In Sickness and in Health, In Debits and In Credits

Just in time for Valentine's Day, the Tax Policy Center has updated their Marriage Bonus and Penalty Tax Calculator -- so you can see just how much you benefit or lose by marrying that special someone. (Whether that event is the the future or the past.)

For myself, The Wife and the two boys contribute substantially to lowering my tax...but not nearly as much as they contribute to the expenses of the household.

Najafi Sells Bookspan to Pride Tree

Publishers Weekly reported yesterday that the Najafi Companies, the mysterious holding company that bought the book- and music-club assets known by a bewildering array of names (Yes Solutions, Direct Brands, Doubleday Entertainment, Direct Group North America, Bertelsmann Direct, Bookspan, "the entity") from Bertelsmann back in 2008, has sold those assets to what seems to be an even more mysterious entity called Pride Tree Holdings.

Good luck to my old compatriots still working at the clubs, though this certainly doesn't look like a good sign from the outside. PW notes that the operation has been "steadily downsized in recent years," but all of the major clubs seem to still be running and Direct Brands is claiming 8 million members, which ain't chicken feed. Najafi is privately held, so no revenue or sales figures (or details on the Pride Tree deal) are or will be forthcoming.

From what I've heard, the downsizing has been the usual corporate type: get rid of half of the people and insist on running the same level of business. And we all know how well that usually works.

Gaining, and Losing, Capital

Anyone plugged into US politics has heard the debate about capital-gains tax rates -- currently pegged at 15%, lower than most rates for earned income (particularly for the people actually earning capital gains). Supply-siders claim that capital gains are "double taxation" (as if all monies in markets are not taxed, repeatedly, as they move around and are involved in various transactions) and that lower rates stimulate investments by increasing the potential rewards for such investments.

Those things may well be true. But those same supply-siders are usually also the people who note that taxation tends to depress interest in the things taxed -- if something costs more, people tend to do less of it. This is one of the rationales behind "sin taxes" -- cigarettes have a punitive tax on them in part to discourage smoking.

I haven't seen anyone connect those two things, though.

If we have a tax regime in which capital gains are taxed at a lower rate than earned income, we are systematically providing a disincentive to work and an incentive to passively gain from already having already accumulated wealth.

In a healthy, well-functioning society, though, working would be privileged -- taxes would be organized so as to provide incentives to work rather than to let your money do the working. We are clearly not a healthy, well-functioning society.

It's Soothing Until the Moment It's Terrifying

I forget who I got this link from (probably Jay Lake), but there's an animation by Kevin Drum right here that shows (along with his accompanying article) exactly why High Frequency Trading is a bad idea.

If you don't know what HFT is, it's automated, computerized stock sales by software robots -- millions of times a second, often to make fractions of a penny. Most of us could probably figure out a dozen reasons why that wouldn't be a good idea...and that's why we're not Masters of the Universe.

Quote of the Week: Creative Destruction

"There are more than 27 million businesses in the United States. About a thousand are huge conglomerates seeking to increase profits. Another several thousand are small or medium-size companies seeking their big score. A vast majority, however, are what economists call lifestyle businesses. They are owned by people whose goal is to do what they like and to cover their nut. These surviving proprietors [in the gentrifying West Village] hadn't merely been lucky. They loved their businesses so much that they found a way to hold on to them, even if it meant making bad business decisions. It's a remarkable accomplishment in its own right."
-Adam Davidson, "Jane Jacobs Vs. Marc Jacobs," The New York Times Sunday Magazine, June 10, 2012, p. 18

Secret Codes

One of the more amusing parts of my current working life is the variety of interesting people who think the US Tax Code is some kind of hidden game. They tend to think that if they can just use the secret password, or otherwise show they have the Inner Knowledge, that they'll at least never have to pay taxes ever again. (Some more extreme cases think that the government will give them millions of dollars.)

I was reminded of this by a news report from Friday; a district court has, once again, declared that another one of these dodges is invalid.

I know everybody has their own rules for life, and that some people are just stupider than others. (Though you do have to at least have a certain kind of low cunning to attempt tax-dodge schemes; I may call these people dumb, but they're reasonably smart.) But, for me, the most important rule in life has always been this: anything that looks too good to be true is.

The corollary, of course, is that anything that looks too bad to be true is happening sooner than you expect.

Do You Know How Geeky I Am?

​So​ geeky that I actually explained mandatory audit firm rotation to my wife the other night.

Probably not the kind of geeky that you expected, though.