The Typical Illegal Immigrant Won’t Pay Net Income Taxes

On Thursday evening, President Obama unveiled his plan to offer legal status to approximately 5 million undocumented aliens. “If you’re willing to pay your fair share of taxes,” said Obama, “you’ll be able to apply to stay in this country.” But the President neglected to mention that the income of the typical illegal immigrant is so low that he would pay no net income taxes, and become eligible for welfare benefits like Obamacare. According to a 2006 report from the left-leaning Century Foundation, “it is likely that the undocumented workers will end up receiving rather than paying the Treasury money.”

Legalized undocumented immigrants could become eligible for significant transfer payments

Income statistics for illegals are, as you might imagine, not so easy to discern. But the Century Foundation analysis, published in Mother Jones, estimates that in 2005, “we can be virtually certain that illegal immigrants earned less than $24,000 per year, on average, probably much less.” That’s about $29,177 in 2014 dollars. According to theCongressional Budget Office, a person making that kind of money would pay negligible federal taxes, and receive around $10,000 in government benefits.


That $10,000 doesn’t include Obamacare, and probably understates the actual amount of government transfers that these individuals would receive. Obama’s executive order is primarily aimed at undocumented parents of U.S. citizens, which may mean that they are older than average. If so, they will gain access not only to Obamacare, but also to Social Security and especially Medicare.

These individuals pay almost nothing in federal taxes. “Households in the lowest income quintile,” writes the CBO, “paid less than 1 percent of all federal taxes,” but are eligible for substantial tax credits under the Earned Income Tax Credit program.

Amnesty will yield little in additional payroll taxes

“Aha,” you might argue, “but while the newly legalized population pays no net income taxes, it does pay payroll taxes for Social Security and Medicare.” That’s true, but the government already receivesmuch of that money. “In fact,” says the Century Foundation, “about $6 billion in annual payroll taxes are allocated to non-existent Social Security accounts. Experts attribute these payments to the forged documents that illegal immigrants purchase in order to find work. This $6 billion is collected each year with no future benefit-rights assigned. This sum is certainly more than any income taxes that would be owed on the earnings involved.”

Again, the Century Foundation is one of the nation’s leading left-wing think tanks, so you might wonder why they would be calling attention to this problem. Their argument in 2006 was designed to rebut those who sought to deport illegal immigrants because they were fiscal drains on the U.S. Treasury. Because illegals pay payroll taxes but aren’t eligible for most federal benefits, “illegal immigration is likely to be a crime that delivers net economic benefits to its average ‘victim,’ even in tax revenue.”

Much more to read at FORBES.

They’re Illegal, Not Stupid


Could the EU break up Google?

The Financial Times reports that a draft motion from the European Parliament (paywall) calls for Google to unbundle its search operation from other businesses to satisfy antitrust concerns. This reflects a hardening of the EU’s stance in its long-running tussle with Google over the power it wields on the web.

and a bottle of rum

AG pick Lynch may face grilling over seizing properties, experts say

A boast by President Obama’s pick to be the nation’s top law enforcement official could come back to haunt her in confirmation hearings before the Senate, where some members object to prosecutors’ rampant use of civil forfeiture, a controversial but legal process that can allow citizens’ assets to be seized without due process.

U.S. Attorney for the Eastern District of New York Loretta Lynch, who Obama seeks to elevate to U.S. attorney general, replacing Eric Holder, announced in January that her office collected more than $904 million in criminal and civil actions in fiscal year 2013. While the policy generates funds used for other law enforcement efforts and offsets the burden on taxpayers, liberals and conservatives alike have questioned asset forfeiture as “an abuse of due process.” Experts say Lynch will likely have to defend the practice she once touted.

“It’s definitely a subject likely to come up and she’ll be pressed on it,” said Tim Lynch, director of Cato Institute’s Project on Criminal Justice. “I don’t know what she’s going to say, but I would expect her — as someone who’s going to assume leadership of the entire Justice Department — to come to the defense of these existing practices and I would be surprised if she struck a chord that’s different from that. The Department of Justice likes things exactly the way they are, so I assume she’s going to defend the status quo.”

Read more HERE.

Cat and his beer.

cat drinking beer

Republicans sue Obama over Obamacare.

They’ve aired their grievances with the president’s signature healthcare measure for months—to which he replied, “So sue me!“—and that’s exactly what just happened. The suit calls into question the $175 billion given to insurance companies and the delays in the deadline for when large companies need to offer insurance.

Penguins do have a sense of humor!

hi cold i am dad

The United States v. Paramount and How Movie Theater Concessions Got So Expensive

In 1948, the Supreme Court ended the stranglehold Hollywood studios and distributors had on the U.S. movie market. Declaring the big eight a monopoly and ordering them to divest of their ownership of movie theaters and cease other non-competitive practices, with U.S. v. Paramount Pictures, et al., the Court opened the movie industry to independent producers and theaters, and indelibly changed the way we see films (and the films we see).

Prior to the government’s efforts to break their trust, a handful of Hollywood studios and distributors controlled nearly all of the movie theaters in the United States, either through direct or indirect ownership, or by the system of “block booking.” With this latter, the big boys insisted that independent theaters contract to run a “block” of films (some set number). Between controlling the distribution and exhibition, and its strong-arm negotiating, these few companies decided not only where and when any movie would be shown, but set admission prices, as well.

Clearly anti-competitive, beginning in 1928 Uncle Sam sought to limit the studios’ power. Identified by the Federal Trade Commission (FTC) as having a monopoly over 98% of domestic movie distribution, the Justice Department brought suit in 1929 against Paramount-Famous-Lasky Corporation, First National Pictures, Metro-Goldwyn-Mayer, Universal, United Artists, Fox, Pathé Exchange, FBO Pictures, Vitagraph and Educational Film Exchanges (together the Motion Picture Producers and Distributors of America or MPPDA). Declared a trust in the lower courts, the Supreme Court affirmed the decision on November 25, 1930.

But, since the country was in the mire of the Great Depression, that decision was never enforced, and, rather, in 1933, under the protection of the National Industrial Recovery Act, the studios and the government agreed that the former could continue with business as usual. That is, they continued to own and control movie distribution (and block booking continued, as well).

Nonetheless, as the economy improved, the government decided to limit the big studios’ grip on distribution, and in July 1938, filed another suit, this time against seven studios (Paramount, Loew’s, RKO, Warner Bros., 20th Century Fox, Columbia and Universal) and one major distributor (United Artists). The trial was halted only two weeks after it began, and on November 20, 1940, the parties reached a compromise that allowed the studios to keep ownership of theaters, but inhibited block booking.

This angered independent movie producers, including Charlie Chaplin, Samuel Goldwyn, Mary Pickford, Orson Welles, David O. Selznick and Walt Disney, and together, they formed the Society of Independent Motion Picture Producers (SIMPP) to fight the consent decree. Effective, eventually the antitrust suit returned to federal court, and on December 31, 1946, the district court of New York found the defendants in violation of anti-trust laws. It then ordered that bidding had to be competitive and movies were to be licensed individually, as well as prohibited admission price fixing, block-licensing of copywritten movies, and joint ownership of theaters by distributors and exhibitors, among other things.

The parties returned to the Supreme Court, and on May 3, 1948, it entered its decision. The high court agreed with the district court on most points, including affirming the prohibition against price-fixing, joint ownership, major franchises and block licensing; however, the court reversed and remanded on the issue of competitive bidding, noting:

The system would be apt to require as close a supervision as a continuous receivership . . . . The judiciary is unsuited to affairs of business management and control through the power of contempt is crude and clumsy.[1]

This Supreme Court decision still controls movie distribution and exhibition in the U.S., and today, studios split gross profits with theaters. But how they do it is pretty interesting.

During the first few weeks of a movie’s run, the studio receives the bulk of gross ticket sales.  While the details vary based on deals between the theaters and the distributors, it’s quite common for the theater to fork over 90%-95% of the revenue from the film on week one, perhaps 80% on week two, etc. By the end of the movie’s run, when the fewest people are going to see a film, the theater is taking in the lion’s share of the gross. When averaging the whole run, the theater might only get 20%-30% of the gross ticket sales, with these numbers varying a bit based on a variety of factors.

As one commentator has noted, this system provides a strong incentive for the studios to make “movies with built-in demand – in the form of a superhero in the lead or a plot drawn from a hit book – and the potential to open with a bang.”

Over time, this has developed such that it’s not uncommon today for theaters to take a loss for a given movie based on ticket sales alone, particularly movies from major studios. There’s really little the theaters can do about this, however, as they have extremely limited leverage in negotiations (particularly for small theater chains). They can’t make the movies themselves, and certainly can’t turn away major blockbusters, lest people stop going to their theater(s).  In addition, if a given small theater chain is dealing with a major movie studio, the studio may also say something like, “Well, if you don’t put this movie on 1/4 of your screens for this amount of time and give us X% of the gross, you’ll not be seeing any more Warner Bros. films offered to your theaters.”  Major theater chains have a little more leverage in these negotiations, particularly when dealing with smaller studios, but still not that much in general.

What this all means is that the theater must find other ways to make money outside of ticket sales. The solution is to charge ridiculous prices for concessions, which nonetheless is necessary for them to stay in business at all, at least given the way things are done today. (The concession hike began in earnest around the 1970s.) For reference, even with the exorbitantly high prices on food items, only about 4% of a theater’s gross revenue in a given year is profit, despite typically around an 85% profit margin on concession sales themselves, according to Australian market research company IBISWorld.

So, as 55 year veteran of the movie theater business Jack Oberleitner observed, theaters have “left the movie business and [are] now in the popcorn business.”

On the other side, big movies cost pretty amazing sums to produce, and when they flop, that means huge losses for movie studios, despite the favorable terms they get with theaters. Since many feel this is a direct consequence of the prohibition of studio ownership of theaters, they are calling for a change in the law. One of the many arguments they make is claiming ending the prohibition would have the benefit of allowing studios to target releases geographically to better place movies in more favorable markets, and broaden the types of movies they make. As an example, they point to Magic Mike which “hugely overperformed” in St. Louis, Nashville and Kansas City, but had disappointing sales in New York and L.A. If the studios owned the theaters, they would have shortened Magic Mike’s runs on the coast, and perhaps shown it more in the Midwest; thereby, suffering fewer losses, earning greater profit, and giving people more of what they actually want.

Another potential benefit of studio ownership of movie theaters is that it would shorten the time it takes a stale film to move from theaters to home release. As one industry insider noted: “If 92 percent of the gross of a movie comes in the first four weeks, wouldn’t it make sense for [a studio] to put out a movie and say, after four weeks, ‘We’re moving this to DVD?’”

Beyond that, studios would have some small incentive to lower the price of concessions in order to increase the number of people coming to the theaters, and thus increase ticket sales and hype for their movies.  If Disney owned theaters saw higher volumes of ticket sales for their movies, and ticket prices were reasonably close between studios, Disney movies would consistently be topping the box office charts.  Under the current system, theaters really have little incentive to focus on overall volume of customers, instead trying to focus on the right customers- ones that not only buy tickets, but also are willing to pay the high prices for concessions.

Of course, with the few potential benefits of allowing studios to own theaters again comes potential drawbacks, many of which were seen before U.S. v. Paramount Pictures, et al.

Found HERE.

winter is this

Obama’s Agenda Threatens to Divide the Democratic Party

Hillary Clinton’s ability to win the White House in 2016 depends on the president moving to the middle, not playing to his base.

President Obama’s biggest problem over the next two years may not be coming from recalcitrant Republicans, but from members of his own party blanching at his activist agenda over the final two years of his presidency. While the midterm election results suggested widespread dissatisfaction with the president’s policies, Obama nonetheless is planning to press forward on several polarizing decisions in his final two years. It could help advance his legacy, but come at the expense of the Democratic Party’s long-term health.

Three of the administration’s biggest agenda items—threatening a veto of bipartisan legislation authorizing construction of the Keystone XL pipeline, reaching a nuclear deal with Iran, and issuing an executive order legalizing millions of illegal immigrants—divide Democrats, and unite Republicans. If the president moves forward with all of them, it would aggravate fissures in an increasingly-divided Democratic Party. And it would put Hillary Clinton, his party’s expected 2016 standard-bearer, in an uncomfortable position even before she announces her candidacy. She’s already avoided taking stances, if not outright rejecting the direction Obama is heading during his final two years in office.

The dirty secret in Washington is that while Obama (rightly) blamed Republicans for holding positions to the right of the American electorate, the president is pursuing policies that are equally as far to the left.

Approving construction of the long-delayed Keystone XL pipeline may not be the most consequential legislation, but it is symbolic of the lengths the administration has gone to avoid a postelection bipartisan accomplishment. Embattled Sen. Mary Landrieu, on the ballot next month in a Louisiana Senate runoff, has been furiously lobbying colleagues to approve the pipeline, and won support from 14 Democrats in an unsuccessful vote Tuesday. A new USA Today poll of adults, conducted last week, found strong support for it—60 percent backing construction of the Keystone pipeline, with only 25 percent opposed. This month, the Pew Research Center found even 44 percent of Democrats supporting it, with 46 percent opposed. When Republicans take control of the Senate in January, it’s expected to pass with at least 63 votes.

More to read found HERE.

Strawberries being grown for just the women…


Obama’s Incoherent Immigration Speech

I count three ways President Barack Obama’s speech on immigration last night contradicted itself.

First, there was the absolutist language he used to justify his policy — coupled with restrictions that aren’t compatible with such language. The argument Obama made for his policy of offering legal status to millions of illegal immigrants was highly moralistic: We’re not supposed to rip apart families, we can’t deny people “a chance to make amends” and so forth. But you don’t qualify for the new forbearance if you’ve only been here a short time, or are coming here tomorrow. No chance to make amends for tomorrow’s illegal immigrant.

Second, the president insisted that all he was doing was exercising routine prosecutorial discretion. Yet he also explained that he was engaging in a quasi-legislative act. When speaking in one vein, he made it sound as though the policy he was announcing was old news: “We’re going to keep focusing enforcement resources on actual threats to our security.” But if that’s all he was doing, he wouldn’t have needed to make a speech.

He was more candid at other times, when he made clear that his policy was a partial substitute for the legislation he wants, which would offer illegal immigrants a path to citizenship. But his political challenge to Congress — I’m acting in your place because you haven’t, and to make you act — makes no sense if he’s just exercising prosecutorial discretion. It makes sense if he’s legislating from the White House.

Third, Obama invoked public opinion to legitimize his action — even though the public doesn’t appear to be on his side. “Most Americans support the types of reforms I’ve talked about tonight,” he said. That’s an arguable point. But most Americans don’t support Obama’s imposing those policies unilaterally. Polls shouldn’t trump our constitutional tradition: You know, all that stuff about Congress writing the laws. But the polls aren’t on Obama’s side anyway.

It was a speech, then, that was internally incoherent from top to bottom. Its tone clashed with the policies Obama actually intends to pursue. And it offered no plausible defense of those policies based on the Constitution, on a consistent moral argument or even on public opinion. It’s hard to imagine that it convinced many people about the propriety of the president’s actions.

Found this HERE.

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