Author: A.T.

“We already know what a big winner the government is when it comes to the lottery,” writes Graig Ponthier. “If someone wins $30 million, the government gets almost half. That’s almost $15 million to the government and they didn’t even buy a ticket.”

But Graig was writing in with a further observation — something he noticed at the checkout line at one of the largest grocery chains in Texas.

“In Texas,” he explains, “you have to be 18 to buy tobacco. This grocery store had all its tobacco items locked up in a glass cabinet. If you want to buy tobacco, the checker has to get the key from the Manager and unlock it to get your product.

“Well, it is also a law in Texas that you have to be 18 to play the lottery. The difference is that these ‘scratch-off’ lottery tickets are conveniently located in vending machines for any patron to purchase, right next to the Soda machines and even a baseball card vending machine. There is no age verification system built in to the machine. Anyway, I thought this was interesting, only the government could get away with that!!!”

We are becoming a nation of addicted gamblers, and lottery vending machines between the Pepsi and the baseball cards can’t be helping.

Neither can the huge expansion of legalized gambling. Remember when Las Vegas was the only game in town? Or should I say the only town in gaming? OK, and Tahoe. But when Atlantic City got casinos, it was a huge deal. Now everybody’s got them. Or we seem headed that way.

But today’s explosion in gambling has nothing to do with casino. Or race tracks or ballgames, for that matter. Even with a bookie you used to have to make a phone call, and then physically, face-to-face, settle up. (Well, I’ve never actually placed a bet with a bookie. Maybe some of them pay off with checks?) Until recently, you couldn’t actually place a slot machine in your den. Or, well, maybe you could (I had a Black Knight pinball machine for a long time — “THE . . . BLACK . . . KNIGHT . . . WILL . . . PLAY . . . YOU”) and I actually still do have a 1937 nickel one-armed bandit. But what kind of gambling is that? It’s your own nickels! Maybe, if you’re lucky, you get a couple of your dumbest children to play the slot machine with their spare change on the way home from school. Or even the occasional dinner guest. A nickel here, three nickels there. But this is not gambling.

No, effort-free in-home gambling arrived just a short while ago, and it is called, needless to say, Online Trading.

Click . . .

Click . . .

Click . . .

With a one-armed bandit you need to be able to reach your entire arm up a foot or two, grasp the handle firmly with your fist, and yank. With Ameritrade or E-Trade or any of the others it is just the slightest indentation of your index finger. Click . . . click . . . click.

Most of us haven’t gotten addicted to this and probably won’t — even with the much clamored-for advent of night-time trading. But an alarming number of people have and will.

Investing is a terrific habit everyone should acquire. We would all be better off, individually and as a group, if everyone did. Speculating also serves a useful economic function, but is best left to a relative few — sophisticated, disciplined players who understand the odds and can afford the risk. (The odds, because of the tax system and the transaction costs, are generally against you.) What an awful lot of people have developed a taste for is neither investing nor sophisticated speculation but gambling. This should be no surprise. We are a nation of gamblers. Indeed, a species of gamblers. The difference is that now the betting window is right there at our fingertips. The wait until “post time,” what with the seeming inevitability of “24/7” trading, will soon shrink to nothing.

We will survive this, of course. But it may not be pretty.

Susan Kazmaier: “I am writing regarding a problem I had fairly recently with Ameritrade. I sold shares of TSATA on April 22nd, the day this stock was downgraded from the Nasdaq to the OTC bulletin board (although I wasn’t aware it was happening that day). I sold the shares over the internet trading system, and the order screen displayed 2 7/32 as the bid, ask. This happened to be the previous day’s close, but I thought that was a coincidence. It turns out that it wasn’t a coincidence, the internet wasn’t showing me the correct price, which was actually 1 3/8! (Fortunately, still more than I paid for it — but I would not have sold it at this price.) I have corresponded with Ameritrade, and one of their lawyers basically told me that my account is a self-managed account and quoted me the ‘Data Not Guaranteed’ terms and conditions. Ameritrade has not explained why I was not shown the correct price, nor why I was even able to trade an OTC BB stock over the internet. Their normal policy is that bulletin board stocks can only be traded through a representative. This experience has been disturbing, and I am almost certain to transfer my account out of Ameritrade. It also speaks of the risks of trading over the internet.”

Sorry you had this problem, Susan. I also use Ameritrade … but I take very seriously all their little warnings about “delays” and such. And I almost always use “limit” orders — I would with any broker — which prevent this sort of thing from happening.

Unless I’m missing something here, I don’t think you have a claim. Still, it’s a bummer — and perhaps yet one more reason not to try to outperform the pros, almost all of whom can’t outperform the averages over the long run, either. (Though it’s fun.)

Coincidentally, I have dabbled in TSATA, as well. The story, if I remember it right, is that John Malone paid $8, and John Malone is not the kind of guy to lose money. I bought some at $1.75 and then more at 75 cents. Then something happened and the stock suddenly jumped to nearly $5 (where I sold the shares I’d paid $1.75 for) and fell back almost immediately into the $2+ range, where it is today. So I’m very nicely ahead of the game with TSATA, and hoping for more.

This may sound like easy money, but bear in mind that when you trade in and out this way, your partner Uncle Sam takes a big chunk of any profit. And bear in mind, too, that it doesn’t always work. (To say the least.) To take just one fairly recent example: Ron Perelman, also not the kind of guy to lose money, had both money and ego tied up in Marvel Comics — and it crumbled to dust.

If I get lucky, my wonderful TSATA profit may one day equal my Marvelous loss.

So, yes, I have my vices, too.

The time you would have spent reading this column today? Click here and save some money instead.

Recently, I called “that new car smell” the most expensive fragrance in the world. Thanks to Stephen Gilbert for pointing Susan Sprechter’s excellent letter, posted on “the car guys‘” excellent web site. (You know the car guys? Tom and Ray? One more reason to listen to National Public Radio — or visit its excellent web site. On NPR, excellence abounds.)

To wit:

“This week a friend showed us her new Malibu, and as I smelled that seductive ‘new car’ aroma I felt myself strangely compelled to go out and purchase a brand-new automobile, too. Later in the week I was putting up a recently purchased plastic shower curtain and noticed that it had exactly the same satisfying odor as a new car with a three-year warranty. May I suggest that people save themselves from a very expensive form of chemical dependency by carrying a little piece of new shower curtain in their pockets? Just one sniff at the first urge to visit a dealership, and the fit passes. You are once again cool, calm and breathing normally.”

The alternative, I should think, would be to fit your car seats periodically with shower-curtain seat covers. Is Rayco still in business? When I was five, my dad had the Rayco Seatcover advertising account and put me in one of their commercials, jumping up and down on the seatcovers, presumably to demonstrate their protective qualities. (I was five, what did I know?) Thus began and ended my acting career.

I believe you can also buy that aroma in a spray can as well. I don’t know the official name of the scent, but I call it eau de saved money.

THE $64,000 QUESTION

“Regarding your recent column, the expression, in a less munificent version — ‘that’s the $64 question’ — predates the television quiz show. In the 1940s a radio quiz show ‘Take It or Leave It’ had a $64 question that worked its way into the language and meant that later the title of the TV quiz show would have some resonance. I remember watching the television show the night it premiered. When I told my parents about it, they were quite certain I was confused — NO ONE could possibly give away the almost unimaginable sum $64,000.” — Tom Williams

A precursor to “Take It or Leave It to Beaver,” no doubt.

EXPENSIVE WATCHES

“I would not buy an expensive one for myself, but my wife purchased a stainless and gold Rolex Submariner for me about 10 years ago for about $2,300. (I’m not so fussy about my principles that I returned it.)Today, despite gold’s fall, the same watch retails for $6,000 and mine would probably bring $4,000 if I were to sell it. I realize that’s only 5.6% or so annualized, but it’s tax free so far and some of my shallower friends are impressed.” — Bill D.

SPDR EXPIRATIONS

“Which is better, a Standard & Poor’s 500 index fund or ‘spiders’ — SPDRs — and how come my brokerage statement shows an expiration date for my SPDRs?” — John Ebert

As between the two, it’s basically six of one, half a dozen of the other — go with whichever is more convenient if you’ve decided to go for an S&P 500 surrogate.

But an expiration date on SPDRs? This was a new one to me, so I steered John to the toll-free phone line for the American Stock Exchange, where they are traded — 1-800-THE-AMEX — and asked him to find out the answer himself and let me know. A little Q-and-A judo, as it were. John dutifully reported back that, according to THE-AMEX, state laws, except for Alaska, do not allow perpetual trusts. So the SPDR trust is set up for the maximum time allowed, which translates to an expiration date of 2118.

That will be a very long-term gain indeed.

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.

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.”

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.

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

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.