Posts filed under “Wages & Income”

Uh-Oh: Cars/Vacations/Flat Panels Not Tax Deductible

Here’s some more bad news for John Q. Public:

We all know that the fun of the past few years Housing binge / ATM withdrawal / GDP Party is long since over. But it turns out that the hangover isn’t nearly done.

Why is that? Well, one of the advantages of Home Equity financing is that if you use the proceeds for capital improvements to the home — *new floors, walls or lighting, installing central A/C, removing trees, refurbishing bathrooms, new lawns or gardens — then it has the same tax deductiblity as if it were a primary mortgage.

What abut if you use the proceeds for other, non-capital improvement purposes? 

From Realty blog Patrick.Net:

"Word from the IRS is that they are auditing people based on refiances on their
house. If you refied and pulled money out of the house and use for other
purposes than home improvement you can not claim that as Mortgage Deduction,
needs to be claimed as Interest expense. Guess what, they want proof of home
improvements…"

Uh-Oh !

Why do I smell some big trouble coming down the road for some people?

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Source:
Refi Interest Trap?
March 28th, 2008
http://patrick.net/wp/?p=594

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* What we did to our home

Category: Economy, Employment, Real Estate, Taxes and Policy, Wages & Income

Was 2007 Q4 GDP Positive — or Negative ?

Category: Consumer Spending, Data Analysis, Economy, Wages & Income

Changes in US Withholding Taxes

Category: Consumer Spending, Credit, Economy, Taxes and Policy, Wages & Income

Latest Bank Headache: Home Equity Loans

Category: Credit, Economy, Finance, Psychology, Wages & Income

NonFarm Payroll Day: Not-So-Great Expectations

Category: Economy, Employment, Wages & Income

Hackonomics, Part II

Category: Economy, Taxes and Policy, Wages & Income

Hackonomics

 

“The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.”

-Joan Robinson, Cambridge University

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One of the things that really perturbs me are disingenuous, intellectually indefensible commentary consisting of willfully misleading tripe. Up until recently, that territory has been owned by the WSJ OPED pages. This past weekend, the NYT was seen elbowing its way into the same space.

I call this approach to economic analysis Hackonomics.

An OpEd in the Sunday Times is classic Hackonomics. Unfortunately, it takes little craft to slip junk past the editors at the Times OpEd section. Impressive-looking academic or government credentials seems to be all that is required. (Its a shame they don’t have, say, a professor from the Princeton Economics department on staff).

Perhaps there is a fear of looking silly or economically ignorant, rather than asking anyone else about any of these “analyses.” What we get instead are pieces like You Are What You Spend. The authors are Michael Cox, and Richard Alm, chief economist and senior economics writer at the Federal Reserve Bank of Dallas. As my British colleagues would delightfully articulate, “their work is shite.”

To wit: These two gentlemen press forward the idea that the proper manner to review economic inequality should involve looking not at income differentials. Rather, this Fed duo favors a more direct measure of economic status: household consumption. They claim “the gap between rich and poor is far less than most assume, and that the abstract,
income-based way in which we measure the so-called poverty rate no longer applies to our society.”

Their analysis is so problematic and their theory so full of holes, that, if time permitted, we could identify errors in nearly every paragraph. That sort of critique is best reserved for serious intellectual analysis of major importance. For Hackonomics, we will simply identify 3 major flaws, and then get on to more pressing and important work.

Let’s take a closer look at their arguments:

1. Income Disparity: Abstract? There is nothing “abstract” about income-based measures of poverty or wealth inequality. Merely calling income comparisons “abstract” does not make it so, nor does it make their position any less absurd. Instead, it reads as a
transparent attempt by the authors to avoid any income discussion.

Why not discuss income? Perhaps the data is the reason: The share of national income of the wealthiest 1% rose from 14.6% five years ago (2003) to 17.4% in 2005 (Emmanuel Saez, University of California-Berkeley). And since 2005, the wealth disparity has grown even further.

Indeed, as several commentators have already pointed out, these same authors previously tried to make an income based argument that “the gap between rich and poor is far less than most assume” – and crashed and burned.

Next attempt, please.

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Category: Consumer Spending, Data Analysis, Economy, Wages & Income

Overstated Job Growth & the Annual Establishment Survey Benchmarking

Category: Data Analysis, Employment, Wages & Income

Brilliant Economists Can’t Figure It Out

Tom Toles perfectly sums up both the present economic environment, and the problem with economists:

Category: Earnings, Economy, Employment, Psychology, Wages & Income

Real Income Fails to Rise for most of the 2000s

Category: Data Analysis, Economy, Employment, Psychology, Wages & Income