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Caught this video over at mint.com – I’m starting to like them more and more.  Not sure I trust them with all my financial information yet, but I have entered a few accounts in there, and I like what I see so far.  Good information, well-designed site, and its free!  Plus they have videos like the one below to teach people about finance, managing money, and government statistics (an oxymoron, really).

Free budget software – Mint.com

With the recent rise in gas, the issue of extraordinary oil company profits is likely to come up again in the next earnings period, especially given that we are approaching an election year. Every politician worth his salt will be out trying to prove that they are earning their keep as politicians by regulating people who are making too much money (excepting themselves of course – they work hard!). Oil companies are an easy target – anytime a company makes billions in profits, they become a target (ask Microsoft about being a target!), and when those billions represent money spent by the average American to fill up his car, that’s even better. It’s the golden goose of politics – hold public hearings on excessive profits and promise to do something about it until they pay you off or you get re-elected. I believe Stephen R. Covey would call that a “win-win”.

All sarcasm aside, I read an interesting article from one of my favorite sources – the Investment U – about this topic with a spot-on analysis of the issue. It’s the government that should be paying on excessive profits, not private businesses. The nerve of those guys…

I read a letter in a Utah paper today in which the writer complains that she has gained nothing by being a conservative saver all her life. With taxes on interest earned and medical costs today, she says that she understands why people don’t save, even though we are told we need to all the time. She then makes the point that one medical problem, such a short-term disability, could wipe out all the savings that she has (for which she has forgone vacations, luxuries, etc.) while the non-saver would simply use medicaid for the same problem. It’s a good point, and a systemic fault with the U.S. system of taxation. The government provides disincentives for savings (taxing interest) and incentives for taking on debt (mortgage interest deduction) and then complains people don’t save? I’ve discussed this before here in the blog, but it’s an important distinction that I believe gets overlooked often.

For those of you unfamiliar with this term, Tax Freedom Day is a theoretical calculation – it supposes that, if you were an average income earner, and all of your wages went to taxes first, how long would you have to work to pay your annual tax bill? 15% of the year? More or less?

A group called the Tax Foundation calculates this each year, and this year they have determined it is April 30th. (See an article from MSN about differences for different states and what it all means here.) In my limited government mind, this is both absurd and unbelievable. A full 1/3 of the year is spent working for the yahoos that sit around trying to figure out how the country should be run and how to get more money in their pockets.

Seems like an enormous burden to me – I think the Boston Tea Party was objecting to a fairly minor tax in comparison? Yet we accept it because it grows incrementally. It’s like the old story about cooking frogs – if you haven’t heard it, a quick summary: If you want to cook frogs, you don’t throw them in boiling water or they jump out. But, if you put them in warm water and gradually turn up the heat, they don’t notice the incremental rise in temperature until it’s too late. (Please don’t send me angry emails – it’s just an example, and one that I frankly haven’t tried…) By the same token, if we were paying no income tax, and the government proposed a 33% tax rate all of a sudden, heads would roll, figuratively as well as probably literally. But if they start with a low rate, say 3%, and then keep increasing it gradually, all with the soothing talk of temporary tax increases to pay for this or that that everyone needs, or tax cuts once we are through this rough patch? Pretty soon we are paying 33% of our income to the government, are accepting April 30th as Tax Freedom Day, and wondering where we ever went wrong. Does it ever end?

Saw an example of one of my pet peeves with big government here. In case the article has been taken down, the gist of it is that originally the government had calculated that the mandated destruction of chemical weapons could be completed by 1996 and would cost $1.7 billion. I realize that there are probably a lot of factors involved and all, but $1.7 billion is a lot of money for that kind of project. Well, apparently after a long history of revisions, etc., the Army is projecting that it won’t be completed until 2023 and will cost $27.8 billion. Pentagon investigators fear that the most recent estimate may be too optimistic. The article goes on to point out that “inadvertently” the contracts reward contractors for delays and that they get performance bonuses without earning them. The Pentagon is concerned that there is no accountability with the project (10 years after it was supposed to be done, they just figured that out? Ya think?!? I wonder how much they spent to determine that!)

Unbelievable that the costs could be that far off isn’t it? If I am estimating the cost of a project and am off by a factor of 16 times, you can bet that there will be consequences, even if I’m only talking about a few hundred or thousand dollars. But billions? Maybe that is just slush money for our government though. That’s one reason I believe it (the government) has gotten too big and expensive for us to be able to support it much longer. There is just no fiscal discipline in the public sector, and no consequences for cost overruns. Naturally, you find corruption and fraud under these circumstances. Anyone seen any of that lately? I mean, besides this case?