A Real Business Sense

From the Comments of the previous post that should be brought to our attention:

Egg Farmer needs to clarify... It is section 179 depreciate, not accelerated depreciation that is a problem. Section 179 allows businesses to completely write off a new piece of equipment. The state of minnesota does not allow the deduction or only a portion of the total amount the federal section 179 allows. If a business person cannot take it both on the federal and state, what is the point... In our case we don't take the full amount of section 179 tax deduction, because it doesn't help on the state tax return. Of course, my good friend across the state line can take the section 179 both on the state and federal tax. All these different tax deductions and/or incentives that are given to businesses I understand (we take advantage of as many as we can). The problem is that the playing field becomes uneven. I am not arguing that the government should some how make it "even" or "fair" for all, because innovation and technology will always disrupt the playing field. What I think the role of government can or should play is to use its limited resources in shaping a better playing field (better infrastructure, simplifying the tax code and security), which would benefit all.

A few thoughts. First, it is easy for the folks who don't run a company to see the day to day effects of our taxation policy. How we tax matters. Second, if I ever want to run a small business, boy I need an education. Third, I'd be interested in Egg Farmer's take, do you think that services you get in MN (better infrastructure, better schools, etc) and the closer proximity to large population centers outweigh the higher taxes? Life is full of trade offs (no matter what Congress says), so is this a worthwhile trade off?

The BET!

I was talking to Egg Farmer in Cokato the other day about the topics of the day: taxes, federal budgets, and egg prices. As a businessman Egg Farmer in Cokato had lots of insight into taxes, particularly how a lack of harmonization between federal and state taxes create different incentives (e.g., the feds allow a business to accelerate the depreciation of an asset--say new packing equipment--encouraging the business to purchase expensive items and then deduct the cost from it's taxes. Minnesota does not allow a business to do that).

Anyway, EFIC is much more pessimistic than me. I said that the USA will hit a significant budgetary crisis because of every rising deficits, while he says it will happen within in 10 years. Thus, a bet is born. For a six pack of beer we decided to bet on the timing of a significant budgetary crisis. The definition of the crisis will be a point of time in which the US Congress will need to balance the budget (for the fiscal year) because of significant financial pressures. If this crisis happens before Dec 31, 2019, Egg Farmer in Cokato wins. If after, Redhead in Rapid wins. The bet is a bit wooly, but we think we can agree when we see the crisis unfold before our eyes.

Good News of the Day

It is easy to see man a hard scrabbled creature willing to cut any throat to seize the day. So here is my good news to consider, from The Best Defense:

With Colombia now moving toward peace, there are hardly any wars underway in the western hemisphere, notes Fettweis, a political scientist who used to teach at the Naval War College and now slings international relations at Tulane University. Europe is at peace -- and barely has any militaries anyway. The Pacific Rim has two billion people and no fighting, quite an achievement. Asia's only conflict last year was the nasty little Sri Lankan civil war, which is over. The wars that are occurring are long-term affairs on low boil, such as the Israeli-Palestinian standoff, the Yemeni fighting, and, of course, the United States' messes in Iraq and Afghanistan.

Me in 5 Years

Copyright: Mr. Thompson

My Congressional To Do List

It's easy to complain about Congress and Politics. Bitching and moaning make up much of cable news and facebook status updates. I'm as guilty as the next guy, so to make amends here is my congressional to-do list.

1. Repair the Tax Code: We are living under an onerous and cancerous tax code with too many favors for special groups (e.g., homeowners, certain businesses, etc). Much too much time and money is spent on trying to comply with the tax code and work within the tax code to save money. We need to remember the spirit of the Tax Code Reform Act of 1986 and make real reforms. Some things to be done--get rid of nearly all deductions, especially the home interest deduction, and specific industry credits and deductions; get rid of the corporate income tax and raise the rate of dividend and capital gains taxes; get rid of AMT, it is a fantasy that takes up way too much time; and on and on.
2. Talk Seriously About our Debt and Deficit Problem: Notice that I'm not even asking Congress to solve the problem, but just to be realistic about the problem. To that end we need Congress to recognize that (a) our biggest cost driver is Medicare and something much be done about it; (b) we don't actually have a Social Security Trust Fund and that soon we'll need to use general fund money to cover Social Security payments; and, (c) that Defense Spending is the largest piece of the discretionary pie and has increased the most in the last year and therefore can't be ignored.
3. Deal with America's Infrastructure: It's a well known fact Johnny that America has an aging and decrepit infrastructure. From cracking roads, to an overworked freight rail system, to bursting pipes, to poor transportation systems, the US of A needs some work. We need to raise real revenue (increase gas tax and other stuff) and reform our construction bidding process and start laying the foundation for our next economic boom.

That's it. There is plenty more that I would like Congress to do, such as ending farm subsidies and getting serious about our engagement with the world and a host of other issues. But here are at least 3 things they could do and can do.

The ELECTION

Since last Tuesday we've been inundated (if you've been paying attention) with analysis about the ELECTION. Folks, pundits, and politicians have been pontificating upon the meaning of the election... MANDATE for Republicans...Victory for the Tea Party...Demonstrated the limits of the Tea Party...Smaller Government...No Government...The Dems still control 2/3 of the legislative process...

Each narrative has some truth and has elections and opinion polls to back it up, nevertheless, I think the takeaway from this election is that the American People WANT RESULTS. Their expectations may be unrealistic, but the first party to be "in power" when the economy turns will become the victors. If it happens over the next two years it will be Mr. Obama who benefits. But if we are stuck with 9% unemployment and a stuttering economy, the President is in trouble. Better than that and we got an (new) election on our hands.

Personally, I'm disappointed with the parties in power. We have significant issues--health care, the economy, the deficit and national debt, two wars--but neither party wants to tackle them. The GOP claims to be serious about the deficit, but that's absolute BS. They have not listed any serious changes to significant budget expenses (i.e., Social Security, Medicare, and Defense). It's big plus is that they won't go crazy with spending. Now the Democrats, well, they ain't doing much either. They won't touch the same budget items, but feel free to spend at will.

This isn't going to be a pretty two years.

The Best Kind of Theater

Back in the 1960s and 70s my grandfather would find himself at the Santa Barbara Airport parking lot fifteen minutes before takeoff. He would stroll to the counter and quickly pick up his ticker. Security was an invention waiting to happen (and it did happen sometime during web 1.0) and so he would just take his ticket and hop on the plane. The airlines were happy, the airline workers were happy, and my grandfather was happy (particularly because he wasn't the most timely man).

Now, of course, those days are consigned to the dustbin of history. Ancient, forgotten days before the advent of anything worth doing.

My Eyes Hurt

Cause I got them dilated. Ms. Red Head in Rapid was duly impressed with my wrap-around polarized glasses. She thought I couldn't walk straight. Bleh. I was just admiring the pretty leaves on the tree. What are you going to do when the haters start hating?

Wind Cave...

This last weekend my Mrs. Redhead in Rapid and I headed to Wind Cave National Park. It was awesome. I got to learn lots and lots of new facts. Let me tell you some:

• Wind Cave is the fourth longest cave in the world.
• However, though 135 miles have been discovered the 'experts' think that they've only found 5% of the cave. If true, this would make it the largest cave in the world.
• So far, all 135 miles are crammed into 1 square mile (with a depth of 1/3 mile). That's like cramming 134 inches of a string into 1 square inch.

Wait, you don't want more facts? Well, too bad:

• The cave was "discovered" by the settlers in the 1880s.
• This cave has very little water, so you don't see stalagmites or stalactites. Instead...
• 95% of the world's box-work is found in Wind Cave.

This is only a few of the facts I gleaned from my 3 hour trip. Boy, what fun!

The RACE...

Here in the Heartland (aka South Dakota... eat it Minnesota, Iowa, North Dakota, Nebraska, etc...) we are having an intense US Representative race between Kristi Noem and Stephanie Herseth-Sandlin. Both gots lots of money so we get to experience plenty of attack ads. And because ad time is cheap we get to see lots and lots and lots of ads. And because I watch old folks T.V. (e.g., Wheel of Fortune) they pile them on.

Anyway, the ads are getting a little ridiculous. Kristi attacks Stephanie as a Pelosi stooge, conflating procedural votes with real votes, to say that Stephanie votes with Pelosi 90% of the time. Even though Stephanie voted against the Health Care Bill, etc... On the other hand Stephanie's best attack is that Kristi has had 20 speeding tickets over 20 years... Umm... not that impressive.

I'm a bit stuck in this race. Generally speaking I'd prefer a conservative Democrat over a really conservative Republican. Both candidates say that they take the deficit and national debt seriously, but neither of them will tackle the elephant in the room... entitlement and deficit spending. And to make matters worse they both are for increasing farm subsidies. Sheesh. I got 2 weeks to decide and it ain't going to be easy.