Letters: Speculators and the Price of Oil

In “Speculators Get a Break in New Rule” (Fair Game, Sept. 25), Gretchen Morgenson noted how Senator Bill Nelson, Democrat of Florida, was objecting to a Commodity Futures Trading Commission rule proposal regarding how many financial contracts traders can accumulate for any given commodity.

Mr. Nelson cited research showing that speculators may now be adding $21 to $27 to the cost of a barrel of oil — or about 25 percent of the total.

If so, why allow speculators who cannot take delivery of any commodity to buck up the Consumer Price Index and defeat all growth in the rest of the American economy?

Just imagine the uproar that would ensue if anyone seriously proposed a new $20-a-barrel tax on oil. Albert Henderson

Milford, Conn., Sept. 25

A Progressive Flat Tax

To the Editor:

In “Darwin, the Market Whiz” (Economic View, Sept. 18), Robert H. Frank says adoption of a flat tax “is unlikely because it would fall disproportionately on people with lower incomes.”

That problem is easily solved by exempting from taxation, say, the first $25,000 of income. Someone making $25,000 would owe no taxes. Assuming a 20 percent tax rate, someone earning $50,000 would owe $5,000 in taxes (20 percent of $50,000 less the $25,000 exemption), an effective rate of 10 percent.

The tax on $100,000 of income would be $15,000 (20 percent of $75,000), an effective rate of 15 percent. On $1 million in earnings it would be $195,000 (20 percent of $975,000), an effective rate of 19.5 percent.

Such a “progressive flat tax” could satisfy conservatives with its flat rate, and liberals with its progressive effective rate.

Steve Nelson

Washington, Mass., Sept. 19

2 Pictures, 2 Messages

To the Editor:

In the Sunday Business section of Sept. 25, one article profiled Christine Lagarde, the new managing director of the International Monetary Fund (“Mme. Lagarde Goes to Washington”), and another featured David Barger, chief executive of JetBlue Airways (“Early Access as a Fast Track to Learning”).

Under Mr. Barger’s picture, the caption described a business lesson he has learned. Under Ms. Lagarde’s photograph, the comments were about her wardrobe.

And you believe that you are not tilting against women?

Jacqueline Heneage

Bridgeport, Conn., Sept. 25

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