Today is the day of great tax reckoning for many people. As we fill out and file our tax returns, we may be inclined to believe that married couples benefit from an increase in allowable deductions; however, this isn't the case. Many married women could benefit from tax reform -- so says today's D.C. Examiner.
According to a study by Edward McCaffery, a professor of law, economics and political science at the University of Southern California, and published by the National Center for Policy Analysis, there is a high disconnect between the way women participate in the economy and how they are taxed. The major elements of the tax system were put in place in the 1930s, 1940s and 1950s, when most women were not in the workforce. Today, 70 percent of all married women work for wages while 60 percent of mothers with children under the age of 6 work for wages. Yet, the tax laws are biased toward single-earner households in which only one spouse works, and biased against two-earner households.
According to McCaffery, the "marriage penalty" in the tax code is a tax on two earner households -- when a wife enters the labor market, even if she earns only the minimum wage, she is automatically in her husband's tax bracket. Moreover, even if her husband has paid the maximum Social Security tax, the wife who works must begin paying from the first dollar she earns.
Combine a 28 percent federal income tax with an 8.5 percent state and local income tax, then add a 7.65 percent Social Security (FICA) payroll tax, and the marginal tax rate of the second earner in the average household is more than 44 percent. Some married working women actually lose money by entering the labor market.
Under present tax law, if you are middle- to upper-income and married, the incentive is not to work. And if you are low-income and working, the incentive is not to marry. In order to bring our tax system into the 21st century, McCaffery recommends changing the income tax law to permit each married partner to file separately and avoid unfair penalties for working wives. He also suggests allowing a second-earner exemption which would let couples deduct work-related expenses associated with two earner households when calculating income taxes.
It's time to get the tax code out of the 1950s.
Wednesday, April 15, 2009
Tuesday, April 14, 2009
When good news isn't so good, and bad news isn't so bad
The two big items in today's financial news were the better-than-expected first quarter earnings reported by Goldman Sachs, and the worse-than-expected 1.1 percent decline in retail sales in March.
The market rewarded Goldman Sachs with a sell-off that sent its common stock down almost 12 percent. And some analysts are calling the retail sales decline an encouraging sign. So, what gives? Well, it turns out that Goldman's good earnings report isn't so good, and the decline in retail sales isn't so bad.
First, let's look at the Goldman Sachs. It's true that Goldman reported a $1.8 billion profit in the first quarter -- one of its highest ever. Why is this not good news? It's not good news because Goldman resorted to a little accounting gimmickry, and investors were not fooled. Goldman's 2008 fiscal year ended November 30, and Goldman switched to calendar year reporting this year. This switch allowed Goldman to effectively "skip" December in its earnings report. Not surprisingly, Goldman used December to write off $780 million in losses.
Goldman has also received $12.9 billion in counterparty payments from AIG. No one knows what the "AIG" effect was in December, and naturally Goldman isn't talking. Goldman probably benefited from the suspension of mark-to-market accounting rules as well. In the end, investors weren't buying it, and the stock plummeted. It's encouraging when investors act rationally.
That's not to say that Goldman's earning report is a bad sign for the economy. Goldman Sachs is one of a number of large banks that is heavily exposed and in danger of failing (the others are Wells Fargo, Bank of America, JPMorgan Chase, Citibank, HSBC USA, SunTrust, Compass, Fifth Third, and Huntington). But many other large and mid-sized banks are healthy, and that's good news.
This brings us to March's retail sales. It's true that retail sales fell when analysts had expected a small increase. This isn't as bad as it might seem. While retail sales fell, savings increased. This means that consumers are saving money and paying off debt. That's important because one of the bigger problems facing us is that consumers are over-extended with debt. Paying off debt is a good thing.
In the 90's boom, people used to talk about the "wealth effect" due to housing and the market. Well, now we have the reverse -- the poverty effect. To everyone's surprise, consumers are acting in a sane and logical manner; saving money and paying down debt. In the long run, this is a good thing. It means that we're getting healthier, we're heading in the right direction. But right now it means pain, and unfortunately this pain will probably be with us for a while.
The market rewarded Goldman Sachs with a sell-off that sent its common stock down almost 12 percent. And some analysts are calling the retail sales decline an encouraging sign. So, what gives? Well, it turns out that Goldman's good earnings report isn't so good, and the decline in retail sales isn't so bad.
First, let's look at the Goldman Sachs. It's true that Goldman reported a $1.8 billion profit in the first quarter -- one of its highest ever. Why is this not good news? It's not good news because Goldman resorted to a little accounting gimmickry, and investors were not fooled. Goldman's 2008 fiscal year ended November 30, and Goldman switched to calendar year reporting this year. This switch allowed Goldman to effectively "skip" December in its earnings report. Not surprisingly, Goldman used December to write off $780 million in losses.
Goldman has also received $12.9 billion in counterparty payments from AIG. No one knows what the "AIG" effect was in December, and naturally Goldman isn't talking. Goldman probably benefited from the suspension of mark-to-market accounting rules as well. In the end, investors weren't buying it, and the stock plummeted. It's encouraging when investors act rationally.
That's not to say that Goldman's earning report is a bad sign for the economy. Goldman Sachs is one of a number of large banks that is heavily exposed and in danger of failing (the others are Wells Fargo, Bank of America, JPMorgan Chase, Citibank, HSBC USA, SunTrust, Compass, Fifth Third, and Huntington). But many other large and mid-sized banks are healthy, and that's good news.
This brings us to March's retail sales. It's true that retail sales fell when analysts had expected a small increase. This isn't as bad as it might seem. While retail sales fell, savings increased. This means that consumers are saving money and paying off debt. That's important because one of the bigger problems facing us is that consumers are over-extended with debt. Paying off debt is a good thing.
In the 90's boom, people used to talk about the "wealth effect" due to housing and the market. Well, now we have the reverse -- the poverty effect. To everyone's surprise, consumers are acting in a sane and logical manner; saving money and paying down debt. In the long run, this is a good thing. It means that we're getting healthier, we're heading in the right direction. But right now it means pain, and unfortunately this pain will probably be with us for a while.
Monday, April 13, 2009
A Madness of Angels
"Book trailers" on the Internet are relatively new on the marketing scene, and most of them fall short in my opinion. This one, however, is pretty cool.
Sunday, April 12, 2009
Cheering for the frogs (and salamanders, too)
As if there wasn't already enough to think about in our sometimes frenetic, hectic lives, there is now one more thing, thanks to Linda Madsen -- local town resident and submitter of a letter to the editor in my town's newspaper. The vernal pool season is once again upon us!
What on earth is a "vernal pool" you might ask? And who is Linda Madsen? Well, a vernal pool is a wetland area that fills with water in the spring. It is sort of like a temporary pond that only exists during the months of March or April, depending on your region of the country.
Each year, on the first warm and rainy night of spring, millions of frogs and salamanders migrate to vernal pools to breed. That is what's called the vernal pool season. The salamanders and frogs come out of their winter habitat and travel through woods and fields to get to their breeding pools. Unfortunately, large numbers of these amphibians are destroyed by vehicles, and several species are on the verge of becoming endangered because of this.
Linda is an older woman in town who works 10-hour days, but still finds time to venture into the woods in hip boots in her spare time to identify vernal pools to help protect the environment. She closed her letter by suggesting that readers try not to drive on rainy nights at least until mid-April. And if we do have to drive, Linda implored, please go out of our way to avoid amphibian crossings.
The news of the day has unsettled many of us, and perhaps rightly so. There is concern for our global economy, rising unemployment, trillion-dollar budget deficits, diminishing retirement savings, uncertain and tumultuous financial markets, not to mention wars, famines, and not a few natural disasters. Add to that school and school activities, home improvement projects, bills, and housework. For most of us, the plight of frogs and salamanders does not place very high on this list.
And yet, something about Linda's letter struck me not as tragic, but importantly hopeful.
While it may be difficult for us to restructure much of our lives to take into account the migration of these creatures, it is hard not to be pulling for them. Linda's letter reminds us that this rite of passage will take place this year as it has for thousands of years before it. In God's economy, even these small and seemingly insignificant creatures hold a highly consequential place in our eco-system. They will get through this. If frogs and salamanders can do it, how much more so can we?
Thank you, Linda, for helping to remind us of this. I look forward to this harbinger of spring and the promise of renewal it brings.
What on earth is a "vernal pool" you might ask? And who is Linda Madsen? Well, a vernal pool is a wetland area that fills with water in the spring. It is sort of like a temporary pond that only exists during the months of March or April, depending on your region of the country.
Each year, on the first warm and rainy night of spring, millions of frogs and salamanders migrate to vernal pools to breed. That is what's called the vernal pool season. The salamanders and frogs come out of their winter habitat and travel through woods and fields to get to their breeding pools. Unfortunately, large numbers of these amphibians are destroyed by vehicles, and several species are on the verge of becoming endangered because of this.
Linda is an older woman in town who works 10-hour days, but still finds time to venture into the woods in hip boots in her spare time to identify vernal pools to help protect the environment. She closed her letter by suggesting that readers try not to drive on rainy nights at least until mid-April. And if we do have to drive, Linda implored, please go out of our way to avoid amphibian crossings.
The news of the day has unsettled many of us, and perhaps rightly so. There is concern for our global economy, rising unemployment, trillion-dollar budget deficits, diminishing retirement savings, uncertain and tumultuous financial markets, not to mention wars, famines, and not a few natural disasters. Add to that school and school activities, home improvement projects, bills, and housework. For most of us, the plight of frogs and salamanders does not place very high on this list.
And yet, something about Linda's letter struck me not as tragic, but importantly hopeful.
While it may be difficult for us to restructure much of our lives to take into account the migration of these creatures, it is hard not to be pulling for them. Linda's letter reminds us that this rite of passage will take place this year as it has for thousands of years before it. In God's economy, even these small and seemingly insignificant creatures hold a highly consequential place in our eco-system. They will get through this. If frogs and salamanders can do it, how much more so can we?
Thank you, Linda, for helping to remind us of this. I look forward to this harbinger of spring and the promise of renewal it brings.
The Big Loser in Geithner's Plan? You!
Did anyone really not see this happening? Welcome to the unintended consequences of government intervention in the financial markets - big (and possibly insolvent) banks aggressively buying securities that the taxpayer is going to subsidize hedge funds and private investors to buy in a few months. And all of this is made possible by Treasury Secretary Tim Geithner's public-private partnership program. According to Friday's New York Post, Citi and Bank of America have been aggressively buying up Alt-A and ARM mortgage backed securities, sometimes paying more than the going rate of around 30 cents on the dollar.
See, these banks were given TARP funds to stimulate the economy by making new loans to safe borrowers. Instead, Bank of America and Citi are spending money to buy up the old, bad loans. Why? Because they know that the Geithner plan will create renewed demand for mortgage-backed securities. Actually, they are betting on it ... with your money. We have created a moral hazard here where the taxpayer will bear all of the risk (and the burden), and big banks really won't quite have learned any lessons. Remember, that the purpose of TARP was to help big banks rid themselves of these assets. Instead, they are aggressively buying them back up in the secondary market.
One Wall Street trader told The Post that what's been most puzzling about the purchases is how aggressively both banks have been in their buying, sometimes paying higher prices than competing bidders are willing to pay. Totally unintended, yet thoroughly expected -- it's government meddling at its imprecise, unwieldly best.
See, these banks were given TARP funds to stimulate the economy by making new loans to safe borrowers. Instead, Bank of America and Citi are spending money to buy up the old, bad loans. Why? Because they know that the Geithner plan will create renewed demand for mortgage-backed securities. Actually, they are betting on it ... with your money. We have created a moral hazard here where the taxpayer will bear all of the risk (and the burden), and big banks really won't quite have learned any lessons. Remember, that the purpose of TARP was to help big banks rid themselves of these assets. Instead, they are aggressively buying them back up in the secondary market.
One Wall Street trader told The Post that what's been most puzzling about the purchases is how aggressively both banks have been in their buying, sometimes paying higher prices than competing bidders are willing to pay. Totally unintended, yet thoroughly expected -- it's government meddling at its imprecise, unwieldly best.
Donald O'Connor, in 'Singing In The Rain': Origins of Hip Hop Dance in the US?
Donald O'Connor in Singing in the Rain is amazing! Check out this youtube video:
I know that hip hop dance allegedly originated in New York during the 70s, but O'Connor undoubtedly shows hip hop moves like the worm (when he dives on the floor), the centipedespin suicide flip (self explanatory), and the makeshift swipe he does when his one leg was locked under the other.
To be honest, the choreography for these moves probably has its origins from Capoeira. Capoeira is not Brazilian in origin, but was brought to Brazil via African slaves. Watch people play Capoeira, and it's pretty easy to see the similarities: http://www.youtube.com/watch?v=DdZXp0Tq6Jk
Bottom line: hip hop dance has been around a lot longer than the 1970s. (when he swings his one leg under the other), the
I know that hip hop dance allegedly originated in New York during the 70s, but O'Connor undoubtedly shows hip hop moves like the worm (when he dives on the floor), the centipedespin suicide flip (self explanatory), and the makeshift swipe he does when his one leg was locked under the other.
To be honest, the choreography for these moves probably has its origins from Capoeira. Capoeira is not Brazilian in origin, but was brought to Brazil via African slaves. Watch people play Capoeira, and it's pretty easy to see the similarities: http://www.youtube.com/wat
Bottom line: hip hop dance has been around a lot longer than the 1970s. (when he swings his one leg under the other), the
Subscribe to:
Posts (Atom)
