Thursday, April 28, 2005
One of the nice things about Passover (besides the inimitable Slacker Seder, of course!) is the joy of a well-stocked refrigerator and more frequent cooking in response to extremely limited NH eating options. At the moment, for instance, am lunching on leftovers from last night's rather satisfying "breaded" chicken (matzo-mealed chicken?); added a sautéed zucchini, have some strawberries for dessert. In last five days have also made a big m'ssouki (traditional Tunisian Passover dinner involving many fun exotic vegetables to puzzle your supermarket check-out person) -- with lots of chopping/stirring help from Somebody Nice! -- and a yummy potato-pear-leek thing, very quick winter squash soup, charoset, and a nut cake with honey-citrus syrup. Mmm. Excuse me -- nut cake beckons!
Happy birthday M.L.!
:-)
Tuesday, April 26, 2005
When I was a kid, a teacher at my elementary school talked to us about learning styles: the categories were something like visual, aural, written, or tactile. At the time, I remember identifying as a tactile learner -- always needing to have a pencil in hand. This was especially true when doing math in college; my brain basically didn't work without the pencil, whether I was actually using it or not! Questionnaire here to find out which you are. In case you care, looks like law school may have changed me:
Your scores were:
Visual: 2
Aural: 2
Read/Write: 6
Kinesthetic: 3
You have a strong Read/Write learning preference.
Your scores were:
Visual: 2
Aural: 2
Read/Write: 6
Kinesthetic: 3
You have a strong Read/Write learning preference.
Friday, April 22, 2005
You know you want that Lexus...
Had a couple of discussions lately regarding car leasing -- and how sometimes, a more expensive car can actually be cheaper to lease. This counterintuitive result has to do with residual value. As this article explains (with examples!), lease price is based on the residual value of the car in question. When you lease a car, you are paying the dealer for the difference between the new price and the selling price at the end of the lease. Another way to think about this: when you buy a car, you're paying for two things -- the value you get out of the car as long as you own it, and the residual value that you'd get back when you sell the car. When leasing, you're not paying for that second component. So a car that has a high residual value will be comparatively cheap to lease.
Anyway. Just something to add to all that financial advice I've been getting from my Pensions & Employee Benefits prof lately... :-)
Had a couple of discussions lately regarding car leasing -- and how sometimes, a more expensive car can actually be cheaper to lease. This counterintuitive result has to do with residual value. As this article explains (with examples!), lease price is based on the residual value of the car in question. When you lease a car, you are paying the dealer for the difference between the new price and the selling price at the end of the lease. Another way to think about this: when you buy a car, you're paying for two things -- the value you get out of the car as long as you own it, and the residual value that you'd get back when you sell the car. When leasing, you're not paying for that second component. So a car that has a high residual value will be comparatively cheap to lease.
Anyway. Just something to add to all that financial advice I've been getting from my Pensions & Employee Benefits prof lately... :-)
Wednesday, April 20, 2005
For R.A.: it's not just us! Magpie: a person who buys new things he/she absolutely does not need but wants to have because they are shiny and new.
Monday, April 18, 2005
The latest issue of The Economist features a cover story on flat taxes -- essentially an argument that at this point, given the complexity of the U.S. tax code, it would probably be simpler to scrap it than to start patching. The idea behind the flat tax, at least as this article proposes, is simple: up to a certain income level, people are not taxed at all; beyond that level, all income is taxed at a certain percentage -- the same percentage for everyone, with no deductions or credits or anything else. I'm also currently reading about the 1986 tax reforms, possibly as close as the U.S. has gotten to radical tax reform since the income tax was first implemented, which makes for some interesting comparisons.
The Economist purports to deal with one major objection -- that a flat tax is unfair. The rationale behind our current tax system is progressivity. The rich are taxed at higher rates, and the poor at lower ones. This makes sense because the poor spend a much larger portion of their income on basic everyday needs; 25% of income for a struggling family is 25% of money they were spending on food and shelter and school supplies; 25% of income for the rich is money that would otherwise have gone to non-essential uses. The Economist's point is that precisely because the rates on high-income individuals are so much higher in the U.S., the rich have enormous incentives to engage in tax strategizing to evade them -- with the well-known result that the richest people often pay far less, as a percentage of income, than much poorer people. That may be true as a practical matter -- but if our system is unfair in practice, that would seem to suggest we need to find a way to make it work as it should, not to replace it with a system that is unfair in theory.
Furthermore, it is not at all clear to me that a flat tax system is abuse-proof. Admittedly, I don't have a lot of knowledge about how other countries have done this -- but, to cite just one question that has led to vast amounts of tax litigation in the past, and that does not go away under a flat tax, how exactly is "income" defined, and what falls into that categorization?
The appeal of the flat tax is its simplicity. With our current system, the costs of complexity are undeniable -- it costs the U.S. economy vast amounts of money just to have people filling out the forms, and tax preferences and loopholes lead to huge and inefficient distortions in people's behavior. A full-sized copy of the annotated Internal Revenue Code and Regs runs to several thin-paged, tiny-printed volumes. It's easy to dimiss that complexity as just a product of special-interest giveaways and exceptions. But think for a moment about what the tax code does. Its purest goal is to figure out how much people really have and can really afford to pay, and tax them accordingly. Part of modern life is a proliferation of financial instruments, investment techniques, and creative accounting practices. One example is the variety of ways in which people can be paid for their work -- besides just pay checks, there are health care benefits, corporate jet privileges, life insurance benefits, and all sorts of other things that aren't cash but do affect a person's ability to pay. Figuring out how much people really have requires an understanding of the full range of financial tools at their disposal. To do its job, the tax code has to track economic reality, in all its complexity -- and that task alone accounts for at least a few of those thick volumes.
The example of 1986 is both hope-inspiring and... not. The 1986 tax reform effort involved a non-partisan committee of tax experts, insulated from all political pressures, trying to draft a revised tax system based on sound economic principles. The goal of the Reagan reforms was to achieve lower tax rates for everyone by doing away with special preferences for a few. But apparently the big business interests believed they did better under a tax code with high rates + special breaks than under a code with low rates and no breaks. Faced with intense, focused political pressure for the tax breaks (and only the most diffuse support for the overhaul), Congress proceeded to dismember the plan, ultimately passing a much-weakened version that restored many of the special-interest tax breaks. What's to say a flat-tax legislative effort would turn out any differently?
The Economist purports to deal with one major objection -- that a flat tax is unfair. The rationale behind our current tax system is progressivity. The rich are taxed at higher rates, and the poor at lower ones. This makes sense because the poor spend a much larger portion of their income on basic everyday needs; 25% of income for a struggling family is 25% of money they were spending on food and shelter and school supplies; 25% of income for the rich is money that would otherwise have gone to non-essential uses. The Economist's point is that precisely because the rates on high-income individuals are so much higher in the U.S., the rich have enormous incentives to engage in tax strategizing to evade them -- with the well-known result that the richest people often pay far less, as a percentage of income, than much poorer people. That may be true as a practical matter -- but if our system is unfair in practice, that would seem to suggest we need to find a way to make it work as it should, not to replace it with a system that is unfair in theory.
Furthermore, it is not at all clear to me that a flat tax system is abuse-proof. Admittedly, I don't have a lot of knowledge about how other countries have done this -- but, to cite just one question that has led to vast amounts of tax litigation in the past, and that does not go away under a flat tax, how exactly is "income" defined, and what falls into that categorization?
The appeal of the flat tax is its simplicity. With our current system, the costs of complexity are undeniable -- it costs the U.S. economy vast amounts of money just to have people filling out the forms, and tax preferences and loopholes lead to huge and inefficient distortions in people's behavior. A full-sized copy of the annotated Internal Revenue Code and Regs runs to several thin-paged, tiny-printed volumes. It's easy to dimiss that complexity as just a product of special-interest giveaways and exceptions. But think for a moment about what the tax code does. Its purest goal is to figure out how much people really have and can really afford to pay, and tax them accordingly. Part of modern life is a proliferation of financial instruments, investment techniques, and creative accounting practices. One example is the variety of ways in which people can be paid for their work -- besides just pay checks, there are health care benefits, corporate jet privileges, life insurance benefits, and all sorts of other things that aren't cash but do affect a person's ability to pay. Figuring out how much people really have requires an understanding of the full range of financial tools at their disposal. To do its job, the tax code has to track economic reality, in all its complexity -- and that task alone accounts for at least a few of those thick volumes.
The example of 1986 is both hope-inspiring and... not. The 1986 tax reform effort involved a non-partisan committee of tax experts, insulated from all political pressures, trying to draft a revised tax system based on sound economic principles. The goal of the Reagan reforms was to achieve lower tax rates for everyone by doing away with special preferences for a few. But apparently the big business interests believed they did better under a tax code with high rates + special breaks than under a code with low rates and no breaks. Faced with intense, focused political pressure for the tax breaks (and only the most diffuse support for the overhaul), Congress proceeded to dismember the plan, ultimately passing a much-weakened version that restored many of the special-interest tax breaks. What's to say a flat-tax legislative effort would turn out any differently?
Saturday, April 16, 2005
Of daffodils and other things
Weather's gotten beautiful in N.H. -- sunny and breezy; daffodils along Chapel St. and little blue wildflowers dotting the Green. Whatever my mixed feelings about the Coming of the Spring, it certainly has some benefits.
Have been remiss in blogging for a while. Sadly this is likely to continue for a bit, as I have much writing to do and reading to catch up on and friends to see and administrative issues to deal with... For now, back to work!
Weather's gotten beautiful in N.H. -- sunny and breezy; daffodils along Chapel St. and little blue wildflowers dotting the Green. Whatever my mixed feelings about the Coming of the Spring, it certainly has some benefits.
Have been remiss in blogging for a while. Sadly this is likely to continue for a bit, as I have much writing to do and reading to catch up on and friends to see and administrative issues to deal with... For now, back to work!
