Don't Quit Your Day Job…

The earthquake and tsunami disasters in northeastern Japan have the entire world buzzing about disaster preparedness. This usually entails a disaster kit complete with water jugs, flashlights, radio, canned goods, and bags of kibble for the cats and dogs, but there’s one aspect the media has beenneglecting: financial preparedness.

Here at DQYDJ, we like to write about things that have unintended consequences – a perfect example is the Alternative Minimum Tax, which was intended to stop the very rich from having a 0% tax rate.  Of course, since that tax was not indexed for inflation, it has creeped its way into the middle class’s check book.  Today we’ll link you to an article on another distortion of the AMT – deepening the “Marriage Penalty”, a situation where two singles would be better off, tax-wise, staying single as opposed to marrying.

Ahh, the free market. Like ‘freedom’, ‘family’, ‘patriotism’ and other such words, the phrase ‘free market’ means different things to different people. Yes, a free market, one unencumbered by the price fixing of governments, has different meanings around the world. GlobeScan took the liberty of actually running the poll – asking numerous people in a small selection of countries whether or not they trust the free market.  The results are,as you might expect, somewhat surprising.  China has more trust in the free market than the United States (they have more respondents who say they ‘strongly’ or ‘somewhat’ think the Free Market is the best Economic system).

High oil prices and a declining dollar – the complex interaction between a war in Libya and a declining dollar (and a strengthening Euro, go figure!) means all commodities priced in dollars which are declining slower than the dollar, remaining the same, or increasing in price, are increasing for us Americans using dollars.  This sort of rise isn’t included in inflation measures - fuel and food prices are considered too volatile so are left out of the ‘core’ inflation rate.  However, we need food to survive and fuel to get around, so you’re definitely feeling the effects.

The Alternative Minimum Tax, a tax enacted in 1969 to set a minimum level of taxation, has had major mission creep – especially in the last 10 years. The Alternative Minimum Tax is a secondary set of tax brackets which disallow certain deductions which are allowed under the normal tax code. The tax was enacted since 155 rich households avoided paying tax altogether back when the tax was started. Today, even with annual ‘patches’ by congress, the alternative tax bracket is hitting more and more people – 4.5 million tax payers last year. Hope you’re having fun doing your taxes this year!