. Instead they are $1.5 billion ahead of the game.

With numbers like these, it is easy to see how the Tax Cuts and Jobs Act of 2017 was a much-needed lifeline for the money-losing fracking industry. EOG is routinely touted as one of the best shale oil and gas companies. Yet the company still lost $700 million in the past two years. Or at least it would have if not for the tax bill.

This is the same company that an analyst at the investment advice website Seeking Alpha says is “generally considered one of the best unconventional upstream oil and gas players in the business, and its financials back it up.” If those are the best financials in your industry, your industry has a big problem.

An interesting side note is that EOG stands for Enron Oil and Gas, which was spun off as its own company from Enron — the company notorious for one of the great energy Ponzi schemes of the 20th century. Today, an Enron spinoff company is being held up as the most fiscally sound in the shale oil industry.

…click on the above link to read the rest of the article…

War Deaths, and Taxes

April 6, 2018

War Deaths, and Taxes

Are the federal taxes coming out of your wages and due this week killing you? Sadly what’s rhetorical for US tax payers is gravely literal for people of eight countries currently on the shooting end of the US budget.

This year at least 47% of federal income taxes goes to the military (27%, or $857 billion, for today’s bombings and occupations, weapons, procurement, personnel, retiree pay & healthcare, Energy Dept. nuclear weapons, Homeland Security, etc.); and 20%, or $644 billion, for past military bills (veterans’ benefits — $197 billion; and 80% of the interest on the national debt — $447 billion).

A ceasefire, drawdown and retreat from the country’s unwinnable wars would reduce this tax burden, and didn’t the president promise to end the foreign “nation-building” that’s breaking the bank? Of course, that was a Trump promise, so:

Seven US airmen were killed on March 15 when a US Pave Hawk helicopter crashed in western Iraq, with 5,200 soldiers and as many contract mercenaries fighting there.

When VP Mike Pence visited Afghanistan last December he said with perfect meaninglessness: “we are here to see this through.” About 11,000 US soldiers are currently seeing it, and the Pentagon will be sending thousands more this spring. US bombing runs have almost tripled since the Obama/Trump handover, and Pence claimed “we’ve put the Taliban on the defensive” — but during Pentagon chief Jim Mattis’s visit the Taliban shot dozens of rockets at the Kabul airport where the general’s plane was parked.

The 16-year-old war in Afghanistan is now broadly understood to be militarily unwinnable, so a ceasefire and withdrawal would be a quick way to save billions of tax dollars. But US B-52s bombers flying from Minot Air Base in North Dakota are still creating new terrorists every day; the 3,900 US bombs and missiles exploded on the country in 2017 caused countless of civilian casualties.

…click on the above link to read the rest of the article…

New Jersey Prepares To Raise Taxes On “Almost Everything” As It Nears Financial Disaster

March 13, 2018

New Jersey Prepares To Raise Taxes On “Almost Everything” As It Nears Financial Disaster

Last week we noted that in what was a radical U-turn to what other public pension funds have been doing in recent years – most notably Calpers – the struggling New Jersey public pension system decided that instead of lowering its expected rate of return, it would raise it, from 7% to 7.5%.

The simple reason behind this odd increase in projected returns was an accounting sleight of hand which would allow the state of New Jersey to save some $238 million in pension contributions as a result of the higher discount rate applied to the fund’s liabilities. And with a pension funding level of only 37% for the 2015 fiscal year, the worst of any state in the US, New Jersey would gladly take even the most glaring accounting gimmickry that would delay its inevitable death.

Unfortunately, being the not so proud owner of the most distressed and underfunded public pension fund in the US is just the start of New Jersey’s monetary woes, and as Bloomberg reports, New Jersey’s fiscal situation is so dire that new Governor Phil Murphy has proposed taxing online-room booking, ride-sharing, marijuana, e-cigarettes and Internet transactions along with raising taxes on millionaires and retail sales to fund a record $37.4 billion budget that would boost spending on schools, pensions and mass transit.

The proposal which is 4.2% higher than the current fiscal year’s, relies on a tax for the wealthiest that is so unpopular it not only has yet to be approved, but also lacks support from key Democrats in the legislature, let alone Republicans. It also reverses pledges from Murphy’s predecessor, Republican Chris Christie, to lower taxes in a state where living costs are already among the nation’s highest.

Murphy, a Democrat who replaced term-limited Christie on Jan. 16, said his goal is to give New Jerseyans more value for their tax dollars; instead he plans on bleeding them dry. He has promised additional spending on underfunded schools and transportation in a credit-battered state with an estimated $8.7 billion structural deficit for the fiscal year that starts July 1.

…click on the above link to read the rest of the article…

When Did Global Warming Theory Begin?

March 4, 2018

When Did Global Warming Theory Begin?

Back in 1967, the International Global Atmospheric Research Program was established, mainly to gather data for better short-range weather prediction, but included climate. The following year, this was the beginning of biased studies which suggested that a possibility of a collapse of the Antarctic ice sheets would raise sea levels catastrophically. The put forth the idea that a big enough rise in global temperatures would eventually melt the world’s glaciers. They then pointed to a retreat of mountain glaciers since the 19th century claiming this was very apparent in many regions. This trend, they argued with linear logic, would release enough water to raise the sea level a bit. The argued that starting during the 1960s, several glacier experts warned that part of the Antarctic ice sheet seemed unstable. If the huge mass slid into the ocean, which did not happen, the sea-level rise would wreak great harm, perhaps within the next century or two. They completely failed to point out that there had historically been cycles in climate and even the poles were not at the same location.

We find one of the early articles that predicted the average temperature would be 9 degrees hotter by now. This appears in Popular Mechanics back in January 1970. The analysis was flawed as always because they take whatever trend is in motion and project it out without end. They completely fail to comprehend that there is any cycle within anything.

All of these forecasts are indistinguishable from looking at the Dow Jones Industrials and observing it has risen 5% per year since 2009 and therefore, it will never correct once again. The analysis simply does not qualify as analysis by taking whatever trend is in motion and forecasting it will never end. That analysis was set in motion following 1967. Unfortunately, this crazy analysis will not reach its peak until 2032. Governments will continue to embrace it as an excuse to raise taxes.

Rising Economic Head Winds

March 2, 2018

Rising Economic Head Winds

Remember the “tea party” revolt in 2009–2010 against government bailouts and government spending?

Remember the “fiscal cliff” drama of Dec. 31, 2012, when Congress raised taxes and cut spending to avoid a debt default and government shutdown?

Remember the actual government shutdown in October 2013 as Republicans held the line against more government spending?

Well, congratulations if you do, because everyone else seems to have forgotten.

The days of caring about debt and deficits are over. In just the past two months, Republicans passed the Trump tax cuts that will increase the deficit by $1.5 trillion on a conservative estimate, and probably much more.

Then Republicans and Democrats “compromised” on eliminating caps on defense spending and domestic spending by agreeing to more of both. That repeal of the so-called “sequester” will add over $300 billion to the deficit over the next two years.

Then there’s a tsunami of student loan debts in default that the Treasury has guaranteed and will have to pay off. Finally, the higher interest rates from this debt will add $210 billion to the annual deficit for every 1% increase in average federal debt funding costs.

Today we are looking at $1 trillion-plus deficits as far as the eye can see.

That’s extraordinary enough. What is more extraordinary is that no one cares! Democrats, Republicans, the White House and everyday Americans are all united in totally ignoring the fact that America is going broke.

This euphoric mood in response to more spending won’t last. The growth is not there to pay for the tax cuts, and the economy is not even growing fast enough to keep up with the growth in the debt.

…click on the above link to read the rest of the article…

Hunt for Taxes & the CRS

March 2, 2018

Hunt for Taxes & the CRS

QUESTION: Mr. Armstrong; I followed your advice and opened an account in the United States. I live in Britain and my daughter lives there in the States so I used her local address. To my shock, it was very easy. You said the USA has become the new tax haven. So the USA is not part of the common reporting that even covers the Middle East?

ANSWER: That is correct. The Common Reporting Standard (CRS) is an information standard for the automatic exchange of tax and financial information on a global level. It was put together by the Organisation for Economic Co-operation and Development (OECD) back in 2014. Its purpose was to hunt down tax evasion primarily for the European Union. They took the concept from the US Foreign Account Tax Compliance Act (FATCA), which imposed liabilities on foreign institutions if they did not report what Americans were doing outside the country.

The legal basis of the CRS is the Convention on Mutual Administrative Assistance in Tax Matters. As of 2016, 83 countries had signed an agreement to implement it. First reporting took place in September 2017. The CRS has many loopholes for countries have to sign the agreement. This has omitted the United States as well as most developing countries. Note that countries that are included are China, Singapore, Switzerland, most tax havens and of course Australian/New Zealand as well as Canada.

As of 2018, the signing nations to avoid are:

Albania, Andorra, Antigua and Barbuda, Aruba, Australia, Austria, The Bahamas, Bahrain, Belize, Brazil, Brunei Darussalam, Canada, Chile, China, Cook Islands, Costa Rica, Dominica, Ghana, Grenada, Hong Kong (China), Indonesia, Israel, Japan, Kuwait, Lebanon, Marshall Islands, Macao (China), Malaysia, Mauritius, Monaco, Nauru, New Zealand, Pakistan, Panama, Qatar, Russia, Saint Kitts and Nevis, Samoa, Saint Lucia, Saint Vincent and the Grenadines, Saudi Arabia, Singapore, Sint Maarten, Switzerland, Turkey, United Arab Emirates, Uruguay, Vanuatu

Canada Taxes & Dependents

February 25, 2018

Canada Taxes & Dependents

Meet the Italian government’s Orwellian new automated tax snitch

February 21, 2018

Meet the Italian government’s Orwellian new automated tax snitch

By the end of the 3rd century AD, the finances of ancient Rome were in terminal crisis.

Years and years of debasing the currency had resulted in severe hyperinflation– a period of Roman history known as the Crisis of the Third Century (from AD 235 through AD 284).

During the time of Julius Caesar, for example, the Roman silver denarius coin was nearly 98% pure silver.

Two centuries later in the mid-100s AD, the silver content had fallen to 83.5%.

And by the late 200s AD, the silver content in the denarius was just 5%.

As the money continued to be devalued, prices across the Empire skyrocketed.

Wheat, for example, rose in price by over 4,000% during the first three decades of the third century.

Rome was on the brink of collapse. And when Emperor Diocletian came to power at the end of the third century, he tried to stabilize the economy with his ill-fated Edict on Wages and Prices.

Diocletian’s infamous decree fixed the price of everything in the Empire. Food. Lumber. Salaries. Everything.

And anyone caught violating the prices set forth in his edict would be put to death.

Another one of Diocletian’s major policies was reforming the Roman tax system.

He mandated widespread census reports to determine precisely how much wealth and property each citizen had.

They counted every parcel of land, every piece of livestock, every bushel of wheat, and demanded from the population increasing amounts of tribute.

And anyone found violating this debilitating tax policy was punished with– you guessed it– the death penalty.

Needless to say, Diocletian’s reforms didn’t work.

Every high school economics student knows that wage and price controls don’t work… and that excessive taxation bankrupts the population.

…click on the above link to read the rest of the article…

Trump Tax Cuts Have Postponed Economic Collapse: “The U.S. Has Become The Tax Haven Of The World”

February 5, 2018

Trump Tax Cuts Have Postponed Economic Collapse: “The U.S. Has Become The Tax Haven Of The World”

The last several years have seen massive gains for both stock market and digital currency investors with prices hitting unprecedented levels of growth. But one particular asset class, despite its necessity for day-to-day global activities, has been totally ignored by the general investing public. According to venture capital financier Carlo Civelli, there are varying reasons for why mining companies involved in commodity metals like copper, zinc, gold and silver have been either stagnant or seen disproportionate drops in their market value versus broader stocks, but one in particular stands out as of late:

The exploration stocks are just not attracting the following that they used and the reason for that could be the whole blockchain and Bitcoin mania… which is diverting a lot of speculative money from what used to be the commodities markets.

And while we’re likely to see continued interest in crypto currencies over coming years, Civelli notes that recent political developments in the United States, as well as favorable supply demand fundamentals, suggest that 2018 will be a breakout year for commodities markets after having hit cyclical lows. In an interview with Future Money Trends, Civelli says that President Trump’s tax cuts have shifted the global balance and may have postponed any serious economic problems for another ten years.

The United States has become the tax haven of the world.

Coupled with Trump’s trillion dollar infrastructure plan, the widespread tone of economic optimism across the global economy explains why Civelli has been aggressively gobbling up mining stocks (and he’s not talking about digital blockchain mining):

…click on the above link to read the rest of the article…

The Hunt for Taxes Brings Down Governments Every Time

January 19, 2018

The Hunt for Taxes Brings Down Governments Every Time

COMMENT: Mr. Armstrong; I live in Germany. I wanted to send my father €200 for Christmas. I had to prove where the money came from. It does seem as if there is a major gap between those trading the euro for big banks and the people. I left Romania for freedom. Everything that I fled from has seemed to follow me to the West. Those who cheer the rise of the euro seem oblivious to the reality on the street. We have no real government in place here since nobody won a majority. The clash between freedom and oppression is playing out in silence. I fear this will just explode all of a sudden as it did behind the Iron Curtain.

REPLY: You are not alone. I have several Russian, Hungarian, and Ukrainian friends who all express the same concerns. The fact that you fled to freedom and then see the very aspects of government that made you flee in the first place have taken hold in the West is all part of the cycle. This is simply how Empires, Nations, and Citystates collapse. They are always the same – a constant search for more power to retain their control. Then it all snaps. That comes typically when a government can no longer feed its own workforce to keep the people in check.

Revolt of the Heraclii 608-610 AD of Carthage

Emperor Phocas (602-610) persecuted the Aristocrats (rich) seeking taxation causing capital to go into hiding and the VELOCITY of money to decline. His reign did more than any other to begin the process of a significant decline of the Byzantine Empire. His tyrannical treatment of wealth led to a rebellion that began in North Africa by the exarch of Carthage, Heraclius in 608AD, who had been a leading and respected general under the previous emperor Maurice Tiberius (582–602).

…click on the above link to read the rest of the article…

The Debt Beneath

January 4, 2018

The Debt Beneath

Debt is irrelevant and matters not. It’s different this time. That’s the message from politicians, markets and participants. Tax cuts pay for themselves (they do not), leverage doesn’t matter (it does) and the increased costs of servicing the debt as a result of rising rates will be offset by imaginary real wage growth to come (they won’t). But the calmest market waters in history continue to keep these illusions alive as asset prices keep levitating from record to record.

Debt does matter and it was ironically left to Janet Yellen to voice any remnant concerns about the sustainability of debt to GDP: “It’s the type of thing that should keep people awake at night” she said.

With good reason:

After all the debt burden has never been higher and rates, following years of enabling the largest debt expansion in human history, are starting to rise in the US. In the larger historic context rates are still low, but let’s be clear, they are rising:

And with rising rates come questions of the sustainability of servicing incredibly high debt loads.

The worldwide equity rally since the early 2016 lows has resulted in a massive increase in the market capitalization of global asset prices which have increased by over $25 trillion in value since then. As discussed in my 2017 Market Lessons US market capitalization is now north of 143% of US GDP.

Low rates and free money in form of global QE and now US tax cuts make it all possible and consequence free. But is it?

Let’s take a look at the leveraging game over the past 2 years since this is when the most recent rally began. And note in many cases we don’t have full 2017 data yet so I’m using the running 2 year data where I can pull it. The trend is the same: Up, up and away.

…click on the above link to read the rest of the article…

Can a Country Commit Suicide by Taxation?

December 19, 2017

Can a Country Commit Suicide by Taxation?

Certainly, an economy can be seriously damaged by reckless taxation, but Greece seems determined to see if it can be outright destroyed by it, too.

Greece has confirmed that a nation can spend itself into a fiscal crisis.

And the Greek experience also has confirmed that bailouts exacerbate a fiscal crisis by enabling more bad policy, while also rewarding spendthrift politicians and reckless lenders (as I predicted when Greece’s finances first began to unravel).

So now let’s look at a third question: Can a country tax itself to death? Greek politicians are doing their best to see if this is possible, with a seemingly endless parade of tax increases (so many that even the tax-loving folks at the IMF have balked).

At the very least, they’ve pushed the private sector into hospice care.

Let’s peruse a couple of recent stories from Ekathimerini, an English-language Greek news outlet. We’ll start with a rather grim look at a very punitive tax regime that is aggressively grabbing money from taxpayers with arrears.

Tax authorities have confiscated the salaries, pensions and assets of more that 180,000 taxpayers since the start of the year, but expired debts to the state have continued to rise, reaching almost 100 billion euros, as the taxpaying capacity of the Greeks is all but exhausted. In the month of October, authorities made almost 1,000 confiscations a day from people with debts to the state of more than 500 euros. In the first 10 months of the year, the state confiscated some 4 billion euros.

But the Greek government is losing a race. The more it raises taxes, the more people fall behind.

…click on the above link to read the rest of the article…

The Deep History of Taxation May Surprise You

November 16, 2017

The Deep History of Taxation May Surprise You

For the majority of history, the idea of sustained taxation in peacetime was anathema. So what happened?

Two things in life are certain: death and taxes. So goes the saying. And yet despite that, the idea of the necessity of taxation is largely undisputed, “consent” to its use is, historically seen, new. How did it come about that tax evasion, first an act of protection against the abuse of government, is now frowned upon? Why is there such moral indignation, and why is tax avoidance such a big deal today when it was widespread centuries ago?

Think of the procedure of taxation and then imagine you’d have to explain it to a person who has never heard of it before. That is pretty much the history of taxation in a nutshell. Early taxes in Ancient Rome and Greece were not only very low and indirect (for instance, on goods), they were only levied when there was a time of crisis. European countries which were large traders, such as the Netherlands or England, gathered funds for the expenses of the state through tariffs. While these were protectionist and surely not good news for the farmers on each side, at least they did not claim ownership to a part of the people’s income, as they did in France.

Historically Speaking

The crown was confronted with such a large opposition to the tith, that King Henry suspended it and promised to never levy such a tax again.

During the Middle Ages, the King’s finances and those of private individuals were merged: there was no distinction between a public budget and private budget. Consecutive monarchs instituted taxes according to the expenses they deemed necessary at that moment in time.

…click on the above link to read the rest of the article…

Tax Them Till They Bleed

November 12, 2017

Tax Them Till They Bleed

Jean-Léon Gérôme Truth Coming Out of Her Well to Shame Mankind 1896An entire library of articles about Big Tech is coming out these days, and I find that much of it is written so well, and the ideas in them so well expressed, that I have little to add. Except, I think I may have the solution to the problems many people see. But I also have a concern that I don’t see addressed, and that may well prevent that solution from being adopted. If so, we’re very far away from any solution at all. And that’s seriously bad news.

Let’s start with a general -even ‘light’- critique of social media by Claire Wardle and Hossein Derakhshan for the Guardian:

How Did The News Go ‘Fake’? When The Media Went Social

Social media force us to live our lives in public, positioned centre-stage in our very own daily performances. Erving Goffman, the American sociologist, articulated the idea of “life as theatre” in his 1956 book The Presentation of Self in Everyday Life, and while the book was published more than half a century ago, the concept is even more relevant today. It is increasingly difficult to live a private life, in terms not just of keeping our personal data away from governments or corporations, but also of keeping our movements, interests and, most worryingly, information consumption habits from the wider world.

The social networks are engineered so that we are constantly assessing others – and being assessed ourselves. In fact our “selves” are scattered across different platforms, and our decisions, which are public or semi-public performances, are driven by our desire to make a good impression on our audiences, imagined and actual.

…click on the above link to read the rest of the article…

The Great Deficit Ruse

November 4, 2017

The Great Deficit Ruse

Your intuition is right: tax cuts are good and tax increases are bad.

If your profligate friend blew his budget on liquor, you might feel bad for him. But it’s unlikely that you would be willing to fork over money to cover his mistake. He needs to figure it out. And maybe, then, he will learn a lesson for the future.

This is exactly how I feel about all this whining about the federal deficit. I didn’t cause it. It’s not my problem. I should not be forced to pay for it. I don’t work every day in order to earn money to pay for other people’s problems.

It’s bad citizenship always to be willing to pay the government’s debts.

Admit that you agree. You don’t really care about the deficit. Not really. It’s an abstraction to you. More crucially, the deficit is not your fault. You are not responsible for paying for one dime of the federal debt. No portion of your justly made income should be taken to cover the fiscal irresponsibility of anyone except perhaps your children.Actually, it’s very bad parenting always to be ready to pay the kids’ debts. It’s similarly bad citizenship always to be willing to pay the government’s debts.

All this media talk–and it is incessant and ubiquitous–about how the deficit is way more important than your property rights completely disregards the realities of politics. Namely: politicians and bureaucrats desperately need an excuse to take your money. Making you pay for their past mistakes is as good an excuse as any.

Your intuition is right: tax cuts are good and tax increases are bad.

But hold on: doesn’t that just shove the burden of debt onto the next generation? My answer: not if the next generation is similarly unwilling to cough up taxes to pay for the dumb things government does.

…click on the above link to read the rest of the article…

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