End of February Round Up

Continuing a long tradition that dates back four weeks, I’m using this last day of the week and month to round up a few things I’ve found lately on the interwebs that deserve comment but not whole posts.

Kiyosaki in Canada

The Consumerist asked the other day Is Rich Dad Robert Kiyosaki Getting Rich Off Suckers? Excellent question. Let’s examine it logically.

1. Kiyosaki is rich.

2. What he does for a living is sell books and seminars.

3. Those books and seminars are basically worthless.

4. Purchasers of those books and seminars are therefore suckers.

5. Ergo, Kiyosaki has gotten rich off suckers.

It seems that the Canadian TV show Marketplace did an expose of Kiyosaki in January, which took a little while to get noticed South of the Border. It’s a classic bit of earnest TV journalism, complete with hidden cameras and ambush interviews.

I could only bring myself to watch about half of it. (It’s 22 minutes long and available at the last link.) It’s not that I don’t think Kiyosaki is a snake oil salesman in a fright wig, it’s just that he is so obviously a charlatan that a long investigative piece on him has a shooting fish in a barrel aspect. What’s next? 22 minutes of evidence that drivers routinely ignore speed limits?

Feeling Rich

Continuing the firm-grasp-of-the-obvious theme, the Wall Street Journal’s Wealth Report on Monday carried the headline Taxpayers Who Earn $300,000 a Year Don’t Feel Rich. How true. Perhaps Obama’s policy should be modified into raising taxes only on those who think of themselves as rich.

I wonder what percentage of Americans would pay higher taxes under that scheme. The closest I can find to an answer is a Gallup survey from 2006 in which 5% of Americans said they “have more money than they know what to do with.” Gallup also tells us that for the past few decades, around 60% of Americans have felt that wealth should be more evenly distributed than it is, and that most of those felt the government should tax the rich accordingly.

The obvious problem being that everybody has a different definition of rich, generally some multiple of their own level of wealth. We can all probably agree that the private jet and domestic staff crowd are rich, but the inconvenient truth is that there are so few of them that raising their taxes isn’t going to move the deficit needle much.

The WSJ item discusses a dentist in Boulder, Colorado who makes $320,000 a year. She attained minor celebrity when she told ABC News that she may cut back her practice so that she makes only $250,000, and thus escapes a tax increase. Yet another example of a millionaire who is bad at personal finance.

I strongly suspect that she doesn’t understand how tax brackets work. She is suggesting cutting back her hours by 22%, from 50 to 39 hours a week, let’s say, because although she is willing to work 11 hours a week for $46,900 net of federal taxes, she won’t do it for $44,800. Well, I suppose anything is possible….

December Case-Shiller

This Tuesday S&P delivered it’s update on house prices for December 2009. The national story was a duplicate of the previous month, down slightly in absolute terms and up slightly when seasonally adjusted. But there was some inspirational news in the report. Las Vegas was up 0.2%, ending a losing streak of 39 consecutive down months, totaling a loss of more than 55% of the value of the average Vegas house. If Vegas can stop going down, prosperity must be just around the corner for the rest of us.

Now, I didn’t think that this month’s update was interesting enough for a full post, so I shouldn’t criticize others for not discussing it. But I will anyway. The New York Times apparently didn’t cover it at all. [Actually, they did. I guess it's just not indexed properly.] Do a search for the C-S index on nytimes.com and you get a list of regularly spaced end-of-month articles ending with January 27, 2010. I guess they needed the space for more important stuff. Like [See also] this front page article which told us, without citing a source, that the number of homeowners whose houses are worth less than 75% of what they owe is “projected to climb to a peak of 5.1 million by June.” I emailed the author asking where this came from. He did not reply.

At Least I Don’t Live There

Much as I enjoy griping about the various governments with jurisdiction over me, I prefer to amuse myself with stories about governments doing what they do someplace else.

From California, specifically in San Francisco, comes the story (via The Big Money) that “The California Alcoholic Beverage Control agency is cracking down on bars and restaurants that make their own “infused” drinks, such as limoncellos.” And they say that California is ungovernable.

And then there is France. The UK Telegraph carried an article Wednesday entitled “Anti-smoking advert with sexual innuendo shocks French.” If you are thinking that an ad with sexual innuendo that shocks French people must horrify and confuse Americans, you are right on the money. (Go ahead, follow the link. I’ll still be here when you get back. It’s SFW. Barely.) Admittedly, the anti-smoking campaign is from a private group, not the government, but still.

And we will end our world tour in New Zealand, where, Weakonomics tells us, a girl auctioned off her virginity to pay for college. (She allegedly got $30K USD.) Of course, this would not be legal in the Land of the Free. Here the girl couldn’t even get a Frisbee for filling out a credit card application. We have rules, you know.

I was hoping that the comments on the Weakonomics post would discuss the morality of the transaction or possibly even if $30K was a good price. Instead our old friend Kosmo raised a more interesting question: if it were legal in the US, would be taxed as income or capital gain?

Gurus, Media, Musings, PF Blogs | Frank Curmudgeon | February 26, 2010 12:59 pm

50 Comments

By Steve, February 26, 2010 @ 1:36 pm

You know you are a personal finance geek when you laugh at jokes about capital gains. Nice zinger.
By Hibryd, February 26, 2010 @ 1:45 pm

One, thanks for the Kiyosaki link. Two, if you make $300K a year and don’t feel rich, you’re blowing too much of it on stupid stuff. Three, I know Murdoch’s Journal is circling the intellectual drain when a columnist seriously brings up “Atlas Shrugged”.
By Neil, February 26, 2010 @ 2:09 pm

Is illegal income not taxed in the US? No wonder you’ve got such a big deficit.

Prostitution is illegal in Canada (well, technically prostitution is legal, being a customer is illegal), but it’s still taxable as business income. There’s even cases where hookers have taken Canada Revenue to court because they weren’t letting them deduct some of their business expenses.
By Adam, February 26, 2010 @ 2:43 pm

The times did cover the December numbers, for what it’s worth
http://www.nytimes.com/2010/02/24/business/economy/24price.html
By Chuck, February 26, 2010 @ 3:17 pm

People who are bad at math pay taxes. So if people work less to pay less taxes, tax revenue will go down anyway. So the effects need to be considered, even if everyone isn’t behaving rationally.
By Chuck, February 26, 2010 @ 3:31 pm

Neil, illegal income *is* taxed in the US. That’s how they incarcerate criminals without any real evidence of a crime. They say, “Where’d all that money come from? Did you pay tax on it? Oops, welcome to jail.”

IRS publication 17 has this all laid out:

http://www.irs.gov/publications/p17/ch12.html

Here are some gems:

“If you receive a bribe, include it in your income.”

“If you steal property, you must report its fair market value in your income in the year you steal it unless in the same year, you return it to its rightful owner.”

My favorite, if you sell illegal drugs, you can choose whether to count it as miscellaneous income, or self-employment income:

“Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040) if from your self-employment activity.”
By Frank Curmudgeon, February 26, 2010 @ 3:46 pm

Adam: I stand corrected. (Why wasn’t it searchable?)

Chuck: Awesome IRS quotes.
By mwarden, February 27, 2010 @ 2:10 pm

How does that not qualify as a violation of 5th Amendment rights against self-incrimination? Are you not required to identify how you got the income, only to report its receipt?
By Investor Junkie, February 27, 2010 @ 8:05 pm

Russ Whitney is doing the Rich Dad/Poor Dad seminars under license. Just when you thought this guy disappeared, the cockroach is back again.
By Investor Junkie, February 27, 2010 @ 8:09 pm

Your first part of your statement is incorrect:

“1. Kiyosaki is rich”

It should be:

“1. Kiyosaki was poor” The way you have it assumes he was rich before the books.
By Kosmo @ The Casual Observer, February 28, 2010 @ 10:11 am

@ Chuck – In Iowa, it’s illegal to sell drugs without a state-issued sales tax stamp (used only for drugs) affixed.

The state actually does sell some of these stamps. To stamp collectors, of course.
By Guzzo, February 28, 2010 @ 7:28 pm

“if it were legal in the US, would be taxed as income or capital gain?”

I’m pretty that it would be taxed as in-cum.
By Dave_W, March 1, 2010 @ 7:19 am

I assume that all remaining NZ virgins will be marking their virginities to market. It’s just a better accounting treatment.
By Brandon, March 1, 2010 @ 9:35 am

I think the real question if selling your virginity were legal is “what were the costs to the girl?”. I mean, sure you gross 30K, but what can you write off against it? If she had not used acne medication for the last few years, she might not be as attractive, same goes for hair care products, clothes for the pictures (and “date”), STD testing costs, etc.

You might think the point is less important if she uses the funds for something tax favorable like college anyway, but upon further reflection, she could still save by being able to write off all kinds of things and then still using the $30k all for college to offset other income especially if she were “aggressive” about the deductions.
By Craig, March 1, 2010 @ 10:12 am

Al Capone, famously, was convicted in a Federal court of evading the income tax.

The IRS does not play. Did you know that if you arrange with a neighbor to wash his windows if he mows your yard, you have both earned taxable income?

“Bartering: Bartering is an exchange of property or services. You must include in your income, at the time received, the fair market value of property or services you receive in bartering. If you exchange services with another person and you both have agreed ahead of time on the value of the services, that value will be accepted as fair market value unless the value can be shown to be otherwise.”

And yes, they’re serious. Ever been in a babysitting exchange?

“Example 2.

You are self-employed and a member of a barter club. The club uses “credit units” as a means of exchange. It adds credit units to your account for goods or services you provide to members, which you can use to purchase goods or services offered by other members of the barter club. The club subtracts credit units from your account when you receive goods or services from other members. You must include in your income the value of the credit units that are added to your account, even though you may not actually receive goods or services from other members until a later tax year. ”

There’s even a special version of the 1099 for reporting this stuff.
By Kosmo @ The Casual Observer, March 1, 2010 @ 10:21 am

“How does that not qualify as a violation of 5th Amendment rights against self-incrimination? Are you not required to identify how you got the income, only to report its receipt?”

Well, it’s not a court case. While McCarty vs. Arnstein expanded the scope of the 5th to include protection in civil as well as criminal cases (thought this was chipped away a bit by US vs. Hale in that your silence in a civil case is “considered evidence of acquiescence”) I’m not sure how broadly this could be interpreted outside of the constructs of an actual case. (Note: I’m not a lawyer, just someone who Google’d about this a while ago for research into another issue).

In any case, on line 21 of the 1040, you merely need to indicate the “type” of income. You might just indicate “illegal”, which would be pretty hard to nail down as evidence against a specific offense

Interestingly, if you you have an illegal business, you report the income on schedule C, but are not allowed to deduct ANY expenses, even cost of goods. So if you buy $5000 of drugs and sell for $10,000, all $10,000 is taxable.
By Frank Curmudgeon, March 1, 2010 @ 10:29 am

So the girl who exchanges her viginity for a year of pandering from her boyfriend has triggered a big taxable event for both of them? I think this goes under-reported.
By Ken, March 2, 2010 @ 1:36 pm

A few years ago, the local PBS station ran a pledge drive program featuring Kiyosaki and his wife. That was the first time I ever heard of him. Needless to say, he provided no useful information, and I was extremely disappointed in my PBS station for airing that garbage. I saw it one more time, but they may have permanently shelved it. Almost as bad, they still use Suze Orman once in a while. The one guy they occasionally feature who does make some sense is Jonathon Pond.
By Michael Burns, July 22, 2011 @ 8:04 pm

kiyosaki was rich before he sold his books but he lost it. If you read rich dad poor dad, you’d know that. He had a velcro & wallet buisiness which went under after making millions. Now he is doing a good job education the public on how to become rich. Not in teaching systems to become rich but the mindset people have to learn to become rich.
I don’t know what your problem is with him but if you actually would listen to what he has to say and apply it in your life, you would see a difference too.

If you EARN money and spend more than you earn, you will never be wealthy. only that is common sense but people seem to forget that.

The biggest problem is that people use teir credit card for more than they have in the backend and act so surprised that they stay poor and go deeper into debt.

btw, robert is not getting rich off of his books and seminars. He owns oil wells, apartment buildings and gold, silver, and lots more of income streams.

try researching that for a hobby!
By acne education, August 12, 2012 @ 2:14 pm

I really like it when individuals come together
and share thoughts. Great website, stick with it!
By websites, March 11, 2023 @ 11:34 am

Great post! We are linking to this great article on our site. Keep up the great writing.
By Download Mp3 Libianca People, March 11, 2023 @ 8:28 pm

I quite like reading through an article that will make people think. Also, thanks for allowing for me to comment.
By San Luis Obispo CA Lake Front Homes For Sale, March 12, 2023 @ 9:49 pm

Phenomenal is an all-in-one life management tool that will aid you stay on top of your to-dos, goals, as well as routine.
By bucket truck repair shops near me, March 13, 2023 @ 8:11 pm

This is a step by step guide on how to use it and also what you can do with it.
By nearest auto repair shop, March 13, 2023 @ 8:12 pm

Incredible is an all-in-one time administration toolkit that can assist you get more performed in much less time.
By downloadlagump3, March 14, 2023 @ 3:15 pm

Hi! I could have sworn I’ve visited this site before but after going through a few of the posts I realized it’s new to me. Regardless, I’m certainly delighted I discovered it and I’ll be bookmarking it and checking back frequently!
By go to this site, March 15, 2023 @ 4:39 am

Pretty! This has been a really wonderful article. Thank you for supplying this information.
By RV Repair California, March 15, 2023 @ 1:10 pm

Offering you the astounding advantages of Extraordinary!
By auto repair shop near me open now, March 16, 2023 @ 3:28 am

Merely do something about it and also achieve everything you want.
By chord gitar komang, March 16, 2023 @ 6:46 pm

Next time I read a blog, I hope that it does not disappoint me just as much as this particular one. After all, I know it was my choice to read through, however I truly thought you would probably have something helpful to say. All I hear is a bunch of whining about something you can fix if you were not too busy searching for attention.
By RV Repair Near Me, March 17, 2023 @ 3:20 am

Presenting Extraordinary, the productivity toolkit that can aid you work smarter and live far better.
By download mp3, March 17, 2023 @ 8:40 am

Hello! I just want to give you a huge thumbs up for your great info you have right here on this post. I’ll be returning to your site for more soon.
By RV Bathroom Riverside, March 18, 2023 @ 1:16 am

Say goodbye to demanding days and nights when you can not find a cure to your clinical ailment.
By download lagu lesti insan biasa, March 18, 2023 @ 7:00 pm

When I originally commented I seem to have clicked on the -Notify me when new comments are added- checkbox and from now on each time a comment is added I recieve 4 emails with the same comment. Perhaps there is a means you can remove me from that service? Thanks.
By RV Furniture Shop Oc California, March 19, 2023 @ 4:36 am

You don’t need to be superhuman to be impressive. Let Amazingness help you do more, really feel much better, as well as get ahead.
By RV Generator Los Angeles, March 19, 2023 @ 10:42 am

Breathing in and out numerous times a day improves your life tremendously.
By local auto repair shop, March 19, 2023 @ 1:06 pm

The Phenomenal will certainly help you intend your days, weeks and also months easily to make sure you’re obtaining one of the most out of life!
By rv repair shop diamond bar california, March 20, 2023 @ 12:37 am

Discover the keys to a perfect life and exactly how to make it take place.
By Tubidy, March 20, 2023 @ 10:49 am

An impressive share! I have just forwarded this onto a coworker who has been doing a little homework on this. And he in fact bought me breakfast due to the fact that I discovered it for him… lol. So allow me to reword this…. Thanks for the meal!! But yeah, thanks for spending the time to discuss this issue here on your blog.
By RV Collision Repair Shop, March 20, 2023 @ 12:25 pm

You may discover that you are doing whatever much faster, far better as well as much more efficiently than ever in your life!
By Bus Repair Shop Orange County, March 20, 2023 @ 3:42 pm

Extraordinary is one of the most efficient as well as reliable method to simplify your life.
By tubidy, March 21, 2023 @ 8:54 am

It’s hard to come by educated people on this subject, but you sound like you know what you’re talking about! Thanks
By tubidy mp3 download, March 22, 2023 @ 7:30 am

A motivating discussion is definitely worth comment. I do believe that you ought to publish more about this topic, it may not be a taboo subject but typically people do not speak about such subjects. To the next! Kind regards!
By Sandsport Toy Hauler Near Me, March 22, 2023 @ 10:43 am

Remarkable can aid you obtain even more done in less time and with better simplicity than ever before!
By Mercedes Sprinter Diesel Repair Near Me, March 22, 2023 @ 11:56 pm

All from one little pill, Remarkable provides you awesome power!
By auto repair shop near me open now, March 23, 2023 @ 2:13 am

I will make your life a lot less complicated, you won’t recognize just how to thank me.
By rv generator repair, March 23, 2023 @ 9:24 am

Its the brand-new modern technology that will certainly alter your life.
By tubidy.net.za, March 23, 2023 @ 6:25 pm

Excellent write-up. I absolutely appreciate this site. Keep writing!