Saving for College; Hank Gillette for President October 27, 2000February 15, 2017 Jim Batterson: “Pardon me for cluttering up your political discussion with a thought on personal finance. My sons are grown now and I am mostly through paying for college. I believe that the way I managed this financially was a good technique and one that I, and you, ought to be passing on to families with younger children. “Instead of setting up Uniform Gift to Minors (UGM) investment accounts for my children, I regularly put my funds into what I thought were good, long term growth stocks during their pre-college years, all in my own name. It was mostly a buy-and-hold strategy with a variety of investments. When a child, now a young man, enrolled in college and needed funds, I was able to then set up his own account with my brokerage house. Then I could send a signed letter to my broker asking him to transfer my shares of selected stocks to my son’s account. “Over the period of eighteen years that I had been investing, some of these stocks had increased significantly in value, while others had done less well or even declined. By selecting the stocks to transfer that had the largest capital gains, I was able to avoid the capital gains tax myself and have my son pay the capital gains tax at his much-reduced marginal rate. At the same time, I was able to keep the losses for myself and use them to my advantage for tax purposes. It also allowed me more control over the funds and the timing with which I could transfer it.” ☞ A sound strategy, Jim. Thanks for sharing it. (Don’t forget that transfers valued at more than $10,000 per child per parent in any given year require filing of a gift tax return.) Are your sons Democrats? Hank Gillette: “I thought Vice-President Gore did better than Governor Bush in the final debate, but I thought he also missed some opportunities to sharpen the differences between the two of them. For example, on Bush’s tax cut he could have said something like ‘The previous two Republican administrations ran up deficits of $4 trillion. I think that while times are good, it is more important to repay our country’s debts than to initiate large tax cuts, especially during a period when the Federal Reserve is trying to slow the economy. That’s why I am earmarking most of the surplus for deficit reduction while targeting tax cuts to the people who need them most.’ “On the death penalty: ‘I am in favor of the death penalty, but I think it is imperative that the people executed get a fair trial and actually be guilty of the crime committed. Gov. Bush and the state of Texas have not met this standard. They have executed people whose defense attorneys were either drunk or asleep during much of their trials. Despite the fact that the Republican governor of Illinois has declared a moratorium on executions because so many condemned prisoners were found to be innocent, Gov. Bush asserts that the much larger number of prisoners on Texas’ death row are without a doubt guilty. And if Gov. Bush finds the death penalty so serious, why did he mock in an interview with Talk Magazine Carla Faye Tucker’s efforts to gain clemency?'” ☞ If there’s a fourth debate, we’re sending you into the ring, Hank. Robert Johnston: “You know very well tax revenues nearly doubled as a result of Reagan’s tax cut — a Democratic controlled congress just raised spending at a faster rate. Cheap shot of the week.” ☞ Are you saying that if Reagan hadn’t cut taxes as he did, the IRS would have collected barely half as much money? I think that would be a hard statement to defend. Be that as it may, I totally agree that it made sense to lower the top rate drastically from 70%. And I think we’d both agree that a 0% top rate would be too low, and that, thus, the best balance must lie someplace in between. I think 28% didn’t work (although I sure enjoyed it!), and that 39.6%, though it chafes, has worked quite well. At least we can agree on this: it shouldn’t be any higher. Chris: “I will be surprised when any person (including myself), who is trying to convince others of their position, will fully represent the truth. I find it humorous that you are intentionally ignoring the truth for your own benefit, or are just naive. The fact of the matter is that Bush’s tax plan is fair.” ☞ I would think fairness is a matter of opinion, not fact. Why not just a poll tax, where everyone pays the same amount, and a family of five pays five times as much as a single person? Why would you have some people pay more than others at all? And if so, why a graduated tax? But if you agree a graduated tax is fair — and you may not — then why specifically 33% for the top bracket (the Governor’s proposal), versus asking those who’ve done the best in recent years to keep paying as they do now so we can pay down the debt and keep the prosperity going? Reasonable people can disagree on what’s fair without “intentionally ignoring the truth for their own benefit.” No? J Raymond: “We all like putting down the government while simultaneously benefiting from it, and I think about this often as I drive home each day on the roads I carved out of the wilderness as a small child.”