Archive for Danielle Schultz

Should you pay more taxes?

We’ve all been flooded with rhetoric lately on the necessity of either a) tax cuts or b) tax increases. It’s been on my mind lately at every level: national health care, State of Illinois cuts to services for disabled people, and a referendum in my school district to increase property taxes. Okay, I’m a liberal so my general impulse is to agree with taxes that look like they’ll improve services or take care of a need not obtainable elsewhere—I’m not actually opposed to paying taxes. But not every single increase. This post is an effort to come up with some principles to help with future decisions. I’m going to try to use some personal financial planning procedures to inform my reasoning.

Is the problem being addressed the result of poor decision making or abuse in the past?

There isn’t a citizen of any country I know of who thinks their government runs efficiently. We tend to scrutinize and complain about the public sector mostly because we feel that the money which funds it comes directly out of our pockets. But, I ask you, have you ever worked for a private company that didn’t have some benchwarmers, incompetents, and people who were missing in action in the middle of the afternoon? Someone who sloughed their work off on subordinates, had an in with the boss, maybe family money, and blamed everything on somebody else? Oh, wait, I got distracted there, since that perfectly describes our current “businessman-in-chief”.

As with personal financial mistakes, you can’t rewrite the past. But making up for these mistakes (personal or public) requires significant belt tightening, enterprising ways to earn more, identifying greater funding sources or some combination of all three. I don’t think that we can ever achieve total perfection—we’re all going to be tempted by some non-essential purchases, and every employer is going to have some non-productive employees they can’t get rid of. But the last choice, not the first, should be a tax increase.

Is the proposed tax reasonable compared to the benefits produced?

In other words, are we getting bang from our buck? Like Woody Allen, in my family it was a sin to buy retail. So before I can support paying increased taxes, I have to know that cost controls are in place, a real plan has been thought through and vetted or beta tested, and that the benefit will be at least commensurate with cost (which immediately disqualifies the current Republican health care proposal).

I am, for example, willing to pay more taxes to support a single-payer national health care system, because countries that have them have clearly better health outcomes at far lower per person cost. I currently pay about $14,000/year in health insurance premiums + $3,500 in deductible. I have yet to see a proposal for even luxurious health care that would cost me an extra $17,500 in taxes, although it appears Paul Ryan will give me the opportunity to pay more for even less coverage. Similarly, I’d gladly pay an extra $2,000/year (my current long term care insurance) if it would guarantee not only me, but every elderly person good quality long-term care.

When I hear that something is pitched as more value to me, I want to be convinced by the numbers. The current school referendum is being pitched to residents as a way to maintain and increase property values. However, I haven’t seen any math that wasn’t, shall we say, a little bit fuzzy. So let’s say that I pay an extra $450/year for 5 years—will my property value increase by $2,250? Or will the increased taxes hold down property values because the cost of carrying the property becomes so high compared to neighboring communities? Arguments that might sound reasonable but have no research to back them up don’t convince me.

On the other hand, if the schools are truly deteriorating, why has there been an increased population of users? One of the arguments for increasing school taxes is an influx of new students, but then there should be an increase in the tax base. Personally, I would have preferred to deliver a baby in the comfort of the maternity care provided to French citizens. But since I’m not a taxpayer or citizen of France, they weren’t eager to provide those services to me.

Is the tax fairly distributed?

As a general principle, people who pay the tax want to derive benefit from it. It’s not a direct payment for services, though. There are some services, and some population segments, that need services but cannot pay for them, or the scale is so big that the costs need to be distributed—the military, services to the elderly and disabled, health care, and education.

Some things can be handled locally, some must have state level participation, and some jobs are so big that the federal government is needed. The larger the vulnerable population or need compared to the tax base, the higher the level we need to go. And we need to consider our society as a whole, not just our individual gain or loss.

Could the same benefits be obtained in some other way with fewer burdens?

I think it’s a myth that private enterprise always does things better, but without private initiative, innovation and sensitivity to consumers also suffer. On the other hand I strongly believe that the government needs to put some brakes on robber baron capitalism, For example, prescription drug prices negotiated by a national health care system can hold down costs for all of us—and I don’t notice drug companies pulling out of business with countries that have those controls.

I’m going to take a deeper dive into some specific issues in future posts—I’d love to hear your comments and reasoning on health care, long term care for the elderly, and college funding costs.

Adventures in Consumer Complaints

English: Stearns lawn mower - Made in Syracuse...

English: Stearns lawn mower – Made in Syracuse, New York – 1934 (Photo credit: Wikipedia)

 

If we’ve spent any time chatting you’ve probably guessed that I’m fairly frugal or at least trying to be (we all have our exceptions). Provided there’s a legitimate grievance, I think it’s good financial and consumer behavior to complain about poor services or products. I also think it provides valuable feedback to the practitioner or manufacturer. I don’t mean sending a wine or restaurant dish back because you don’t like the taste—but send it back if it’s spoiled or over-salted or cold when it should be hot. I don’t have a problem with returns if the business model demands it—like online shoe purchases. Many people complain illegitimately, but many people don’t complain at all. Sure it’s a pain, and sometimes the magic works and sometimes it doesn’t, as they say. Here are two recent experiences to illustrate the perils and worth. I make the mistakes so you don’t have to.

I need a new lawn mower, as you will agree if you’ve been here recently. After five years of struggling to be ecological with a mechanical push mower, I’ve decided it’s a lot less time consuming to go to the gym than to spend two hours cutting a few inches at a time. I researched mowers with Consumer Reports and to my delight found the one I wanted available online at both Amazon and Home Depot for the same price (no driving around for an entire Saturday). However, because dear daughter has Prime, Amazon was offering to deliver it within two days (that grass is really high) whereas Home Depot was going to take about 10 days. I ordered it from Amazon. Big mistake. Amazon used UPS as a carrier, and they dumped the 91 lb. package at my gate (blocking entrance) while I was out for the afternoon. It poured rain, soaking the box. In addition, it looked like gorillas had played polo with the carton.

I called Amazon to notify them that I would not accept a damaged and soaked electronic item that had a limited warranty, since if past experience is a guide, it will go kaput days after the warranty expires. They informed me that they would not pick it up because it was a hazmat item due to the battery. While they’d send another one, this one was my problem to dispose of (!) I’m not quite sure how I’d wrestle a dripping wet and falling apart 91lb. box to whatever hazmat disposal site exists in Chicago, but you can probably imagine that the conversation went somewhat south. That was 5 days ago. They decided to make a “one-time special exception” and send out a disposal service. I have still not heard from the hazmat disposal and to frost the cake, UPS delivered the second one right next to the first one, out in the yard. At least until I called and they sent the guy back to re-deliver it to the house. Finally, upon reading the warranty, I discovered that in order to exercise the guarantee, you have to return the machine to where you purchased it, or to a Black and Decker repair center, including shipping.  I’m not going to analyze how much time I’ve spent on the phone on this one, because for a $300 item there was nothing else I would have done. But my moral for the story is that if you are thinking about buying large electronics or machines that are likely to need servicing, well, I’ll think a long time before I buy them on Amazon again.

My other experience was delightful. I’m a huge fan of Craftsy and I do feel somewhat guilty about the money I spend, although as entertainment goes it’s not much more than going to the movies. Recently I anted up for 2 more classes, and 2 days later got a promo for the same classes for a total of $25 less. I complained and received a response with a coupon for TWO free classes (worth far more than the $25), and an explanation that they guarantee their prices for 30 days if purchased through them (I had used the Apple app, where I got charged tax). Sometime ago I had complained that the cost of essential materials (over $250) should have been disclosed before the class, and they refunded the entire class fee, although I’d assured them there was no problem with the actual class. And finally, some time ago they just sent me a free class to thank me for my patronage. It’s not a publicly traded company, but if it ever is, I’d be really tempted to take a hard look.