Sunspot update

Back in 2009 I did two posts on the unexpected decline in the number of sunspots, and wondered whether that might lead to a period of global cooling.  The sunspots eventually returned, and there is no general cooling trend as yet.

Here we are ten years later, and the blankness of the sun is even more pronounced.  The record for spotlessness is 269 days, set in 2008.  We are at 225 spotless days this year, with two months to go, so the record is in jeopardy.

Electroverse provides more data on this, with some analysis and graphs.  The next solar cycle is projected to be weakest in 200 years.  200 years ago we had the Dalton minimum, when global temperatures fell by 2 degrees centigrade over 20 years, leading to crop failures and food riots.  Some believe that a grand solar minimum operates on a 400-year cycle, and we are at the beginning of just such a cycle. 

Perhaps we can put the Green New Deal on hold until we have more data?

"Taxing the Rich"

Funding the government by taxing the wealthy has always had political appeal. In 1913 the ancestor of today's federal income tax was introduced to chastise the rich by imposing a tax ranging from 2 percent to 6 percent.

The 2 percent bracket started at an income level, in today's dollars, of over $500,000.

The top rate of 6 percent only hit incomes, again in todays' dollars, of $13 million or more.

Times have changed, haven't they? 

Taxes on wealth may trickle down even before they are enacted. Elizabeth Warren's proposed 2 percent tax on wealth over $50 million, for instance. One of her advisers has already suggested a lower tax bracket starting at $l million. 

Dubious Decanting of Grandchildren's Trusts

A potential advantage of decanting, where authorized by state law, is that it may permit a trustee to modify a trust without the consent of the grantor and the beneficiaries or the time, expense, uncertainty, and publicity associated with obtaining court approval of the modification.

          – Michael J. Skeary, "The Power of Trust Decanting"

A wealthy grandmother celebrated the birth of her grandchildren by funding a generation-skipping trust for each new arrival. She served as trustee, with Merrill Lynch as custodian.

When grandmother resigned as trustee because of age, the children's father took over. Decades later, when the grandchildren learned they were old enough to draw upon their trust funds, they found their mother had been named co-trustee. And, according to the childrens' lawsuit, she had moved trust assets into a new trust that entitled her “to all net income and as much principal from the trust property as the trustee determines is necessary.”

For other wealthy grandparents the moral is obvious: Naming a reputable bank or trust company is  worth the trustee fees.

As Candidates Talk Taxes, Remember Hauser's Law

Jim Gust once called attention to David Ranson's column on Hauser's Law.

We should keep the "law" in mind for the next year or so, as political candidates shout their promises to cut taxes or hint at plans to raise them.

Despite ups and downs in tax rates, Hauser's Law states, federal tax revenues hold more or less steady. The tax take persistently hovers at slightly below 20% of GDP.

All those tax billions the Democrats will be hoping to raise? All those billions Republicans will be hoping to shield from the IRS?  Hauser's Law indicates we shouldn't pay them much heed.

Is the Estate Tax a Good Wealth Redistributer?

The concentration of wealth among the very few is a problem. In a WSJ op-ed ten years ago, Art Laffer argued that estate taxation is not the solution:

Advocates of the estate tax argue that such a tax will reduce the concentrations of wealth in a few families, but there is little evidence to suggest that the estate tax has much, if any, impact on the distribution of wealth. To see the silliness of using the estate tax as a tool to redistribute wealth, realize that those who die and leave estates would be taxed just as much if they bequeathed their money to poor people as they would if they left their money to rich people. If the objective were to redistribute, surely, an inheritance tax (a tax on the recipients) would make far more sense than an estate tax.

Brown Beats Harvard, Trounces Yale

We refer, of course, to investment results, not football.

For fiscal 2019, Brown's endowment recorded an investment return of 12.4%

Harvard reported 6.5%.

Yale, a meager 5.7%

Over the same period, a plain vanilla portfolio of 60% stocks, 40% bonds returned 9.4% and the S&P 500 delivered 10.4%.

So take heart! Even the Ivy League elite aren't invincible.

Whisky – a “Robust" Investment?

Would you pay $20,000 or more for a 50-year-old Glenfiddich? How about this high-design bottle of Glenlivet, with contents that date back to the Battle of Britain?

Welcome to the world of collectible whisky. Sotheby's offers this aspirational guide.

To those of us who go into shock at the price of a decent 12-year-old single malt, the notion of collecting rare bottlings seems daft. On the other hand, the everyday bottles on your liquor store's shelves might not be a bad investment. On October 18th, whisky and other European luxuries are due to be hit with a  25% tariff.