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Archive for May, 2010

Do it now. Make contact with a tax professional, start thinking ahead. In December, when you find out about the prospect for tax credits, it will likely be too late to do it legally.

The tax world this year is still favorable to working and non-working people with a couple exceptions. For some of the more important benefits, you’ve got to think ahead.

I start at the bottom of the tax return at refundable tax credits. The two most prominent are the “Making Work Pay Credit” and the “Earned Income Credit”. At low incomes, both are available to individuals and families with no children, but can result in actual significant income for those with 1, 2, or 3 children.

With both, the cumulative credits INCREASE with an increase in earned income, until reaching a threshold of earned income.

This is counter-intuitive. Most that counsel on tax planning, suggest that individuals realize lower earned and taxable income, but if you don’t have children, the federal government contributes significantly to credits up to about $12,000 in earned income. (Even with tax on self-employment and no children, there is some net tax paid, but its not onerous, if you think ahead and pay or save it before it is due.)

For individuals and families with one child, at around $9000 earned income, the combination of making work pay, earned income and child tax credits max out to over $2000 in net refundible credits. With two children, at around $12,500 earned income, the credits max out to around $3800, and for three or more children, max out also at $12500, but to around $4500 in refundable credits.

For those families that don’t otherwise earn income in conventional forms, it is possible to start a “business” in personal services. Even things like cooking, or cleaning, or child care, or driving, anything. It can be reciprocal. One person cooking for their neighbor one day for $5/meal, then the neighbor the next day cooking for the other person for $5/meal. If money changes hands in compensation for a service, and records are kept, it is a business, even if nets at $0 between all of the parties at the end of the year.

The caveat though is that the work cannot be performed strictly for tax avoidance purposes. But, if you clean up someone’s house for $20, and they cook you and your family a meal for $20, they are both value adding activities, that amount to a sole proprietorship. The services can be organized, even through say a recorded service credit club. (Be careful though. Talk to a professional ahead of time. Its worth it to you to get the half hour of their time.)

For communities that bear some collective burden of a population that is struggling, it is good public policy for local communities to enhance the degree that the federal government contributes to citizens’ welfare.

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There’s got to be a better name for this.

The concept is to form committees (boards or councils if you will) that are responsible to facilitate and ensure optimal community health within their eco-social jurisdiction.

The purpose of the project is to fund the role of neo-ombuds, so that in this by this region, there is a person/committee that works full-time to realize sustainable prosperity in the region of their jurisdiction.

It is meant to empower leadership to take defined responsibility to ensure that minimum necessities are universally available, that the physical environment is healthy and permanently so, that cultural diversity is fostered, and primarily that a sustainable integrated region/economy emerges and remains.

The neo-ombuds project is more regional than local, macro-regional (New England) and micro-regional (Franklin County). It is not a representative body, in which representatives are asked to advocate for their regions in a zero-sum fight for finite Congressional funds. It is more comprised of selected/elected active philosopher-kings, learning and making things happen within the comprehensive palette of social action (governance, commerce, grass-roots movement).

The emphasis is on facilitative responsibility and social intimacy far far more than power. In most cases, the neo-ombods/committee will not be the person/group to do specific work, but the neo-ombuds might arrange to seed-fund, mentor and facilitate projects.

Its different than the role of government in that government actions are legislated publicly, and only those commitments and laws that are legislated get done. A neo-ombuds does not need to wait for politically elected majority to initiate some good in the world. In the modern world of very finite resources, governments are often in the business of staying afloat more than optimizing social welfare.

The neo-ombuds project would not conflict with government (probably sometimes), but would be either indifferent or skew to government or complement it

In order to happen, three things are needed/possible.

1. Definition and mentorship of what is effective neo-ombuds(ing)

2. Funding of position at a moderate pay scale with some funding for associated expenses ($50,000/year, it can start as volunteer or part-time funding)

3. Appointments at macro-regional and micro-regional scale (likely first self appointed, then committee appointed and later elected)

The characteristics of a neo-ombuds.

1. Scrupulous integrity

2. Tangible (not tentative) love of community/region

3. Diverse skillsets (Listener, group process, small group presentation, tangible business skills, energetic, well-organized, good time-management, determined, familiarity with law and government)

4. Knowledge of and commitment to regional sustainability

5. Commitment to full term applied effectively and dynamically (5 years when program is mature)

The Sustainable New England (macro-region) and Sustainable013 (micro-region) projects are meant to be facilitated by ombuds.

What is the one project that an ombuds takes on, neo-ombuds(ing).

Its not an original idea. It is inherent in most religious traditions that I’ve encountered, but not widely practiced in society as a whole (usually only within the specific religious community), and most often not conceived within a context of comprehensively defined sustainability.

Lets do it.

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I track stock and other investment performance in managing some funds in my family.

In the last week, the stock market in large-cap has lost nearly 10% of its value. The loss in value is not spread equally throughout the market, but all sectors are affected by it.

The sad irony from my perspective, is that again a wild swing in values is resulting not from the majority of working and managing populations’ incompetence, but from strictly financial structural negligence and speculative greed (again).

On Main Street, the loss in the value of a retirement portfolio is the difference in a real perceived change in life experience over a retirement. On Wall Street, its a communication merely.

For those that gambled on currencies, it may be the difference between solvency and bankruptcy, and for those downstream it may be the difference between solvency and bankruptcy.

It takes an ENORMOUS amount of work for a company to increase their net income by 1% (as a percentage of revenues), which as a very very rough rule of thumb might increase a company’s valuation by 5-10%.

The contrast between that hard work to realize a moderate increase in value, and the passive relationship to financial losses is stark.

A year ago, Europe’s Main Street was affected by frivolous US mortgage and other loan policies, disclosures, rating. Now, the US Main Street is negatively affected  by Europe’s odd currency/federalism design.

The financial volatility will affect Main Street’s earned income.

Currency relationships are volatile and are disrupting much import-export trade. If the loss in the value of the Euro is sustained, which is likely given perceived weakness in other EU member economies, then the dollar will become expensive, and US exports will decrease again. Imports will increase as they will be less expensive. This will exacerbate the trade deficit. (The trade deficit is driven by the relationship of the US to oil-producing countries, and to China.)

As Paul Krugman described (I don’t have a reference or a direct quote), the European Union as a whole will benefit as a result of the currency devaluation as its exports will be cheaper for Americans. But, the local areas (Greece, Portugal, Spain, Ireland) that are experiencing current difficulty, will not see an improvement without the austerity packages proposed. With high unemployment already, austerity is not giving up a luxury, but surviving a muscle cut.

They’ll get by, right? We’ll get by, right?

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