Is Canadian Income Tax Unconstitutional? (Hint: No)

One thing that seems to cheer up my American skeptical friends is when they discover Canadians have their fair share of wingnuts and loonies. I gather many Americans view Canadians as reasonable people and not given to the nastiness that has emerged from the so-called Culture War. So when Americans find out Canadians are as bonkers, it gives them hope that maybe the inmates are not in charge of the insane asylum.

One of the odder claims by some is the idea that income tax is unconstitutional. Wesley Snipes’ problems with the IRS have brought some larger media attention to the notion that some people have the odd view they can ditch out on paying income tax by simply asserting income tax is unconstitutional. This ghost-shirt type tax dodge strikes me as wholly silly. Sure you can direct people to things like the 16th Amendment but at the end of the day I think the most powerful argument that there is nothing to this claim is the fact that no major law firm has ever, ever, ever taken up a class action lawsuit. You would think if the unconstitutionality was so obvious and clear cut to a B-list movie actor and people who mint their own gold currency that it would be as clear cut to big time law firms always hungry for the next big money class action suit. That no group of powerful lawyers have ever, ever, ever taken up such a suit in the last 40 years, won, collected a 40% cut, and then bought France with the proceeds indicates to me that most sane, rational legal minds fully understand income tax passes constitutional muster.

Incentivize peaceful protest

My current city of residence is Toronto. That’s in Canada. Toronto, this weekend, will be hosting the G20. As has become custom since the Battle of Seattle, protestors like to turn out to these things and like to get violent. Starbucks, ATMs, Nordstroms Rack, they’re all fair targets for the mallets, bricks, and firebombs of these radicals who seem to think property damage is the most efficient method of remaking the world into whatever paradise they think they can make the world.

China to let Yuan float freely or not?

On Friday, the People’s Bank of China announced that “the People’s Bank of China has decided to proceed further with reform of the RMB exchange rate regime and to enhance the RMB exchange rate flexibility.” On the heals of this announcement, commentators and the media lauded this as progress. After all, the G-20 meeting is coming up in a few weeks and it would have been horribly unpleasant for the Chinese had they not conceded something on currency maniplution (or “managed” as the Chinese prefer to call it).

I couldn’t help but notice that the statement contained absolutely nothing about timing or magnitude. In fact, the statement goes painfully out of its way to say significant adjustment is not necessary:

With the BOP account moving closer to equilibrium, the basis for large-scale appreciation of the RMB exchange rate does not exist.

So there you have it. Frankly, I think this is likely to be “vapor-ware” of sorts. So far, the Yuan has appreciated since the announcement. Let’s see how far it goes and how long it lasts.

Iran moves back to the Dollar

Iran announced way back around 2006 that it would sell more oil for Euro’s and transition away from U.S. Dollars. This was of course ammo for the “collapse of the dollar” crowd. After all, the U.S. imports enormous quantities of crude and so the dollar must be losing its reserve status if we can’t even buy oil with dollars right?

Well, Iran has just announced a giant about face. You see, they are curtailing oil sales in Euros and going back to the Dollar. Turns out the Euro isn’t so great afterall. Oh, how sentiment changes fast! As I’ve argued before, the Dollar may be an unattractive currency, except for all the rest!

High hopes for Buffett’s testimony

Warren Buffett was called to testify in front of Congress today. He was hauled there against his will and made no opening statement. The reason he was called to testify is to forcibly share his thoughts on Moody’s and S&P, the ratings agencies which lie at the heart of the housing bubble.

In typical Congressional fashion, I expect the committee to challenge and charge the panel about their mistakes. It is painful to watch clueless Congresspeople attack executives. Buffett, who is Moody’s largest shareholder, has nothing to do with Moody’s business decisions, so his presence is merely for show.

My hope- which I highly doubt will come to fruition- is that when the committee points the guilty finger at the ratings agency’s (which they will) and Buffett responds with something about how Congress enabled Fannie and Freddie had FAR more to do with the bubble than he. Oh, how I wish just one person would push back against these stupid hearings. Wouldn’t it be great for the world’s greatest investor to chastise Congress’ stupidity?

I can dream anyway.

Satirical Op Ed on Financial Reform

Over the weekend, Michael Lewis posted a satirical piece on the state of financial reform in the New York Times. It’s a good read, check it out: Shorting Reform