While you're right that in most cases, nobody will find out that you're not paying taxes on small amounts of money, recording transactions comes with the territory of buying and selling products and opening savings accounts.
Plus, the beauty of savings accounts is that they tell you interest earned, so you don't need to calculate your own interest, they're happy to tell you!
Where do you start recording your 'business' transactions? After how many items? It's good practice to record everything.
The money is earned by the enterprise, and then is divvied up between the workers, the owners, and the managers. In the last thirty years or so, for a variety of reasons, the share that goes to workers has shrunk, while the shares that go to the owners and the managers have grown.
As I said earlier, the sizes of the shares vary for a lot of reasons. But over time, the most powerful determinate is power.
This has to be one of the worst tax articles I've ever seen on a personal finance blog. As was pointed out already, your discussion of eBay is oversimplified and in many ways wrong. You only have income if the amount the item sold for is over what you paid, and the eBay and PayPoo expenses incurred in selling the item can reduce that taxable income.
Additionally, your comment on credit card rewards is way off base. As Xin pointed out, the rewards are considered a non-taxable purchase rebate. The same applies for most credit card sign-up bonuses: these are technically rebates since they will normally require you to make at least one purchase on the card.
You are correct that most money that comes in should be reported as income, but at some point you have to be practical. Am I supposed to report income if I have a small savings account that earns $3 in interest, if I somehow sell a handful of small items on eBay for a profit, if I win a gift card at an office party, or if I find a dollar bill on the ground? Yes, but I'd argue it isn't a reasonable expectation for me to track a couple of dollars earned in an account I don't get a tax form for, the change I find on the ground, or to even try to determine if I made any money off the three items I sold on eBay last year. Not reporting that gift card you won isn't going to get you sharing a cell with Wesley Snipes! If you are aware of it then you should report it, but to suggest you need to go to great lengths to keep up with that is lunacy!
I'm not too big on roasting or frying of potatoes because of acrylamide development. While I grow plenty of potatoes, I usually boil them in chicken stock with carrots, and they are delish that way.
The most unique use I've ever seen potatoes was in Ireland. They were sliced thinly cooked atop a pizza. The same way pepperoni would be added to pizza in the US. It was the merging of Italian and Irish food.
in re: "From the end of World War II until the early 1980s, the top 10% got about 34% of total income. In recent years the share taken by the top 10% has grown sharply; they now get almost 50%."
I find this statement curious. The top 10% "got" the the 34% and they now "get" the 50%? Interesting choice of words as I would have said they earned those incomes, not got them. Maybe the reason that percentage has grown from 34% to 50% is because these people chose to work and earn versus waiting to get!
I think many smaller businesses do have a reason to hire more people, it's because they desire to expand. For instance, Michigan has an outdated tax structure where small business owners basically are exposed to double taxation. Our governor, though currently unpopular, is trying to end this in order to encourge small business growth.
When you say, It's your money, you're overlooking the role that public investment plays in creating a system that enables you to generate revenue: creating infrastructure, educating the workforce, establishing and enforcing laws and regulations. Those elements are what make our society possible. Our current system allows the wealthy to benefit from what public investment created and skim off the profits.
Several lines of thought seem to be reaching similar conclusions to Laszewski. For example, a student of energy in world systems, Charles A. S. Hall, points out that most of our economic and financial hypotheses were formed during the period when energy subsidies (mostly from fossil carbon) to everything humans do were increasing exponentially. Now that energy is declining, he suggests, the old ideas, such as market economics, probably are no longer a realistic guide.
One of his interesting calculations is that our new-found natural gas stores probably require so much energy to produce that the net energy from current natural gas production is near zero.
But more to the point here are some of his "new ways we will have to do economics," such as "We will have to reduce labor productivity." "We will have to reduce wages." And "it is a great time to think about redistribution."
There has been a correlation between the decline in labor power (private sector) since 1980 and the stagnation of working class incomes, but I think you have the causation reversed. The "power of labor" pre-1980 in the private sector went away because it effectively destroyed itself by destroying the businesses in which it operated, forcing the bankruptcy or export of American manufacturing, which in turn cost manufacturing jobs and their unions to vanish.
Since then, the "power of labor" has been steadily growing in the public sector, with public sector workers who used to lag their private sector counterparts now having significantly better total compensation packages. We are seeing the results now in exploding budgets, vast underfunded pension and health care liabilities and local & state governments facing financial tsunamis. Once again, the "power of labor" is destroying its own substance.
It is no more possible for labor to think about the long-term consequences of its immediate demands than it is for executives to think about the long-term health of their companies if their bonuses are driven by short-term-performance results.
I read the article you link to. As far as I can tell, it's economic GIGO.
I love piccadillo~~ a favorite from when I was growing up. My mom had a company worthy version and a kid friendly version {sans wine olives chopped eggs etc but with diced potatoes and peas added in} Of course I clicked on your link. Instructions begin with saute onion and peppers in EVOO but there are no peppers in ingredient list. I would suggest an equal amount of green peppers even tho it was never an ingredient in any version of piccadillo I grew up eating.
Every time we clean out our house, most of it ends up going to Goodwill. In addition, I do most of my clothes shopping at thrift stores. My whole family does this and sometimes we even find our own clothes on the rack.
Regarding the "fewer ATMs" drawback: many credit unions are members of what's called the National Co-Op Network, which means that you can use any "member" ATM in any other part of the country without getting hit by a charge.
I'm a member of a Colorado-based credit union, and I now live in Atlanta. Since I'm lazy, I didn't bother switching to a Georgia credit union ... I maintain the original account, and simply do my banking with the Georgia branch and with the Georgia ATMs, since they belong to the same national co-op network.
This point of view would make sense if you were arguing that by reason of possession the people who are currently getting 50% of the income stream are automatically the ones who earn it. However, we don't argue for example that by virtue of people having given Mardoff money he has automatically earned and deserves that money. Same thing when a gangster extorts protection money.
It's specifically said that the best way to increase income distribution would be to give greater power to workers so they can negotiate a bigger share of profits and therefore a bigger portion of the money that currently goes to the top 10% in the form of company profits. You know the people who are getting paid to actually do the work and thereby are MOST of the cause of the profit? This is not an arguement that the problem would be solved by giving more profits to people completely uninvolved in doing the work of getting said money.
The ones who do the earning are all of the people in a company, not just the heads of the company, and our current system is set up to disproportionately reward people doing management and punish people doing skilled tasks.
artificially inflated wages would just lead to more unemployment. also, i don't think some jobs merit huge wages. do you think every mcdonalds or jamba juice cashier deserve 30 dollars an hour? That doesn't make sense to me.
And the idea of using the government to steal money from those that earned it and giving it to those who have not earned it does not bother you at all?
I have an idea: lets not give money to the wealthy or the poor. Lets just create an economy built on justice and take our lumps come what may.
There's no guarantee, but you can look various places for clues. For example, the graph on the page linked below shows the rate of growth in GDP from 1947 to 2010.
When I mentally divide the graph into the period before and after the early 1980s, I see no indication that the capture of a larger share of income by the top 10% has increased the rate of growth. The left-hand side of the graph definitely has higher peaks. It also had lower troughs, except that the trough of the most recent recession is much deeper than any previous post-war troughs.
As you say, this does not guarantee that growth wouldn't have been lower still, but I'd say that it's suggestive.
I just did a rough count, and I figure that in excess of 96% of my posts here are on how to get by with what we have.
But I figure the other 4% are also important. They're largely my attempt to explain how the economy works—on the theory that a better understanding of the bigger picture helps my readers when they want to step back from the tactical questions of "living large on a small budget" and focus on more strategic questions of how to live a life that supports living even larger. Understanding how the economy works can help you come up with better answers to these questions.
Let me finish by saying that your larger point is half right: In science it's very hard to say that something is definitely correct. It is, however, very easy to say that something is definitely wrong—scientists falsify hypotheses all the time. So I'd urge you to respond to my statements by reading the paper and grappling with the issues it addresses. And if you do, come back and tell us about it. We'd all benefit.
This is a good post. I would like to add the following websites as great resources also: These are invitation only like beyondtherack.com and you will find usually the best bargains/selection in this order:
Thanks for the feedback.
While you're right that in most cases, nobody will find out that you're not paying taxes on small amounts of money, recording transactions comes with the territory of buying and selling products and opening savings accounts.
Plus, the beauty of savings accounts is that they tell you interest earned, so you don't need to calculate your own interest, they're happy to tell you!
Where do you start recording your 'business' transactions? After how many items? It's good practice to record everything.
The money is earned by the enterprise, and then is divvied up between the workers, the owners, and the managers. In the last thirty years or so, for a variety of reasons, the share that goes to workers has shrunk, while the shares that go to the owners and the managers have grown.
As I said earlier, the sizes of the shares vary for a lot of reasons. But over time, the most powerful determinate is power.
This has to be one of the worst tax articles I've ever seen on a personal finance blog. As was pointed out already, your discussion of eBay is oversimplified and in many ways wrong. You only have income if the amount the item sold for is over what you paid, and the eBay and PayPoo expenses incurred in selling the item can reduce that taxable income.
Additionally, your comment on credit card rewards is way off base. As Xin pointed out, the rewards are considered a non-taxable purchase rebate. The same applies for most credit card sign-up bonuses: these are technically rebates since they will normally require you to make at least one purchase on the card.
You are correct that most money that comes in should be reported as income, but at some point you have to be practical. Am I supposed to report income if I have a small savings account that earns $3 in interest, if I somehow sell a handful of small items on eBay for a profit, if I win a gift card at an office party, or if I find a dollar bill on the ground? Yes, but I'd argue it isn't a reasonable expectation for me to track a couple of dollars earned in an account I don't get a tax form for, the change I find on the ground, or to even try to determine if I made any money off the three items I sold on eBay last year. Not reporting that gift card you won isn't going to get you sharing a cell with Wesley Snipes! If you are aware of it then you should report it, but to suggest you need to go to great lengths to keep up with that is lunacy!
I'm not too big on roasting or frying of potatoes because of acrylamide development. While I grow plenty of potatoes, I usually boil them in chicken stock with carrots, and they are delish that way.
The most unique use I've ever seen potatoes was in Ireland. They were sliced thinly cooked atop a pizza. The same way pepperoni would be added to pizza in the US. It was the merging of Italian and Irish food.
We donate clothing and other household items to a local charity.
in re: "From the end of World War II until the early 1980s, the top 10% got about 34% of total income. In recent years the share taken by the top 10% has grown sharply; they now get almost 50%."
I find this statement curious. The top 10% "got" the the 34% and they now "get" the 50%? Interesting choice of words as I would have said they earned those incomes, not got them. Maybe the reason that percentage has grown from 34% to 50% is because these people chose to work and earn versus waiting to get!
I think many smaller businesses do have a reason to hire more people, it's because they desire to expand. For instance, Michigan has an outdated tax structure where small business owners basically are exposed to double taxation. Our governor, though currently unpopular, is trying to end this in order to encourge small business growth.
www.moneyistheroot.com
When you say, It's your money, you're overlooking the role that public investment plays in creating a system that enables you to generate revenue: creating infrastructure, educating the workforce, establishing and enforcing laws and regulations. Those elements are what make our society possible. Our current system allows the wealthy to benefit from what public investment created and skim off the profits.
Several lines of thought seem to be reaching similar conclusions to Laszewski. For example, a student of energy in world systems, Charles A. S. Hall, points out that most of our economic and financial hypotheses were formed during the period when energy subsidies (mostly from fossil carbon) to everything humans do were increasing exponentially. Now that energy is declining, he suggests, the old ideas, such as market economics, probably are no longer a realistic guide.
One of his interesting calculations is that our new-found natural gas stores probably require so much energy to produce that the net energy from current natural gas production is near zero.
But more to the point here are some of his "new ways we will have to do economics," such as "We will have to reduce labor productivity." "We will have to reduce wages." And "it is a great time to think about redistribution."
There has been a correlation between the decline in labor power (private sector) since 1980 and the stagnation of working class incomes, but I think you have the causation reversed. The "power of labor" pre-1980 in the private sector went away because it effectively destroyed itself by destroying the businesses in which it operated, forcing the bankruptcy or export of American manufacturing, which in turn cost manufacturing jobs and their unions to vanish.
Since then, the "power of labor" has been steadily growing in the public sector, with public sector workers who used to lag their private sector counterparts now having significantly better total compensation packages. We are seeing the results now in exploding budgets, vast underfunded pension and health care liabilities and local & state governments facing financial tsunamis. Once again, the "power of labor" is destroying its own substance.
It is no more possible for labor to think about the long-term consequences of its immediate demands than it is for executives to think about the long-term health of their companies if their bonuses are driven by short-term-performance results.
I read the article you link to. As far as I can tell, it's economic GIGO.
I love piccadillo~~ a favorite from when I was growing up. My mom had a company worthy version and a kid friendly version {sans wine olives chopped eggs etc but with diced potatoes and peas added in} Of course I clicked on your link. Instructions begin with saute onion and peppers in EVOO but there are no peppers in ingredient list. I would suggest an equal amount of green peppers even tho it was never an ingredient in any version of piccadillo I grew up eating.
Every time we clean out our house, most of it ends up going to Goodwill. In addition, I do most of my clothes shopping at thrift stores. My whole family does this and sometimes we even find our own clothes on the rack.
Regarding the "fewer ATMs" drawback: many credit unions are members of what's called the National Co-Op Network, which means that you can use any "member" ATM in any other part of the country without getting hit by a charge.
I'm a member of a Colorado-based credit union, and I now live in Atlanta. Since I'm lazy, I didn't bother switching to a Georgia credit union ... I maintain the original account, and simply do my banking with the Georgia branch and with the Georgia ATMs, since they belong to the same national co-op network.
oooppsss I meant Irish not Scottish ... :)
This point of view would make sense if you were arguing that by reason of possession the people who are currently getting 50% of the income stream are automatically the ones who earn it. However, we don't argue for example that by virtue of people having given Mardoff money he has automatically earned and deserves that money. Same thing when a gangster extorts protection money.
It's specifically said that the best way to increase income distribution would be to give greater power to workers so they can negotiate a bigger share of profits and therefore a bigger portion of the money that currently goes to the top 10% in the form of company profits. You know the people who are getting paid to actually do the work and thereby are MOST of the cause of the profit? This is not an arguement that the problem would be solved by giving more profits to people completely uninvolved in doing the work of getting said money.
The ones who do the earning are all of the people in a company, not just the heads of the company, and our current system is set up to disproportionately reward people doing management and punish people doing skilled tasks.
artificially inflated wages would just lead to more unemployment. also, i don't think some jobs merit huge wages. do you think every mcdonalds or jamba juice cashier deserve 30 dollars an hour? That doesn't make sense to me.
Thanks for including my post!
And the idea of using the government to steal money from those that earned it and giving it to those who have not earned it does not bother you at all?
I have an idea: lets not give money to the wealthy or the poor. Lets just create an economy built on justice and take our lumps come what may.
I love the fast-forward technique -- that's why I so rarely buy dry-clean-only clothing.
There's no guarantee, but you can look various places for clues. For example, the graph on the page linked below shows the rate of growth in GDP from 1947 to 2010.
When I mentally divide the graph into the period before and after the early 1980s, I see no indication that the capture of a larger share of income by the top 10% has increased the rate of growth. The left-hand side of the graph definitely has higher peaks. It also had lower troughs, except that the trough of the most recent recession is much deeper than any previous post-war troughs.
As you say, this does not guarantee that growth wouldn't have been lower still, but I'd say that it's suggestive.
http://research.stlouisfed.org/fred2/graph/?&chart_type=line&graph_id=&c...
Great idea, now who pays the bills while you are living the life????????
I just did a rough count, and I figure that in excess of 96% of my posts here are on how to get by with what we have.
But I figure the other 4% are also important. They're largely my attempt to explain how the economy works—on the theory that a better understanding of the bigger picture helps my readers when they want to step back from the tactical questions of "living large on a small budget" and focus on more strategic questions of how to live a life that supports living even larger. Understanding how the economy works can help you come up with better answers to these questions.
Let me finish by saying that your larger point is half right: In science it's very hard to say that something is definitely correct. It is, however, very easy to say that something is definitely wrong—scientists falsify hypotheses all the time. So I'd urge you to respond to my statements by reading the paper and grappling with the issues it addresses. And if you do, come back and tell us about it. We'd all benefit.
My family gives through our church. We have a wonderful church staff and we know they will research well before handing out any monies.
This is a good post. I would like to add the following websites as great resources also: These are invitation only like beyondtherack.com and you will find usually the best bargains/selection in this order:
1) Ideeli.com
2) Hautelook.com
3) Ruelala.com
4) Gilt.com
5) Prive.com
6) Ivorytrunk.com
Thanks for including our house staging tips!