As I write this column on the day of the first presidential debate, taxes are all over the media and, no doubt, on the minds of many Americans, and the subject of many discussions.
The controversy of whether President Trump, over the last decade or so, paid his fair share of taxes (whatever that means – clearly different things to different people) seems to be the main tax issue. However, that controversy brings up a whole set of other controversial issues that people disagree on, including valid deductions, loss carryforwards, lower capital gains rates, favorable corporate tax rates, and so much more.
That seems to always take us to the question of whether the Democrats, if they take the Senate and the presidency, will raise taxes, and/or eliminate the recent tax cuts, which, despite all the talk of how they helped the very rich, put more money in the pockets of many not very rich Americans.
Then there is the ongoing question of how state and local governments, and some school districts, are going to go forward in the near term, given the substantial declines in sales tax, income tax, and other revenues, since it seems that Congress is not in a big hurry to come to their financial rescue. After all, there are the President’s taxes, the Supreme Court nomination, and the mail-in ballots and post office issues to deal with. Oh, yes, and there is that upcoming election, where many members of Congress are up for re-election.
In New York State, revenues are down substantially in a number of areas, including, as of just May, sales taxes (20% – $2.5 billion); gaming (34%); income taxes (14% – $4.6 billion); and lottery (12%).
As for New York State, once again there is the issue of a possible “Millionaires Tax,” like the one in neighboring New Jersey, with people lining up on both sides. I am sure other states would love to see such a tax implemented, in the hopes that some of those millionaires might move there.
To be honest, every time taxes become an issue in the media, I keep wondering about the possible wisdom and fairness of a “Flat Tax,” combined with a “GST” (Goods and Services Tax). Then there is all of that unreported income that we all know about and sometimes participate in, when we pay people “under the table.” How about that age-old question – where is all of our tax money going?
On a totally different “call me frugal not cheap subject,” I got the lowest price ever on Holly Tone fertilizer for my acid plants next spring at BJ’s end-of-season markdown. It comes out to a little less than 36 cents per pound. Of course I purchased all three of the remaining bags.
On another subject, with the volatility in the stock market, and with more people at home with more time to focus of their 401(k) retirement portfolios, I thought this portfolio advice from bankrate.com might be of interest to some readers, and could be the beginning of a discussion with their financial advisor.
How to know if your 401(k) is too aggressive:
$ Your account balance fluctuates a lot.
$ You worry a lot about your 401(k).
$ You need cash in the near-term, but your 401(k) doesn’t have any.
How to know if your 401(k) is too conservative:
$ Your portfolio doesn’t seem to grow.
$ Your 401(k) has a big allocation to bond funds.
$ Your 401(k) has a money market fund.
On a different subject, as you would expect, I am always on the lookout for surveys, polls, and reports that provide some insight into how New York State is being affected by the pandemic. Recently, in order to determine where people are most in need of loans as a result of the pandemic, WalletHub combined internal credit report data with data on Google search increases for three loan-related terms in the 50 states and the District of Columbia. Unfortunately, New York State ranked number one.
The underlying WalletHub theory is that the greater interest in getting a loan indicates that more people in the state are struggling to make ends meet. It also implies there may be more strain on the state’s public assistance programs in the near future, and the state may experience a deeper recession than others will, The loan inquiries that were looked at were Loans in general, Payday Loans, and Home Equity Loans.
Most of the experts interviewed in response to the results of the report, suggested that, before taking out a short-term loan, every effort be made to pick up some income, somewhere, including selling some things. Then, if a loan is really necessary, because it is truly a “last resort,” try to play out how you may be able to repay any short-term loan, no matter where you obtain it. Beyond that, one option is a retirement plan loan, like a 401(k) loan, if you have such an account. Then, you might look first to family members or close friends for a loan….
Read More: PERSONAL FINANCE/JOHN NINFO: Taxes, taxes, taxes!