Tuesday, October 30, 2012

Income Tax Update

With the elections a week away, there is a lot of talk of tax reform.  No matter who wins the presidential election, it will not be an easy road. 

The Joint Committee on Taxation, a nonpartisan congressional group that works with House and Senate tax writers has recently released a study that includes their recommendations for tax reform.  It is independent of any proposals made by either Obama or Romney.  It would lower tax rates, but at the expense of some big tax breaks.

Perhaps the most important recommendation made by the committee is the elimination of all itemized deductions.  This means that write-offs for mortgage interest, charitable contributions, medical expenses, property taxes, etc. would be eliminated.  All taxpayers would have to take the standard deduction. 

The proposal would also eliminate preferential tax rates on capital gains and qualified dividends.  This income would no longer be taxed at 15%, but would be considered ordinary income, subject to regular tax rates.

Interest on state and local bonds would now be taxed.  This would apply to all bonds sold after 2012.  Existing Municipal bonds would be covered under a grandfather clause, and would remain tax-free.

AMT (Alternative Minimum Tax) would also be repealed. All of these proposals assume that the Bush era tax cuts would lapse after the 2012 tax year, and would peg rates at about 1 to 1.5 % less than the pre-Bush rates.  Also assumed is that the child tax credit and earned income credit requirements would remain as they are now.  Exclusions for retirement plan contributions and employer-paid health insurance would also remain untouched.  Also, the tax savings generated by this plan could be used for deficit reduction, but at the expense of the 1% to 1.5% decrease from pre-Bush tax rates.

It will be interesting to see what happens tax-wise after the elections.  Expect big changes.

Tax changes for 2013:

The Social Security wage base will increase to $113,700, a $3600 increase over the 2012 figure.  This is the amount of earnings that are subject to withholding for Social Security.  The employer's rate of 6.2% will remain the same, but the employee's current withholding rate of 4.2% will probably go back up to the previous rate of 6.2%.  Again, this applies only to the first $113,700 of wages.  Earnings above that amount are not subject to Social Security withholding. 

Medicare withholding will remain at 1.45% of all compensation for both the employer's and employee's shares.  However, single filers earning over $200,000 will be subject to a 0.9% surtax.  Married filing jointly filers will also be subject to the same surtax if their earnings exceed $250,000.  The surtax does not affect the employer's Medicare rate, and self-employed workers will also be subject to the surtax.

Social Security benefits will increase 1.7%.  This increase is pegged to the inflation rate.

The maximum contribution to 401(k) plans will increase $500, to $17,500.  The maximum contribution for workers older than 50 years will remain at $23,000.  The maximum allowable contribution to IRAs and Roth IRAs will also increase $500, to $5500, with an extra $1000 catch-up contribution allowed to people over 50.

The above information is paraphrased from the October 26, 2012 edition of the Kiplinger Tax Letter.

Tuesday, October 23, 2012

Battle of the Pony Cars: Shelby GT500 vs. Camaro ZL1

For about 45 years now, the Ford Mustang and the Chevrolet Camaro have battled head-to-head for the pony car market.  It started in the late 1960's with the Shelby GT Mustang and the Camaro Super Sport.  Today the tradition continues with the Shelby GT500 and the Camaro ZL1.  (MOPAR fans, this is not about you.)

Car and Driver and Motor Trend magazines recently conducted side-by-side comparisons of the two cars, with similar results.  Both magazines tested the two cars on the street, the drag strip, and the racetrack, and documented the results.  Which car did they give the highest rating to?  Read on and find out.

The cars tested by the magazines were a 2013 Shelby GT500 and a 2012 Camaro ZL1.  Both cars were similarly equipped with supercharged aluminum block V8 engines, 6 speed manual transmissions, Goodyear Supercar G2 tires, and multi-mode traction systems with launch control.  The similarities end there, however.  The GT500 features a dual overhead cam V8 with 4 valves per cylinder, while the ZL1 has a pushrod-type V8 with 2 valves per cylinder.  The Shelby comes with a solid live rear axle while the Chevy has a multilink independent rear suspension.

The engine in the Ford Shelby GT500 is rated at 662 horsepower at 6500 RPM with maximum torque of 631 FT/LBS at 4800 RPM, making it the most powerful production V8 in the world.  It displaces 5.8 liters, or 355 cubic inches.  The car is capable of a 3.5 second 0 - 60 MPH time from a dead stop and will run a quarter mile in 11.8 seconds at 125 MPH.  Ford advertises that the car will exceed 200 MPH, but 189 MPH is the best that could be coaxed out of it by the Car and Driver testing staff.  Curb weight of the vehicle is 3882 pounds.

The Chevrolet Camaro ZL1 engine has a horsepower rating of 580 horses at 6100 RPM.  It develops 556 FT/LBS of torque at 3800 RPM.  Displacement is 6.2 liters, which translates to 376 cubic inches.  The ZL1 will go from 0 - 60 in 3.8 seconds, and does a 12.1 second quarter mile at 118 MPH.  Top speed is 181 MPH.  At 4118 pounds, the ZL1 outweighs the GT500 by more than 200 pounds.

As seen in the quarter mile times above, the GT500 is dominant on the drag strip.  It also has a slight edge on the racetrack.  The ZL1 corners better, but the GT500 makes up for it with faster acceleration on the straightaways.  Driving on the street is a different story, however.  The writers from both magazines found the ride of the Shelby to be too stiff, and the engine simply too brutish for everyday street use.  The Camaro, by contrast, rode smoother, shifted easier, and was a lot quieter.  The Camaro's advantage here is due to the multilink rear end and a better balance between front and rear weight.  The weight distribution front/rear for the ZL1 is 53%/47%, compared to the GT500 with a weight distribution ratio of 57%/43%.

The base price of the Shelby GT500 is $56,295, and the Camaro ZL1 has a base price of $54,995.  The as-tested versions list the ZL1 at $57,265 for Motor Trend and $56,795 for Car and Driver.  The GT500 tested by both magazines lists at $63,080.  Both cars require 91 octane premium unleaded fuel.  The GT500 gets 15 MPG in the city, and 24 MPG on the highway.  The ZL1 is rated at 14 MPG in the city, and 19 MPG on the highway.

So which is the better car?  For the drag strip, the brute power of the GT500 can't be beat.  But the ZL1, with its smoother ride, relative ease of operation, and "an exhaust that sounds like a 6.2 liter bong hit" according to Motor Trend, merits the better all-around rating from both magazines.  I have not personally driven either car, but would love to find out for myself someday.

Update:

Road & Track magazine also recently tested both of these cars, with similar results.  The cars tested by Road & Track listed at $57,590 for the Camaro ZL1 and $65,075 for the Shelby GT500.  Since Road & Track is a more performance-oriented magazine, they gave the GT500 a slight edge overall.

Sources:

"Flat Out!  Will the Shelby GT500 Go 200 MPH as Advertised?" , by Aaron Robinson
Car and Driver Magazine,    August 2012

"The Mega Mustang and the Killer Camaro Battle For Control of the Street In...Superponies", by Michael Austin
Car and Driver Magazine,    August 2012

"Title Fight - There Can Be Only One Musclecar Champion", by Scott Evans
Motor Trend Magazine,   October 2012

"Horseplay on the Raceway", by Shaun Bailey
Road & Track Magazine,     September 2012

Friday, October 12, 2012

Tara's Story

It is always difficult when a family member passes away.  It is especially hard when the family member is a child, more so when the child is unborn.  I know.  It happened to our family.

The year was 1998.  My stepdaughter, Angie was pregnant with her first child.  Everyone in my family was excited, including me.  I was going to be a grandfather!  An ultrasound revealed that the child was female.  I was soon to have a granddaughter to love (and spoil!)  She would be called Tara Rose.  We went through the usual pre-birth activities, like purchasing baby items and clothing and getting ready for the impending arrival.

It was October and Angie had carried the baby almost to term.  But one day she awoke in severe pain.  Angie called her obstetrician, who told her to come to see him immediately.  She was given an examination and ultrasound, which revealed the worst news possible:  Angie had suffered a spontaneous abortion, commonly called a miscarriage.  The baby was dead.  We were devastated.

Angie was immediately hospitalized.  Tara needed to be delivered before the miscarriage endangered Angie's health.  The whole family gathered at the hospital, and a delivery room was made ready.  We waited in her hospital room while Angie was taken away to be attended to by the doctors.  What should have been a joyous occasion was turning into one of the worst days of our lives.  Soon a nurse entered the room and told us that the baby was out.  They would be bringing Angie and Tara back to the room soon.

The hospital took a very sympathetic and compassionate attitude toward the miscarriage.  For the sake of closure, we were allowed to see and hold Tara.  Everyone there took a turn holding her while photographs were taken.  Scissors were produced so that locks of hair could be clipped for keepsakes.  When it was my turn, I held her lifeless little body and looked at her face.  She looked like an angel.  I felt an intense sadness as I contemplated what would never be.

The doctor told us that Tara's umbilical cord had somehow become kinked or obstructed, cutting off the supply of vital nutrients.

We said goodbye to Tara on a brisk and windy fall day.  She was placed into a tiny white casket and buried in Rock Island's Chippiannock Cemetery, in a special section reserved for babies and children.  Angie knelt down and gently touched the lid of the casket before it was lowered into the ground.  My heart ached for her.

It took a while, but we all moved on.  Angie later had two more babies, both girls.  Alex, now 12 years old, and Ella, 7 years old, are bright, beautiful, happy, and healthy.  Angie had special prenatal care while carrying both of them in order to prevent a repeat of what happened with Tara.  Alex and Ella miss the older sister they never knew, and like to visit the cemetery to place flowers, toys, and balloons on Tara's grave.

Tara's birthday is October 17.  She would be 14 years old, in her first year of high school and embarking on all the adventures that high school brings.  I sometimes wonder what she would be like.  Would she be pretty?  Smart?  Athletic?  Popular?  One thing I know for sure: she would be loved.



Tuesday, October 9, 2012

Presidential Trivia

Every four years, the people of the United States vote to elect a president, the highest elective office in the land.  Unless you have been hiding under a rock, you are no doubt aware that 2012 is an election year.  On November 6 , we will elect the man who will lead us for the next four years.

We have had many great presidents, and some not so great ones.  There are many interesting facts (and myths) surrounding the office.  Some of these facts are well-known and some are not.  Following are some of the more interesting and strange facts about the various presidents.  I will be presenting this trivia in a question and answer format.  Read on and you might learn something.


How many presidents have we had?
Although Barack Obama is considered the 44th president, 43 men have held the position.  Grover Cleveland is the only president elected twice to non concurrent terms.  He served as president from 1885 - 1889 and again from 1893 - 1897.  He is therefore considered to be the 22nd and the 24th presidents.

Who was the only president elected by unanimous proclamation?
George Washington was unopposed and elected unanimously to his first term.

Did George Washington really have wooden teeth?
No.  Although he did lose most of his teeth to gum disease, his dentures were made of lead, ivory, or human or animal teeth, not wood.

Who was the first president to wear pants?
John Quincy Adams, the 6th president, was the first president to wear long pants to his inauguration.  Prior to him, all the presidents wore knee-length breeches.

Did any presidents own slaves?
Yes.  George Washington and Thomas Jefferson both owned slaves.  Jefferson had six children by one of his slaves, Sally Hemmings.  Jefferson emancipated (freed) the entire Hemmings family, and Washington's will freed the slaves he owned upon his death, but not the slaves owned by his wife.

Has any president ever killed a man?
Yes.  Several presidents have served in the armed forces during wartime and have most certainly killed enemy soldiers or Native Americans in battle.  Andrew Jackson, the 6th president from 1829 - 1837, killed Nashville attorney Charles Dickinson in a duel in 1806 after Dickinson insulted Jackson's wife.  Grover Cleveland, the 22nd and 24th presidents, personally pulled the lever that sent two convicted murderers to their deaths by hanging when he was Sheriff of Erie County, New York, before he was president.  Presidents have also ordered the deaths of certain enemies of the country, and are therefore at least indirectly responsible.  President Harry S. Truman ordered the dropping of two atomic bombs on Japan in 1945, resulting in more than 100,000 deaths.  And more recently, President Barack Obama ordered and oversaw the operation that resulted in the death of terrorist Osama Bin Laden.

Have we ever had a "gay" president?
Possibly.  James Buchanan, the 15th president, from 1857 - 1861, never married.  During his political career in Washington, D.C., he lived with Alabama Senator Rufus B. King.  There were many rumors and even some letters suggesting that they were more than just friends.  Andrew Jackson called Rufus King "Aunt Fancy" or "Miss Nancy", and the two were sometimes referred to by other politicians as "Buchanan and wife".  Both men's private correspondences were burned by their relatives, and evidence of their homosexuality is at best inconclusive.

Who was the youngest president?  Who was the oldest?
Theodore Roosevelt was the youngest man ever to assume the office.  He was 42 years old when he succeeded to the post upon the death of President William McKinley in 1901.  John F. Kennedy, at 43 years old, was the youngest man elected president.  When he was assassinated at age 46, Kennedy was also the youngest president to die.  Ronald Reagan was the oldest president.  He was 77 years old when he left office.

Which president lived the longest?
Gerald Ford was the longest lived president.  He was 93 years, 5 months old when he died in 2006.  Ronald Reagan was a close second.  He was 93 years, 4 months old when he died in 2004.

Which president served for the shortest period of time?
William Henry Harrison, the 9th president, died after only one month in office.  He was president from March 4, 1841 - April 4, 1841.  He delivered the longest inaugural address in history, at two hours, on a cold, rainy day.  He developed pneumonia two weeks later, and never recovered.  He was the first president to die in office.

Who served the longest term?
Franklin Delano Roosevelt, the 32nd president, was elected to four terms, and served from 1933 - 1945.  He died three months after his fourth inauguration.  After his death, the 22nd Amendment to the Constitution was enacted.  It limits presidents to two terms of office.

Have presidents hidden physical infirmities or illnesses from the people?
Yes.  At the beginning of Grover Cleveland's second term, in 1893, he had secret surgery performed to remove a malignant tumor from his jaw.  The public did not find out about this operation until 1917, nine years after his death.  In 1919, during his second term, Woodrow Wilson suffered a stroke that left him debilitated for five months.  During this time, his wife made decisions for him.  Wilson's decision to veto the Volstead Act, which enforced prohibition and the Eighteenth Amendment, was probably made by his wife.  As with Cleveland, the public did not find out about Wilson's stroke until after his death.  Few Americans at the time knew that Franklin Roosevelt was paralyzed during his entire tenure as president.  He suffered a bout of Polio in 1921 that left him unable to walk or use his legs.  John F. Kennedy was in poor health during his presidency.  He suffered from Addison's Disease, which is characterized by the body's inability to produce adrenaline, and he had to take steroids to combat the condition.  He also had Osteoporosis.  These ailments were kept from the public.

Who was the only unelected president?
Gerald Ford, the 38th president, from 1974 - 1977.  Ford was appointed vice president by President Richard Nixon in 1973 to replace Vice President Spiro Agnew, who was forced to resign for tax evasion and accepting bribes.  In 1974, Ford ascended to the presidency when Nixon resigned over the Watergate affair, making Ford the only president never elected either president or vice president. 

What presidents were related to to other presidents?
John Quincy Adams, the sixth president, was the son of John Adams, the second president.  Benjamin Harrison, the 23rd president, was grandson of William Henry Harrison, the 9th president.  Theodore Roosevelt, the 26th president, and Franklin Roosevelt, the 32nd president, were distant cousins.  Theodore Roosevelt was the uncle of Franklin Roosevelt's wife, Eleanor.  And George H. W. Bush, the 41st president, is the father of George W. Bush, the 43rd president.

How many presidents have been impeached?
Two.  Andrew Johnson, the 17th president, was impeached in 1868 after he tried to dismiss  Secretary of War Stanton without Senate approval.  William Clinton, the 42nd president, was impeached in 1998 for perjury related to a sexual harassment suit.  Both men were acquitted.

Have any presidents died on the same day?
Yes.  John Adams and Thomas Jefferson, the 2nd and 3rd presidents respectively, both died on July 4, 1826, the 50th anniversary of the signing of the Declaration of Independence.  James Monroe, the 5th president, also died on the Fourth of July, in 1831.

What presidents held public office after their terms as president?
John Quincy Adams was a U. S. representative from Massachusetts for eighteen years after he left the presidency.  After leaving the White House, Andrew Johnson was a U. S. senator from Tennessee for eleven years.  And William Howard Taft was named Chief Justice of the Supreme Court in 1921, seven years after he served as president.

How many presidents got married while holding the office?
Three.  After John Tyler's wife died in 1842, while he was president, he remarried while still in office.  Grover Cleveland was a bachelor when he was first elected in 1884.  During the campaign, he was accused of fathering an illegitimate child.  He took responsibility and agreed to support the child, but refused to marry the child's mother.  He later married Frances Folsom, the daughter of his law partner.  She was also Cleveland's ward.  She was twenty-one years old at the time.  It was the only wedding ceremony to actually take place in the White House.  Their child, Esther Cleveland, was born during his second term, in 1893.  Esther was the only presidential child actually born in the White House.  Woodrow Wilson's first wife died from kidney disease during his presidency.  He remarried while still president.

Who was the only president to resign?
Richard Nixon resigned the presidency in August 1974 when the Watergate scandal made it impossible for him to effectively manage the office.


Sources:

The World Almanac and Book of Facts, 2012 Edition, World Almanac Books, 2012

Don't Know Much About the American Presidents, by Kenneth C. Davis, Hyperion Books, 2012