Risk abounds in every field of life—right now, we’re pretty much all swimming in political risk, financial risk, health risk, and food/drug safety risk. I myself am sitting here watching a crew of guys dig out my apartment complex’s sidewalks (with a backhoe and bulldozer) to lay new concrete, and only one hard-hatted head is seen: the concrete truck operator, who stays inside the cab smoking cigarettes. Does he think the hard hat will save him from lung cancer?
Both Concrete Guy and I know it isn’t safe out there—especially with this crew working. If my Navy OSHA-employed husband could see this, blood would shoot out of his eyes! Thank God they’re all gone before he gets home.
Let's don our hard hats and safety goggles and do some digging of our own, shall we?
FINANCIAL:
To start us off, Lily at The Honest Dollar sends us this primer on risk--it deals with monetary risks faced by investors daily.
Jacob at Early Retirement Extreme sends us this post about retirement model precision. Accuracy is important when forecasting and planning a retirement—early or no.
John at Truthful Lending alerts us to the scam banks pull on us every day in the name of check processing. I wrote him back and told him how to avoid this—don’t use a bank. Credit unions are so much kinder to us folks!
Raymond at Money Blue Book asks “what happens to my money if my broker goes bankrupt?” Isn’t that what account insurance is for, like FDIC, FSLIC, and such? He also sends us this article on how to avoid bankruptcy by buying basic health insurance.
Charles Greene at Trusted Advisor shows us how risky behavior from one field can spread to other fields—cheating to get a loan sets a wonderful precedent for children to learn from their parents, for example, through decaying social trust and moral indignation. Just like baseball players set competition examples through the use of steroids, people are setting borrowing examples through the use of extremely risky loans they know they can’t afford payments for.
Dorian at Personal Financier shows how ETFs and mutual funds will teach us a lesson in the slowdown--Dorian, they teach us one NOW about inefficiencies and cost-averaging into ETFs. ETFs don’t care how much the stock costs at the time of purchase, they just buy indiscriminately--usually at the top when they should be buying at or near the bottom. Talk about a case of always buying high and selling low—ETFs have it BAD!!
The folks at Personal Finance Claims warn us about something called PPI in car financing--this is coming from Britain, but it may be headed here (or is already here and I don’t know it yet). I haven’t financed a car in decades, so I wouldn’t know.
KClau’s Money Tips sends us this timely information on how recession happens and 8 tips to prepare for it.
Fire Finance sends us this tome on how to protect our portfolios from inflation risk.
MEDICAL:
David Williams of Health Business Blog warns us of medication risks with this article --can too low of a cholesterol level lead to suicides? I’ll bet the makers of Lipitor and Zetia don’t want us to know! Personally, I’m betting on thyroid malfunctions, because my cholesterol’s 160 and I certainly don’t feel suicidal.
Bob Vineyard at Insure Blog sends us this article about transparency—no, it isn’t about tape, but about transparency in health care, and how you can look up performance scores for doctors, hospitals, and such.
Jason Shafrin at the Healthcare Economist shows us what’s happening over in the Netherlands with patient channeling and preferred providers.
My Wealth Builder writes about seniors, the Nintendo Wii, and the risks to physical injury they face from active participation. It’s good that seniors are getting some sort of exercise, but maybe this is too much for them—or maybe they need to warm up first. Who knows?
John Cogan of Regulating Health Insurance sends us this informative article about extending coverage to minors all the way to 30 on their parent’s plan—but beware! Tax consequences abound! States are so desperate to get people covered without having to resort to the dreaded iron fist of universal health care, it would seem. Just eat right and exercise, and you’ll find you don’t need much in the way of health care, except for tests. But then you have accidents, broken bones, a jealous lover stabbing you in the chest, etc.—all things that food won’t cure. Well, maybe chocolate would’ve helped with that jealous lover…
Jay Norris of Colorado Health Insurance Insider looks at the difference in care levels between Medicare/Medicaid patients and those with private insurance. He notes that Medicare patients are more likely to be diagnosed with advanced cancer than other insured people—I’m thinking it’s probably because Medicare/Medicaid only covers the bare minimums, and reimbursement rates for certain diagnostics are very low to zero. There’s also a culture problem in some communities with trusting doctors and modern medicine, and it’s not like cancer has only one set of blatantly-obvious symptoms. By the time some people finally break down and go see a doctor, it’s too late for the Medicare/Medicaid system to help them effectively.
An ounce of prevention (and plenty of annual or semi-annual testing) is worth a pound of cure.
Lastly, there’s one from me about universal health care and patient-stacking--the latest on how Britain is handling its universal health care populace, and how we could be seeing it too if a Democrat gets into office and Congress enables him/her to keep this promise.
LEGAL:
Mark Mayerson at Insurance Scrawl alerts us to the insurability of punitive damages—Texas style. Now we all know that everything is bigger in Texas, right?
Shaheen Lakhan of GNIF Brainblogger writes about medical malpractice, and tells us with this article how it’s sometimes easier to pay than go to court—this is called “out-of-court settlements.” Yes, it IS cheaper, because getting a jury’s sympathy involved can jack up the bill enormously—sometimes by a factor of 12 (or however many jurors are seated for the trial).
Dr. Jose DeJesus of Medical Entrepreneur (I see his articles everywhere in the blog carnivals) sends us this link about medical justice and the discouragement of frivolous malpractice lawsuits.
RISK-RELATED ARTICLES ON THE WEB:
In the Land of IT
IEEE Spectrum Online holds this article about how freezing memory chips allows access to encrypted information.
From the British Front
ReRisk Online has this article about just how many British workers aren’t aware of asbestos risks and asbestosis in general.
From the Misconstrued Medical Files
Bev Sklar of That’s Fit had this article about how daytime naps can supposedly create a link to stroke risk, but the article (I saw this same one in Yahoo Health, BTW) does NOT differentiate between naps taken on purpose and the occasional nodding off that elderly people do. I personally clock out of consciousness every day from about 1-4 p.m., and my doctor says I’m not even close to having risks for stroke. Tiredness is to be expected when your adrenal glands no longer perform as they did in youth, or are subject to inflammatory/rheumatoid onslaught from arthritis or other rheumatic diseases.
On the Animal Front
This article over at Dogster and Catster Vetblog warns us of the possible risks to a dog’s knee ligament from neutering at too young an age. Every time I’ve gone to the vet with a new pet, they always recommend we wait until 6 months of age. I’ve never asked why—now I think I know.
From the “Prior Planning Prevents Piss-Poor Performance” Department
Ivan Ciano at Not Another Project Management Journal tells us how to visualize risks better and include risk management into the planning phases of a project.
Something overheard in high school shop class: “You’re gonna trip, fall, and land on all those corners you cut.”
From Mid-Wife Central
Dr. Amy Tuteur of the Home Birth Debate blog has an article on the risks of home births and how advocates aren’t being honest with themselves.
That’s all for this edition of Cavalcade of Risk. I now pass you onto the capable (and safety-gloved) hands of John Cogan and Regulating Health Insurance, and am going to attempt taking my trash out amidst careening backhoes, rampant bulldozers, and totally unsafe construction workers. Maybe I should wait for them to take their lunch break.
Wednesday, February 27, 2008
Saturday, February 23, 2008
Universal Health Care Blues: Patient Stacking
This is going on over in Britain NOW under their universal health care system.
"Patient stacking" is when promises were made to the people that emergency room waits will be no longer than 4 hours, then they find out the four-hour time limit isn't even close to reality. To offset this patient quota, emergency cases are being "stacked" in the back of ambulances for as long as five hours, waiting for their four-hour waiting room time. This means a total of NINE hours (minimum) an emergency ambulance case has to wait for care!
In this country, ambulance cases are served first, and waiting room patients are sorted out due to level of care needed. Minor cases go last (of course). It's called triage.
Over in Britain, while ambulances are stacked up in the hospital ambulance bays with emergency cases (waiting for care), there are car accidents, industrial accidents, and domestic accidents happening that aren't being picked up--this means people are dying on roadways, at work, or in homes because the ambulances are all tied up at the hospitals! People are also dying in the backs of ambulances waiting for their turn in the actual waiting room.
Britain's medical establishment is also electing not to treat obese people for ANY illness simply because they're obese.
For those of you voting Democrat, do you still want universal health care in this country? Patient stacking is where this plan will lead here in America. This is what happens when you give it all over to government--Uncle Sam gets to decide who lives or dies, just like the British Health Authority.
"Patient stacking" is when promises were made to the people that emergency room waits will be no longer than 4 hours, then they find out the four-hour time limit isn't even close to reality. To offset this patient quota, emergency cases are being "stacked" in the back of ambulances for as long as five hours, waiting for their four-hour waiting room time. This means a total of NINE hours (minimum) an emergency ambulance case has to wait for care!
In this country, ambulance cases are served first, and waiting room patients are sorted out due to level of care needed. Minor cases go last (of course). It's called triage.
Over in Britain, while ambulances are stacked up in the hospital ambulance bays with emergency cases (waiting for care), there are car accidents, industrial accidents, and domestic accidents happening that aren't being picked up--this means people are dying on roadways, at work, or in homes because the ambulances are all tied up at the hospitals! People are also dying in the backs of ambulances waiting for their turn in the actual waiting room.
Britain's medical establishment is also electing not to treat obese people for ANY illness simply because they're obese.
For those of you voting Democrat, do you still want universal health care in this country? Patient stacking is where this plan will lead here in America. This is what happens when you give it all over to government--Uncle Sam gets to decide who lives or dies, just like the British Health Authority.
Everything Old is New Again--Especially in Politics
Just for fun, I have a quest for my readers:
Go read up on the histories of FDR and Wilson, how they used their ideologies/theories in the post-war and Depression, and what the similarities are between those and Obama's campaign promises and recently published economic plan.
After learning all that, this Obamania will stun you. Not only is he "xeroxing" speeches, he's also xeroxing policies and plans.
Just like the 70's, fascism will arrive with a smiley face and not jack boots. Our 22nd Amendment took care of FDR's "president-for-life" quest--don't be surprised if the Democrats start working to overturn it.
Obama's bringing change, all right, and tons of people are falling for it! Fascism now has a warm, genial black face and a lovely wife.
Go read up on the histories of FDR and Wilson, how they used their ideologies/theories in the post-war and Depression, and what the similarities are between those and Obama's campaign promises and recently published economic plan.
After learning all that, this Obamania will stun you. Not only is he "xeroxing" speeches, he's also xeroxing policies and plans.
Just like the 70's, fascism will arrive with a smiley face and not jack boots. Our 22nd Amendment took care of FDR's "president-for-life" quest--don't be surprised if the Democrats start working to overturn it.
Obama's bringing change, all right, and tons of people are falling for it! Fascism now has a warm, genial black face and a lovely wife.
Thursday, February 21, 2008
FairTax: The Critics Answer ME
I never got a response from either Neal Boortz or Congressman John Linder, but someone over at Amazon gave me some answers: gambling and vending machines would stay the same (only they would provide greater profit margin), and anything generated by the state (licenses, gas taxes, cigarette taxes, etc.) are NOT covered by this tax.
What the FairTax means is this--most likely, all your STATE-GENERATED taxes will go up to make up for the loss in federal revenues coming to the states (as they do now), and there is nothing but the people's anger to keep Congress from raising this 23-30% rate to something higher. This plan, in my opinion, would tax us into oblivion on the state level, and usher in a fascist Socialist wave of politics that promises to support the common man since he can no longer support himself (due to higher taxes).
This tax plan still doesn't sound fair to me. Socialism doesn't last forever, as we can see by the former Soviet Union, Italy, Germany, and countless other small countries. I bet Cuba even loses its Communist ways with the Raul administration--it'll probably go the way of China. We'll probably end up going the way of China too--a capitalist country ruled by an iron hand, thanks to FISA.
What the FairTax means is this--most likely, all your STATE-GENERATED taxes will go up to make up for the loss in federal revenues coming to the states (as they do now), and there is nothing but the people's anger to keep Congress from raising this 23-30% rate to something higher. This plan, in my opinion, would tax us into oblivion on the state level, and usher in a fascist Socialist wave of politics that promises to support the common man since he can no longer support himself (due to higher taxes).
This tax plan still doesn't sound fair to me. Socialism doesn't last forever, as we can see by the former Soviet Union, Italy, Germany, and countless other small countries. I bet Cuba even loses its Communist ways with the Raul administration--it'll probably go the way of China. We'll probably end up going the way of China too--a capitalist country ruled by an iron hand, thanks to FISA.
Sunday, February 17, 2008
Global Warming as Environmental Creationism
I was reading the Carnival of Insanities, and came across this little ditty. It completely busts the myth that the ice in Greenland is melting, and would eventually cause a massive change in sea level. Apparently none of these panic-mongers are checking the WESTERN side of Greenland, where the ice is GROWING!!
Apparently they're still not checking Antarctica either---the ice there is growing and thickening as well. I'm tellin ya--it's a shift in the planet's magnetic field, not greenhouse gases.
Global warming is just the opening salvo for a Socialist agenda. Militant liberals think the rest of us have to be forced into acting their way on social policies, even if their way is dead wrong. Global warming and the "green" bandwagon are the marketing schemes to lure us in. It may work on the I-pod generation, but I'm not biting.
Apparently they're still not checking Antarctica either---the ice there is growing and thickening as well. I'm tellin ya--it's a shift in the planet's magnetic field, not greenhouse gases.
Global warming is just the opening salvo for a Socialist agenda. Militant liberals think the rest of us have to be forced into acting their way on social policies, even if their way is dead wrong. Global warming and the "green" bandwagon are the marketing schemes to lure us in. It may work on the I-pod generation, but I'm not biting.
Thursday, February 14, 2008
Comparing Working vs. Staying Home
I recently did some math, and found a SAHW with no kids to care for would have to earn $7.25/hour with a 15% total tax burden (state and federal), working 27.5 hours per week, and 51 weeks per year to net the same amount of money that the personal exemption and standard deduction would earn her as an individual. She earns (through Uncle Sam) $8750 just to be alive as long as her husband keeps working. Uncle Sam pays her (through tax deductions and credits) to stay married and out of the job market. She (and every other SAH individual) is worth this much to make room in the job market for someone else—then they get married, learn this trick, stay home themselves (making room for another worker), and so on.
If she has kids, each qualifying kid would be worth $3400 just to be alive, and worth more for going to daycare. If Grandma moved in and qualified as a dependent, she too would be worth $3400 just to be alive. It’s all right there on the 1040 and 1040A forms.
None of this takes into account Hubby’s additional tax benefits of $8750 just to be alive and working, or the IRA credits and saver’s credit, which could amount to as much as an additional $2000. If a 401(k) plan is available at his work, there’s an additional $15,500 in tax benefits.
Now, compare that to some of the expenses involved with working outside the home:
• Wardrobe, makeup, and hair styling products—room to store and time to apply all
• Second vehicle initial cost, insurance, fuel, maintenance, registration and taxes
• Money spent in others performing chores at home for you (lawn service, maid, painting, etc.)
• Money spent on lunches and/or dinners away from home, and convenience foods
• Medical bills from added stress and reliance on convenience foods
• Lost time and personal energy
• Gym membership to make up for inactivity
• Daycare, private schooling, after-school care/activities, tutoring, etc.
• Security system for daytime absence from home
• Additional taxes (marriage penalty, AMT, etc.)
See how much money is involved with working outside the home compared to staying at home? When you factor in all the taxes and expenses, whatever salary’s left is a mere pittance—you finally get to see what little you’re actually working for. I know this seems sexist, but my personal experience tells me that unless you are making a large salary (which involves higher education expenses), it’s not worth it to work outside the home. More money can be made (or saved) through tax credits and deductions, and good old-fashioned D-I-Y labor than simply going to work every day. The unfortunate reality is that someone in the family has to work, and it makes sense that the higher earner (usually but not always male) remain working, while the lower earner trade in the expenses, stress, and waste of a futile effort.
It would take nearly $41,000 net (this is after taxes and expenses) annually to get the equivalent amount that Uncle Sam pays a married couple with 2 kids and a SAHW in tax credits and exemptions just for being alive, one spouse working, having two IRAs, and participating in a 401(k) plan. That $41,000 + an estimated 40% total tax burden (state and federal) + all the expenses listed above = a high-paying job with about a $100k (or more) salary annually. Add another $15,500 to that annual salary if you plan on participating in a 401(k) plan yourself. If you’re married and don’t have the capacity for earning that kind of salary on your own (through education level, qualifications, performance, and/or job market conditions), then you might want to consider staying home, unless your job provides benefits and stability that the other spouse’s doesn’t.
Side benefits of staying home include more successful kids, better family health, more happiness, and more time and personal energy to be creative with the money you do have coming in.
Common wisdom says it’s easier to suit up and go to work for more money, but the money itself says something entirely different. If you apply frugal living skills along with your new-found money maker (Uncle Sam), you stand to make (or save) even more! The best part of all: these tax credits, deductions, and exemptions are all indexed to either inflation or the cost of living—it’s like getting a pay raise every year without having to work any harder for it.
How spectacularly hyper-productive would you have to be at work before the boss hands out raises in an inflationary/recessionary environment? Uncle Sam doesn’t care what the economy is doing—this money is available to you whether you lounge around drinking coffee wearing your bunny sippers and pajamas, or if you take the June Cleaver route instead. Staying home has bought you freedom to do both and more. Soon, you’ll be wondering where the “penalty” is in marriage penalty. The penalty’s obviously in working for a second income.
Meanwhile, your old work place is laying off or buying out lots of people, headed offshore, being bought by another company, or may just go out of business altogether. Uncle Sam isn’t going anywhere.
Before you suddenly up and decide to quit working, do the math—can you make do on one income after deleting all those expenses listed above that caused you to have to work in the first place? Are there more expenses you can and will delete to enable you to stay home? Whip out that calculator and start making some serious financially beneficial life changes.
If she has kids, each qualifying kid would be worth $3400 just to be alive, and worth more for going to daycare. If Grandma moved in and qualified as a dependent, she too would be worth $3400 just to be alive. It’s all right there on the 1040 and 1040A forms.
None of this takes into account Hubby’s additional tax benefits of $8750 just to be alive and working, or the IRA credits and saver’s credit, which could amount to as much as an additional $2000. If a 401(k) plan is available at his work, there’s an additional $15,500 in tax benefits.
Now, compare that to some of the expenses involved with working outside the home:
• Wardrobe, makeup, and hair styling products—room to store and time to apply all
• Second vehicle initial cost, insurance, fuel, maintenance, registration and taxes
• Money spent in others performing chores at home for you (lawn service, maid, painting, etc.)
• Money spent on lunches and/or dinners away from home, and convenience foods
• Medical bills from added stress and reliance on convenience foods
• Lost time and personal energy
• Gym membership to make up for inactivity
• Daycare, private schooling, after-school care/activities, tutoring, etc.
• Security system for daytime absence from home
• Additional taxes (marriage penalty, AMT, etc.)
See how much money is involved with working outside the home compared to staying at home? When you factor in all the taxes and expenses, whatever salary’s left is a mere pittance—you finally get to see what little you’re actually working for. I know this seems sexist, but my personal experience tells me that unless you are making a large salary (which involves higher education expenses), it’s not worth it to work outside the home. More money can be made (or saved) through tax credits and deductions, and good old-fashioned D-I-Y labor than simply going to work every day. The unfortunate reality is that someone in the family has to work, and it makes sense that the higher earner (usually but not always male) remain working, while the lower earner trade in the expenses, stress, and waste of a futile effort.
It would take nearly $41,000 net (this is after taxes and expenses) annually to get the equivalent amount that Uncle Sam pays a married couple with 2 kids and a SAHW in tax credits and exemptions just for being alive, one spouse working, having two IRAs, and participating in a 401(k) plan. That $41,000 + an estimated 40% total tax burden (state and federal) + all the expenses listed above = a high-paying job with about a $100k (or more) salary annually. Add another $15,500 to that annual salary if you plan on participating in a 401(k) plan yourself. If you’re married and don’t have the capacity for earning that kind of salary on your own (through education level, qualifications, performance, and/or job market conditions), then you might want to consider staying home, unless your job provides benefits and stability that the other spouse’s doesn’t.
Side benefits of staying home include more successful kids, better family health, more happiness, and more time and personal energy to be creative with the money you do have coming in.
Common wisdom says it’s easier to suit up and go to work for more money, but the money itself says something entirely different. If you apply frugal living skills along with your new-found money maker (Uncle Sam), you stand to make (or save) even more! The best part of all: these tax credits, deductions, and exemptions are all indexed to either inflation or the cost of living—it’s like getting a pay raise every year without having to work any harder for it.
How spectacularly hyper-productive would you have to be at work before the boss hands out raises in an inflationary/recessionary environment? Uncle Sam doesn’t care what the economy is doing—this money is available to you whether you lounge around drinking coffee wearing your bunny sippers and pajamas, or if you take the June Cleaver route instead. Staying home has bought you freedom to do both and more. Soon, you’ll be wondering where the “penalty” is in marriage penalty. The penalty’s obviously in working for a second income.
Meanwhile, your old work place is laying off or buying out lots of people, headed offshore, being bought by another company, or may just go out of business altogether. Uncle Sam isn’t going anywhere.
Before you suddenly up and decide to quit working, do the math—can you make do on one income after deleting all those expenses listed above that caused you to have to work in the first place? Are there more expenses you can and will delete to enable you to stay home? Whip out that calculator and start making some serious financially beneficial life changes.
Wednesday, February 13, 2008
Quick Review of FairTax: The Truth--Answering the Critics
As I expected, this book didn't directly answer any of my concerns posted in this article, but there may be some hope on the depreciation front. I'm going to contact Congress-critter John Linder (R-Ga) to see if he can shed some light on my questions directly. Writing to Neal Boortz has been somewhat of a bomb, because he apparently doesn't write back.
If you also have questions or concerns about the FairTax plan that don't resemble mine, please see one or more of the many web pages on FairTax--each one has a FAQ as part of their site. None of their FAQs addressed my concerns, unfortunately.
I'll let you know if I get answers.
If you also have questions or concerns about the FairTax plan that don't resemble mine, please see one or more of the many web pages on FairTax--each one has a FAQ as part of their site. None of their FAQs addressed my concerns, unfortunately.
I'll let you know if I get answers.
Monday, February 11, 2008
Proof Your Democrat Vote Really Doesn't Matter
Here's the delegate and super-delegate list of the Democrats. Note that Hillary not only out-numbers Obama vastly, but she and Bill (along with many of their political cronies) make up the delegate and super-delegate list. Rumor has it they even tried to make Chelsea one of the super-delegates!
Even though the popular vote may say Obama's winning, the delegates and super-delegates are in Hillary's favor. The deck was stacked here even before the ink was dry on candidate sign-up sheets. Hillary may turn on the waterworks, even start acting humble and less iron-fisted, but she knows she's got this one in the bag--now you do too. Now you can see that you didn't even need to go to the polls unless you were voting Republican (honest winner-take-all system) or Independent (subject to either party rules).
As it is, the Dems are protecting themselves by having delegates and super-delegates made up of ex- and current Congress-critters and DNC members/officials...what do they need OUR votes for, when they have the security of "old guard" voting in the new players? Now do you see how the system is rigged--at least for the Dems?
My original article about why your vote doesn't matter is here.
To be fair, I looked up the delegates from the Republican Party, and the list won't be available until we get closer to convention time (September). I'm highly interested in what their delegate list has to say.
Even though the popular vote may say Obama's winning, the delegates and super-delegates are in Hillary's favor. The deck was stacked here even before the ink was dry on candidate sign-up sheets. Hillary may turn on the waterworks, even start acting humble and less iron-fisted, but she knows she's got this one in the bag--now you do too. Now you can see that you didn't even need to go to the polls unless you were voting Republican (honest winner-take-all system) or Independent (subject to either party rules).
As it is, the Dems are protecting themselves by having delegates and super-delegates made up of ex- and current Congress-critters and DNC members/officials...what do they need OUR votes for, when they have the security of "old guard" voting in the new players? Now do you see how the system is rigged--at least for the Dems?
My original article about why your vote doesn't matter is here.
To be fair, I looked up the delegates from the Republican Party, and the list won't be available until we get closer to convention time (September). I'm highly interested in what their delegate list has to say.
Sunday, February 10, 2008
Working for Perks and Benefits—Revised for 2008
Receiving benefits and perks in lieu of actual $$ saves on cash outlay for the business, and tax outlay for you. Benefits and perks are not taxable.
Some examples:
• Employer-paid medical premiums: Even at HMO prices, $300/month x 12 = $3600 annually, and family rates at $600/month x 12 = $7200 annually. With or without family premiums employer-paid, it could come to $3600-7200 or more annually, depending on going rates.
• Employer-provided mileage/commuter reimbursement would yield approximately $944+/- annually (no maintenance figured in) when a 22-mile round trip is used when gas is estimated at $2.75/gallon, and 330 days of work/year are used. An employer-provided car would save us this much in gas, travel/maintenance, and reduce our insurance premiums if our car is no longer used to commute.
To calculate your cost per mile: cost per gallon divided by miles driven (maintenance not included in this calculation—to add this, go to a car comparison site and find your average annual maintenance cost, and add it in).
$2.75 (example cost of gas) divided by 22 (miles driven per day) = .13 per mile
$.13/mile x 22 miles x 330 calendar days a year = $944 (rounded up)
• Disability insurance policies usually run in numbers equal 1-2 or 3 years of salary as the face value of the policy (annual salary x 2 is the optimal amount). I don’t know what the monthly premiums run nowadays, so you’ll have to look this one up. Multiply this figure by 12 to get annual benefit amount, then add annual figure to this list of bennies/perks value. Disability insurance will pay for your living expenses (other than medical) while you recover.
• Employer-paid expense allowance, if available, should cover your clothing care/maintenance, special work clothes (safety-related and/or not wearable in public every day), and any other business-related expenditures you plan to rack up during your year (software, books for additional reading/training, industry magazines for staying current with new trends, etc.) Add this annual guesstimate to your list. (Laundry costs can be figured by cost of supplies + cost of machine use (if using a laundromat), or by cost per load.
Finding the cost per load: 1 measure required for a load, multiplied by 8, then multiplied by cost per ounce = cost per load. Example: Purex liquid soap takes 2/3 cup to make 1 load according to the manufacturer’s instructions. 2/3 cup x 8 = 5.36 with decimal rounding. If Purex soap is purchased at $2.50/gallon, then the cost per ounce is .02 for this soap. 5.34 (2/3 cup x 8) multiplied by .02 (cost per ounce) = .11 per load (with decimal rounding). This particular soap at this particular price costs .11 a load to use, not counting any Laundromat costs per load.
$2.50 (cost per gallon) divided by 128 ounces (one gallon) = .02 (cost per ounce)
5.34 (decimal equivalent of one capful) x .02 (cost per ounce) = .11/load
Estimating laundromat costs at $1.75/load to wash and $1.25 to dry, plus dryer sheets at .005 each, total laundry costs (.11 for soap, .01 for dryer sheet, $1.75 to wash, and $1.25 to dry) = $3.33/load. Figure how many loads you plan to do each week, and multiply by 50 (the number of workweeks in a year). This can be nearly $500 or higher annually if 3 loads a week are done using these figures and these materials.
$2.00 (est. cost of dryer sheets) divided by 250 (est. number of sheets in box) = .01/sheet
Needless to say, dry cleaning would be more expensive, and you should seek reimbursement or some sort of cost defray for this. The alternative is to buy clothes that don’t need dry cleaning.
• Life insurance can cost you a miniscule amount now, but what will it cost to transfer, lose, or re-start the policy? Multiply this figure by 12 to get an annual number—employer-paid, preferably. Make sure your employer is NOT the beneficiary of any employer-paid life insurance policies by designating one of your own in writing.
• How much are your current retirement savings expenses? Add up the contribution ceilings of all IRAs, 401k’s, saver’s tax credit, and so on (as eligible) to determine you total annual retirement savings expenses. Seek to have some of these defrayed through employer contributions, employer reimbursement, or salary addition. This number could be as much as $5000 per person (IRAs) + a percent number of $15,500 (401k).
• Employer-paid tuition or reimbursement is also a nice-to-have. It would be nice to get some defrayment in the future.
• Paid time off (known as “comp time”) in addition to the usual annual allotment would help for appointments, crises and emergencies, etc. An estimated $55,000 salary divided by an estimated 330 work days/year = $166.67+/- per day for excess paid days off. Just think—you could be at home in your PJ’s earning $166.67/day because you negotiated comp time into your contract.
• Opportunities for learning outside of and beyond your current field will prove immeasurable when you go for your next job. Skill enhancement with an eye for making you worth more in the eyes of an employer are priceless until you land that next job—then we know what they’re actually worth. This would be a good way to spend that “comp time.”
• Title and status need to be examined and selected with care. Certain titles are worth more in the eyes of the employment world, and titles need to change with added or changed responsibilities. The value of that, too, won’t be known until you land the next job.
• Excess unpaid time off from work in the form of shortened workweeks, shortened work days, or just more unpaid time off per calendar year. This would make your total work year salary much higher, because you’d have to work less to average more pay per hour or day. God knows what you could do with more time away from work—make money elsewhere or just rest (to save personal energy and health).
• Employment contracts and/or termination agreements should be pursued in lieu of job security, because they allow for more money to be made in the form of signing bonuses, departure parachutes for soft landings, and an exact specific list of terms which you will work or depart under. Basically, you get more money shoved at you for coming or going. When working up a termination agreement, specify 2 weeks’ pay for every year of employment AT MINIMUM for severance pay. Employment contracts are worked up based upon salary and benefit negotiations at the start.
You get to write your own job description, what conditions you will perform the job under, and what amount of money you will leave the job under. While on the job, perform it with the boss’s needs foremost in mind—the only form of job security nowadays. Seek out how you can help beyond the job completion and fulfilling the boss’s needs—ask how you can help raise the bottom line. Such activities will not go unnoticed come performance review time (and if so, then remind him). Do not wait for a performance review when asking for a raise or promotion—if you do your job well, see to his needs, AND help raise the bottom line, THEN ask for a raise (because that’s when you deserve it). Keep careful documentation of bottom-line-raising activities as proof—you may need it come re-negotiation time. More money to the company means more money to you.
All these things should be taken into account when selecting a job or deciding between more than one job offer. Salary dollars don't always mean the entire salary—take perks and benefits into account as well. There's hidden money in "them thar" things—sometimes thousands of dollars—when you add it all up! Don't forget--perks and bennies are tax-free to you.
Some examples:
• Employer-paid medical premiums: Even at HMO prices, $300/month x 12 = $3600 annually, and family rates at $600/month x 12 = $7200 annually. With or without family premiums employer-paid, it could come to $3600-7200 or more annually, depending on going rates.
• Employer-provided mileage/commuter reimbursement would yield approximately $944+/- annually (no maintenance figured in) when a 22-mile round trip is used when gas is estimated at $2.75/gallon, and 330 days of work/year are used. An employer-provided car would save us this much in gas, travel/maintenance, and reduce our insurance premiums if our car is no longer used to commute.
To calculate your cost per mile: cost per gallon divided by miles driven (maintenance not included in this calculation—to add this, go to a car comparison site and find your average annual maintenance cost, and add it in).
$2.75 (example cost of gas) divided by 22 (miles driven per day) = .13 per mile
$.13/mile x 22 miles x 330 calendar days a year = $944 (rounded up)
• Disability insurance policies usually run in numbers equal 1-2 or 3 years of salary as the face value of the policy (annual salary x 2 is the optimal amount). I don’t know what the monthly premiums run nowadays, so you’ll have to look this one up. Multiply this figure by 12 to get annual benefit amount, then add annual figure to this list of bennies/perks value. Disability insurance will pay for your living expenses (other than medical) while you recover.
• Employer-paid expense allowance, if available, should cover your clothing care/maintenance, special work clothes (safety-related and/or not wearable in public every day), and any other business-related expenditures you plan to rack up during your year (software, books for additional reading/training, industry magazines for staying current with new trends, etc.) Add this annual guesstimate to your list. (Laundry costs can be figured by cost of supplies + cost of machine use (if using a laundromat), or by cost per load.
Finding the cost per load: 1 measure required for a load, multiplied by 8, then multiplied by cost per ounce = cost per load. Example: Purex liquid soap takes 2/3 cup to make 1 load according to the manufacturer’s instructions. 2/3 cup x 8 = 5.36 with decimal rounding. If Purex soap is purchased at $2.50/gallon, then the cost per ounce is .02 for this soap. 5.34 (2/3 cup x 8) multiplied by .02 (cost per ounce) = .11 per load (with decimal rounding). This particular soap at this particular price costs .11 a load to use, not counting any Laundromat costs per load.
$2.50 (cost per gallon) divided by 128 ounces (one gallon) = .02 (cost per ounce)
5.34 (decimal equivalent of one capful) x .02 (cost per ounce) = .11/load
Estimating laundromat costs at $1.75/load to wash and $1.25 to dry, plus dryer sheets at .005 each, total laundry costs (.11 for soap, .01 for dryer sheet, $1.75 to wash, and $1.25 to dry) = $3.33/load. Figure how many loads you plan to do each week, and multiply by 50 (the number of workweeks in a year). This can be nearly $500 or higher annually if 3 loads a week are done using these figures and these materials.
$2.00 (est. cost of dryer sheets) divided by 250 (est. number of sheets in box) = .01/sheet
Needless to say, dry cleaning would be more expensive, and you should seek reimbursement or some sort of cost defray for this. The alternative is to buy clothes that don’t need dry cleaning.
• Life insurance can cost you a miniscule amount now, but what will it cost to transfer, lose, or re-start the policy? Multiply this figure by 12 to get an annual number—employer-paid, preferably. Make sure your employer is NOT the beneficiary of any employer-paid life insurance policies by designating one of your own in writing.
• How much are your current retirement savings expenses? Add up the contribution ceilings of all IRAs, 401k’s, saver’s tax credit, and so on (as eligible) to determine you total annual retirement savings expenses. Seek to have some of these defrayed through employer contributions, employer reimbursement, or salary addition. This number could be as much as $5000 per person (IRAs) + a percent number of $15,500 (401k).
• Employer-paid tuition or reimbursement is also a nice-to-have. It would be nice to get some defrayment in the future.
• Paid time off (known as “comp time”) in addition to the usual annual allotment would help for appointments, crises and emergencies, etc. An estimated $55,000 salary divided by an estimated 330 work days/year = $166.67+/- per day for excess paid days off. Just think—you could be at home in your PJ’s earning $166.67/day because you negotiated comp time into your contract.
• Opportunities for learning outside of and beyond your current field will prove immeasurable when you go for your next job. Skill enhancement with an eye for making you worth more in the eyes of an employer are priceless until you land that next job—then we know what they’re actually worth. This would be a good way to spend that “comp time.”
• Title and status need to be examined and selected with care. Certain titles are worth more in the eyes of the employment world, and titles need to change with added or changed responsibilities. The value of that, too, won’t be known until you land the next job.
• Excess unpaid time off from work in the form of shortened workweeks, shortened work days, or just more unpaid time off per calendar year. This would make your total work year salary much higher, because you’d have to work less to average more pay per hour or day. God knows what you could do with more time away from work—make money elsewhere or just rest (to save personal energy and health).
• Employment contracts and/or termination agreements should be pursued in lieu of job security, because they allow for more money to be made in the form of signing bonuses, departure parachutes for soft landings, and an exact specific list of terms which you will work or depart under. Basically, you get more money shoved at you for coming or going. When working up a termination agreement, specify 2 weeks’ pay for every year of employment AT MINIMUM for severance pay. Employment contracts are worked up based upon salary and benefit negotiations at the start.
You get to write your own job description, what conditions you will perform the job under, and what amount of money you will leave the job under. While on the job, perform it with the boss’s needs foremost in mind—the only form of job security nowadays. Seek out how you can help beyond the job completion and fulfilling the boss’s needs—ask how you can help raise the bottom line. Such activities will not go unnoticed come performance review time (and if so, then remind him). Do not wait for a performance review when asking for a raise or promotion—if you do your job well, see to his needs, AND help raise the bottom line, THEN ask for a raise (because that’s when you deserve it). Keep careful documentation of bottom-line-raising activities as proof—you may need it come re-negotiation time. More money to the company means more money to you.
All these things should be taken into account when selecting a job or deciding between more than one job offer. Salary dollars don't always mean the entire salary—take perks and benefits into account as well. There's hidden money in "them thar" things—sometimes thousands of dollars—when you add it all up! Don't forget--perks and bennies are tax-free to you.
Friday, February 08, 2008
Elections: The Ultimate Marketing Scheme
Primaries. Super Tuesday. Super Duper Tuesday. Tsunami Tuesday. We’ve all heard these terms used to describe huge campaign events.
But what exactly ARE campaign events, and campaigns in general? They’re marketing schemes designed to distract you from the reality that whomever you “vote” for, it doesn’t count.
What’s the difference between what a store does to try to get you to buy more of their stuff, and seemingly endless rounds of debates, speeches, and public appearances? Nothing. Both stores and candidates are trying to get you to “buy” (or buy into) more of their stuff.
The more they campaign, speechify, and debate, the clearer their “stuff” becomes—in the case of Hillary and universal health care, she intends to have everyone on some sort of coverage or their wages will be garnished for federal coverage fees. This is clearly a power play, and a vote for Hillary means you’d like her to make your health care choices for you.
On the other hand, Hillary says she’s in favor of capitalism, markets, and lowering corporate tax rates—she wouldn’t dare bite the hand that feeds her campaign coffers. There’s a reason why she went to New York—it was either that or California. That’s where the money is, folks. Big-time contributors live in those two states.
This is a heck of a lot of dog-and-pony show to go through when a vote (even all of them) doesn’t matter one jot. The fact that a successful campaign for a $400k job now runs over $100 million is obscene, especially since none of it has to take place at all.
Ah, the marketing—misplaced at best, and ineffective at worst. It’s the DELEGATES who need all this marketing, not us. Even then, individual voting records can be looked up to get a glimpse of the candidate’s real motives and intentions based on past history. So why the carnival masks of “what I’m going to do for you” when the voting record clearly says otherwise? They’re marketing for your meaningless vote, and that of the meaningful delegates. Candidates are appealing to our emotions, just like print and TV ads. We are irrational creatures, and can be swayed one way or another, provided the right bait is hung before us.
Time after time, the far-right conservatives are swayed with the values-and-anti-abortion bait, while the far-left liberals are swayed with offers of benefits for all, and government control/regulation bait to ensure it stays that way. Everything else is considered middle ground, and is up for grabs.
Come inauguration day, the “winner” may try to get a few campaign promises through Congress, fail, and end up repeating old habits—retreating to safer ground. He/she got to where they wanted to get, and the marketing machine has been unplugged and put into storage until re-election fund-raising time comes again. This is akin to grocery store ad cycles—the Sunday ad is out, then the Wednesday ad, then Sunday again, and another Wednesday, and so on. Some stores only have one ad cycle (only Sundays or only Wednesdays) instead of the Sunday and Wednesday cycle, but it’s a cycle nonetheless. The ad “winners” that sold the most aren’t likely to show up again unless overall sales are flagging—too much repeated margin loss isn’t good for business.
Every time you see a campaign ad, think of the sale, clearance, closeout, and discontinued signs you see in stores that lure you over to look and possibly buy. In this instance politicians are on sale instead of merchandise. Their signs say “vote for me” instead of “sale”, but there’s fine print in both cases—the fine print is what your political candidate ISN’T telling you, and will surprise you with when they win office and manage to get through Congress. Then there’s fine print involved in just getting to pull the lever: eligibility, compromised electronic voting machines, downed computers and power outages, weather-related issues, literacy and competency tests, sudden changes in dates and polling places without proper notification, child care issues, the media making early calls, or the worst one of all—when your candidate bails out before your state even has its primary, and there’s nothing left but turd sandwiches and giant douches to choose from. All these things help to control access to the polls and who gets to “buy the merchandise” just like a VIP shopper discount card controls how many get access to special discounted merchandise prices.
Holiday and special event marketing = pandering. What’s the difference between gearing an ad to the Super Bowl or Thanksgiving and gearing a campaign towards women or a specific minority? Nothing—they’re both target marketing.
Now that you see political campaigning for what it really is, why do you bother to be lured to the polls? Does print or TV advertising lure you into stores to buy the advertised merchandise? Do you fall easily for these marketing schemes, and find yourself distracted by shiny things? Guess what—you’re susceptible…TO ALMOST ANYTHING.
If you abhor store advertising, internet ads, and the like, why do you fall for the most cleverly-disguised marketing plan of them all? I bet you’re so embarrassed right now. Don’t be—we’ve all been led to believe (through more clever marketing) that our vote counts, when really it doesn’t count at all. And it doesn’t really matter who gets elected, because Congress is where the real power lies! Just as you watch unit pricing and compare it to so-called “sales” in stores, watch Congress and compare it to the President. Soon, you'll know how best to spend your voting "dollars."
But what exactly ARE campaign events, and campaigns in general? They’re marketing schemes designed to distract you from the reality that whomever you “vote” for, it doesn’t count.
What’s the difference between what a store does to try to get you to buy more of their stuff, and seemingly endless rounds of debates, speeches, and public appearances? Nothing. Both stores and candidates are trying to get you to “buy” (or buy into) more of their stuff.
The more they campaign, speechify, and debate, the clearer their “stuff” becomes—in the case of Hillary and universal health care, she intends to have everyone on some sort of coverage or their wages will be garnished for federal coverage fees. This is clearly a power play, and a vote for Hillary means you’d like her to make your health care choices for you.
On the other hand, Hillary says she’s in favor of capitalism, markets, and lowering corporate tax rates—she wouldn’t dare bite the hand that feeds her campaign coffers. There’s a reason why she went to New York—it was either that or California. That’s where the money is, folks. Big-time contributors live in those two states.
This is a heck of a lot of dog-and-pony show to go through when a vote (even all of them) doesn’t matter one jot. The fact that a successful campaign for a $400k job now runs over $100 million is obscene, especially since none of it has to take place at all.
Ah, the marketing—misplaced at best, and ineffective at worst. It’s the DELEGATES who need all this marketing, not us. Even then, individual voting records can be looked up to get a glimpse of the candidate’s real motives and intentions based on past history. So why the carnival masks of “what I’m going to do for you” when the voting record clearly says otherwise? They’re marketing for your meaningless vote, and that of the meaningful delegates. Candidates are appealing to our emotions, just like print and TV ads. We are irrational creatures, and can be swayed one way or another, provided the right bait is hung before us.
Time after time, the far-right conservatives are swayed with the values-and-anti-abortion bait, while the far-left liberals are swayed with offers of benefits for all, and government control/regulation bait to ensure it stays that way. Everything else is considered middle ground, and is up for grabs.
Come inauguration day, the “winner” may try to get a few campaign promises through Congress, fail, and end up repeating old habits—retreating to safer ground. He/she got to where they wanted to get, and the marketing machine has been unplugged and put into storage until re-election fund-raising time comes again. This is akin to grocery store ad cycles—the Sunday ad is out, then the Wednesday ad, then Sunday again, and another Wednesday, and so on. Some stores only have one ad cycle (only Sundays or only Wednesdays) instead of the Sunday and Wednesday cycle, but it’s a cycle nonetheless. The ad “winners” that sold the most aren’t likely to show up again unless overall sales are flagging—too much repeated margin loss isn’t good for business.
Every time you see a campaign ad, think of the sale, clearance, closeout, and discontinued signs you see in stores that lure you over to look and possibly buy. In this instance politicians are on sale instead of merchandise. Their signs say “vote for me” instead of “sale”, but there’s fine print in both cases—the fine print is what your political candidate ISN’T telling you, and will surprise you with when they win office and manage to get through Congress. Then there’s fine print involved in just getting to pull the lever: eligibility, compromised electronic voting machines, downed computers and power outages, weather-related issues, literacy and competency tests, sudden changes in dates and polling places without proper notification, child care issues, the media making early calls, or the worst one of all—when your candidate bails out before your state even has its primary, and there’s nothing left but turd sandwiches and giant douches to choose from. All these things help to control access to the polls and who gets to “buy the merchandise” just like a VIP shopper discount card controls how many get access to special discounted merchandise prices.
Holiday and special event marketing = pandering. What’s the difference between gearing an ad to the Super Bowl or Thanksgiving and gearing a campaign towards women or a specific minority? Nothing—they’re both target marketing.
Now that you see political campaigning for what it really is, why do you bother to be lured to the polls? Does print or TV advertising lure you into stores to buy the advertised merchandise? Do you fall easily for these marketing schemes, and find yourself distracted by shiny things? Guess what—you’re susceptible…TO ALMOST ANYTHING.
If you abhor store advertising, internet ads, and the like, why do you fall for the most cleverly-disguised marketing plan of them all? I bet you’re so embarrassed right now. Don’t be—we’ve all been led to believe (through more clever marketing) that our vote counts, when really it doesn’t count at all. And it doesn’t really matter who gets elected, because Congress is where the real power lies! Just as you watch unit pricing and compare it to so-called “sales” in stores, watch Congress and compare it to the President. Soon, you'll know how best to spend your voting "dollars."
Sunday, February 03, 2008
Do-It-Yourself Fair Tax Plan (Super L-O-N-G)
Why wait, hope, and pray Mike Huckabee gets elected president, which won’t happen until November (if at all), when you can have the benefits of the Fair Tax plan NOW?
The main tenet of the Fair Tax plan is this: brand new things get taxed at the retail level to the tune of 30% (an effective 23% rate), while used and second-hand things don’t get taxed at all. This would eliminate the need of the IRS, because it would make retailers the tax collectors instead.
Another goal of this plan would be to eliminate corporate taxes, making our shores once again profitable for businesses to operate back here at home. Exports to other countries wouldn’t be subject to this tax, but imports and domestically-made goods would be—giving foreign countries an instant 23% incentive to buy our stuff. Never mind the fact that there’s already a 30% incentive to buy our stuff due to the devalued dollar.
Our visible taxes include a 7.65% rate for payroll taxes like Social Security, Medicare, and the rest, a separate rate for federal income taxes, and a state or local sales tax for food and non-food. All these numbers added together compose your current total tax burden, and Fair Tax aims to replace all of them (as well as a few unseen taxes) with one rate.
My total tax burden is lower than the Fair Tax rate. Does this mean I’m not paying my fair share because I’m frugal and tax-savvy? No, but it appears that anyone in the 10% bracket in my state will end up paying more, while everyone above the 10% bracket will pay less. People here in the 28% bracket would see double-digit tax discounts, and the higher your federal bracket, the more your discount (in this state, anyway).
All this may sound well and good on the surface, but I would think it ultimately penalizes our inventors, producers, and manufacturers, because there would be no incentive for us to buy new and eventually cast off as used—this would put a limit (at some point) on the amount of things one could buy used if nobody is creating more used stuff. This would also serve to severely stall our economy, because there would be no incentive to create and produce new stuff if the pool of buyers is going to be substantially reduced.
While you sort through this, as well as all you know and have heard or read about the Fair Tax plan, you can create a part of the Fair Tax plan for your very self: buy used whenever possible. Nothing’s stopping you from doing this right now.
Now for the rest of the plan: payroll taxes currently pay for elderly and disabled to exist right now—not to mention Uncle Sam. Take away that money, and someone’s grandmother or great uncle would be out on the street without food, shelter, or meds. It might even be your own. There would certainly be a lag time between old money going out and new money coming in, and the amount of new money (it would seem) would probably be a lot lower than current levels.
The Fair Tax plan, as I remember it, would supposedly give us a 25% raise. There are better ways to get a 25% raise without putting a muzzle on the economy, opportunity, and freedom of choice: taking more tax deductions, qualifying for more tax credits, checking to see if you take the right number of W-4 exemptions, take higher deductibles on your health and car insurance, etc. (and these are tax-free). Then there’s what you could do at work to earn raises, like making the boss’s priorities your own as well as doing your own job (finding ways to cut costs and/or raise productivity and efficiency, and discovering hidden markets to sell your company’s products/services in), and learn to negotiate a better employment contract for yourself that includes a hiring bonus, adequate pay and benefits, and termination pay—make sure you get paid coming in and going out.
Another thing we can all do is use Pareto’s Principle in eliminating waste and increasing productivity in our own lives. It’s referred to as the 80/20 principle, and states that 80% of what we do and own is pretty much waste (in time, space, energy, and/or money), leaving about 20% that’s actually useful and productive. If we get rid of the waste WITHOUT REPLACING IT, we gain back the wasted resources that went into acquiring and go into maintaining it—another way toward that 25% raise. Less is more.
Pareto’s Principle was actually developed for the business world, but it works like a charm at home too. It was meant to get rid of low- or non-performing employees, sales accounts, equipment, etc., but I put it to work in my own home—starting with the kitchen, moving through the rest of the house, then on to the food I buy. My small apartment seems like a mansion now, and I’m rewarded handsomely with more time, space, money, and personal energy.
If you’d like to see Pareto’s Principle in action, watch an episode of Clean Sweep on TLC every Saturday morning. After the featured family sorts through their possessions out on the front lawn a couple of times, roughly 75-80% of their stuff ends up going into a yard sale. The remaining 20% or so goes back into the house, leaving the residents with a whole lot more space—this leads to more time, energy, and money not having to dig around for stuff, or spending mental energy blocking it out and trying to live around it. They get the added bonus of yard sale profits, and a tax deduction for donating the remains to charity.
How much of your mortgage is devoted to buying expensive storage space for stuff you could easily live without? Smaller homes with smaller mortgages, lower property taxes, less junk and wasted space, and lower utility bills also mean more money for you—yet another tax-free way toward that 25% raise!
There’s not much that we absolutely HAVE to buy new, but what DOES have to be new is essential: food, beverages, medicines and supplements, toilet paper, personal hygiene products, laundry products, and energy. The Fair Tax is supposed to “reimburse” us for these purchases, but what constitutes a necessity? What if I broke my glasses and needed new ones—is this considered a necessity? It is to me. Good thing I have vision coverage.
It wouldn’t be the prices of the products themselves that would rise so fast, but the tax on them—there’s nothing to stop Congress from raising this level even higher in the future, while lowering the “reimbursement” rate. When that happens, you’ll definitely be yearning for the good old days of the IRS and cumbersome tax forms.
This is how Uncle Sam (or a possible President Huckabee) would aim to target your spending, or deter you from spending on other items. All of a sudden, there’d be less freedom of personal choice for those who make less money than others—almost a federally-forced frugality for lower income workers. Why force it when it can be easily taught and done voluntarily? It’s already being done by many of us all throughout the income scale.
Another thought: what are the alternatives to this tax? We’d definitely be looking back to Depression days when Grandma (or Great-Grandma) used Sears catalog pages and corn cobs in the outhouse, grated Fels-Naptha soap in the wringer washer, and made her own soap for bathing and hair washing. Wood stoves would once again be the norm for heating. Junior’s summer job would be harvesting crops and chopping firewood with Dad, while Suzie’s summer job would be soap-making, candle-making, and canning with Mom. I imagine quilting bees and knitting/crochet groups would replace cable TV in most homes. Libraries would start up reading clubs, and once again be a major social center in American lives.
We’d have to resort to JC Penney catalogs and a daily New York Times, Boston Herald, or San Francisco Chronicle subscription just for the bathroom, assuming we could even flush the pages without causing a plumbing calamity!
Instead of having us resort to Depression-era fixes, this tax plan aims to give us a “pre-bate” of our estimated annual tax bill—but nothing says this is going to be enough to buy all our necessary “new” items, nor does anything say we HAVE to spend it at all. Where would this tax system be if we all suddenly started growing and raising our own food, and basically went into Grandma- or Great-Grandma-mode? What if we were to put our pre-bates and reimbursements into savings instead of spending it? This certainly wouldn’t help the economy in any way, but it would lessen the load on Uncle Sam’s future spending—Medicare and Social Security payments would dwindle, as would welfare and food stamp programs.
UPDATE: in 2009, we don't even have a Fair Tax plan enacted, and Obama has us resorting to Depression-era fixes just to avoid the coming hyperinflation!
It would seem even this plan has gaping loopholes. Would it also carry an additional 23% depreciation rate on things going from “new” to “used” status in secondary markets? Things we buy new right now lose about 30% or more to depreciation. That depreciation could be sped up by an additional 23% if you bought the item after the tax plan was enacted—you’d already be 23% in the hole for book value when you went to re-sell the item later on, and this is on top of the usual 30% or more devaluation. If this is so, you’d practically be giving things away free in the secondary market, because they’d be so worthless, and you’d be the one to suffer all that loss of value. The depreciation alone would deter some people from ever buying anything new again unless it was absolutely necessary to do so, and they planned on keeping it forever.
This Fair Tax plan doesn’t sound like it would be very fair to me! As much as we may curse and shake our fist at the IRS, this is what they’re saving us from—an almost-forced Depression lifestyle trying to avoid taxes.
I also have to ask: what about all the NON-payroll taxes we pay, like the gas tax, cigarette taxes, alcohol taxes, property taxes, taxes on utilities, and so forth? Would these taxes also be raised to make up for the loss of tax revenue caused by super-frugal living? What about fees, levies, licenses and permits, not to mention car registration or bus passes? How about gambling—both cards and slot machines? Would this plan affect the trading of securities? What about free trade and the obvious resulting decline in consumption? Are internet purchases included? Would this tax also replace the personal property tax some people pay now for their cars, boats, and computers?
Then there’s vending machines, pay phones, pay toilets, and lottery tickets—you see how far this would go, don’t you? I see a possible double-taxation in both the purchase of lottery tickets AND any winnings that may result. I suppose this would go for sweepstakes, contests, and game shows as well.
As you can see, the tax on consumption would go a lot deeper than just what immediately comes to mind: the grocery store and mall.
Let’s not forget union workers—would their supposed increases end up going into union coffers? It’s enough to make you want to stay in bed and pull the covers over your head!
How would thrift stores be able to designate “new” (and taxable) from “used” (and non-taxable), especially when it comes to corporate donations of overstock? All of a sudden, thrift stores and auction houses would have to ask questions of each and every donor and seller to determine when the stock was originally purchased—before or after the plan was enacted.
In fact, we’d all be required to keep track of our before- and after-plan purchases to avoid double-taxation when we re-sell. Can you see how the taxable white elephants would mount up at stores, auctions, and yard sales? Brand new items would mount up at ports and countries of origin, causing an economic slowdown (all the way back to the raw materials phase) in every country we do business with.
Would food banks have to start keeping track of “new” stock vs. “used” stock (pre-tax plan)?
Is THIS the grand plan to make up for the loss of payroll taxes? So much of this tax plan is unanswered—even on the official Fair Tax website). It claims to put an end to the underground economy, but in my mind, it creates whole new markets of people looking to avoid paying the 23% on new goods and services. There’d be a whole lot more stealing, pawning, bartering, dumpster-diving, and scavenging-then-reselling going on!
On the other hand, it would serve to finally get those black-market-made dollars out of pockets and into the economy—there would be no more reporting of income to the IRS, because you would pay the tax at retail level, not payroll level. The IRS wouldn’t need to know how much money you make, or where you made it. This could open the door wide to lots of illegal activity and too many places to get rid of the evidence (cash). As it stands now, if you live a lifestyle that’s clearly and obviously beyond your means, the IRS has a deep interest in you, and is watching. Everything you earn legally, and every transaction you make is reported to them. Even your savings and investments are reported. Under Fair Tax, nothing gets reported—drug traffickers, black market bankroll-holders, and bank thieves could suddenly be investing it in the stock market, buying large properties, yachts, and expensive cars. Before, they couldn’t do any of these things. They pretty much kept their cash wads in coffee cans and spent it at grocery stores and in the secondary market as needed.
Do you get the same feeling I do about this—that maybe we’d ultimately be taxed back into the 18th century, or even clear back to biblical times? It would just be a matter of time before we’d reach European tax levels of 80% and up.
There is one sigh of relief, and that is this: the President doesn’t run the country. If Mike Huckabee gets elected, and tries to run the Fair Tax plan up the flagpole, Congress in all its Democrat-controlled wisdom will fight him tooth-and-nail. There’s a reason why it hasn’t been enacted already, and I think I know why—it always dies in committee because it’s a control issue. All this reporting that’s currently done is a means to collect financial information about us, and Fair Tax would take that control away. Some smart, sane handful of committee members see the same dilemmas I do, and obviously haven’t had their questions answered to satisfaction.
Like many people, the Fair Tax authors presume that all rich people buy large new mansions, fast sports cars, a fleet of yachts, and eat filet mignon every night of the week, and the plan is laid out to tax their spending. In truth, the wealthier people are, the more frugal they are—with some exceptions, like Dennis Koslowski and other extravagant CEOs who obviously let their egos dictate their spending. Warren Buffett is probably the most frugal billionaire on earth.
If you’d like verification of the spending habits of wealthy people, I urge you to pick up and read any one of Thomas Stanley’s “millionaire” books. He’s personally interviewed lots of them, and wrote about their lifestyles.
Sometimes I’m glad we have a do-nothing Congress. If they did manage to pass this plan into law, we’d all cease to buy, use, and do lots of stuff, creating a tax quandary. Congress would be forced to borrow-and-spend just like they do now, and the bulk of their spending would remain the same: military, Medicare, Social Security, and payments to the states. The amount they'd be borrowing would shrink with each passing year until we managed to save enough "pre-bates" and "reimbursements" to completely finance ourselves and our futures. In about five generations (maybe more, maybe less), Uncle Sam would no longer be shelling out for anything beyond the military and maybe small payments to the states. Do you think we'd see an increase in reimbursement rate when Dear Uncle starts to swim in money? Of course not--there's still the deficit, but even after we're completely in the black? Nope--not even then. Earmarks would grow, pork barrel spending would explode, and Congress would vote themselves a 100% pay increase in broad daylight!
Here’s how to have it your way right now, without the interference of Uncle Sam or a Mike Huckabee:
• Buy used whenever possible.
• Find other ways to make that 25% raise—through improvement of your own tax situation, insurance situation, work situation, or home situation (see the list above). No expensive higher education needed for this one.
To hopefully get a fuller understanding of this plan, I pre-ordered a copy of Neal Boortz’s book The FairTax: Answering the Critics (available Feb. 12th) to go along with my original FairTax book. I certainly hope Mr. Boortz can answer my questions, because none of the many FairTax web pages can. I may end up eating crow after the book arrives and is digested—that’s okay. I always need blog fodder, and it would make for a good follow-up article. It might even serve to clear up a lot of other foggy minds out there besides my own.
The main tenet of the Fair Tax plan is this: brand new things get taxed at the retail level to the tune of 30% (an effective 23% rate), while used and second-hand things don’t get taxed at all. This would eliminate the need of the IRS, because it would make retailers the tax collectors instead.
Another goal of this plan would be to eliminate corporate taxes, making our shores once again profitable for businesses to operate back here at home. Exports to other countries wouldn’t be subject to this tax, but imports and domestically-made goods would be—giving foreign countries an instant 23% incentive to buy our stuff. Never mind the fact that there’s already a 30% incentive to buy our stuff due to the devalued dollar.
Our visible taxes include a 7.65% rate for payroll taxes like Social Security, Medicare, and the rest, a separate rate for federal income taxes, and a state or local sales tax for food and non-food. All these numbers added together compose your current total tax burden, and Fair Tax aims to replace all of them (as well as a few unseen taxes) with one rate.
My total tax burden is lower than the Fair Tax rate. Does this mean I’m not paying my fair share because I’m frugal and tax-savvy? No, but it appears that anyone in the 10% bracket in my state will end up paying more, while everyone above the 10% bracket will pay less. People here in the 28% bracket would see double-digit tax discounts, and the higher your federal bracket, the more your discount (in this state, anyway).
All this may sound well and good on the surface, but I would think it ultimately penalizes our inventors, producers, and manufacturers, because there would be no incentive for us to buy new and eventually cast off as used—this would put a limit (at some point) on the amount of things one could buy used if nobody is creating more used stuff. This would also serve to severely stall our economy, because there would be no incentive to create and produce new stuff if the pool of buyers is going to be substantially reduced.
While you sort through this, as well as all you know and have heard or read about the Fair Tax plan, you can create a part of the Fair Tax plan for your very self: buy used whenever possible. Nothing’s stopping you from doing this right now.
Now for the rest of the plan: payroll taxes currently pay for elderly and disabled to exist right now—not to mention Uncle Sam. Take away that money, and someone’s grandmother or great uncle would be out on the street without food, shelter, or meds. It might even be your own. There would certainly be a lag time between old money going out and new money coming in, and the amount of new money (it would seem) would probably be a lot lower than current levels.
The Fair Tax plan, as I remember it, would supposedly give us a 25% raise. There are better ways to get a 25% raise without putting a muzzle on the economy, opportunity, and freedom of choice: taking more tax deductions, qualifying for more tax credits, checking to see if you take the right number of W-4 exemptions, take higher deductibles on your health and car insurance, etc. (and these are tax-free). Then there’s what you could do at work to earn raises, like making the boss’s priorities your own as well as doing your own job (finding ways to cut costs and/or raise productivity and efficiency, and discovering hidden markets to sell your company’s products/services in), and learn to negotiate a better employment contract for yourself that includes a hiring bonus, adequate pay and benefits, and termination pay—make sure you get paid coming in and going out.
Another thing we can all do is use Pareto’s Principle in eliminating waste and increasing productivity in our own lives. It’s referred to as the 80/20 principle, and states that 80% of what we do and own is pretty much waste (in time, space, energy, and/or money), leaving about 20% that’s actually useful and productive. If we get rid of the waste WITHOUT REPLACING IT, we gain back the wasted resources that went into acquiring and go into maintaining it—another way toward that 25% raise. Less is more.
Pareto’s Principle was actually developed for the business world, but it works like a charm at home too. It was meant to get rid of low- or non-performing employees, sales accounts, equipment, etc., but I put it to work in my own home—starting with the kitchen, moving through the rest of the house, then on to the food I buy. My small apartment seems like a mansion now, and I’m rewarded handsomely with more time, space, money, and personal energy.
If you’d like to see Pareto’s Principle in action, watch an episode of Clean Sweep on TLC every Saturday morning. After the featured family sorts through their possessions out on the front lawn a couple of times, roughly 75-80% of their stuff ends up going into a yard sale. The remaining 20% or so goes back into the house, leaving the residents with a whole lot more space—this leads to more time, energy, and money not having to dig around for stuff, or spending mental energy blocking it out and trying to live around it. They get the added bonus of yard sale profits, and a tax deduction for donating the remains to charity.
How much of your mortgage is devoted to buying expensive storage space for stuff you could easily live without? Smaller homes with smaller mortgages, lower property taxes, less junk and wasted space, and lower utility bills also mean more money for you—yet another tax-free way toward that 25% raise!
There’s not much that we absolutely HAVE to buy new, but what DOES have to be new is essential: food, beverages, medicines and supplements, toilet paper, personal hygiene products, laundry products, and energy. The Fair Tax is supposed to “reimburse” us for these purchases, but what constitutes a necessity? What if I broke my glasses and needed new ones—is this considered a necessity? It is to me. Good thing I have vision coverage.
It wouldn’t be the prices of the products themselves that would rise so fast, but the tax on them—there’s nothing to stop Congress from raising this level even higher in the future, while lowering the “reimbursement” rate. When that happens, you’ll definitely be yearning for the good old days of the IRS and cumbersome tax forms.
This is how Uncle Sam (or a possible President Huckabee) would aim to target your spending, or deter you from spending on other items. All of a sudden, there’d be less freedom of personal choice for those who make less money than others—almost a federally-forced frugality for lower income workers. Why force it when it can be easily taught and done voluntarily? It’s already being done by many of us all throughout the income scale.
Another thought: what are the alternatives to this tax? We’d definitely be looking back to Depression days when Grandma (or Great-Grandma) used Sears catalog pages and corn cobs in the outhouse, grated Fels-Naptha soap in the wringer washer, and made her own soap for bathing and hair washing. Wood stoves would once again be the norm for heating. Junior’s summer job would be harvesting crops and chopping firewood with Dad, while Suzie’s summer job would be soap-making, candle-making, and canning with Mom. I imagine quilting bees and knitting/crochet groups would replace cable TV in most homes. Libraries would start up reading clubs, and once again be a major social center in American lives.
We’d have to resort to JC Penney catalogs and a daily New York Times, Boston Herald, or San Francisco Chronicle subscription just for the bathroom, assuming we could even flush the pages without causing a plumbing calamity!
Instead of having us resort to Depression-era fixes, this tax plan aims to give us a “pre-bate” of our estimated annual tax bill—but nothing says this is going to be enough to buy all our necessary “new” items, nor does anything say we HAVE to spend it at all. Where would this tax system be if we all suddenly started growing and raising our own food, and basically went into Grandma- or Great-Grandma-mode? What if we were to put our pre-bates and reimbursements into savings instead of spending it? This certainly wouldn’t help the economy in any way, but it would lessen the load on Uncle Sam’s future spending—Medicare and Social Security payments would dwindle, as would welfare and food stamp programs.
UPDATE: in 2009, we don't even have a Fair Tax plan enacted, and Obama has us resorting to Depression-era fixes just to avoid the coming hyperinflation!
It would seem even this plan has gaping loopholes. Would it also carry an additional 23% depreciation rate on things going from “new” to “used” status in secondary markets? Things we buy new right now lose about 30% or more to depreciation. That depreciation could be sped up by an additional 23% if you bought the item after the tax plan was enacted—you’d already be 23% in the hole for book value when you went to re-sell the item later on, and this is on top of the usual 30% or more devaluation. If this is so, you’d practically be giving things away free in the secondary market, because they’d be so worthless, and you’d be the one to suffer all that loss of value. The depreciation alone would deter some people from ever buying anything new again unless it was absolutely necessary to do so, and they planned on keeping it forever.
This Fair Tax plan doesn’t sound like it would be very fair to me! As much as we may curse and shake our fist at the IRS, this is what they’re saving us from—an almost-forced Depression lifestyle trying to avoid taxes.
I also have to ask: what about all the NON-payroll taxes we pay, like the gas tax, cigarette taxes, alcohol taxes, property taxes, taxes on utilities, and so forth? Would these taxes also be raised to make up for the loss of tax revenue caused by super-frugal living? What about fees, levies, licenses and permits, not to mention car registration or bus passes? How about gambling—both cards and slot machines? Would this plan affect the trading of securities? What about free trade and the obvious resulting decline in consumption? Are internet purchases included? Would this tax also replace the personal property tax some people pay now for their cars, boats, and computers?
Then there’s vending machines, pay phones, pay toilets, and lottery tickets—you see how far this would go, don’t you? I see a possible double-taxation in both the purchase of lottery tickets AND any winnings that may result. I suppose this would go for sweepstakes, contests, and game shows as well.
As you can see, the tax on consumption would go a lot deeper than just what immediately comes to mind: the grocery store and mall.
Let’s not forget union workers—would their supposed increases end up going into union coffers? It’s enough to make you want to stay in bed and pull the covers over your head!
How would thrift stores be able to designate “new” (and taxable) from “used” (and non-taxable), especially when it comes to corporate donations of overstock? All of a sudden, thrift stores and auction houses would have to ask questions of each and every donor and seller to determine when the stock was originally purchased—before or after the plan was enacted.
In fact, we’d all be required to keep track of our before- and after-plan purchases to avoid double-taxation when we re-sell. Can you see how the taxable white elephants would mount up at stores, auctions, and yard sales? Brand new items would mount up at ports and countries of origin, causing an economic slowdown (all the way back to the raw materials phase) in every country we do business with.
Would food banks have to start keeping track of “new” stock vs. “used” stock (pre-tax plan)?
Is THIS the grand plan to make up for the loss of payroll taxes? So much of this tax plan is unanswered—even on the official Fair Tax website). It claims to put an end to the underground economy, but in my mind, it creates whole new markets of people looking to avoid paying the 23% on new goods and services. There’d be a whole lot more stealing, pawning, bartering, dumpster-diving, and scavenging-then-reselling going on!
On the other hand, it would serve to finally get those black-market-made dollars out of pockets and into the economy—there would be no more reporting of income to the IRS, because you would pay the tax at retail level, not payroll level. The IRS wouldn’t need to know how much money you make, or where you made it. This could open the door wide to lots of illegal activity and too many places to get rid of the evidence (cash). As it stands now, if you live a lifestyle that’s clearly and obviously beyond your means, the IRS has a deep interest in you, and is watching. Everything you earn legally, and every transaction you make is reported to them. Even your savings and investments are reported. Under Fair Tax, nothing gets reported—drug traffickers, black market bankroll-holders, and bank thieves could suddenly be investing it in the stock market, buying large properties, yachts, and expensive cars. Before, they couldn’t do any of these things. They pretty much kept their cash wads in coffee cans and spent it at grocery stores and in the secondary market as needed.
Do you get the same feeling I do about this—that maybe we’d ultimately be taxed back into the 18th century, or even clear back to biblical times? It would just be a matter of time before we’d reach European tax levels of 80% and up.
There is one sigh of relief, and that is this: the President doesn’t run the country. If Mike Huckabee gets elected, and tries to run the Fair Tax plan up the flagpole, Congress in all its Democrat-controlled wisdom will fight him tooth-and-nail. There’s a reason why it hasn’t been enacted already, and I think I know why—it always dies in committee because it’s a control issue. All this reporting that’s currently done is a means to collect financial information about us, and Fair Tax would take that control away. Some smart, sane handful of committee members see the same dilemmas I do, and obviously haven’t had their questions answered to satisfaction.
Like many people, the Fair Tax authors presume that all rich people buy large new mansions, fast sports cars, a fleet of yachts, and eat filet mignon every night of the week, and the plan is laid out to tax their spending. In truth, the wealthier people are, the more frugal they are—with some exceptions, like Dennis Koslowski and other extravagant CEOs who obviously let their egos dictate their spending. Warren Buffett is probably the most frugal billionaire on earth.
If you’d like verification of the spending habits of wealthy people, I urge you to pick up and read any one of Thomas Stanley’s “millionaire” books. He’s personally interviewed lots of them, and wrote about their lifestyles.
Sometimes I’m glad we have a do-nothing Congress. If they did manage to pass this plan into law, we’d all cease to buy, use, and do lots of stuff, creating a tax quandary. Congress would be forced to borrow-and-spend just like they do now, and the bulk of their spending would remain the same: military, Medicare, Social Security, and payments to the states. The amount they'd be borrowing would shrink with each passing year until we managed to save enough "pre-bates" and "reimbursements" to completely finance ourselves and our futures. In about five generations (maybe more, maybe less), Uncle Sam would no longer be shelling out for anything beyond the military and maybe small payments to the states. Do you think we'd see an increase in reimbursement rate when Dear Uncle starts to swim in money? Of course not--there's still the deficit, but even after we're completely in the black? Nope--not even then. Earmarks would grow, pork barrel spending would explode, and Congress would vote themselves a 100% pay increase in broad daylight!
Here’s how to have it your way right now, without the interference of Uncle Sam or a Mike Huckabee:
• Buy used whenever possible.
• Find other ways to make that 25% raise—through improvement of your own tax situation, insurance situation, work situation, or home situation (see the list above). No expensive higher education needed for this one.
To hopefully get a fuller understanding of this plan, I pre-ordered a copy of Neal Boortz’s book The FairTax: Answering the Critics (available Feb. 12th) to go along with my original FairTax book. I certainly hope Mr. Boortz can answer my questions, because none of the many FairTax web pages can. I may end up eating crow after the book arrives and is digested—that’s okay. I always need blog fodder, and it would make for a good follow-up article. It might even serve to clear up a lot of other foggy minds out there besides my own.
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