Business Investment Deferral - A tax compromise idea

I watched a discussion on the "to extend or not extend" debate regarding the Bush tax cuts on "Meet the Press" this morning. If I understood it correctly, one of the major arguments is over the democratic position of 'let taxes go up for people over $250K' and the republican position of 'many or even most small businesses would be affected and thus dampen growth'.

What I propose is a new tax deferral I call the 'Business Investment Deferral', which would allow small businesses to defer a portion of their profits (over $250k) for future investment without being taxed. Sort of a section 175c capital expense in reverse. I would propose that this deferral must be spent within 2 years, or be taxed at the then current rate.

Example: Let's suppose I have profit from a sole proprietorship of $400k. This is my only income, and I need $250k to support my family lifestyle. This option would allow me to defer tax on $150k of the income for up to two years so that I can accumulate enough capital to grow the business. I take the $150k into the next year purchase some additional capital equipment and hire 2 new employees. The capital equipment is purchased for 75k as a section 175c investment and is paid for with the BID money. The net is 175c = $0 and the deferred amount is now 75k. My business income profit for the next year shrinks to $250k but I am still whole. Everyone is happy.

Something like this might work. I won't begin to argue that $250k is way to low a number to call someone rich, but that's a whole different argument. What it does is differentiate the difference in a small business with profits over $250k, and an individual or family with total taxable income over $250k.

Will the iPad be as revolutionary for me as the iPhone?

I resisted carrying a cell phone for years. I finally relented when I did my last consulting assignment, and now carry one at all times. The first one I really liked was the Blackberry Pearl. It did Phone as well as PIM functions and was small enough to carry in a pocket, which I much prefer to a case.

I got an iPhone when they first came out. The original iPhone. I have since upgraded to 3G, and now 3GS. I consider it the greatest techno widget I have ever owned. The sheer magnitude of the functions it performs is staggering. Consider, as a frequent business traveler, the difference between traveling to strange cities alone in the mid-seventies, and traveling with the iPhone now.

Navigation:

Then: Get a map at the rental car counter

Now: Key in destination for turn-by-turn directions

Call Home:

Then: When you get to the hotel, call and give phone number and room number to spouse

Now: Place safe arrival call as soon as you land while taxiing to gate.

Find a place to eat:

Then: Ask desk clerk at hotel, or read hotel guide

Now: Bring up location based services app such as Around Me, Zagat, or Yelp

Mugged:

Then: Find a place to call police

Now: If phone not stolen, use phone to call 911. If phone stolen, use computer to find phone.

To be fair, there was a period when I had some of these before iPhone. I had an IBM x40 Thinkpad (very small and light). I had a USB connected GPS and Delorme Street Atlas. It would give me directions, show points of interest, but it always took a few minutes to get it going, was difficult read in bright sun, and the biggest thing, it wouldn't fit in my pocket. Small as it was, it still needed an over the shoulder carry bag.

What the iPhone did for me was replace all of the needs to carry a computer when traveling unless it is needed for business. For me, the only significant issue with the iPhone was that it's small size causes eyestrain for this old man if I try to read for a long time, watch TV, or anything like that. I wished it could be just a bit bigger.

Enter the iPad

When I first started hearing rumors about an Apple tablet, I was really excited. There were a lot of different screen sizes rumored, and the one I so fixed my thoughts on was one that would be about 5x7 in size and had all of the hardware, including the phone, that came with the iPhone. It would still be small enough to be carried in a pocket (such as a vest pocket in a jacket), but would be large enough to be read as easily as one of the millions of paperback books of that size.

What Apple announced is cool, really cool, but it is too big. For my lifestyle, it's imperative that it fit in a pocket. I want a senior size iPhone. If one appears, I will trade my existing iPhone for it. Until then, even if I buy an iPad for whatever reason, I'll still need my iphone as the current iPad will not replace it. The iPad, as announced, will not revolutionize my life the way the iPhone has.

Life's Little Irritants: Breaking News Abuse

Breaking News banners are going the way of the 'boy who cried wolf'!

I used to stop what I was doing the moment I heard of 'Breaking News' on the TV, Radio, or whatever the source was. Breaking News was truly a new and newsworthy event. No more!

Not only do the cable news networks such as CNN, FOX News, MSNBC, and others use the 'Breaking News' for stories that just aren't worthy, they use it over and over again, declaring Breaking News on the same identical story they reported in the previous hours.

If there could be a law on 'Breaking News', it would be that it can only be used the first time the story is broadcast. Any repeat can be labeled 'Top News', but by my definition a repeat is not 'Breaking News'

While this gripe applies broadly to all of the Cable TV News Networks, I do want to commend those breaking news SMS feeds for not following this practice. If TV is annoying, imagine how repeat SMS would be.

My Driveway Container Experiment

I created a container garden on my driveway earlier this year because I believed that my prime vegetable garden spot wasn't getting enough sun. It's between two brick walls and was only getting about 4 hours of direct sun a day.

As a comparison, I planted some of the identical plants in containers in the old spot so I could directly measure the differences. I installed automated watering for both, attempting to apply similar water in both locations.

The control plants were:

Heatwave Tomatoes

Texas Sweet Onions

Burpless Cucumbers

Jalapeno Peppers

Strawberries

Green Onions

Basil

Curly leaf Parsley

Observations as of mid-July

Early in the season, the driveway garden won hands down. The driveway garden receives twice the sun of the sideyard garden, and it was evident in early tomato production. The strawberries and Texas Sweet Onions also did much better, the onions producing fully formed onions sooner, and the strawberries thrived where in previous years they bore poorly in the sideyard.

However, as of today, the sideyard garden is producing good tomatos, cucumbers, parsley, and basil, while all plants except the strawberries, peppers, and basil in the driveway garden are showing extreme heat stress. More water isn't noticeably helping.

I'm thinking of changing the experiment in the fall. The driveway container garden sits on a white concrete driveway, and is on the East side of a 6 foot brick wall. It gets sun from about 2 hours after sunrise until about Noon, and then becomes sheltered from direct sun after that. I'm thinking the combination of the direct sun, the collection and reflection of heat by both the brick wall and the concrete may just be too much.

My plan is to move the container garden to the center of the driveway, forming a single mine down the center with a lane for a car on each side. This would provide for more sun, more air circulation, and less accumulated heat from the brick wall.

This past year, I planted winter lettuce in the sideyard garden. My observation is that it really didn't do well until late winter, when the lettuce produced quite well until about mid May. My hope is that the center driveway location will provide more sun for lettuce growth during mid-winter.

I'll report again next Spring on the results of the next experiment.

Life's Little Irritants: Food Labeling

I've been trying to count calories and cholesterol lately, and at times it get's really frustrating. It has to do with trying to look good without necessarily being so. Take an example on a can of Pam Organic Canola Oil Spray.

The label says 0g Fat, 0g Trans Fat, 0mg Cholesterol. Also 0 calories, and 0 calories from fat. Sounds good, right? Well then, look at the serving size: 1/5 second (spray time). Servings per container: 419. WHAT? Did anyone ever try to cook with 1/5 second of cooking spray? It looks like if you can list 0 for a value if the true value is less than 0.50 of a gram, and perhaps less than 0.5% of daily value. At the serving size specified, all the values are zero. The label certainly doesn't tell you anything. It is totally useless. From reading a label on a bottle of Canola Oil, Canola Oil contains about 14g of fat per tbsp., which is also 14g of product.

Doing a little math, it takes spraying about 10 seconds to get 1 tbsp of product by the spray. I probably don't spray 10 secs, but I do probably spray 2 secs. That would make a reasonable serving 2.8 g of fat.

Now why can't they just say that on the label?

Another example is content by deduction. An example, Total fat: 6g. Saturated fat: 2g. Of the 4 grams not specified, any idea how much is polyunsaturated fat and how much is monounsaturated fat? I haven't a clue!

Life's Little Irritants: Left Turn on Green Arrow Only

I am going to begin my "Life's Little Irritants" series with one of my least favorite signs, "Left Turn on Green Arrow Only". This is such a time waster. The government feels a need to protect us from ourselves. No one is allowed to think and make a decision on when it is safe to make a left turn.

I agree that there is value to protected left turn arrows. Some times the traffic is so heavy that without a left arrow, it would be a long wait for a break in traffic, and then only one or two cars could make the turn.

However, the 'Left Turn on Green Arrow Only' is carring the protection too far. For most times during the day, cars just sit, waiting for the green arrow for minutes at a time with no cars in sight in any direction. Such a waste of time.

I am tempted to make the turn anyway, ignoring the little sign, but I try to be a law abiding citizen. So I wait, and I get irritated, and I still wait.

Frustrations of Interstate Driving

I just returned from a lengthy, but brief, road trip. My wife and I drove 1700 miles spread out over only 3 days. 850 Dallas to Knoxville on Friday, and 850 Knoxville to Dallas on Sunday. On a good day with sunshine and light traffic, 850 miles is about my driving limit. On a bad day, with heavy traffic and heavy rain, it's just too far.

The Sunday trip was a fiasco of bad alternatives. About 6 hours of the 14 hour trip were in heavy rain. Visibility was down to about 200 yards, and the road between Memphis and Texarkana was loaded with traffic. Interstate 40 between Memphis and Little Rock is always heavy 18 wheeler traffic, and dealing with it in the rain is espescially stressful.

The alternatives are drive the speed limit and go with the flow, even in poor visibility; slow down and risk being run over or contributing to a traffic problem; or just get off the road or find another route. I chose go with the flow, even though the visibility was extremely poor, probably bad judgement and high risk. This brings me to the point of this post: Driving our interstate highways can be a high risk activity!

Here are some of the frustrations:

Speed Limits and Speed enforcement vary from state to state.

Different speed limits in different states are certainly understandable. Miles of open road I-90 in Montana or I-80 in Wyoming certainly justify higher speeds than I-95 in New England. What's more difficult to understand is the wide variations in enforcement. Why isn't a speed limit a speed limit? It's a guessing game to figure out what the magic number is. As a law abiding citizen, I drive at the speed limit on the open road. In some cases, this is more hazardous than going with the flow.

On the otherhand, I passed no less than 10 radar checks in Tennessee enroute between Knoxville and Memphis. The speed limit was generally 70, and much of the traffic was flowing at about 75. What speed was too much? Who knows?

There is way to much speed variations among vehicles on the road

No matter how fast you drive, someone will go faster. No matter how slow you go, someone will go slower. Extremes in either direction created hazardous and frustrating situations.

The dangers of average speed

In hilly or mountainous country, trucks especially seem to practice the concept of average speed. What this means is in a stretch of road with a speed limit of 65, you may find trucks slowing to 45 going uphill and accelerating to 85 going downhill. It is so frustrating to get behind trucks going uphill, trying to pass each other, with one going 45 mph and the other going 46. If you are able to get by this problem, you are promptly blown away by both of them going downhill at 80 a few minutes later.

The lower the speed limit, the greater the violations

As I said before, I usually drive the speed limit. Last summer, driving through West Texas where the speed limit was 75, I drove 75. Almost no one passed me, and I passed very few myself. It seems most people just don't want to go faster than about 75.

Friday, as I approached Knoxville, in East Tennessee, the speed limit steadily is reduced from 70, to 65, and then to 55 as you near the city. At 70, the ration of cars passing me to cars I was passing was about 50/50. At 65, it was probably about 60/40, and at 55, it was about 90/10. This is frustration at it's extreme. Why adopt a speed limit you have no intent to enforce?

Size Matters

Trucks are way bigger than cars, all cars. All cars lose when they hit trucks. But! as we trend toward smaller cars, the matter gets worse. My wife and I used to own a Mercedes SLK. This is a really small car. On several occasions we were nearly pushed off the road by an 18 Wheeler whose driver simply didn't see us.

Self imposed solutions

I can't fix this problem. Maybe, over time, our efforts to reduce our oil dependence and switch to alternative fuels will also bring changes to our transportation infrastructure which may address some of these problems. Meanwhile, I'm going to impose some changes on myself to try and lower both stress and risk when I travel.

As a retired citizen, time is not as important as it used to be. So, for starters, I am going to try and avoid the very busiest of the Interstate Highways, and enjoy more of the countryside. I get way better gas milage in my SUV at 60 than I do at 70 anyway, so slowing down and taking the less traveled byways may be both more scenic and less stressful.