Wednesday, November 28, 2007

Soda Jerks: Cradle to Grave

The Nanny Police strike again. Last September seven senior citizens, average age 76, picketed their senior center for cutting off their doughnuts, pies and breads in Putnam County, New York. County officials believed that the goodies, donated free, were unhealthy for our senior citizens. If you live to 80 with poor eating habits, God Bless You. You should be rewarded with whatever let you live so long.

But not for the government nannies! Let’s do to gramps and granny what we have been doing to their grandchildren in recent years.

Growing concerns about childhood obesity has led to drastic deprivations in school diets. 30% of schools ban junk food from their school vending machines. Bake sales are shrinking. Even celebrating birthdays with cupcakes is verboten in many schools. Too much fat, too little joy and happiness!

A backlash is beginning. Cupcakes have seemingly replaced apple pie as the American icon. Indeed, the Texas Legislature has responded with the Safe Cupcake Amendment of 2005. Don’t Mess With Texas or cupcakes

It’s bad enough that sodas are being barred from school children on the grounds that sodas are making them obese. Instead, new healthy, and often uneatable, meals are prepared for the students. As it turns out, a lot of the traditional healthy food ends up in the cafeteria’s waste bins. Anything green is inedible to youngsters.

We are also in the process of removing trans fats from food products. The ban is gaining steam. New York City and Philadelphia have banned the use of trans fats in restaurants. The California Legislature is in the process of enacting bans against trans fats and deep fryers in school cafeterias. Food processors and falling over each other to remove trans fats from their products.

Many consumers aren’t exactly sure what trans fats are, but the phrase sounds bad. Trans fats are essentially the addition of hydrogen oil in the cooking process. They serve three purposes: improve flavor, improve texture, and increase shelf life. They also add highly unhealthy levels of bad cholesterol to the diet.

To some extent the rush to ban trans fats is faddish. Saturated fats are almost as unhealthy, and are present in 10-15% of our diet compared to 1-2% for the reviled trans fats. The next move will be to go after the saturated fats, followed by an intensified drive against red meats.

Once the War Against Soda is won, then we should progress to other killer foods, such as ice cream (Say goodbye to Haagen-Dazs and Ben and Jerry), lunch meats, hot dogs, sausage, bratwurst, pork rinds, and double cheese burgers. Bagels are ok; bagels with cream cheese may not be. Forget those Starbucks’ lattes.

All we may be left with are diet foods, salads (sans fattening dressings), fruits, vegetables and yogurt in the end. Did anyone say government mandated vegans? Even vegetables would have to be organic – no chemicals of any kind. A few fish would be allowed, but none with mercury, thereby excluding tuna, swordfish, and shark.

Diet foods are not the answer. For example, studies have shown that diet sodas do not reduce weight in most persons for two reasons. First, they apparently stimulate the body’s need for additional liquids. Roughly 55% of a woman’s body weight, and 60% of a man’s, is liquids.

Second, some consumers believe that if they drink a diet soda, then they can cheat on the rest of the meal. Indeed, diet foods often result in eating more of something, so the result is the same as eating lesser amounts of fatty foods.

The place to start with dietary adjustments should be in the home – not the schools or senior centers.

The biggest problem for many teenagers is the freshman year of college. We know that for college students the four basic food groups are beer, pizza, fast food, and microwave popcorn.

Today’s growing obesity problem has many causes, including diet and a sedentary life style.

The problem is actually to a large extent a lack of exercise, much of which is the fault of school boards and legislatures, and some the parents. When I was growing up in San Francisco, we were required to take PE through the 12th grade. Now in California it is only into the 10th grade.

We engaged in a highly unusual activity then of actually walking to school, often over a mile. Now most kids are seemingly bussed or get rides from parents. Pizza was a novelty, MacDonald was just starting up, and prepared foods, such as “lunchables” were virtually non-existent. Microwaves did not exist, thereby depriving us of the joys of eating fatty, artificially buttered with the toxin diacetyl, microwave popcorn. Comedians made fun of the new food group four decades ago, known as frozen dinners.

A recent Los Angeles County public health study showed that children in low income communities have obesity rates up to nine times higher than children in affluent areas with ample recreational space. Exercise matters!

Sugared sodas receive the blame for the growing obesity problem. It’s always easier to place the blame on someone else instead of looking in the mirror.

The mounting cascade of pressure resulted in the soda industry adopting voluntary guidelines in May 2006 that would eliminate the sales of sugared sodas to schools by the 2009-2010 school year. This agreement was apparently not good enough. An amendment to the pending, and otherwise bloated, farm bill would impose limits on the calories, fats, and sugar allowed in snack foods sold in schools. It imposes nutritional standards for beverages and sports drinks in vending machines, school stores and other school venues. Only bottled water, milk, juice, or other drinks containing 25 calories or less per 8 ounces would be allowed. Sports drink sales would be limited to athletic areas in high schools.

The Los Angeles City Council, concerned about growing obesity in South Los Angeles, is considering a moratorium on new fast food restaurants in South LA for one or two years. On its face, a rational basis exists for the proposal. Countywide obesity rates rose from 14% in 1997 to 21% in 2005 with 30% in South LA. 45% of the 900 restaurants in the area are either fast food or have limited seating capacity.

On the other hand, the proposal defies economic reality. Fast food provides both the taste and low pricing attractive to the residents. The idea of placing upper scale, sit down restaurants in these areas is not economically viable at the present time. In addition, many of fast food restaurants offer healthy alternatives on their menus. They are just not as popular as the traditional greasy burgers, salty fries, cheesy pizzas and tacos, footlong grinders, and high cholesterol shakes.

All these bans also defy evolutionary biology. Humans are omnivores. Our ancestors were meat, fish, berries, nuts, vegetables and grain eaters - whatever was available, with an emphasis on meat. Our ancestors ate more red meats than we do today.

Those who daily eat junk food and then gain 100 pounds, should not be suing fast food restaurants, but look into the mirror to spot the responsible party. I’m waiting for the lawsuits against Coke and Pepsi for making victims fat.
Marie Antoinette supposedly said “Let them eat cake.” We say “Let them eat cupcakes

Tuesday, November 6, 2007

Warren Buffett is Undertaxed

Warren Buffett is undertaxed. We know this because he told us so at a million dollar Hillary Clinton fund raiser on June 26, 2007. He stated he paid only 17.7% in taxes on income of $46 million, a lower tax rate than any of his staff.

He revealed his secretary, earning $60,000, paid a 30% tax rate, and the average tax rate for his staff was 32.9%.

Several observations are immediately apparent. First, his secretary is grossly underpaid. The secretary, or executive secretary, or administrative assistant, to a multi-billionaire is certainly worth much more than $60,000.

Second, he never tells us the source of his taxable income, but it apparently is not from wages and salaries. Therefore, his income is derived from capital gains, dividends, and interest on prior investments. Dividends and capital gains are taxed at a 15% rate to encourage capital investment - the key to economic growth in America.

He should also release his tax returns for the edification of the American public.

We can safely assume that much of the tax burden on his employees is from the highly regressive social security (FICA) and Medicare taxes (FICA-HI) since the marginal tax rates of his obviously undercompensated employees are only 10% or 15%. The proper corrective action would be to lower his staff’s taxes or pay them more, but he never advocates for lower taxes for the rest of us. Unfortunately, the future prospect is that these taxes will increase as the base level for social security taxes automatically rises yearly. His Democratic friends are always happy to raise these regressive taxes, as well as the equally regressive sales, tobacco and alcohol taxes. Such compassion for the underprivileged!

Warren Buffet also opposes any lowering of inheritance taxes. The rank hypocrisy of this multi-billionaire is monumental. His estate planning will result in minimal, if any, inheritance taxes from one who professes to be undertaxed. He has almost eliminated any prospect of his estate paying inheritance taxes by donating $30 billion to the William and Melinda Gates Foundation. He has also made it clear that his children should expect nothing from him when he dies. What a loving father!

He earlier complained that the property taxes on his Laguna Beach house were also too low because of California’s Proposition 13. Maybe he should move to California and enjoy our 10.3% marginal tax rate on millionaires, including dividends and capital gains. He should immigrate to California to offset the flow out of California expatriates upset by California’s already high taxes and poor business environment.

If Warren Buffet sincerely bellies he is undertaxed, a simple solution exists. Talk is cheap. He can always put his money where his mouth is by voluntarily writing out a larger check to the IRS, thereby paying more. The solution to his being undertaxed is not to raise the taxes on the rest of us.