And the poll says......

Have you ever been part of a Gallup Poll or maybe a Quinnipiac University Poll?  (Is that a real school?  Do they play football?  What conference are they in?)  According to the above poll of pollsters (haha!) they're in the believable category.  Political party polls and news media polls, not so much.

I'm always hearing about how the American people are in favor of or against blah blah blah, but if you look at how Americans say they feel about contemporary issues, and then look at how Congress is representing us with their votes, you'll see a definite disconnect. 

We say we want immigration reform, and our politicians nod and agree, and then passively do nothing, or worse, the exact opposite.

We say we don't want trade tariffs, and our politicians nod and agree, and then just sit on their thumbs.

We have opinions on various gun control measures, ditto.

We tell them how we feel about taxes, and health care, and they tippy toe around them and do nothing.

Here's a typical day for a Washington politician:  They meet for breakfast with a lobbyist who says his client wants X, then meets with a trade group from "back home" who says they do not want X.  He poses for pictures with his constituents, passes out ceremonial Congressional paper weights, thanks them for their opinion, promises to keep in touch, then goes out and votes for X, which is slyly buried in a bill promising to end puppy mills, 'cause, you know, everyone wants to end puppy mills, right?

Then two months later he's the speaker at an event back home, and they treat him as if he was royalty!  People are scared to speak up and hold his feet to the fire, or throw him in the fire, because....I have no idea why.

What's the point of public opinion polls if our public servants (wow....there's an oxymoron!) pay us no attention?

S

A challenge for the GOP

WARNING!  Back yourself into a corner, sit down, and hold on to your wallets.  The politicians are putting together their budgets. 

The Republican Party has for years called for cutting, or at least not raising, taxes.  It's the glue that holds that party together.  Every two years they run for re-election proudly proclaiming that they didn't raise taxes on their watch.  

They are equally adamant about their opposition to "re-distribution", the policy of taking money from one class and giving it to another.  And the Democratic Party just smiles and lets them get away with it, as they are silent partners in this sham.

Sham?  What ever do you mean, Lowandslow?

It's all about the definition of "tax".  To my way of thinking, taking money from my pocket and putting it in the government's pocket is a "tax".  But what about all those "fees" and licenses we're required to pay?  Whenever the pols need a few more $$$ they just raise "fees", never "taxes".  What's the difference between a "tax" and a "fee"?

Example:  Years ago I had a nursery license (landscape, not the juvenile holding facility kind).  It originally cost me $10 a year.  Then it went to $30 a year, then $90, and when it got to $300 (?) I decided it wasn't worth it and let it lapse.

I'm sure the same can be said for licenses for electricians, plumbers, beauticians, exterminators, etc.  Likewise the cost to get your yearly auto registration and safety inspection has greatly outpaced inflation.  

Wanna go to a state or national park?  It'll cost you more than it did a few years ago.  The list of things we have to pay for that falls outside the traditional definition of a "tax" is long.  It may seem like small stuff, but it adds up.

Oh...and toll roads!  In my state, because the politicians won't dare raise the gasoline tax, which is used to build and maintain public roads, they've come up with a new scheme:  set up new "tollway authorities" and let them build the roads and charge tolls.  Or worse, let them take a road we've already paid to build and turn it into a toll road.  I spend well over $1000 a year on tolls.  Now we're talking BILLIONS!  But at least they didn't raise my taxes.  Whew!

And isn't a "subsidy" really just a "re-distribution"?  When taxpayer money is given as a subsidy to the oil industry, Big Pharma, Big Ag, Wall Street, etc, by my definition that's a "re-distribution".  I once had that money, then government got it and gave it to someone else.  Someone with political connections no doubt.  Same with tax loopholes.  Added up, these total HUNDREDS OF BILLIONS OF DOLLARS!  But it's OK...sleep well...they aren't "taxes".

Here's my challenge for our politicians, particularly the Republicans as they seem to hold all the cards these days:  Declare all things that require us to pay our money to the government a "tax".  No more "fees" or other obfuscated terminology.  

Declare all things that transfer our money to someone else a "re-distribution".  And when one group can avoid paying taxes (formerly known as a loophole), requiring another group to pick up the slack, that should also be declared a "re-distribution".

Now let's see 'em backtrack, declaring tax increases to not be so bad after all.  But...but...uhh...

Here's my point:  Don't bullshit us.  Admit the government needs money to conduct business on our behalf.  But instead of lamenting HOW MUCH we're paying in taxes, concentrate on HOW IT'S BEING SPENT.  Right now we're not getting our money's worth.  

Waaaaaay too much taxpayer money is being wasted on crap stuff that is of minimal if any value, and waaaaaay too much taxpayer money is being handed out as political largess.  The bureaucrats and political insiders are living very well at the expense of the rest of us.

Politicians need to learn that The People won't mind paying taxes IF THEY FELT THEIR MONEY WAS BEING WISELY SPENT.  Right now we're NOT feeling the love.

S

It's not "what were we thinking?" but "ARE we thinking?"

It's said by middle class Americans that one class pays taxes, and another class gets the benefits.  That is probably greatly exaggerated, yet I would agree it still holds some truth.

Yes, we all benefit from police and fire protection, public sanitation, a strong military, the (increasingly irrelevant) postal system, etc, but individually, most of us in the middle class simply don't qualify for any public perk.  We pay for them, yet we "make too much" to qualify ourselves.  No wonder we're resentful.

Europeans pay considerably higher taxes than we do, but I've read that most pay it willingly (Greeks, Italians, and a few others excepted) because the average taxpayer there personally gets something in return.  Higher education is subsidized or is free, health care is subsidized or is free, day care is subsidized or is free, elderly care is subsidized or is free, and so forth. Not just for the poor, but for everyone.

I'm not saying we should necessarily emulate European socialism, but just pointing out how even middle class taxpayers there recieve something for their tax  dollars....er....Euros.  They're getting "bang for their buck".

If you're middle class in America, you're on your own.  You pay, you just don't get your money's worth in return.  As long as you have a good job and believe a bright future awaits you, you'll pay for your kid's daycare and college tuition, mom's nursing home, etc, out of your pocket and still pay your taxes and not think much of it.  But in this age of globalization, that often isn't possible any more.  

Anyone remember when Ross Perot ran for president back in 1992?  Free trade agreements were the hot topic back then (the opening salvo of globalization) and Ross said, "That giant sucking sound you hear will be American jobs going overseas." Prices were cheaper at Walmart, so (almost) everyone was happy.  We lost a few jobs initially, but no big deal.  

The next year, a few more jobs left, but the price of a toaster was cheaper still so who cared?...on and on.  Now the news (USA Today, Yahoo) reports that 4 of 5 middle class Americans are fearful of their future and are essentially just hanging on.  

Yes, we're creating new jobs once again, but they generally aren't anywhere near as high paying as the ones we've lost.  We're constantly lowering the bar.  

~~~~~~~~~~~~~~~

A real world example of the mess we've caused for ourselves:  Our roads and bridges are crumbling.  They say it will cost hundreds of billions of dollars to fix them, money the state and federal governments don't have.

Road maintenance and expansion are paid for with gasoline sales taxes.  Because new cars get better (mandated) mileage these days, more people can drive more cars more miles and still buy less gasoline.  They put more strain on our highways, yet pay less taxes to maintain them.  

We really need to *gasp* raise gas taxes.  In my state most of our new major roads are toll roads.  So now I'm not paying more taxes, but I'm paying tolls instead.  My wallet can't tell the difference.  

Paying more taxes isn't necessarily a bad thing IF YOU CAN SHOW ME I'M PERSONALLY GETTING SOMETHING OF VALUE FOR IT.

The politicians are just playing games with us.  Yet by touting their tax cutting record, we keep re-electing them.  We've become a nation of airheads.

S

Just stirring the pot....plus a double feature

Time for me to make at least half of you mad, and maybe all of you.  A topic back in the news today has touched a nerve....immigration reform.

On the face of it undocumented workers who literally wade the river or jump the fence ARE ILLEGAL.  It's undeniable.  The knee-jerk reaction is to round them up and send them back.  IMO, that is probably the worst thing we could do, and probably impossible to do, too.

Truth is, we NEED these people.  Stop and think about it....without them most of our restaurants would simply not be able to function.  They grow and harvest our crops.  Roads and bridges, not to mention homes or office buildings, would not be built.  Landscape companies, janitorial companies, all sorts of blue collar companies would go out of business.  They do honorable work that we want and need and value.  

And no, there aren't enough native-born (white, black, or brown) Americans to fill those positions if all the illegals were sent home.  There are "Help Wanted" signs out there right now and I don't see whites or blacks lining up to apply.  I frankly doubt that even much higher wages would entice enough whites to fill those positions.  Consumers simply can't pay more for their daily necessities.  Our buying power is stretched now.

So what form should immigration reform take?  I have no idea, but I know we need to agree to something that will make these illegals a legitimate part of our economic landscape.  Industrious, clean living undocumented workers should be made taxpaying partners in America.

This ties in with another news bullet that just popped up on my 'puter:  Whites in America had more deaths than births last year for the first time ever.  We need MORE workers to pay taxes, and we can't count on those new workers being white.  

We'll need to either raise taxes or make even deeper cuts in services, including defense, and as the recent sequester has shown, we squeal like 2-year-olds when you ask us to do without something.  The solution (to me) is obvious.

OK, rip me.

S

PS....I had another post in the que, but decided this one was more "in the news".  It follows if you're interested.

"Hi....I'm from the government and I'm here to help", or "Bend over and feel the love"

Imagine for a minute you decided you wanted a new computer, but you didn't want to go into debt for it.  Then you heard of a merchant who would sell you one on an old-fashioned layaway plan....you paid monthly, and when you'd paid in full, you could go and pick up your purchase.  It was sale priced, so you jumped at it.

This was the prize you were promised.

After working hard day after day, looking at the picture of your new computer stuck to your refrigerator door with a little magnet, waiting for the day when you could get your hands on it, you go to the store to claim your hard earned prize, and this is what they handed you....

Then they tell you they miscalculated....they couldn't deliver on that new computer after all.  Their projections were way off, they were operating in the red, costs were up, revenues were down, times were tough.  Never mind what they promised, but this was all you were going to get.  Sorry.

This is essentially what is threatening to happen with Social Security.  Most Republicans and more than a few Democrats have decided that "entitlements" must be cut if we're ever to have a balanced budget, or even a manageable deficit.  It seems the politicians have over-promised.  *shock!*

Only one little problem....people PAID into Social Security all their working lives in order to have that little pot of money waiting for them when they retired.  It's THEIR money!  Anything they could put aside over and above Social Security was great, but at the very least they had their Social Security waiting for them.   Now the gubment is considering taking at least some of it away.

"Entitlement" means they've already paid for it and they are entitled to receive it.  IMO, at this point it's a right, not a privilege.

This might be a bit more palatable if they had scrapped the entire tax code and put in a new one that treated everyone equally, but they didn't.  There are still subsidies and loopholes sprinkled throughout the old code, robbing the gubment of revenues it needs to keep above water.  And now they want to change the Social Security rules in the middle of the game to make up for their wild promises elsewhere.

Loopholes and subsidies are not paid for in advance.  They are pure and simple freebies to the recipients.  They are not entitled to them.

So people who are "entitled" to something are (maybe) not going to get it, while people who are NOT entitled to something can still count on getting theirs.

I could not in my wildest dream imagine a more dishonorable idea.  Considering it's coming from Congress I guess I shouldn't be surprised.

Oh....and Happy Tax Day.  :)

S

Catch me if you can....

In a post a while back I suggested it was likely that, due to the middle class being so squeezed, more and more people will start working for cash and not report their income, or at least not all of it, to the IRS.  More than a few of you commented my scenario was unlikely.  Consider this:

Here are some statistics from a German university study in 2006 showing the size of the "shadow economy" (% of the economy not reporting income/paying taxes) in a number of advanced western countries:

   Greece                 28%
   Italy                      25%
   Spain                    22%
   Portugal                21%
   Sweden                18%
   Germany              16%
   UK, Netherlands   12%
   US                          8%

(There are other more current studies, too, but this one was the easiest to pull numbers from.)

Closer to home let me share a few actual examples I have personal knowledge of:

Last year (2012) I was approached by a guy who owned a specialty grocery store about building him a house.  He wanted to pay me $200,000 in cash and then have the balance documented on a sales contract.  This would make it look like the house cost $200,000 less than it actually did.

I suspected he was skimming cash from his business and needed to burn it off, and/or he wanted to claim his house cost less than it actually did for property tax purposes.  I wanted nothing to do with him and declined.

Today his house is being built by another builder.  Is that builder working under the same terms I was offered?  If he is, is he going to report the $200,000 in cash he received?  I don't have answers to these questions, but the opportunity to cheat is certainly there.

I have a cousin who owns a masonry supply business.  He tells me he has numerous customers who do small brick and stone repairs for individuals on a cash basis only....$200-$300 at a time, several a day....and that's how they pay for their materials, too....in cash.  Do these small one-man operations pay taxes on any/all of this cash income?  I don't know, but I have my doubts.

I know a guy who has a residential window washing business, and he works on a cash basis only.  He quit his full-time career with benefits and made this part-time job his full-time business.  He's single and has no employees.  Whether he pays taxes on his cash income I don't know, but his lifestyle suggests he doesn't.  Regardless, the opportunity is there to cheat.

I have more examples, but I believe these are enough to prove my point.  I think more people than you might imagine would jump at the chance to screw the government out of some taxes if they could.  Look around and you can probably see similar examples where you are, too.

And these are just the small-time tax cheats.  The big boys don't pay their taxes....legally and with congress' blessing....by sending their money to low-tax/no-tax havens offshore.  I recently read in the Economist that these havens hold tens-of-TRILLIONS of dollars from all sources worldwide.

Why should you care?  Because what they don't pay, you do.  Sorta makes signing that tax check a bit more infuriating, doesn't it?

S

In Seattle latte's are out....Cheetos are now in.

It looks like Seattle has enthusiastically embraced the recent vote to legalize marijuana in Washington.  ;)

So today is 12.12.12, a "once in a lifetime" event.  Do you have anything planned to celebrate?  Fuzzy's is offering $1.20 tacos all day.  WooHoo!  Yeah, I know....kinda pitiful, huh?

I understand there are women having C-sections in order to deliver their babies on 12.12.12.  Isn't that kinda extreme?  Is it really that big deal?

I see that Ravi Shankar, the famous Indian sitarist, has passed away at age 92.  I never cared for that kind of music, but I surely do enjoy the music his daughter, Nora Jones, makes.

It's looking more and more like we're going over the fiscal cliff on January 1st.  Get out your wallet and prepare to fork over more taxes to The Gubment.  Now they're saying that even if Bronco Bama and John Boner can come to some sort of Grand Compromise, Boner can't deliver the votes from his ultra-ideologically conservative Tea Party faction.   Prepare to be thrown under the bus. 

~~~~~~~~~~~~~~ 

At our house we don't need no stinkin' "atomic clock".  We have Luke the Wonder Dog.  His internal body clock is uncanny.  Every day, 7-days a week, he wakes up at the exact same time and wants to go outside.  He eats at 6am.  If you're 5 minutes late he'll tell you about it in no uncertain words terms.

At 7:15am he wants to go outside again, not to take care of any bodily function, but just to take a stroll.  Before K goes to work he wants to play chase round the house.  That's a new one.  K did it a couple days in a row and now it's a part of his daily routine.

His other new one is at 7:15pm....that's ice cream time.  I'll often have a small (Weight Watchers) ice cream bar, and he gets to lick the stick when I'm finished.  He doesn't like to be told "no", but he's learning, much to his chagrin.  He's definitely a creature of habit.

Oh....gotta go.  Luke's calling.  ;)

Happy Hump Day.

S

My downsizing saga, Pt. 1

I've been a custom home builder for nearly 40 years.  Inflation, zoning laws, and buyer's tastes being what they are, most of the homes I build today are very large and cost well over $1M (just the kitchen appliances cost more than my first home) and look something like this:

(Sorry for the small photos.  Any larger and they lost sharpness.)

Maybe that's why big swanky houses hold no special allure for me....I see them every day.  *yawn*  For myself I built a more modest-sized home....3,147 sq feet, two-story, corner lot, study, 24' x 36' Great Room, etc.  (I know...what was I thinking?)  When I met K and first brought her to my home her jaw hit the floor when she walked in.  To me it was just run-of-the-mill, but to her it was "a mansion".  She loved it at the same time I was tiring of it.  That was in 2006.  By 2007 the economic outlook was getting scary.  By 2008 it was obvious to me it would be "man-the-lifeboat" time very soon.  I could see a little pro-active strategic planning was in order.

In retrospect I'm the last person who should own a home.  I HATE yard work, but with a next-door neighbor who was Mr. Yard-of-the-Month I had to put forth at least some effort.  To me a yard is just a place for the dog to crap.  I don't entertain much at home, and never have any overnight company. 

I DETEST doing maintenance of any kind, but of course I do it (grudgingly)....I want things to look good and work right.  I flip the switch and expect things to come on.  Unfortunately things don't always work like that and my home was by then at the age where maintenance / repair was becoming a regular occurrence.

My kids were long since grown, educated, married, and on someone else's payroll.  I had bedrooms....an entire upstairs even, unused.  When is a 24 x 36 foot Great Room too big?  When you have to wave your arms and yell to get your mate's attention.  And besides, when you're in bed asleep you can't tell if your bedroom is 13 x 13 or 23 x 23.  The thought of paying for all that unused space, and paying taxes on it, and insurance, and utilities, etc, was really bugging me.

I knew it was going to break my new bride's heart to give up her "mansion", but she deferred to me (thank you Sweetie!) and let me put it on the market.  My timing was fortunate....values were still up there and financing hadn't yet seized up.  We sold it before the economy "hit the fan" and did well.

Since K had been driving 50 miles round trip in heavy traffic daily to work I told her we'd rent a 2 bed, 2 bath apartment somewhere closer to her work for a while and we could address another, smaller home later.  My plan was moving forward.  

That's where I'll leave the story for now.  Part 2 tomorrow.

S

Are we being played for chumps?

The "fiscal cliff" is apparently the only news out there these days.  That's all I hear...fiscal cliff...fiscal cliff...blah...blah...blah.  Both sides agree spending will have to be cut.  The devil will be in the details, I understand, but at least it's a start.  The sticking point is taxing the rich.  The Democrats say it will bring in a gazillion dollars and help reduce the deficit.  The Republicans say it will cripple job creation.

Here is my question:  How will raising taxes on the rich, the "job creators", hinder hiring?

The argument seems to be that if taxes go up on the rich (actually if the Bush tax cuts aren't extended to the rich), they won't have the capital (money) to finance new entrepreneurs or fund business expansion, therefore no new jobs.  

Here's the fly in that ointment....the rich already have TRILLIONS of dollars (the Wall Street Journal estimates $1-2 Trillion) sitting on the sidelines not currently invested.  Our economy isn't strong enough to support all these new businesses the Republicans envision, and there isn't any place in China or Europe to invest this money either.  (China is slowing and Europe is a basket case.)  It just sits.

The money to invest in new job creation is there NOW.  How will any MORE money in the pockets of the wealthy create any new jobs?  This money has been in their pockets for a DECADE, since the GW Bush administration.  So where are the jobs?

Somebody please (honest question) explain in terms I can understand how tax cuts to the rich will somehow create new jobs while the money sitting there right now can't?

The wealthy seem to like the sound of the term "job creators" and have made it their justification for existing, and their Republican puppets in Congress happily spout it every chance they get without ever explaining it.

In fairness, let me admit right now I think an entirely different set of special interests are pulling the strings on their (Democratic) puppets in Congress, too.  It's a pretty sleazy game they play in Washington and you and I are the big losers.  If you'll just follow the money trail you'll see who the big winners are.

S

The "Pelosi-Ryan" connection

Yesterday on the news I saw GOP Veep candidate Paul Ryan trying to explain why Mitt Romney won't divulge any specific tax loopholes he would close or what tax rates he would set if he's elected.  They're being vague, he said, "....because we want to get it done."  He went on to say, "We don't want to presume to say, 'Here's exactly our way or the highway, take it or leave it Congress.'"  Huh?

Ummm, Paul....that's exactly what the Tea Party "Young Guns" have been saying since they got to Congress:  "Here's what we demand, take it or leave it."  No compromise, no way.

And didn't the Republicans lambaste then-Speaker Nancy Pelosi for her quip during the debate over health care reform when she said, "We'll just have to pass this bill so you can see what's in it"? 

Aren't Romney and Ryan doing the same thing, in essence saying, "You'll just have to vote for us so you can see what were going to do with your taxes"? 

One of my favorite old sayings is, "If you're not part of the solution, then you're part of the problem."  Looking around Washington today I see lot's of "problems" and very few "solutions".  

Even though you might have some potential solutions, unless you're willing to work with others, you have nothing.  Therefore you're still a "problem".

Whenever politicians, any politicians, try to fluff me off by just saying "trust me and I'll fix everything",  I immediately grab my wallet and back myself into a corner, 'cause I'm fixin' to either get robbed or screwed....quite likely both.

S

"Now you see it....now you don't."

I recently read that the Greek government, which we all know is an economic basket case, is about to finalize a treaty with Switzerland that will allow them access to the records and the money, estimated to be up to 20 billion Euros, that wealthy Greeks have parked in Swiss banks as a tax dodge.  This follows on similar treaties that Germany, Austria, the UK, and I believe the US, too (?) have negotiated, all to catch tax cheats and bring in more dollars, pounds, and Euros to the respective government coffers.

The problem is, however, that there is a lag time of many months after signing a treaty before it goes into effect.  The wealthy, some say with the help of their Swiss bankers, are using this interlude to move their money to new tax shelters being set up in wealth-friendly Hong Kong and Singapore.  In other words, it's still out of reach of the tax revenooers.

Here's my question:  In this country at least, the wealthy argue that their taxes should be cut dramatically because it is they and their money that create jobs.  If billions of dollars (some say TRILLIONS of dollars) are constantly on the move in this giant shell game of tax dodge, how is that creating jobs?

Somebody please 'splain it to me.  What little business acumen I have doesn't understand how this ultra-high-roller game is played.  Seems to me this is just making the case for those who argue "the rich get richer".  What am I missing?

S

"A fast nickel is better than a slow dime"

I recently saw a short 5-minute video presentation by Nick Hanauer, a mega-millionaire capitalist.  He had an interesting perspective that really got me to thinking.  You can see it here if you're interested.  His position is that the rich will benefit more in the long run if we raise taxes on them now and in effect subsidize the middle class.  Huh?


He disputes the idea that raising taxes on the rich will kill job creation.  He says entrepreneurs do create a few new jobs initially, but unless the middle class has enough disposable income to buy what the new companies are selling, the new businesses will stagnate or even fail.  Only when a company has more customers than it can comfortably serve will it expand and hire and thrive.  Why would a company hire new people unless they had enough customers to keep them busy?  The 1% can't buy enough to compensate for the millions of unemployed/underemployed who can't buy much of anything.  It's a simple numbers game.


Then the next day I read a news article that said the Big Three automakers are booming, running their factories at near 100% capacity, and are adding more shifts and hiring new people, just like Mr. Hanauer suggested they would.  I doubt the 1% are buying very many Chevys, Fords, or Chryslers.  (They're more the Mercedes / Lexus / BMW type.)  This is all due to middle class demand.


The middle class and only the middle class have the numbers to be able to consume in the quantities necessary to stimulate the economy and create jobs.  And when the companies they own thrive and become hugely profitable, the 1% will benefit handsomely.  Give up a little today (higher taxes) to get a lot more tomorrow (higher profits).  It's called "priming the pump."


It's just like the business advice my dad gave me decades ago:  "A fast nickel is better than a slow dime."  Think about it.


S


(For the record, I'm a moderate Independent, distrustful of both political parties.)

I want it, I just don't want to pay for it

I don't understand why people are so "anti-tax".  Don't get me wrong, I don't want to pay more than I need to, but the way our system works, if you want something, you have to pay for it.  You want a nice car, you have to pay for it.  A new shirt....get out your checkbook.  If your computer breaks, you have to pay to have it repaired.


In this election season all I hear are Republican candidates (here in Texas at least) say they won't raise gasoline taxes.   Any candidate who says he would raise the gas tax is immediately vilified by the Tea Party, and his chances of winning in November fall to 0. 


Back to my original point:  the same people who are dead set against an increased gas tax are the same ones who complain about potholed streets and our congested roads.  People....where do you think the money comes from to repair potholes and build new roads?  Our state gas tax!  While our increasing population requires more cars, necessitating more roads, causing more wear-and-tear, they're buying fewer gallons of gas (because newer cars get better mileage) and paying less gasoline taxes.  


You want it, you gotta pay for it.  Simple as that.  I don't think these Tea Party-types think things through very well.  They hear "tax" and immediately freak out.  You can't have it both ways.  There is no Street Fairy.


S

I want THEIR tax guy....

Several news sources reported over the weekend that the most valuable, most profitable company in the world, Apple, is a tax-paying lightweight.  Or to put it another way, Apple is a tax-avoiding heavyweight.  


Last year Apple had profits of $34.2B dollars, yet paid only $3.3B in taxes.  That's a rate of just 9.8%, which is 1/3 less than the average corporate tax paid by other Fortune 500 companies.  By comparison, Walmart paid a rate of over 24% in corporate income tax.


And it's all perfectly legal.  How'd they do it?  By claiming that most of their profits were made by Apple entities located in foreign, low-tax places such as Ireland, the Netherlands, and various post office boxes in the Caribbean.  US taxes are paid based on where "value is created".  If you were making cars or appliances or almost any other tangible product, the place where the factory is located would be where "value is created" and that's where taxes would be paid.  But with intangibles like patent royalties and intellectual property that can be pretty much anywhere they want it to be.  That's why 70% of Apple's profits are made *wink* outside the US.


I don't blame Apple or any other company who takes advantage of this gaping tax loophole.   I blame our congress who created it and does absolutely nothing to fix it.  But with a TRILLION dollar deficit why wouldn't they at least try, you ask? 

Simple....campaign contributions, aka legal bribes.  "Big Bidness" likes our tax system juuuuuust the way it is, thank you very much....subsidies, loopholes and all.  And they make lots of "contributions" to make sure it stays that way.  (And BTW...they're "legal" bribes only because those receiving the bribes are the same ones who get to define "legal".  Pretty sweet, huh?)

S

Taxes....the good, the bad, and the ugly

This week it's all about taxes.  First the good:  April 17th is Tax Freedom Day.  The average American has essentially paid all the money he's earned so far this year to Uncle Sam to satisfy his tax bill.  After tomorrow he'll be working to put money in his pocket.  YEA!!


Now the bad:  Your taxes are due today.  Pay up.  BOO!!


Finally, the ugly:  IMO most Americans wouldn't mind paying their taxes IF we felt our government was being run efficiently and fairly.  I've heard it said that most Europeans don't mind paying much higher taxes than we do because they feel like their government is run efficiently (?) and they're getting something for their money.  A college education is inexpensive or even free for most, child care is free or heavily subsidized, unemployment and job re-training is much more generous, etc.  We won't even go into health care.  


Yes, those things cost a lot of money, and Europeans are taxed through the nose to pay for it (except the Italians and Greeks apparently), but at least they get something for their tax dollars...er...euros.  And yes, since the end of WWII NATO (read: the USA) has covered much of the cost of their national security, leaving them more money for their social programs, but still....  (European readers, if this is not true please feel free to correct me.)  


By contrast, here in the US we have a system that taxes one group and generally gives the benefits to another group, fomenting class conflict.  For example, I had to pay 100% of the cost to have braces on my kid's teeth.  I didn't qualify for any type of government help.  (Here in Texas kids on Medicaid can get them for free.)   College....100% on me.  We made too much to qualify for any grants.  Child care....no government assistance for us.  I know some will say, "But Scott, you could afford to pay for those things for yourself."  I disagree.  It was a HUGE struggle for us at the time.  We had to go without a lot, but my tax bill still came due on April 15th.  Imagine paying for car insurance, then having an accident and being told you didn't qualify for a repair because you made too much money.  Same principle.  You can imagine how such treatment might lead to "tax resentment".


Yes, of course, the rich pay LOTS in taxes, but they also get LOTS of special treatment / tax breaks, etc. And corporations....somebody 'splain to me again why we give BILLIONS of dollars in subsidies to highly profitable companies like ExxonMobil, ChevronTexaco, ConAgra, and others?


Here's my point:  I'm not necessarily suggesting we should adopt Europe's social programs.  We can't afford what we have now, I contend because our government is run so inefficiently it's criminal.  What I am suggesting is that we need to spread the payment of taxes and the benefits they bring more evenly.


OK, rip me. 


S

Not enough zero's on the check

Did you hear that Costa Crocierie SpA, the subsidiary of Miami-based Carnival Corp that owns the Costa Concordia, is offering all un-injured passengers on that ill-fated ship $14,460 apiece as compensation for their little boo-boo?  Italian lawyers are obviously not as aggressive as American lawyers, that's for sure!  If that happened here there would have been an entire fleet of lawyers in rubber dinghies circling the sinking ship passing out business cards before the Captain had a chance to say, "Chao, y'all."


I'm anxiously awaiting our W-2's and donation summaries to arrive so I can do our 2011 taxes.  This is the one time of the year when I'm sorry I don't own a home any longer.  The write-off was nice!  Still, I think the care-free lifestyle we've enjoyed these past 2+ years has more than trumped the write-offs we've missed.


Speaking of taxes, did you see where Mitt Romney (really....who names their kid after sporting equipment?) paid $44,000 MORE in taxes than he should have?  Experts have looked at his newly released tax return and concluded he overpaid.  If it turns out he's elected President I hope he doesn't put his tax man up as Sec Treasury.  As if we're not totally screwed now!  


I'll leave you with these words of wisdom for the weekend:  As my uncle with the bad liver once told me, "Always take life with a grain of salt.  Plus a slice of lime and a couple shots of tequila."  :)


S

"Rain, rain, go away"...no, wait...PLEASE STAY!

"I don't need no stinkin' trainin'."  Smart dog.  Haha!

~~~~~~~~~~~~~~~~~~~~~~~

Rain is always to me a good news / bad news sort of thing.  We desperately need more rain here in drought stricken Texas, but as a homebuilder, rain wrecks a construction schedule.  In a perverse way, not having a home under construction right now is good because we're expecting rain all day and night....2-3 inches of the liquid sunshine, and now I can enjoy it.   I have a couple of errands to run today, but otherwise I'm sticking close to home.  I asked K what needs to be done around here (I'm really scratchin' for something to do, can you tell?) and she said I could clean out the pantry.  How do you "clean out" a pantry?  Do you dust the cans, or maybe arrange them in alphabetical order?  Geez, I'm bored, but....

~~~~~~~~~~~~~~~~~~~~~

So Mitt Romney made $42M last year, but paid only 14% in taxes.  I think people are outraged by that for the wrong reason.  I don't blame him for taking advantage of every deduction and loophole available to him.  You would, too, and don't lie and say you wouldn't.  I blame congress, who WE elected, for allowing those loopholes to exist in the first place.  And to say, "Yes, they (congress) are bad guys, all except MY guy, and he's good" is why things never change.  Just because your congressman sent you a birthday card or gave you a commemorative paperweight isn't reason enough to vote for him/her.  At the same time they were robo-signing your card they were emptying your pocket in order to subsidize 'ol Mitt and his buddies.  Think about it.

S  

Tax cheats

A few years ago I had a Realtor bring to me a Vietnamese couple who owned a liquor store in south Dallas, an area where I'm sure almost all transactions are in cash.  They had a large down payment, and drove a new Mercedes (the BIG one) and a new Toyota SUV.  I later learned the Realtor arranged for them a "no documentation" loan, more commonly called a "liar's loan".  That was an apt description as they only claimed to make, jointly, $13,000 a year.  Hmmmmm.


Just last week I had an oriental gentleman approach me about building him a new, very expensive home, asking if we could have a contract showing a sales price several hundred thousand dollars less than it actually was, with the balance made up in cash.  I refused.  I'm sure he was trying to document that his house was worth less than it actually was (to save on property taxes), or was trying to burn off some unreported cash income, or both.  Either way he was scamming the system, a system that is now in a deep hole, a system that us honest taxpayers are now being asked to sacrifice for.  I also had a man of middle eastern descent (?) recently propose something similar, too.  It seems many of our new immigrants are bringing with them  from "the Old Country" their casual attitude about paying taxes.  Just look at the troubles today in Europe, particularly in Greece and Italy, where tax avoidance is rampant. Believe me, it's not just "over there."


Last Friday the IRS reported that taxpayers here still owed an estimated $385 BILLION from 2006, that's net AFTER the $65 BILLION they collected through audits.  (That could amount to as much as $3-4 TRILLION in lost revenue over 10 years!)  In fact, they admitted they had a voluntary tax compliance rate of only 83%, and I would imagine its only gotten worse these last several years due to the troubled economy.


So let's review:  Our government is a TRILLION dollars a year short of break even, they're cutting back on everything from social services to military spending to paper clips, yet 17% of all taxes owed go uncollected.  Considering how much (probable) tax fraud I've seen right here in my own back yard, imagine how much goes on all across the land?  We're punishing the good, honest folks who pay their taxes on time by cutting back their services or threatening to cut back their Social Security, Medicare, etc, while the cheats are living the good life.  And don't even get me started on the massive tax breaks the rich have bought for themselves.  Grrrr!


OUR SYSTEM ISN'T WORKING!  No band-aid is going to fix it.  We need some extreme, deep changes.  And just replacing  a figurehead at the top isn't going to make a hill-of-beans difference.  The person at the top doesn't control the system; the system controls devours them.  Remember these words.  


S