Personal
Wealth Tax
There is an old adage regarding investing that when your stocks are down, you haven’t actually lost any money until you sell the stock. Because of this, the corollary has always been, that likewise, the gain is not realized until you sell the stock. Gains and Losses “on paper” don’t really matter, until they are realized when they are converted to cash or traded for other things. President Biden and now candidate Harris, along with some members of Congress are pushing a Wealth Tax, which would tax these paper gains.
As an example, if you bought 100 shares of Apple’s stock in 2010, it was 6 dollars a share. It cost $600 to make that purchase. It is now over $200 per share so your $600 investment is worth upwards of $20,000 or a 33 times as much as when you bought it. But that gain is on paper. You’re not able to use that value to purchase anything until you sell the stock, at which time you’ll take a $5,800 capital gains haircut.
The wealth tax proposal suggests that you should pay tax on that unrealized gain now. But how will the unrealized tax be determined? Apple’s stock’s all time high was $237, but its highest day end value was $234. And on August 5th with the short crash, it was at $207. Those numbers all are within the past month. With the constant fluctuation of stock prices, will there be an arbitrary day chosen? The all time high? An average of the past year? At a minimum, this seems like a record keeping nightmare. Record keeping is already a problem with the current capital gain tax where you have to keep documentation of a stock purchase price, transaction costs, and splits along the way… sometimes over decades. This is worse with a business or property where you have to track expenditures on improvements, depreciation and other things that affect value.
Another local example is what has happened to many families around Lake Maxinkuckee. Their ancestors owned a lake cottage which was bought decades ago. The property was passed down to descendants. Not all of these descendants were wealthy, but suddenly they were wealthy on paper because of the appreciation in lake property values. They were then forced to sell property that may have been in the family for generations because they couldn’t afford the real estate taxes on the appreciated value. The wealth tax could be another hit on unrealized generational wealth like that.
In a Kiplinger.com article, John Goralka posits this concept about estate planning, “The cash people receive from you is more cash than you have.” This translates to day to day things as well. Wealthy people don’t live like Scrooge McDuck, with a vault in the back of their home where they swim in gold coins. How much money do you think Elon Musk or Jeff Bezos have that they can access immediately? More than me, I’m sure, but as a percentage of their wealth, I would guess the percentage is smaller. Wealth is generally tied up in “things” and those things are working to help you create more wealth. Some of those things employ people who provide goods and services. It’s likely that a wealth tax would require forced liquidation of those things to pay the tax. That would result in less investment in those things so that cash that should be put to work in the economy is held back in anticipation of tax liabilities.
John Goralka’s article has made me think about my own situation. I own my home and currently have no plans to sell it. That value adds to my net worth, but it’s not money I can spend. But when I die, that home will be converted to cash to distribute to heirs. A smaller version of what Elon Musk has with Tesla and Jeff Bezos has with Amazon, but the concept is the same.
In our current DEI world, it has become de rigueur to bash successful people. Hard work, saving and investing are out of fashion. Along with the wealth tax, there are discussions about taxing 401(k)s and IRAs where people have saved too much or invested successfully. Envy of wealth has replaced the aspirational goal of becoming wealthy. Most wealth is the result of some risk. Most wealth remains at risk as it remains invested. No government has been good at playing Robin Hood. We should push back on this, as a tax on those creating wealth by a government that can’t live within its means won’t end well.
What’s in a name?
I’m pretty unhappy that I know the name of the shooter that attempted to assassinate former President Trump. If you don’t know his name, I’m not going to be the one to enlighten you…
My personal feeling is that it’s unconscionable that the press puts the names of such people out there. Law enforcement must, in the name of full disclosure, but it’s the press that gives them posthumous fame. My distaste for this is not because of concern for their families. Often their families are complicit, through ignoring red flags, if nothing else. My reasoning is that many of these individuals are doing it for that fame. How many other disturbed people see this and think, “At least I will be recognized”? What other heinous acts are being contemplated by disturbed individuals seeing this shooters name plastered across all media?
I knew the names of the killers from Columbine. I knew the name of the Boston Marathon Bombers. I knew the name of the Aurora, Colorado shooter and the man that shot up the music festival in Las Vegas. I know the name of Sharon Tate’s killer cult. I know the names of the brothers famous for killing their parents. I know the name of President Reagan’s attempted assassin. I know the names of JFK’s assassin and clear back to Lincoln’s assassin. I’m sure this is enough to bring many of those names to your minds… None of this information is valuable to us nor does it protect us. All of this could be the catalyst that causes a continuation of this murderous loop.
What’s in a name? For some people, this is their way of achieving their 15 minutes of fame. Let’s stop making that possible.
Chevron Deference
I wrote a bit on this last January (here) when I first heard the Chevron Deference was up for consideration by the Supreme Court. (Kiplinger’s follow-up article here.) Now there seems to be a huge uproar over this or to paraphrase the words of Charlie Daniels: They’re all out there steppin’ an’ fetchin’, like their heads are on fire and their asses are catchin’… (from Uneasy Rider)
Saying that we’ve always done it this way, fails to recognize that the Chevron Deference is a product of the 80’s, not something springing from the Constitution. It was a case where the courts gave up their constitutional power to interpret laws, ceding it to the administrative agencies. This has been abused by the agencies and aided by lazy lawmakers, who intentionally or unintentionally write ambiguous legislation.
Unfortunately, the agencies are abusing their power over their clients, the citizens of the United States, while also ignoring their bosses, the Senators and Representatives that write the laws. (Check out this video of Democratic Senator, Joe Manchin, schooling Treasury Secretary, Janet Yellen, on the way that agency is disregarding very specific language in a Law he wrote and helped pass.) Unambiguous language in legislation is rare, but even when it’s in place, it requires legislators to be enforcers, as with the above video or citizens to risk their livelihoods taking them to court. The Chevron Deference had been used to give the advantage in these situations to the agencies as the de facto experts.
I seriously feel that the various bureaucratic agencies are being allowed to run the show. Even granting them the benefit of the doubt on knowing a lot about the things they oversee, bureaucracies tend to be invasive. They try and make themselves seem more valuable by growing and inserting themselves into more things. This is true with private bureaucracies and seemingly more so with public bureaucracies. When President Biden said we’re going to add 80,000 more IRS agents, I never heard the IRS say, they could get by with 50,000 or even lets start with 30,000 and see how it goes… No, they gladly accepted the growth, the larger budget and the increase power that came with this.
IRS: You owe us money. It’s called taxes. Me: How much do I owe? IRS: You have to figure that out. Me: I just pay what I want? IRS: Oh, no! We know exactly how much you owe. But you have to guess that number too. Me: What if I get it wrong? IRS: You go to prison. ME: [rifling through papers] Ok this is all kind of confusing, but I think this is how much I owe. IRS: Yikes, looks like you missed a number somewhere. I guess you’re going to prison. ME: [being handcuffed] Can’t argue with justice! – Jordan Stratton
As I mentioned on the previous post here, the agencies’ positions and enforcement can swing wildly based on whichever party is in office. Taking the political positions out, at least as much as possible, by putting it back in the hands of the judiciary, seem prudent. Acknowledging their expertise in these things, it would make more sense to bring them in when the law is being crafted rather than waiting until it’s in place and subject to their, sometimes bias, interpretation.
The striking down of the Chevron Deference seems to make perfect sense to me, but only time will tell. While in place, it was interpreted broadly, which caused the problems leading to the Supreme Court’s review. Doing away with it may create a new set of unintended consequences, but with government in general, less is better…
Rick Hensley
Easterday Construction Co., Inc. has lost another good friend. Rick passed away last week and I attended his funeral today. Rick battled cancer against the odds his Doctors were giving him, and he outlived the expiration date they gave him through sheer will and love for his family. He always had a passion for life and a positive attitude. Losing this friend at only 45 years old is heartbreaking.
Rick and his company, Artizan Flooring, has done multiple projects for us over the years. I’ve never had a second thought about taking him to meet a client. He not only made a good impression for himself and his company, but also for Easterday Construction. He also respected that relationship, looking out for our reputation as well as his. I could always trust him to make the best recommendation possible and to follow through on whatever he said. He would never consider end-running us on a client we introduced to him.
As an example of Rick’s integrity, on one of our first projects together, he made a recommendation at Sand Hill Farm Apartments for the installation of a sound dampening underlayment beneath the vinyl plank flooring in the second floor units. Within 6 months of the installation, the vinyl plank began losing adhesion and curling. Rick fought with the manufacturer over this and when he received no satisfaction from them, he removed the plank, removed the underlayment and reinstalled the plank at no cost to us… because he had told us it would work and it didn’t. That made a huge impression.
While Rick will be missed, we hope to continue our relationship with his wife Amber. She assumed the leadership of Artizan Flooring when Rick had to step back and continues to move the business forward. If you have any flooring or tile needs, please search them out at their Plymouth store. I am confident they will continue forward with Rick’s credo.
Positive Collaboration
September 3, 2024
Kevin Berger
Commentary, Marshall County, MCCF, Personal, Politics
Community, housing, Volunteering
I was pleased to be one of the Marshall County Community Foundation (MCCF) board members to attend a regional meeting of MCCF with the Community Foundation of St. Joseph County (CFSJC) and the Community Foundation of Elkhart County (CFEC). The basis of this was to foster regional collaboration on a Lilly grant that would help create more housing in our respective counties. It was great to see the groups come together and work towards a common goal. MACOG was also there, having stepped up to consider offering their services towards a Land Bank or similar vehicle to help move this forward.
I have been involved with several of these types of collaborative efforts in the past. As a Culver Chamber of Commerce (CCC) board member, I helped John Thompson and Eric Freeman create the Culver Second Century Committee. The Second Century Committee used CCC support to pull various non-profits and governmental bodies together to work towards common goals. It was successful for a brief time, creating collaboration among the various entities and was responsible for the 1998 Community Charrette and the new Comprehensive Plan that was born of the Charrette.
I was a founding member of the Marshall County Economic Development Corp. (MCEDC), which brought representatives from the county and each of the municipalities together to foster a collaborative effort towards economic growth. While chairman of MCEDC, I worked with Roger Umbaugh and Kevin Overmyer to start the County Development for the Future (CDFF) meetings. The CDFF meetings were started to bring the communities of Marshall County together to discuss challenges, successes and ways they could collaborate to learn from each other and make things better. One of the successes of CDFF was the community collaboration that brought about Marshall County Crossroads and Marshall County’s successful bid for Stellar Region designation.
I always have high hopes for these collaborative efforts. They really do bring the strengths of multiple people, agencies and entities together to create something bigger than the individual parts. There does seem to be a limited life span for them though. The Second Century Committee came together and did great things by organizing the participating groups. But then as the second generation of leaders took the reigns, it devolved into an executive committee that met and did most of the tasks themselves. They no longer had meetings to involve the underlying groups so the big initiatives went away. As the members of the exec committee burned out, less got done. They attempted to evolve into a Main Street organization, but that transition was not very successful. Main Street reorganized as Develop Culver. While Develop Culver is creating some successes, it’s not with the same larger collaboration of groups that made the Second Century Committee successful.
CDFF was extremely successful. The collaboration between communities broke down the long standing basketball rivalries and had Marshall County Communities working together. Attendees applauded the successes of their sister communities and networked after the meetings on ways to replicate those successes in the other Marshall County Communities. The other communities were all-in when Culver sought Stellar Community designation and helped make it happen. Because of that, I think CDFF was largely responsible for spawning Marshall County Crossroads and the designation of Marshall County as a Stellar Region. But a transition to a new executive director of MCEDC resulted in meetings that were more about his self-promotion and less about the collaboration. CDFF helped move us into the larger region with St. Joe and Elkhart counties when Regional Cities as launched, but at the cost of lost focus on our local communities and the tending of those new relationships. The meetings have devolved further and no longer list the accomplishments and goals of the communities. While they often bring useful information to those that attend, some communities no longer send representatives and there is no longer accountability or celebration of successes.
I was only peripherally involved with Marshall County Crossroads, serving on the larger committee and a subcommittee without having any leadership role. Crossroads took the base collaboration of CDFF and injected it with new life. It was CDFF on steroids for a while! The number of people that it brought in was amazing and the work that got done by the volunteer group was phenomenal. They accomplished the base goal of obtaining Stellar Region designation for Marshall County and set a follow up goal of continuing the collaboration and moving other issues forward as well. But the huge effort required for Stellar became difficult to sustain with a volunteer group. Crossroads has tried to spawn a new and more formal group, ONE Marshall County, but funding has been difficult and communication has deteriorated. Many of the Crossroads leaders have stepped aside and the new group is struggling to sustain the enthusiasm while also fighting some local politicians that (falsely) accuse them of trying to bypass normal government procedures. This has devolved back to infighting among communities. It’s unclear whether the group will survive Wolfe’s Dilemma.
While I continue to be supportive of collaborative efforts and think it results in outsized returns on investment, I’m coming to think that maybe they could work best as task forces in lieu of standing committees or long term organizations. So much of the initial energy and work is done by the original people starting the collaboration, but that energy and focus can become lost as the initial leaders burnout and others come in who don’t understand or agree with the core mission. Maybe they should be treated like fireworks that explode in a bright frenzy that everyone is excited about, and then everyone applauds at the end and everyone leaves happy as the smoke dissipates… Trying to sustain that frenetic energy isn’t possible and lesser results are seen as disappointing.
For this reason, I’m pleased that the three community foundations seem to be coming together for a common goal, but instead of forming a new group, they’re looking to MACOG to expand their services to sustain this. Combining the excitement and energy that bringing volunteers together generates with the infrastructure of an existing organization makes sense. This could be a new model that works. Only time will tell…
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