Tax disincentive

There are two certainties in life: Death and taxes. And a third, “if it sounds too good to be true, it isn’t true”. But there is also another truth. Politicians, bureaucrats and their backers (the news media, bankers, billionaire investors, or celebrities), all stir up chaos for their opponents, whip up groups of like-minded people by pretending to care for them, and make all sorts of speeches promising better times ahead.


The only difference between death and taxes is that death doesn’t get worse every time Congress meets.

Will Rogers, via Brainyquote.com

While people my age have heard all this nonsense before and are less inclined to go along, the palaver is not meant for my age group. Psychological journals, in various published studies, revel in the obvious. Young adults between 18 – 27, are more idealistic, much less structured in goals, exhibit more fluid work ethic, and are more motivated by income “fairness” and other talking points they read on social media. By the time men and women reach their Thirties, with stable jobs, goals, and families, these issues, rhetoric, and ‘social-justice’ activism become much less an influence. But the common talking points in social media and in politics today is how unfairly wealth is distributed. As a child, I was raised that hard work, skilled effort, ethics and morals would, over time elevate my station and economic success. There was plenty of room for anyone to become wealthy and provide for their families without blaming and taking from others. What changed?

Paying their “fair” share?

In 2019, I fear that people who have contributed to the economic well-being of the country for the least amount of time or produced the least amount of economic goods and services are being made fools of, by the wealthiest, least added-value members of society: politicians and bureaucrats funded by taxpayers. It is not that young people are in any way less important or less credible in their contributions and feelings, but forty percent of the Congress is far wealthier than those they represent. While every taxpayer in the United States can voluntarily contribute more to fund the Government, donate to charities for causes they feel strongly, and volunteer to aid those they feel are under-served, are there any who voluntarily give more than they are legally required? But most demand that Government support causes and constituents that are better served through local donations. And despite all the rhetoric we hear, does any public servant reside in public housing, use public transportation, or donate salaries and perks to the underprivileged?

Many, like one of my old college buddies, are worked up frequently about the lack of fairness and greed exhibited by members of a certain American political party, though there is plenty of blame to go around. Tonight, I am more worked up by my miscalculation on our annual income tax returns for Federal and State. We owe a large amount of income taxes due to the change in the approved deductions and income limits for other deductions. This is due to the “Trump Tax Cut” enacted in 2018. Researching the new tax policy, there are two ends of the economic spectrum that are benefiting, though the wealthiest Americans are benefiting far more.

Who benefits from the new tax plan?

With change in the standard deduction, doubling it to $24000 for those who file a joint return, many do not have to file complex returns. While there is some who think that increasing the “standard deduction” will reduce the incentive to make charitable contributions by lower middle-income workers, the tax policy really changes the taxes owed by the higher wage households- reducing the graduated scale of highest earning workers from 39 to 37 percent. And if those individuals are business owners, the rate may drop to 20 percent.


The people are hungry: It is because those in authority eat up too much in taxes.


Lao Tzu

For those caught in the “middle”, such as older taxpayers whose grown children are no longer family deductions, their seniority at work may elevate their incomes to higher tax brackets, and all the expenses of living and home ownership, there are disincentives to continuing to be an employee. But retirement also may come at a cost. Withdrawals from qualified retirement plans prior to age 59.5 incur income taxes and penalties. Some states like California tax retirement pensions, and with public service pensions largely unfunded, these states increase taxes to provide benefits and sacrifice the maintenance of infrastructure – roads, schools, and vital services.

Entrepreneurs and tax sense

Like many, I chose security of being an employee over most of my working life. But being a “worker” and not a “business owner” in 2019 has its tax disadvantages. Fair, ethical, and legal provisions used in the last twenty years have been significantly changed. While younger workers at lower wages and with young families may find some benefit from new tax provisions, others in the “Middle Class” are not as fortunate. Older, still working, married adults with now-adult children, who may still be providing for certain of their needs – no longer can claim them as deductions for tax purposes. Those fortunate to own homes in high property tax states, are limited in the amount they can claim federally- basically paying taxes a second time on the same income. Others, such as small business owners have complex tax rules to follow. The “Trump Tax Cut” seems to be flawed.

Some regulations should have come with bold print. With retirement savings such as employer 401K plans, IRAs and healthcare savings accounts available, these come with certain stipulations. Pre-tax income placed in flexible health spending accounts must be used within the calendar year or are lost; certain employer health plans can place pre-tax earnings in an account which can grow year after year, even into retirement, but must be used for medical expenses – or are taxed heavily. And for higher wage earners, traditional Individual Retirement Accounts, money invested for the purpose of reducing income taxes does not provide the immediate benefit sought.

The wealthiest Americans are fairing a lot better in 2019 than before. While true that the top 20 percent of all wage earners contribute the largest share of the revenue to fund the Government (50 percent of working Americans pay little income tax, while three percent contribute most of all), the overall taxes for those wealthiest Americans – many of whom are business owners – dropped significantly. I’m beginning to think that wealthy politicians are being disingenuous. They are not feeling nor acting in private like the outraged they claim to represent.

If people want to participate more fully in the “American Dream”, operating a successful business seems to be the vehicle to do so in 2019 and into the future. Except perhaps in California, or should the country decide to follow the anti-capitalist and anti-constitutional policies that have been voiced since the President’s election. A look at statistics indicates that the country is not in jeopardy of an economic crisis as some suggest. In the United States in 2017, the median family income was $61,000; in California, $81, 000, according to the US Census Bureau. While there are many who are at the extremes in California and elsewhere, there are many who have gained wealth and property through operating successful businesses.

Paying closer attention to income tax, balance sheets, and government policies that affect income is necessary. But that comes with age and the acquisition of property. All the rest is just politics.

fourteen

What was your biggest accomplishment when you were a teenager?
When I was fourteen, I was responsible enough to arrive at my assigned work at 4:45 AM daily, load a hay wagon, and then feed 80 horses. And in the late afternoon, repeat it all again. I was determined to trade labor for horseback riding lessons. That was on a dude ranch in Arizona where I learned responsibility, animal psychology, ranch operations, and customer service. That was forty years ago. Every generation hears how their predecessors “walked uphill in the snow, both ways, to school and back”. In an age where many are fixated on social media, feel subject to hardship and discrimination without government mandates, and may be emotionally scarred because of others’ contrary views, it is not universal. It may only be a minority opinion.

Becoming an entrepreneur at the age of ten, Noa Mintz, at age sixteen founded a New York City childcare agency, (vetting nannies)and was among those entrepreneurs under age 18 featured in Fortune magazine (2016). Eugenie de Silva, starting at the University of Leicester (UK) in 2015, graduated age 16, from Harvard, through distance learning, with a Masters in Liberal Arts. A pilot, Mason Andrews, completed a circumnavigation of the globe in 2018, as the youngest to do so – at age 18.

And then there is the young Dutch woman, Laura Dekker, who at 14 set off in a sailboat to circumnavigate -solo- the world in 2011. She had been born to a sailing family, and had been dreaming of sailing the world since the age of ten. She had the support of her parents, but had to fight the Dutch authorities in court to be permitted to get underway. For more than five hundred days she navigated and explored the places along her route. A film produced by National Geographic presents her video record of her travels.

film trailer at http://www.maidentrip.com

And finally, there is Jordan Romero, who at age 13, with his father, reached the summit of Mount Everest, in 2009, and by the age of 15 years, 5 months , became the youngest person to climb the Seven Summits (the highest peaks in each of the seven continents).

From circumnavigating the globe, climbing mountain peaks, graduating from a most prestigious university, or becoming a successful entrepreneur, children who attempt the difficult, and refuse to have their dreams quashed, demonstrate that if you have a dream and are determined to succeed, you can. Leave the participation trophy to others.

scrapbook letters

Sailors have more fun

Reading some of my old letters my late mother kept in her scrapbook, I appreciate jogging memories of my initial service in the Navy forty years ago. At the time, I was stuck in limbo, waiting on orders, waiting on a medical evaluation, and bored. I had spent eighteen months training for a career as an electronics technician in San Diego, in Illinois, in Florida and again in San Diego. When I had received an opportunity to attend the Naval Academy, a medical evaluation accompanying the selection board was possibly going to prevent that. In the meantime, I was assigned to support a correctional unit on Naval Training Center San Diego, to guard and escort sailors confined and others pending transfer to the Naval Brig.

“January 13 1978

I was paid this morning and I have finally got some money in my pocket after being in the depths of poverty for the last week. I’ve been keeping a budget book to account for every penny. Setting aside a $120 to send to you to save for me, I spent most of my last paycheck on a stereo receiver and headphones. I got a great deal as the stereo store said it was a trade-in and not brand-new.

I have been chugging away at BE & E. My Learning Supervisor is better at getting the material across to me than reading the book. And I am frustrated at the computer based training – that I am taking remedial tests every time.

Next weekend I am thinking of the YMCA’s military special to Disneyland – everything including bus ride and ticket, for $14.75…. “

When I read these letters I recall that my focus was split between very difficult technical training, spending money slower than earning it, having a good time, and the things a sailor thinks about: cars, girls, staying out of trouble, and so on. And taking care of my mom.

“February 18, 1978

…it’s been a week since I was home for that short visit…. I’m expecting to finish BE and E School (Basic Electricity and Electronics) in seven working days and then ice and snow! (I was scheduled to transfer for further training at the Great Lakes NTC north of Chicago) I have been trying to spend money and save it at the same time….

I bought two books ” How to Buy Stocks” and “How to Build a Fortune Investing in Land””

“July 3 1978

Class 7825C, ET/A school Bldg 520, Great Lakes Training Center: Thunder and lightning this weekend. Thank you for the ever-increasing moral support. It helps this “screw-up” when I seem to be trying and trying over these multiple -choice tests and I miss the question because I don’t put down my first choice but over think them! Why can’t I learn! Some solace in that I got my PO3 raise today. A whole $10.

Congratulations on your new friend and you both seem to be on the same “astral plane”. And my little sister has a boyfriend! She is growing up fast. I ran into a friend who is very close to a bachelors degree having taking a lot of courses through the CLEP tests. He’s looking at Officer Candidate School and making some career-connections with several officers involved in the program. He’s shared with me several of the courses and tests to take should the Annapolis thing not get accepted. Studying electronics harder will give me a mental breakdown. I need some thing different.

I looked at that Naval Academy application. I think they want someone who is a cross between O.J. Simpson and Albert Einstein, not me!”

In the year between my initial training in San Diego, and returning back to San Diego, I had been undergoing technical training and screening for a government security clearance. Between the training, standing watches, and liberty in Chicago and Milwaukee, I was also trying to figure out if I could afford a TransAm like one in the movie Smokey and the Bandit. It was nearly eleven thousand dollars. I couldn’t. I did learn a lot about weather. Playing pool in the barracks. Guys who were playing some role-playing fantasy called Dungeons and Dragons. A summer music festival at the Navy Pier in Chicago. And working on cars. Being in the best physical shape of my life while in Pensacola, Florida. Running several miles a few times a week that started from a dare between roommates in the barracks while attending CT – school. A circuit of the base, inside the fence was about four miles. We would run it twice a night.

“Letter dated August 2 – 5, and 8, 1979

Dear Mother,

It’s the second day of August, and in one day following the most insane twenty-four hours I have yet spent at TPU (ed: Transient Personnel Unit), I think I shall be ready for the funny farm very soon. 

Let me tell you some of the the goings-on at our “Hotel California”.  Yesterday, we got a new boatload of lunies (sic) plus one who is trying to put one over on us that he’s nuts, and he is getting my goat.

Another case is my boss Chief Heller.  His retiring soon and he continues to drop in on Bldg 23 if only to holler and cuss everyone.  It is just as if he’s giving out a daily dose of castor oil. 

Still another example was last night’s supposed-to-work-flawlessly relief of the day watch. A PO1(Petty Officer First Class) who knew he had duty never showed up, and despite all my efforts couldn’t be found anywhere on-base.  No one knew who I was looking for- even though he was supposedly assigned to the same working area!  So, as a result, an overworked PO2, a good friend of mine, was forced to stay all night as well as his morning workday.

In addition, I was forced to work late (a 13-hour day) which it turns out shall be my regular working hours.  It was either that or work 10 hours plus have an extra watch in TPU every three days.

August 3rd

Today was continued insanity when, in the early afternoon, one of our “mental” cases went berserk and smashed a wood-covered (barricaded) window with a chair. He demanded to go to the brig or he would do more damage! It’s a good thing I don’t sleep there- I don’t know if some night I might get my throat cut by one of these scumbags. 

Tonight I went to the PO Club with two friends, George, who works in the NTC Police/Decal Office, and June who also works there.  We all had a good time.  But what occurred later is interesting. Well, June got very drunk, I was sober and George nearly so. June had to be talked into being escorted to her barracks. George (who went with her) in her car and I followed behind in mine.  June wandered all over the road at speed and I sped up to catch her.  And out of the dark an NTC (Naval Training Center) police vehicle pulled ME over.  Luckily, he was a friend but since I was “rocketing along” at 20 or 30 MPH, he wouldn’t let me drive back to TPU. A quarter-mile walk later I was sober; June was the one all over the road – I’m sure the cop saw her.  That will be the last of my “good Samaritan” gestures.

August 5, 1979

Yesterday I finally bought the 10-speed bicycle I was [going to get you] shopping two weeks.   I’m sure you will love it, as a matter of fact I wanted to buy one for myself from the same people.  Now I have only one detail to work out and that is how to get it home.   Two possibilities are open to me, but I don’t know how much it will cost me to ship it, so if you don’t mind I am going to wait till I hand-deliver it.

 In other news I have been heartened by a lot of mail, especially yours and from Nana, but I’m going through a lot of ups and downs.  I’m almost at the end of my rope as far as this Restriction/ CC (Correctional Custody) “babysitter” job goes.  Today I got yelled at for these a@#$@#$ goofing off even as I have been trying to imitate Attila the Hun with them .

August 8th

I’m starting another entry in the ‘journal’ after putting the pen down for two days. I am just putting down thoughts as they come to mind. My mind is awfully screwed being run ragged.  I think I will drop this topic in favor of other topics to ramble on about.

Tomorrow I’ll begin packing a few things for the trip to San Francisco and I’m going to hopefully make a weekend out of it.  What is your reaction to the earthquake this week? It think it is about time for the city to fall into the sea?

It’s all a bit tedious.  I’ll hopefully be home sooner or later. “

Jerry Reed, Chicago Navy Pier; BEE barracks; Sears Tower, Chicago; New Orleans French Quarter; Gulf beach near Panama City, FL

These letters bring back some of the missing names – and the memory -recalling the faces of those Chiefs at TPU. These memories seem as fresh as having occurred yesterday. The more I recall of those months in school, in training, and time at the transient barracks, I am amused by the complaining, angst, self-righteousness, stubbornness, and shock of having to work long hours. In this particular letter, the reference to “Hotel California” my mother probably would have missed – her musical taste was stuck in the early 1960s and she never heard of the Eagles. But I was fortunate that my mother, who pursued a second career as a college English teacher around that time, and worked a full-time nursing job, never pointed out my ‘overworked’ complaints. As I look back after forty years of military and civilian jobs – on my youngest co-workers and their peers – their complaints about fairness, working conditions, and emotional safe-spaces are more their age than something “we” never did.