Tag: money

Environmental Warriors

Posted onAuthorcahwyguy

In my last post, I wrote about the hidden implications of the reconciliation tax proposal. Since then, I’ve seen another series of implications of things discussed: environmental implications. In particular, a new argument as to why both Bitcoin and Porn are bad: they use too much electricity.

Stay with me, this is complicated.

For Bitcoin, new coins are created by solving complex math problems. With the high value of bitcoin, everyone wants to mine. But, according to Wired, that could be a significant draw on the electrical infrastructure:

In a report last week, the cryptocurrency website Digiconomics said that worldwide bitcoin mining was using more electricity than Serbia. The country. Writing for Grist, Eric Holthaus calculated that by July 2019, the Bitcoin peer-to-peer network—remember BitTorrent? Like that—would require more electricity than all of the United States. And by November of 2020, it’d use more electricity than the entire world does today.

All this for a currency that doesn’t really exist. Making paper money costs a lot less.

As for Porn: We have moved from a world where people bought DVDs or videocassettes and watched at home, or in shared spaces like theatres, to individual consumption over streaming networks for free. And that, my friends, may not be good for the environment (who cares about morals, or the actors):

Using a formula that Netflix published on its blog in 2015, Nathan Ensmenger, a professor at Indiana University who is writing a book about the environmental history of the computer, calculates that if Pornhub streams video as efficiently as Netflix (0.0013 kWh per streaming hour), it used 5.967 million kWh in 2016. For comparison, that’s about the same amount of energy 11,000 light bulbs would use if left on for a year. And operating with Netflix’s efficiency would be a best-case scenario for the porn site, Ensmenger believes.

and later in the article:

For Ensmenger, this epitomizes the problem with the digital economy, where so many of the costs are outsourced or hidden that consumers believe everything is free. Most sites offer their free videos by selling advertising to companies that track consumer behavior, and these cookies require a considerable amount of energy. More importantly, consumers don’t have to think about the significant environmental costs of constructing and destructing electrical products, such as screens, servers, and hard drives.

This is actually pretty interesting: costs being hidden from the consumers and shifted onto someone else (in this case, likely taxpayers and ratepayers who build the power plants).

Now broaden the picture: “cutting the cord”, as we know, doesn’t reduce costs. It just means you write more checks, and possibly even more if net neutrality goes away. But there is also the cost of all those streaming servers and the cost of the bandwidth, and who will end up paying for it?

As historians like to say, “It’s complicated”. Much more complicated than you likely thought.

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Nothing is Sure but Death and …

Posted onAuthorcahwyguy

The TrumpAdvantagCare Tax Bill is out of the reconciliation process, and we’re getting a better idea of what is in for it. For the non-super-wealthy, will it be good for us? The answer differs for each individual, of course, but the likely answer is: in the short term, it may be, but the pooch must be screwed at some point. But what do we care — that’s someone else’s problem, right? Is it good for the country? Again, the depends on your opinion, but you can simply ask yourself whether a tax bill that INCREASES the deficit is a good thing, and whether the ultimate goals of the tax bill down the road move society is a better direction. You’ll have your answer.

I do suggest that people read some of the summaries going around. PBS had a particularly good one.  Some of the things we feared would happen did not:

  • Graduate Student Tuition waivers are not counted as income to the student.
  • Medical expenses are still deductable
  • Classroom teacher expenses are still deductable
  • Student loan interest is still deductable.
  • The Johnson Amendment was not repealed.

Still other provisions are better than they might have been:

  • State and local income taxes are still deductable, but with a cap of $10K
  • New mortgage loan interest is still deductable, but capped at $750K.

There are also a number of interesting implications in the bill that aren’t explicit (and perhaps you didn’t think about there). Here are a few that struck me.

State and Local Income Taxes

Although the deduction was preserved, it is limited to $10K. In California, that’s bubkis. A middle-class worker will have almost $10K in property tax, and the income tax over the year could be anywhere from an additional $6K to $10K. High income tax states will likely figure out a work around: here’s an article that describes how it might be done. Quoting from that article:

If [the SALT limitation] happens, the easiest workaround for states like New York and New Jersey would be to lower income taxes and raise property taxes, up to the point that residents can still deduct them. California doesn’t have that option. Its Proposition 13 restricts property taxes to 1 percent of the property’s value, so any change to property taxes would need to go on the ballot for a vote. But California could shift its tax burden away from income tax — one of the highest in the nation —and onto employers via the state payroll tax. Unlike individual taxpayers, employers would still be able to deduct this state tax on their federal returns.

Other options outlined in the paper include making it easier for taxpayers to make charitable contributions to state and local governments. Congressional Republicans plan to maintain the existing write off for donations to charity, which means Californians could deduct those contributions from their federal taxes.

And the state could provide tax credits in the amount of the donation, which taxpayers could use to lower their state income tax liability, as well. As University of California Hastings College of the Law Associate Professor Manoj Viswanathan observes in another recent analysis, “Many more taxpayers could take advantage of state-level initiatives that essentially reclassify state and local tax payments as federal charitable contributions,” essentially allowing them to “double dip” and obtain both state and federal tax benefits from a single donation.

This could have the unanticipated side effect of reducing the amount brought in through Federal Taxes even more: a true “be careful what you wish for.”

Charitable Donations

Donations to charity — cash or non-cash — are deductable if you itemize your returns. This is key to most non-profits donation strategy (and I’m not talking just churches here, but theatres and charitable foundations and hospitals and universities): Push to get the donations before 12/31, so they can be deducted. The charitable contribution isn’t going away. However, the standard deduction is being increased dramatically, meaning fewer people will be itemizing. Except for those that donate out of altruism, this may mean a drop in charitable contributions because — well, why do it if it doesn’t bring you anything?

This isn’t good news for your local non-profit theatre or foundation.

Housing Prices

For most people, their house is their largest investment. But in certain areas, housing prices are already sky-high — often those high tax areas that are also being hit by the SALT limitations and the lower cap on the mortgage interest deduction. When most houses are above $750K, what will that do?

One prediction: It will cause housing prices to drop in every state:

…despite studies that have indicated that the mortgage interest deduction might not be good tax policy, it’s been good for the real estate market. Without it, the National Association of Realtors anticipates that housing prices will fall by at least 10% across the board. The organization recently released a report breaking out on a state-by-state basis how the proposed tax reform efforts might hurt home values. Their findings?  The NAR estimates that home values would fall in every state

If you own a house, this will hit you when you try to sell or pull equity out of your house. It could create another housing burst, as loans go underwater due to property value drops.

Divorces

Another lesser known provision are the changes made to alimony. Under previous tax law, alimony was deductable by the one paying, and treated as income by the one receiving. Under the new bill, that’s reverse: it isn’t income to the recipient, but isn’t deductible by the one paying. It is predicted that this will make divorces harder for the non-wealthy, because the tax on alimony make make it an economic impossibility. This will hurt women.

Vanpools

Of concern to me, of course, a provisions related to commuting. From what I was able to find out, neither the Senate nor House bills touched the $255 subsidy that vanpool riders can receive (whew!). It does look like bike commuting provisions are going away,; as the only amendment to section 132(f) is: (8) SUSPENSION OF QUALIFIED BICYCLE COMMUTING REIMBURSEMENT EXCLUSION.—Paragraph (1)(D) shall not apply to any taxable year beginning after December 31, 2017, and before January 1, 2026.’’.

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Failures of the Subscription Model

Posted onAuthorcahwyguy1 Comment

I subscribe to many things: some unpaid, like political philosophies (which are worth every penny that I don’t pay), and some paid. The paid subscriptions are generally media — magazines, newspapers (Los Angeles Times, New York Times), and theatre. They all have the common characteristics of constantly bringing me something new.

Enter Quicken.

I’ve been using Quicken to track my checkbook and investments since the early to mid-1990s (I want to say my first version was Quicken 3 or 4). At some point I started downloading stock prices and transactions — first with an external program, then using Quicken mechanisms. Since then, I’ve been updating Quicken every three years, because Quicken designed their system so that you could no longer download into a version older than three years.

Last year was an upgrade year, so I moved to Quicken 2016. It’s been one of the worst versions I’ve used: slow, bug prone, non-responsive. Yet I’ve stuck with it and felt no urge to update to Quicken 2017. Perhaps Quicken 2019, when it comes out.

But then I was reading my RSS feeds, including an article about how Quicken (in Canada) is shifting to a subscription model. Quicken Home and Business will be CDN$90 per year. The core software must be installed on a Windows device, and will, Quicken said, be updated “to make sure you’re always on the newest version.” More importantly, however, is that the subscription offers one year of what Quicken dubbed “Connected Service,” the back end that supports transaction downloads from banks, credit card companies and other financial organizations.

But here’s the kicker: According to Quicken (at least in Canada): “if customers do not renew their subscription, they will lose more than just access to downloads from their bank. “While you can continue to access your data and run reports, you’ll no longer be able to download transactions, or add manual transactions [emphasis added],” a FAQ said in reply to a question about what happens when access to Connected Service ends.” Got that? Don’t pay up, and you can’t even use the software offline.

They haven’t said this is coming to the US Market, but you know it will. Further, it is something up with which I will not put.

So now the debate comes: Should I get Quicken 2017 to try to stave things off one year, or find another program. If the latter, what program? What are you using to keep track of personal finances? The program is worth $90 every three years, but not every year.

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Bringing Things Back

Posted onAuthorcahwyguy

Today’s news chum post looks at a number of things from the past (some of which are being brought back):

P.S.: While working on this post, I was reading my FB Pages feed, and I discovered that Orange Empire Railway Museum (FB) is bringing back my buddy Thomas and his friends in April (April 1-2, 8-9). This was a surprise to me; upon investigation, I discovered that OERM is now your only place to see Thomas in SoCal, and that he’ll be back as usual in November as well. We can’t make it to volunteer in April as our schedule is too booked up (you’ll see why in my theatre post tomorrow), but you should if you’re into the Really Useful Engine. We’ll be there as usual in November.

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Can A Government Employee not be a Government Employee?

Posted onAuthorcahwyguy1 Comment

userpic=trumpThis morning, while I was in the shower, an odd question popped into my head:

  • If President Trump or a Cabinet Head elects to take no salary, are they a government employee?

Here’s why that question occurred to me: Ethics rules, disclosure rules, conflict of interest rules, rules about accepting gifts, and all other sorts of regulations apply to government employees. But Trump is nominating millionaires and billionaires who don’t need the salary. Many of them have publicly said they will not take a salary. So does this make them exempt from all the regulations that apply to government employees? Further, note that it means they will not have taxes taken from their salaries (avoiding taxes), and their income will be primarily capital gains on investments (which is a much lower tax rate, and can be offset by losses reducing taxes even further). No salary, and income primarily from capital gains also puts them in a lower tax bracket (I think — I could be wrong there).

So, by refusing a salary, could they both avoid those pesky regulations and lower their taxes? Could this be why we are seeing so many millionaires and billionaires being nominated?

[ETA: Conclusion: (•) Salaries are defined by statute, and must be paid — then they can be subsequently donated, returned to the Treasury, etc.; (•) Volunteering for government service is not allow, so they have to accept a token of $1; (•) even if they did volunteer, there are volunteer agreements to cover ethics.]

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Good Advice Costs Nothing and is Worth Twice the Price

Posted onAuthorcahwyguy

userpic=moneyAfter her graduation from UC Berkeley last May, my daughter did what millions of millenials with student loans have done — she moved back into our house with her boyfriend. I mention this because my accumulating news chum has a collection of useful articles for parents and children in the exact same situation, which I thought I would share:

Hopefully, these links will prove useful to your children (or, if you are a millennial, to you).

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They’ve Outlived Their Usefullness… Maybe

Posted onAuthorcahwyguy

userpic=pirateWe’re continuing to swab the deck of this pesky news chum. This time, we’re making some things that might be of retirement age walk the plank. Let’s see if they sink or swim:

  • The Boeing 747. One of the books I keep rereading from the early 1970s deals with the birth of the Boeing 747. After 45 years, the old lady of aviation (of the current “models” in heavy use, only the 737 is older) may be ready to retire. It’s engineering is from the past: people are astonished when they see the analogue instruments. The flight controls are all dependent on old-fashioned mechanical linkages. A 747 captain once explained that, if hydraulic assistance on the control yoke is lost, you can still put your feet on the instrument panel, give a big tug and wrench the plane about the sky. You cannot do that on a solid-state Airbus. Airline economics have also changed: International flights can now avoid the big hubs and go directly on long, thin routes between secondary cities. The first generation of high-bypass turbofans made the original 747-100 possible, but it was only ever economical when fully loaded, its efficiency tumbling disproportionately as seats were left empty. In the 45 years since its first flight, engine reliability has so dramatically improved there is no need for four thirsty engines. In any case, the fundamental appeal of the original 747 was its range rather than its capacity. Boeing’s own efficient long-range modern twinjets, the 777 and 787 have made it redundant. And the A380 makes it look crude.
  • Quicken. If you are like me, you probably have years and years of data in Quicken. I think I started using it back in 1994, perhaps even a bit earlier, with a version running on MS-DOS. Well the markets have changed, and you and I are dinosaurs. All the cool kids use online money management, and Intuit (born of Quicken) has put Quicken on the market. Intuit has decided to focus on its small business and tax software, represented by QuickBooks and TurboTax, respectively — both have strong cloud- and subscription-based businesses — and is ditching Quicken because, as a strictly desktop product, it has neither.  Some predict Quicken to be dead in two years. After all, the three units Intuit plans to sell — Quicken, QuickBase and Demandforce — accounted for less than 6% of the firm’s fiscal 2015 revenue, and just 2% of its net income during the same period. For the last 12 months, Quicken contributed just $51 million to the company’s total revenue of nearly $4.2 billion.  They want a buyer that will keep the brand up. It will be interesting to see. I still use Quicken — and their long-retired Medical Insurance Tracking software — and it would be a pain to transition that data (and the data does not belong online).
  • Vinyl Records. On the other hand, vinyl records (which were written off for dead), are seeing a comeback. The NY Times reports that the business of record pressing is now experiencing so many orders they cannot keep up (warning: autoplay video). The problem: how to capitalize on the popularity of vinyl records when the machines that make them are decades old, and often require delicate and expensive maintenance. The few dozen plants around the world that press the records have strained to keep up with the exploding demand, resulting in long delays and other production problems. It is now common for plants to take up to six months to turn around a vinyl order. Still, vinyl is a niche market, albeit a valuable one.

Music: The Slightly Fabulous Limelighters: “Aravah, Aravah” (The Limeliters )

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Long Term Care Insurance

Posted onAuthorcahwyguy4 Comments

userpic=moneyI’m getting older — both my wife and I are over 50. If they still published it, we’d be getting “Modern Maturity“. So a recent headline caught my eye about people in their 50s needing to think about purchasing long term care insurance before they get much older. Having seen some cases where it has been a life-saver, the notion has stuck in my head.

The problem? I know absolutely nothing about long-term care insurance. I don’t know what to look for or avoid in policies. I don’t know who the reliable carriers are, and who to avoid. I don’t know the tricks of the trade.

So, given that I’ve probably got some friends who are my age, I’m turning to you. What is your advice on long term care insurance… and what other gambling schemes (uhh) types of insurance should I be looking into as I get older?

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