Emerging Face of a Nationless World

The blog post this week comes from Ruyi Wang (Bachelors of Arts and Science Candidate, 2014) Inquire's very own Co-VIce-President of Initiatives. We're glad she stumbled across this treasure as it deserves to be shared. The campaign encompasses not only an artist's musical skill and talent, but the cultural influences behind it. With a medium as ubiquitous as music we hope that this campaign will spread insight into the parallels between all communities.

Emerging Face of a Nationless World is a campaign begun by the New York based artist Jie-Song Zhang, under the not-for-profit company, Stone Forest New York, which promotes international cultural exchange projects. The campaign is being supported by National Geographic for its artistic and cultural value. The first promotional video speaks volumes about the change in global cultures in its short six minutes.

“The distances that once existed between continents, countries, and cultures, is disappearing.” With the increase of globalization in recent years, the freedom of the migration of people, and the lifestyles which they choose to live has increased immensely. In large “melting pot” cities with a dynamic mix of people from various cultures, the emergence of a nationless world is especially prominent. The city is a collective home to those who come from different homelands, creating its own unique blend as a result of the exchange that takes place. The Internet also plays a large role in the exchange of ideas and cultures. Though it seems that the infusion of technology into modern society has driven people farther apart, it has also brought people closer together. The idea of a nationless world is truly inspiring. Perhaps one day, we can cast aside the borders of nations, cultures, and continents, and defined ourselves under the common identity of the human race.

If you're interested in the project, more of Jie-Song Zhang and his Emerging Face of a Nationless World campaign can be found here.

Warren Buffett on Taxing the ‘Super Rich’

Welcome to the Inquire Blog! This post goes well with our most recent event, a showing of "Capitalism: A Love Story" which we hope that some of you had time to catch. We'd like to take a moment to thank Trisha Egberts (Bachelors of Commerce Candidate 2012, Queen's University), the author of this post, for contributing time and effort to put forward a great guest blog post for us!

Warren Buffett: American business man, investor, philanthropist, CEO of Berkshire Hathaway, and 3^rd wealthiest person in the world. The man is an expert at making money, but now it seems he wants the American government to take its share.

Over the past few months, Buffett has made claims that the United States government is coddling the “mega-rich”, allowing them to pay taxes at far lower rates than their lower-income fellow citizens. After conducting a study in his own office at Berkshire, he found that he was paying taxes at roughly 17.4%, while the 17 employees he interviewed were paying between 33 and 41% of their annual incomes in taxes.

How is it possible that someone so rich living in a country with a progressive tax rate system – one in which higher income earners are taxed at higher rates – can achieve such a low average tax rate? The answer, in short, is capital gains. Capital gains occur when a capital asset (anything from a building to a mutual fund security) is sold for more than the price at which it was purchased. So how do capital gains provide a tax break? In both the United States and Canada, they are taxed at a preferential rate: a max of 15%, and 50% respectively. In addition to these rates, capital gains are only taxed when the gains are realized. So while an asset can increase in value over time, businesses need only pay tax on these gains at the time the asset is sold.

The result is that tax breaks, initially intended to encourage capital investment, have allowed business owners to increase after-tax gains in unusual ways. The problem is that the difference between ordinary business income and a capital gain is often unclear, and also very costly for the government to investigate. While jurisprudence plays an extensive role in this matter, the reality is that many forms of income that should be taxed at an ordinary progressive rate are in fact being taxed at far lower rates as a capital gain.

Another source of tax savings for Buffett and his “mega-rich” friends is carried interest, a form of compensation for general partners of hedge and private equity funds, which is taxed upon receipt. Partners are paid a portion of a corporation’s profit annually in order to align their goals with that of the business, and thus are only taxed when they receive the money.

In light of all this, Buffett has

challenged the American government to take action. He proposes raising taxes – including those on dividends and capital gains – for those earning $1,000,000 or more, and establishing additional tax hikes for those earning more than $10,000,000 per year. This leaves 99.7% of the taxpayers unchanged, and will allow for better redistribution of wealth, greater tax equity, and increased government revenue during economic crisis.

While this all seems fine and dandy, Buffett has been somewhat misleading in his claims. For one, Buffett has ignored the effect of corporate income tax – the tax paid on dividends at the corporate level – which would increase his supposed 17.4% tax rate. Furthermore, Buffett’s income structure is extraordinarily unusual, even among his wealth category. Buffett takes only $100,000 in salary, and earns about $40,000,000 of annual income in dividends and capital gains – taxed at lower rates. If Buffett was serious about the government collecting its fair share of income, he could merely readjust his income structure: take a drastically larger salary (as most CEOs would), and pay income taxes on those rather than at the preferential rates he receives otherwise. But let’s face it: being rich must be difficult. Let’s give the poor guy a break.

Photo credits:

1. http://warren-buffett.org/

2. http://pol.moveon.org/budget10/chart/?id=15734-7176625-v_IiG8x&t=1

3. http://celebrityhub.blogspot.com/2008/11/business-man-warren-buffett-biography.html