Taxes « POWIP

27Apr/114

Explain to a Simple Girl: How Does Raising Taxes Lower Prices?

No, really.

Because this is important.

Obama seems to think that an appropriate response to increasing gas prices is to threaten to remove various tax breaks on gas companies. I well understand all the arguments against such a move -- I want to understand, other than some nebulous "fairness" or "punishment" blather, how the hell this is supposed to help people dealing with rising gas prices.

Even to the general masses, this has got to look like a total non sequitur.

White House press secretary Jay Carney said at his daily briefing Tuesday that this is an apt week to highlight the tax breaks.

“The oil and gas companies are all announcing their profits this week. They’re expected to be quite large,” he said. “And while we certainly are glad to see companies making a profit, we do not believe that . . . they need to be subsidized by the American taxpayer.”

Okay......and? You raise taxes on them, so they raise their prices to keep up their profit margins and....?

I mean, how was this supposed to work out for the rest of us?

But let's look at those taxes on gasoline, shall we, and see who's making how much money on that gas:
gas taxes over the U.S.
Oh, here in my great state of NY, the various govt entities are making almost 66 cents per gallon. Do you think the gas companies are making that much in profit, hmmmm?

Do you really want to talk about taxes, Obama?

SPEAKING OF GAS TAXES: When people buy electric vehicles, you'd think they'd get to avoid the high gas taxes... well, Washington state isn't about to give up those revenues.

Meep

Meep is a member of the Irish Catholic mafia, having a suspiciously high number of green-eyed, red-haired friends. While she doesn’t have red hair herself [except when she goes into the sun (rare for any vampire)], she does have green eyes. She’s a raving Papist and is a life actuary on the side [i.e., she counts dead people]. An amateur pain-in-the-ass [willing to go pro!], she likes covering retirement, mortality, math, and education issues.

Tagged as: gasoline, Taxes 4 Comments

5Feb/112

Lazy post: Reprinting a Letter to the Editor

I have long been writing letters to the editor at the Wall Street Journal. I've had a pretty good success rate in getting printed I think. I can't find the letter I wrote when I was drunk making fun of English majors, but I always found it very funny. Evidently the editors liked it, too. [Anybody able to find it.... please let me know!]

Scott Adams of Dilbert fame has been regularly writing for the Weekend WSJ, and last weekend he wrote a [trying-to-be-funny] piece on making higher taxes more palatable for rich people.

Here's my response:

Alas, the problem isn't convincing the rich to allow higher taxes on themselves; it's convincing the rich to not change their behavior if higher taxes are imposed on them. It's a lot easier to stop making income than to make more. And the richer one is, the more people you've got helping you maximize your after-tax situation. We've seen time and again that raising taxes on people who are actually rich makes for good politics but it doesn't net much in government revenue.

In any case, it's moot. There aren't enough rich people, and they don't have enough wealth to plug the hole in our government finances at state and federal levels. There are, however, a lot more people—and total income and wealth—in the middle range.

So I think Mr. Adams had better get cracking on convincing those of median income that they should pay higher taxes and get fewer government services and benefits. Might as well work on it, as that's what's going to happen. Maybe we can make it like a video game. I know that when I "play" TurboTax, the numbers going up and down seem like a game to me.

And yeah, I need to go buy TurboTax. As I expect to be writing a large check this year, I'm in no hurry to play that game this year.

Meep

Tagged as: Taxes 2 Comments

10Dec/103

Surprise!

Just a quick hit here.

I used to work for an answering service....and one of the business types we answered for were propane companies. (I sell propane and propane accessories) One Christmas Eve I got a call from a woman in Greenwich, CT who was all in a panic because she was out of propane for her gas logs in her fireplace. I explained to her that the office was closed and there were no deliveries on Christmas Eve except in extreme emergencies. She told me it WAS an emergency because she was having a Christmas party and 250 people were going to show up at her house and she wasn't able to use her fireplace. *faceplam*

I explained that even under regular circumstances, this company did not consider gas logs an emergency. She got very upset and said that we were ruining her Christmas party. I apologized...she got angry and hung up. Now it occurred to me while I talking to her and envisioning her head exploding because she couldn't use her fireplace, that she had to have seen this day coming. I mean Christmas Eve is the same date every year. And besides that, 250 people don't just show up at your house...you plan for them and invite them. So....wouldn't it have been prudent to make sure you had enough propane for your gas logs BEFORE Christmas Eve?

This is the way I feel about this debate about the "Bush Tax Cuts". Congress KNEW they were set to expire in January 2011. POTUS KNEW they were set to expire in January 2011. But they waited until December 2010 to even begin TALKING about doing something? Really? They didn't see this coming? They couldn't have started this debate say in April? Now they're all like...."it's not perfect but we have to do SOMETHING so we'll do something crappy." People...time management and prioritizing are important skills for McDonald's employees...certainly they are important on Capitol Hill. #justsayin

Dede

Sometimes stuff rumbles around in my brain that's longer than 140 characters and, well......twitlonger just seems like cheating. :)

Tagged as: Bush Tax cuts, Congress, surprise, Taxes 3 Comments

7Dec/104

Words Matter: Taxes

You may have noticed I preferred the use of the term "death tax" when I posted about estate taxes. Because it is a tax looking upon death as a taxable event.

Here's another term I prefer: "Bush tax rates". They were tax cuts 9.5-years ago, when they cut the Clinton tax rates down. I am tired of them being referred to as tax cuts now, as if the higher Clinton rates were the natural level of taxes. No, if the rates go back up to the old Clintonian levels that's a tax hike, not "letting tax cuts expire".

"Payroll tax". It's just an income tax like all the rest. Sure looks like a tax on income to me. And the worst part of it is that half of it is hidden from the person being taxed [unless you're self-employed]. I wish all federal taxes that are applied on one's paycheck were just rolled into one item, including any employer portion of that tax [ok, that part can be separate, to make the math easier to go from gross to net]. I hate hearing that half of people don't pay income taxes, as that's a lie -- every wage-earner over a certain amount is paying income taxes, but they're calling it payroll taxes. I hear there's a deal to temporarily cut those, but we will see what passes. Unlike continuing current tax rates, it would be a real tax cut.

Finally, the evil "tax refund". I prefer the term "you're-getting-your-own-money-back-because-you-overpaid-during-the-yeat-and-if-you're-happy-for-a-huge-refund-you're-a-real-idiot". Also, the only well-deserved boo hiss to Uncle Miltie for inventing tax withholding. To be fair, if he hadn't invented it, some other bureaucrat would have.

A FAR SMARTER MAN ON THE SAME SUBJECT: Thomas Sowell on tax rhetoric

Meep

Tagged as: Taxes 4 Comments

6Dec/108

Death Taxes and Life Insurance

This is a post somewhat against interest. I work in the life insurance industry [as an actuary.... yup, I count dead people.] There may be something you don't know about life insurance benefits in the U.S.: namely, they aren't taxed [federally - not sure about on the state level. I am not a tax expert.]

Doesn't matter how much the amount is. Can be $300K, could be $300MM -- it escapes tax.

Perhaps you may now see why the life insurance industry has an interest in keeping estate taxes alive?

Life insurance is still a very good risk-mitigation tool for individuals out there, but due to the tax laws, it has morphed into a variety of uses, and you'd better believe it is a lucrative business for those of us who help others legitimately avoid taxes.

That said, I don't see why death should be a taxable event. Taxman, you got your chance to whack while the person was alive. It's not your money! Go away!

No, the life insurance industry is not eeeeeeeeeeeeevil just because it hires lobbyists to promote its interest, but I do hope this is one fight they lose. The very rich don't need this method of tax avoidance (there are lots of ways), but it is one of the most affordable methods for someone who has built up wealth in a small business.

I'm tired of the "class warfare" aspects of the death tax, but more to the point, it's a futile argument -- the really and truly rich have all sorts of methods to avoid tax. Ask Teresa Heinz Kerry how much tax she currently pays on her wealth and how much her estate is likely to pay. I assure you, it will be minimal. There is no way for Congress to make a law that would steal away all of Paris Hilton's inheritances. The very rich are mobile in a way that the moderately wealthy are not. Even if the entire world were to hike up the taxes, they'd figure out a way to get off the earth [why do you think Richard Branson has his Virgin Galactic project?]

I have no expectations for this lame duck Congress to take care of the issue - they couldn't figure out how to properly pass an FDA bill, and are just now getting around to dealing with hiking the tax rates when the recovery in the economy is illusory. I assume the Republican House will put something out there nest year, but I definitely have no expectations of the Senate, a body of rich old tax-dodgers if ever there was one. [Also, rich people supposedly being happy with tax hikes on themselves? You are so full of shit. ]

NEWS THAT YOU CAN USE: From the WSJ, some advice on avoiding death taxes.

Meep

Tagged as: Death, Taxes 8 Comments

13Oct/100

Why Tax Rates Matter

There’s a simple economic concept that liberals either don’t understand or choose to ignore. Essentially, it’s risk/reward. Specifically, it’s the effect of tax rates on the reward side of that equation and how it affects the result of that analysis. Growing up, I never understood it. It didn’t make sense how someone would purposefully make less money to avoid paying taxes when the end result would still be more actual income.

Then, my wife and I had a child and started going through the process of deciding whether she would work for pay outside of the home. At first we figured, even at $10 per hour, it would be worth her working. Then, however, we started subtracting all the work-related expenses (primarily daycare) that we would incur, and realized she would be working for, essentially, $1 to $2 per hour at best. It wasn’t worth it.

It dawned on me at that time that any time you reduce the final reward (through taxes or other expenses), you reduce the incentive to work or invest. It’s even more tricky with investments, as there is actual risk involved as opposed to simply time and effort. Had my wife worked, we wouldn’t have really risked much, if anything. Dropping $100,000 into a business, however, is risky. You risk losing the whole investment, so you expect there is a potential for rewards. If you’ve analyzed the problem and decided that it’s worth it for potential income of $10,000 per year, but taxes reduce the actual potential down to $8,000, you’re going to put your money somewhere else. You’ll either put it where the reward is back in line with the risk (a different industry, perhaps), or where the risk is significantly lower (such as a bank account).

Liberals seem to understand this when they talk about “targeted tax cuts,” but ignore it when it comes to discussing over all tax cuts. When I was liberal, I didn’t understand it; congressional and intellectual leadership on the left do not have that excuse.

Adam Wells

Living life at 84 mph and 7000 feet. All I ask is that you don't block traffic, act like a professional, and don't act all surprised when your actions have consequences. Oh, and don't complain about the refs; trust me, they don't care if your team wins or not.

Tagged as: Taxes No Comments

5Dec/098

More Small Business Stimulus

Got this email from Value Tobacco, today.

To all our valued customers,
@
We are now carrying Golden Harvest Pipe Tobacco. We have a low price of
$17.75 per 12 oz bag and right now it is on sale, 10% off, available for
$15.98. Flavors come in Robust (full flavor), Mild (light), Mint (menthol)
and Natural.
@
We have successfully completed our move to Uniontown, PA and thank you all
for your patience during our move.
@
Update on P.A.C.T. ACT. As you may or may not know, there is a bill
floating in the congress to prevent mailing tobacco products through the
mail. It has already passed the House and is in the Senate. Obama has said
he will sign it. When this happens, we will be extremely busy. I want
everybody to get @all the @tobacco they want, but please understand; when
the law comes into effect we cannot ship tobacco, so buy early. If you plan
on buying a couple of days before the law comes into effect, your order may
not get filled. We are facing two problems, one being that when the law
comes into effect, we will try to run out of stock, and on that day we want
nothing in stock. The other problem is when the law goes into effect, it is
permanent. If we are behind 200, 300, 500 orders then they simply cannot be
mailed, because that is the law.
@
Update on pipe tobacco. The government is well aware of this loophole and
will be addressing this in the near future. We don't know if this will
happen before or after PACT Act is in place. Hopefully after, but it is
just not certain. So once again, this is another reason to bulk up on your
tobacco stock.
@ @ @ @ @ @ @ @
We will be emailing you all when the bill passes the Senate and when the
President signs it, and when we know the actual date the law comes into
effect.
@
On a personal note, I have really enjoyed starting and running Value
Tobacco. I have talked to so many customers and made many friends. I will
always cherish the memories from this whole experience. I'll remember how
scary it was when I first started, the gratification when the business
started to work and the eventual heartache when the business is done. I
will hold no animosity and will not be bitter toward my country, but I am
concerned. How can we keep taking rights away from each other until we have
none ourselves?

So, smoke 'em if you've got them, order it while you can. Â As states move inexorably toward legalization of "medicinal marijuana" (you can even get a degree in pot cultivation), Congress and the cigarette smoking President shut down tobacco.