Category Archives: Public Policy

Tax Retirement Savings Fairly

Posted on November 15, 2005 | Leave a comment

Problem: The 401(k) system means that my employer determines my tax rate on retirement savings. This means that any workers who do not have access to 401(k) plans through their employers have a higher tax rate on their retiment savings. This usually means that low-wage, hourly, and part-time employees pay higher tax rates on their retirement savings; obviously unfair.

Solution: Combine 401(k) into existing IRA program and eliminate old 401(k) program. In effect, increase the IRA contribution amount to $18k and eliminate 401(k)s.

Benefit: Everyone will have access to tax-advantaged retirement savings plans, not just those fortunate enough to work for companies that offer 401(k)s. Eliminates administrative cost for businesses. Simplifies tax code. Also, this plan helps small businesses by letting them compete more fairly with large companies that can offer 401(k)s.

View and comment on SinceSlicedBread.

Leave a comment

Posted in Economics, Investment, Public Policy

Tagged , ,

Trade keeps inflation lower

Posted on October 18, 2005 | Leave a comment

My latest quarterly investment commentary discusses how trade is effectively importing low inflation.

“Prices are only stable for imports.”

“The US imports a low inflation rate.”

Download: 2005 Q4 Investment Commentary

(Subscribe / Unsubscribe)

Leave a comment

Posted in Bonds, Commodities, Economics, Investment, Public Policy, Stocks, The FED

Tagged , , ,

Inflation: Labor, Commodities and Energy

Posted on August 17, 2005 | Leave a comment

There has been a lot of talk about the impact of rising energy prices on corporate profit margins. This is over-rated.

Corporate costs in America are much more heavily weighted toward labor. And it is labor cost inflation that hurts corporate profit margins most. Corporate costs are, on average, 70% labor, 5% commodities, and 3% energy. Energy and commodity prices could continue to rise – even double from here – without changing the cost structure of American businesses in a drastic way. The same dynamic is not true in many other countries, including emerging markets, where labor costs represent a smaller proportion of corporate costs. As energy and commodity prices rise, those companies may encounter much more pressure on their profit margins.

So what’s the bottom line? Energy and commodities can continue to rally without significantly damaging corporate profit margins. Furthermore, rising energy and commodity prices will give a relative advantage to the most efficient producers.

Leave a comment

Posted in Bonds, Commodities, Economics, Investment, Public Policy, Stocks

Tagged , , , ,

North Korea

Posted on June 25, 2005 | Leave a comment

The conflict with North Korea is based on deception and fear.

North Korean leadership has deceived their population into believing that America started the Korean War and killed hundreds of thousands of Koreans. Based on this belief, North Koreans fear that Americans will attack and kill them. Their nuclear agenda may have started as part of their conflict with South Korea, but it has evolved into a defense against a perceived American attack.

To avoid war and encourage positive change, the US and the rest of the world should make an effort to integrate North Korea into the economic landscape. Companies and governments should offer to pay North Korea for exports — clothes, pots and pans, and basic manufactured goods to start. If the North Koreans can develop a growing economy, then greater employment will bring better education and reform.

With basic commercial trade, power is shifted slightly toward the economy and away from the state.

Leave a comment

Posted in Psychology, Public Policy

Tagged , ,

Tax rates on dividends

Posted on April 9, 2005 | Leave a comment

Dividend income should be treated just like income from bonds. And dividend payments should be deductible for corporations just like interest payments on debt. That would clean up the code and solve the corporate double-taxation problem.

Leave a comment

Posted in Economics, Public Policy

Tagged ,