SELL FOR A LOSS?
Linda: ‘My accountant said that I (55, widowed last year, no deductions or write-offs) could be looking at paying $11,000 in federal taxes next year (my job plus husband’s pension). One of my mutual funds (Putnam) is tanking and has lost $21,000 combined in 4 sectors. I would like to take a capital loss to offset my income tax. My accountant thought this would be a good idea. My question is: Do I sell ALL of the mutual fund, or part of it? I am intending to stay out of it for the prescribed 30 days, then reinvest it in the same company (they do not charge a re-investment fee for at least a year). I would like your opinion.’
☞ You only need to sell enough to generate a $3,000 loss, which is the maximum you can deduct against your income this year (unless you have gains you can use the loss to offset). But why are you paying Putnam high annual expenses? [Because her full-service A.G. Edwards broker sold her on this, and on high-commission annuities.] Maybe you should sell it all, dump A.G. Edwards, open an account at Vanguard or Schwab, and switch to no-fee low-expense index funds. If this produces a larger tax-loss than you can use in 2001, the excess will carry over to future years.
THE IRS AND FUZZY MATH
Kevin McCormally: ‘In yesterday’s column you refer to an IRS website that supposedly shows how your federal income tax dollars are spent by the government. Check it out, though, and you’ll see that it says that 23% of your INCOME TAX goes to pay social security. THIS IS NEWS! (I wonder if W. knows this.) Really, though, it’s just flat wrong. That’s what the payroll tax is for.’
☞ Good point. The site should say, “enter the total you paid in federal taxes” not federal income tax. (And even then it’s not exactly accurate, as it takes into account revenues from corporate taxes; and because people vary wildly in the proportion of their overall federal tax that came from Social Security tax. Retirees may pay ZERO Social Security tax, and thus have 0%, not 23%, of their tax go toward Social Security . . . low-income workers may pay ONLY Social Security tax, and thus 100%, not 23%, go toward Social Security.) They should knock a few bucks off your tax bill for catching this.
Brooks Hilliard: ‘Actually Google has much more capability than you mentioned … I bookmarked its “advanced search” page, which does what Marc described yesterday and a lot more.’
WELL, RECUUUUUUUUUUUUUUUSE ME!
DON’T READ THIS if you’ll flood me with more ‘get over it!’ e-mails. I am over it. But people will be debating the 2000 election for decades – not to unseat the President, but because it’s important to know and remember what happened. If that makes you crazy … well, get over it.
Now. Did you see that Justices Scalia, Thomas and Souter recused themselves over whether or not to stay Napoleon Beazley’s death penalty?
Whatever you think of the death penalty*, here were Scalia, Thomas and Souter recusing themselves not because the shooter or the victim was, say, their own son, or perhaps a former law partner – what judge could rule impartially in that situation? – but because the victim was the father of a judge they knew.
Is it appropriate to recuse oneself in a situation like that? Yes, we can say confidently – three Supreme Court Justices have just said so.**
Which leaves us to wonder why it wasn’t appropriate for Scalia and Thomas (and Sandra Day O’Connor) to recuse themselves in another recent case that involved (to the layman’s eye) even more of a potential conflict of interest.
Federal law requires “any justice” to “disqualify himself in any proceeding in which his impartiality might reasonably be questioned.”
Putting myself in their robes, I think that if the father of someone I knew – a fellow wirter, say – had been murdered, and the killer faced either life in prison or the death penalty, I would be able to make a death-penalty determination without prejudice. But I can see how Scalia, Thomas and Souter thought that, well, some might reasonably question this.
But how about if I had been appointed to the Court – the most important event of my life and a tremendous honor – by the father of the plaintiff? And how about if, on top of that, my wife appeared to be strongly partial to the plaintiff himself? Or my son were a law partner of the plaintiff’s lead lawyer? Or I had been at a cocktail party and had publicly voiced my preference for the plaintiff (before the election), noting that if he failed to win, I wouldn’t be able to take the retirement I longed for?
Might Justices’ impartiality “reasonably be questioned” in such situations?
Might one wonder whether they would have ruled exactly the same way, and written exactly the same opinions, if the facts had been exactly the same but it had been Gore petitioning the court to stop the counting lest Bush reverse his lead? Would Scalia, Thomas and Souter have found against Bush and for Gore? Some would argue not, some would argue so. And of course some would express wonder that these states-rights justices would agree to hear the case in the first place.
*I am persuaded by the arguments against the death penalty as it is currently administered (not sure I would oppose it in every instance if it could be “fixed”). But I have trouble buying the argument that a 17-year-old high school class president lacked the maturity to know that shooting a man in the head, and attempting to kill his wife, is inexcusably wrong.
**It has been noted that Thomas does whatever Scalia does. One can’t help wondering, with a smile, whether he might thus have recused himself in this case even if he had not known the son of the murder victim.