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Thursday, March 27, 2008

Annoying "faux-official" sales pitches

We just refinanced our house, and I've been getting a steady stream of annoying "faux-official" marketing pitches for "mortgage protection insurance". These lovely scams are massively overpriced life insurance that pays off your mortgage if you die. The fun part is they're way more expensive than simply getting non-earmarked term life for the mortgage amount, but I digress...

Anyway, these guys are a part of an annoying trend of "official looking" direct mail sales pitches. It's quite obvious that they're sales pitches once you read them, but they're official-looking enough that they make it in the house instead of getting tossed immediately into recycling.

One that actually got me was a magazine renewal pitch. It happened to be for The Economist, which I subscribe to, and which was coming up for renewal anyway.

I'm vastly more careful now...

Thursday, March 20, 2008

My Tax Tweaks

If I were God-Emperor, I'd do the following with taxes:

o I'm not sure about the "Fair Tax", but I do like consumption taxes over income taxes in general. I'd like to see more consumption and less income taxes over time.

o I'd have a fairly high new gas tax. This would strengthen the dollar by reducing oil imports, and would make it clear that gas is not going to get any cheaper, so people should react accordingly. You can still buy a big SUV for pulling your boat, but you probably don't want to use it for your primary commute vehicle.

o Since in most American cities, working people still have to drive, I'd have a front-loaded reduction in payroll taxes. So, for example, if the gas tax produces $2K per worker, the first $2K in payroll taxes, or payroll taxes on about the first $26K of income, would be skipped.

This reduction would be dynamic and would probably go down over time as people use less gasoline.

o I'd eliminate corporate tax and have corporate dividends taxed at the income tax rate. Corporate tax is simply passed through to consumers in the form of higher prices, although reducing it is easy to demagogue as a givaway to "corporate America". Also, one of the reasons the dollar is weakening against the Euro is Europe is reducing corporate taxes.

o I'm not sure what to do about capital gains. If you eliminate corporate tax and corporations don't pay dividends, you need a way to capture the part of a gain in a stock price that is due to undistributed earnings. But you also want something that's easy to account for and doesn't result in a double-tax (ie, the company saves up a bunch of money and then has a dividend.)

At the end of the day, I like the idea of the "Fair Tax", but I'm not sure its implementation is workable...

Tuesday, March 18, 2008

The "pain threshold" of taxes...

OK, I'll admit it. I'm "greedy" and am driven, at least to an extent, by a desire to lower my family's taxes. My "pain threshold" on taxes is definitely exceeded and I'm actively interested in political approaches that lower my taxes and not positively disposed to those that would raise them.

My wife and I are professionals in our late 30s and early 40s, with a household income that would put us well out of most definitions of "middle class". We are probably "middle class millionaires" in that we drive old cars, live in a small house, and aren't visibly "rich" if you saw us walking on the street.

Since we have a high income and live frugally, our tax bill for Federal, State, Social Security, and Medicare taxes is nearly double our total living expenses. (I'm not counting sales taxes, gas taxes, or other taxes here - just the obvious ones.)

Also, our "perceived pain" on taxes is high because while I'm well-paid for what I do, my field - software - isn't noted for job security. I'm very good at what I do, and take the view that job security is best in small companies where a good developer can visibly "shine", but I doubt that I'd ever work anywhere for more than a few years. I fully expect that I'll have to execute a major career change at some point in the next five to ten years, and that career change will result - at least temporarily - in a significant drop in income.

Another part of the "pain" is the notion that higher taxes would delay our retirement. Since there's no pension in my future, and SS will certainly have to be reduced (I'm greedy, but not greedy enough to want the country bankrupted to provide me with a comfy retirement on the public dime), I'll have to retire nearly completely on our savings. Given that taxes versus savings is a zero-sum game at the micro level, higher taxes equals lower savings equals later retirement.

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