Short Takes June 16, 1999February 12, 2017 MALIBU HARDBALL This was the story last week about the real estate dispute. “My father told the same story set in NYC. He insisted that the second encroacher was required to tear down his or her building. My father would believe anything about lawyers.” — Erik Sten “The irony here is that the disputed 1/2-inch between the two houses could qualify as a studio apartment in Manhattan and would probably rent for about $1400 per month in the West Village.” — Nick Corman THAT NEW CAR SMELL “Is it ok to buy one new car per lifetime? I have always bought used ones, and had only paid a total of $5,500 for all the used cars I ever had, until this year, at age 47, I bought my first brand new one. Over a lifetime, doesn’t that represent a major savings and make it ok? Yours, guiltriddenly” — Nicole Ferentz It’s okay, Nicole! It’s okay! “Here’s another way to save money — buy a NEW car. The last two cars I purchased were the previous year’s model — still new and on the lot — after the new models had shown up. They were discounted about 33% off the sticker price, about the same as a one year old used car. Mine still had the full factory warranty, no miles AND that new car smell.” — Mike Elwood Touché.
Quarterly Estimated Income Tax Due Today June 15, 1999February 12, 2017 The world is divided into two kinds of people: those who file their taxes by April 15 and those who file for the automatic extension to August 15. Count me in that latter camp. You still have to pay by April 15, you just don’t have to finish the return until August 15. So, like many, I send in “more than it could possibly be” along with my Form 4868 Automatic Extension to File on April 15th each year . . . but go light on my first quarter’s estimated tax, which is also due April 15. Then, when I finally figure out how much too much I sent in with Form 4868, I apply that to the following year’s tax. Meanwhile, whether you file April 15 or August 15 (August 16 this year, as the 15th is a Sunday), the world is divided into two kinds of people: those who have to make quarterly estimated tax payments and those who don’t. Estimated tax payments are for those who have significant income other than wages (on which tax is withheld automatically). Say you’re self-employed or you get lots of interest income or you realize a big capital gain — sorry, Bud, you have to send in estimated tax payments by April 15, June 15, September 15 and January 15. It’s fine if you overpay in any quarter, but if you underpay, there will be interest and penalties. And the same for most states. The world, I might add, is divided into two further kinds of people: critics, who (with the exception of Janet Maslin) did not like the Star Wars prequel and audiences, who did. But I digress. Oh, wait — and here’s the good news. Taxes are down! At least for families with kids. According to my friend Jane Bryant Quinn’s Newsweek column a couple of months back, a family of four earning the median wage ($55,000) will pay 7.5% of it in 1999 federal income tax — the lowest level in more than 30 years. A family that earns twice the median is expected to pay tax, on average, of 14% — the lowest level in 27 years. And a family of four earning half the median would pay nothing but, rather, get 1% from the IRS, thanks to the earned-income credit. What’s more, as Jane so aptly concluded: “Freedom from taxes isn’t paradise. It’s Cambodia. … It’s any country that cannot afford the social and physical infrastructure on which prosperity is built.”
Of Life Insurance and the Marriage Bonus June 14, 1999January 29, 2017 Q. “How much life insurance (if any) is wise for a high-level executive? I have no children, am the sole income earner in the household, have a net worth of several million dollars and an annual income of between $250,000 and $400,000.” — Name Withheld A. Probably none. Especially as you already doubtless have some coverage at work as part of your benefits package. If there are no dependents who’d be hurt financially if you died, then there is no need for life insurance. Your “several million” will pass to your spouse tax free, unless you have indicated otherwise in your will. Also: the proceeds of your company-paid life insurance benefits, if you designated your spouse the beneficiary. Let’s call it $6 million in all. That should be enough to maintain your spouse’s lifestyle — and there would be Social Security survivor benefits to boot. Note the difference, though, if the other person in your household is a life partner whom you had chosen not to marry, or whom you are forbidden by law from marrying. (In the old days, that could have been because one of you was black, the other white. Today, it would be because you are a same-sex couple.) Of the $6 million, better than $2 million would be grabbed in estate tax — and there would be no Social Security survivor benefits. You and your partner might have been together for 35 years, but you are not entitled to the tax break and Social Security benefits accorded a married couple together even a few months. Some people complain about “the marriage penalty,” but marriage has financial advantages as well. (Actually, in a “traditional” marriage, where one spouse works and the other does not, filing jointly provides a marriage bonus.) For those interested in issues of equality, I commend to you the President’s Gay Pride Proclamation from this past Friday — the first such any President has ever offered.
Presidential Proclamation June 13, 1999March 25, 2012 THE WHITE HOUSE Office of the Press Secretary For Immediate Release — June 11, 1999 GAY AND LESBIAN PRIDE MONTH, 1999 BY THE PRESIDENT OF THE UNITED STATES OF AMERICA A PROCLAMATION Thirty years ago this month, at the Stonewall Inn in New York City, a courageous group of citizens resisted harassment and mistreatment, setting in motion a chain of events that would become known as the Stonewall Uprising and the birth of the modern gay and lesbian civil rights movement. Gays and lesbians, their families and friends, celebrate the anniversary of Stonewall every June in America as Gay and Lesbian Pride Month; and, earlier this month, the National Park Service added the Stonewall Inn, as well as the nearby park and neighborhood streets surrounding it, to the National Register of Historic Places. I am proud of the measures my Administration has taken to end discrimination against gays and lesbians and ensure that they have the same rights guaranteed to their fellow Americans. Last year, I signed an Executive order that amends Federal equal employ-ment opportunity policy to prohibit discrimination in the Federal civilian work force based on sexual orientation. We have also banned discrimination based on sexual orientation in the granting of security clearances. As a result of these and other policies, gay and lesbian Americans serve openly and proudly throughout the Federal Government. My Administration is also working with congressional leaders to pass the Employment Non-Discrimination Act, which would prohibit most private employers from firing workers solely because of their sexual orientation. America’s diversity is our greatest strength. But, while we have come a long way on our journey toward tolerance, understanding, and mutual respect, we still have a long way to go in our efforts to end discrimination. During the past year, people across our country have been shaken by violent acts that struck at the heart of what it means to be an American and at the values that have always defined us as a Nation. In 1997, the most recent year for which we have statistics, there were more than 8,000 reported hate crimes in our country — almost one an hour. Now is the time for us to take strong and decisive action to end all hate crimes, and I reaffirm my pledge to work with the Congress to pass the Hate Crimes Prevention Act. But we cannot achieve true tolerance merely through legislation; we must change hearts and minds as well. Our greatest hope for a just society is to teach our children to respect one another, to appreciate our differences, and to recognize the fundamental values that we hold in common. As part of our efforts to achieve this goal, earlier this spring, I announced that the Departments of Justice and Education will work in partnership with educational and other private sector organizations to reach out to students and teach them that our diversity is a gift. In addition, the Department of Education has issued landmark guidance that explains Federal standards against sexual harassment and prohibits sexual harassment of all students regardless of their sexual orientation; and I have ordered the Education Department’s civil rights office to step up its enforcement of anti-discrimination and harassment rules. That effort has resulted in a groundbreaking guide that provides practical guidance to school administrators and teachers for developing a comprehensive approach to protecting all students, including gays and lesbians, from harassment and violence. Since our earliest days as a Nation, Americans have strived to make real the ideals of equality and freedom so eloquently expressed in our Declaration of Independence and Constitution. We now have a rare opportunity to enter a new century and a new millennium as one country, living those principles, recognizing our common values, and building on our shared strengths. NOW, THEREFORE, I, WILLIAM J. CLINTON, President of the United States of America, by virtue of the authority vested in me by the Constitution and laws of the United States, do hereby proclaim June 1999 as Gay and Lesbian Pride Month. I encourage all Americans to observe this month with appropriate programs, ceremonies, and activities that celebrate our diversity, and to remember throughout the year the gay and lesbian Americans whose many and varied contributions have enriched our national life. IN WITNESS WHEREOF, I have hereunto set my hand this eleventh day of June, in the year of our Lord nineteen hundred and ninety-nine, and of the Independence of the United States of America the two hundred and twenty-third. WILLIAM J. CLINTON
Fire & Ice – Chapter 11 June 11, 1999February 12, 2017 Here’s Chapter 11. (You already have Chapters 1, 2, 3, 4, 5, 6, 7, 8, 10.) It is the story of a TV show called The $64,000 Question. You know the expression that’s the $64,000 question ? Well, this quiz show is where it came from. And at one point, an incredible 82% of all the TV sets in America, if they were turned on at all (and most were), were tuned in to this show. Revlon’s show. Revson’s show. “Cue the ducks!” one Revlon executive found himself screaming in the control room during a commercial break — it was all done live — as tens of millions of Americans watched a dither of ducklings them swim the wrong way, off camera.
Malibu Hardball June 10, 1999March 25, 2012 This story is too good to be true, and I doubt I have all the details right. So my apologies to Bert Fields if I have it wrong . . . to his now or one-time neighbor . . . and to the biographer who wrote this anecdote in the first place (and deserves credit for it, if he did). This whole thing comes from the memory of a friend who says she read it in a book called The Sunset Bomber, which appears to be out of print. Yes, with time I could research all this, but the story is, ultimately, harmless enough and — who cares. So here it is. Even in Malibu this couldn’t be true. Could it? It seems that famous Hollywood lawyer/agent Bert Fields had (has?) a home in Malibu. In much of Malibu, the homes are very, very close together, side by side (and squeezed in the other two directions by the Pacific Coast Highway at their portals and the Pacific Ocean at their pools). This is precarious, expensive living, to say the least. Anyway, one day, Bert got a call from his new neighbor informing him that Bert’s house had been built too wide, and encroached on his neighbor’s property by half an inch. Bert would have to tear his house down or make some sort of huge settlement. Instead, Bert shaved his house down by half an inch. Literally: some kind of grinder grinding half an inch of stucko into dust. (Remember: I’m not saying I have this story 100% accurate. This is, supposedly, the gist.) Can you imagine? So now, a few months later, Bert runs into his neighbor at a party. The neighbor says something like, “Well, sorry we had that little problem, but it’s nice to have it behind us.” “Not exactly,” says Bert. “What do you mean, ‘not exactly?'” asks the neighbor. “I had my house shaved three-quarters of an inch, and you built yours right up flush to it. Your house is encroaching a quarter inch onto my property.” Supposedly, this is all true. Supposedly, the neighbor had to pay a large cash settlement in order to keep that quarter inch. So maybe it’s not precisely true. Neither was Titanic. This is Hollywood. (I assume one of you, if not Bert himself, will fill us all in on the real story. By all means — bring it on!)
Are AOL and Yahoo Buys? June 9, 1999February 12, 2017 “What are your thoughts on investing in yahoo and/or aol for the long haul? is their recent drop just an airing out or the beginning of a further slide?” — Jim Dunn I think AOL is almost certain to survive and possibly thrive, and that Yahoo may, too. I am an enthusiastic user of both. But to me, even at these somewhat lower prices, they don’t seem like good long term bets. Could the market cap of either ten-tuple over the next decade? Maybe, but I don’t see it. I think if things go well, their current market caps may be justified in 5 or 10 years. But that’s just me. It’s a brave new world, and all but impossible to see that far in the future. Still, you must have read a lot by now about the analogy to the early auto manufacturers. Guess what. The pioneers in this incredible new industry that changed the world did not make money. Mostly, their investors went broke. Jim Grant, who is widely accepted as one of the financial world’s wisest and deftest commentators, says all this in his current newsletter much better than I ever could, in comparing the revolution of the Internet to the revolution of the air conditioner. Click here. The Internet is catching on with lightning speed compared with the air conditioner (or the automobile!). But gushing profits and — dare I say it? — cash dividends may be slower to follow.
Priceline.com (the Good Experiences) June 8, 1999January 29, 2017 Last week I passed on a bad experience one of you had with priceline.com, but asked you to send me your good experiences. (A company with a market cap that’s approached $25 billion ought to have quite a legion of fans.) It may be more a testament to the small size of my readership than anything else, but to my surprise, I got just one response, albeit a very good one. It’s from Tony Spina, who writes: “I used priceline.com to buy three roundtrip airline tickets from Detroit Metro Airport to Houghton, Michigan, with short notice for a 100% discretionary trip. Best price I could find using travelocity.com, nwa.com, etc., was $900 each. Priceline accepted my first offer of $250 each. All went perfectly. I was happy — except next time I will start at a lower bid. While priceline will not let you make more than one bid for a certain trip on a given day, the way it keeps track of this is by the credit card number. Use a different credit card each time and you can bid repeatedly for the same trip at gradually escalating prices.” Houghton, Michigan, as best I can tell, is in Northern Wisconsin (which Michigan appears to have won in a war I never heard about, possibly with the aid of Canada, which also seems a more likely home for Houghton). The airport you are looking for is the Hancock/Houghton airport. Tony saved $1,950 with priceline, paying $750 instead of $2700. Not that he would actually have gone for $2,700. So what really happened is that priceline made his trip possible. This won’t work for travelers who have to be someplace at a specific time — you are committed to flying any time on the day you specify, and can’t back out of the deal if you don’t like the time — or routing — priceline finds at your price. But for the right kind of flier (or hotel guest or car buyer or mortgage applicant), priceline can be a real money saver.
Three Money-Saving Ideas June 7, 1999February 12, 2017 1. Buy a used car. “I recently got a chance to put into practice one of the lessons from your book,” writes Tom Grady. “The $28,000 1999-model-year car that my wife had her heart set on was also available as a ’98 lease-return for $17,400. I’m sure my teenagers will put the $11k we saved to good use.” What an easy way to “make” an extra $20,000 or so before tax! (To keep $11,000 after tax, you may have to earn an extra $20,000. And even if you’re combined tax bracket is not that high, remember: Not only is the car cheaper, so are the finance payments, if you have to finance it, and the insurance premiums, if you insure it for collision and theft.) That “new car smell,” as you must by now be very tired of hearing me say, is the most expensive fragrance in the world. 2. Buy a cheap watch. I was reminded of this today when I looked down at my wrist and realized — oh, my Gosh: I am wearing a watch. For decades I enjoyed not having to do so. Now that I am, temporarily, at least, attempting to pass for a grown-up (I have this dollar-a-year job with a well known political party), I have begun to wear a watch. I have three of them, actually. One is a Denver International Airport watch, given to me free by the Denver International Airport when I was out there on a junket. Where you may have Mickey circling the dial of your watch, I have what appears to be a 727 circling the Denver airport, waiting hour after hour to land. So far, it has never run out of fuel. My other two precision timepieces are from Absolut vodka. One of these I got as a party favor at a benefit luncheon. I am not a big drinker, but I like the Absolut ads, and love the Absolut watches, which look expensive and surely cost Absolut (which donated them to The Worthy Cause) twenty bucks apiece. Made in China, which as you know has become the Geneva — indeed, the Schaffhausen — of cheap Asian watch fabrication. One of the cool things about the face of the Absolut watch is that it has no numbers. Just a silver “Absolut” from the center of the dial out to where the “3” might ordinarily be. And into the silver edge of the watch-casing, running around in a complete circle, are engraved the 12 letters: A-B-S-O-L-U-T-V-O-D-K-A. All this with a stainless steel mesh metal band, with the only catch being that the clasp does not catch very well. The clasp quietly unclasps and by the time you realize it, your cab, plane, sloop or rickshaw has long since disappeared. So I lose these watches. Which is why I have two. After I lost the first one, I called The Worthy Cause and asked if I could buy three more. “Buy?” they laughed, sensing further Worthy Contributions someplace down the road. They sent them to me free, and I have thus far lost only one of them. Leaving me two. I have saved a minimum of $2,000, and by some lights $10,000 or more, by wearing cheap watches. Charles, needless to say, scoffs. His watch is a proper status watch. It costs $300 to clean, which seems to need doing fairly often; it produces near panic when mislaid; and it tells precisely the same time as my own. 3. Buy and hold. The way to make money in the stock market is not to trade in and out. That takes time and eats up commissions (small ones if you use a deep discounter, but still). It chips away with spreads (a stock that’s “16 bid, 16-1/8 asked,” costs one-eighth of a dollar — $125 for each 1,000 shares — more than it fetches). And it subjects you to a very rotten tax deal: high ordinary income tax rates on your short-term capital gains in years when you emerge with a profit, but an annual limit of just $3,000 in losses that may be written off against ordinary income. So if you made $100,000 day-trading in 1999 you might have to pay Federal and state taxes of, say, $40,000. But then if you lost $100,000 in 2000, only the first $3,000 of the loss would reduce your taxes — saving you about $1,200 in this example. (Yes, the remaining $97,000 in losses would be carried over to cancel out gains in future years, and to cut your taxable income by another $3,000 each year, until exhausted. But the day could come that gains weren’t such a foregone conclusion. There was, for example, the 16-year stretch from 1966-1982, over which the market actually fell, leaving relatively few people with gains at the end of each year.) In short: heads, the tax men win; tails, they lose very little. Better, for the most part, to buy and hold — sometimes even until after you die. That way, under current law, income taxes need never be due on the capital gains that have accrued as of the time of your death. (I told you to wear your seatbelts. But did you listen?) Tomorrow, a Fourth Way to Save Money: Priceline.com (the Good Experiences)
Don’t Read This If You Hate the President June 4, 1999February 12, 2017 Newsflash: “Isn’t it time,” writes Midwest attorney Steve S (why are people afraid to use their names when praising the administration?), “that someone gives Clinton credit for the Kosovo strategy? For two months all you heard were naysayers opining that the strategy was flawed. But it’s worked. There have to be some friends of the White House remaining in the press who could observe that a two month war, without American casualties and total victory, is a pretty efficient, wise strategy. Of course, you may want to wait for Milosevic to sign the dotted line, but with Milosevic’s preliminary acceptance, someone ought to give Clinton some credit.” Yup. And remember the $40 billion Mexico bail-out that was ridiculed as a disaster? (It worked, and we’ve been paid back on schedule with interest.) And remember the push for NAFTA that any idiot (who listened to Ross Perot) could see would lead to a “giant sucking sound” that would send our unemployment rate soaring? (Unemployment is at a 30-year low, and it’s not just millions of low-wage jobs that have been created, but high-wage jobs as well.) How about the first Clinton budget, designed to get interest rates down and jump-start the economy? It got not a single Republican vote. A dud, they said. But down came interest rates and up went the economy. And what of the conventional wisdom among his critics that the President couldn’t possibly be taken seriously as a leader abroad? Tell it to the solidly unified 19 members of NATO, or to Tony Blair’s government, or to Gerhard Schroeder’s, among others, that credit the Clinton vision with significantly helping to guide their own. It’s galling to those who dislike the President, and I don’t mean to rub it in. But in most respects, he and his team have done a terrific job. Average Americans’ lives are better as a result, and we investors haven’t done too badly, either. It began with his choice of Vice President (contrast Al Gore’s substantive initiatives to “reinvent government” with whatever it was that Dan Quayle did in the same office), and runs page after page after page. From the Family Medical Leave Act to a streamlined and far more effective Small Business Administration to an active S.E.C. that has vigorously pursued the interests of the small investor to 100,000 more cops on the street and community policing and the Brady Bill to a tough line on Joe Camel to the third largest expansion of the national park system (behind only the two Roosevelts) to peace in Northern Ireland to an end to welfare as we’ve known it — just page after page after page. And each page just makes the loyal opposition angrier. My friend Joe Andrew, chairman of the Democratic National Committee, has taken to calling the G.O.P.”the Grumpy Old Party.” They find a cloud in every silver lining, he says. I don’t want to enrage those of you who get furious when I write things like this. And I certainly am proud to count among my friends many thoughtful Republicans . . . though most of them are dismayed that their party has been co-opted by a leadership far right of center. But I do think it’s worth noting that things are actually pretty good. We face lots of challenges and dangers ahead. But for most Americans, on balance and on average, things have rarely been better. And I don’t believe it all just happened by accident. Monday: Three Money-Saving Ideas