This article interested me because Denbury was one of the 10 corporations I chose to use for our investment assignment (I lost $365 with them). According to the article, Denbury is ranked #1 out of 114 stocks in its industry group. Their operations are 75% oil and 25% natural gas based; operating solely within the United States. They are beating their competitors by specializing in drawing more usable oil resources from depleted fields. Their technique is in the use of carbon dioxide, with which they can drill (access) an additional 40% of present oil to the mere 20% that drilling alone can access. Additionally, they are encouraging investors due to the fact that nearly all its cash flow is reinvested into new projects.

Social security tax inequities are a major problem for equality, because it is a high level income tax with an income ceiling. This ceiling is placed at $87,000, putting the majority of the burden of this tax on the taxpayers who are in need of the benefits. Basically, a conservative point of view would say that if its not actually going to act as welfare or equality, those people paying more and benefiting more may as well keep their money up front to invest it themselves. Although there is a graduated tax in our country, a flat tax, that taxes everything equally, would presumably achieve the greatest equality. This is a flat tax that is the same percent on income, capital gains, social security, Medicare, and more; none of them having deductions, credits, exemptions, or ceilings. This is a lofty goal, but far closer to the ideal than our current web of deceitful loopholes. Another problem pointed out about social security taxes is that they are borrowed from for uses other than for which they were intended -simply added to the general fund. This makes the purpose of the payment useless. We owe a lot to it, and we may never reap the benefits, but that’s what happens when you hand someone your money and ask them to take care of it for you. “A fool and his money are soon parted,” because there is no “distinction between trust funds and discretionary spending.” The text points out that if the wealthy paid their fair share there would be a large surplus of $85 billion to start paying off the 1 trillion owed into that fund. This would take another twelve years to repay at this rate.

Another criticism Z&N make about the tax code is the preferential treatment for homeowners. They make several cases in this text with similar arguments to the point that the government doesn’t need to “stimulate”, “encourage” or legislate a “free” market’s behavior. I don’t like that single people cannot have the final benefits that married people have. Men and women don’t need encouragement to get married; it has been a historically common trait for thousands of years. Plus, it is the money of the wage earners who pay into it, that should decide who benefits. This somewhat proves faulty representation, since it is obviously not in singles’, homosexuals’, or renters’ best interest to get the raw end of the deal when it comes to marriage or homeowner tax breaks. Z&N make the point that people already have the desire to own property, so the tax break isn’t meant to encourage it be done, but rather to reward them for behaving in a desirable way toward a certain type of ideal. This gives tax breaks to those wealthy enough to own property, when it should be giving tax breaks to people who need the break in order to afford to purchase property. The logic the tax breaks are sold upon is not sound, and is malignant in design.

The legislation of deductions for large luxury vehicles greatly troubles me. Hummers or Excursions, weighing 6,000 lbs, getting 8-12 mpg, and being a symbol of wealth, have no business getting subsidized. People do not need to be encouraged to show off, especially by throwing the peoples tax dollars their way. Let them show off with their own money, as they rev their own fortunes away. I’m not even sure that hybrid and environment friendly vehicles should be subsidized, as mentioned, but at least it has a positive goal for the community and the benefit of a healthy and technologically prosperous society.

I’m not nearly as judgmental as Z&N are about “runaway government pensions.” Obviously, any single person making over $80, 000 should be doing just fine, especially in a two-income household. But, $80, 000 would seem to me to be a wealthy wage for any family, and beneficial to society in allowing a parent to raise the child without a second income. I’m dreaming again. Anyone making over a certain amount, and then getting pensions far over what they need, is ridiculous. However, the only reason I like the federal government pay scale is that it takes cost of living into account, and it is one of the last empires which is somewhat free from the “Wal-mart-ization” of corporations, whose goal is to maximize shareholder profits at the expense of the workers. Also, a very interesting point made at the end of this section is Halliburton and Enron using shell games to dodge employee coverage; “of the 30 companies with the greatest shortfalls in employee pension funds, CEOs collected 59% more compensation than the median CEO.” This enflames my disdain for the “personhood of business” and the lack of criminal accountability held against executives.

Transnational or multinational corporations are one of the most scandalous entities in our capitalist society. A major tool they use “to shift profits out of, and expenses into, the United States” is called the transfer pricing shell game. This minimizes profits of their U.S.-based operations. The pricing shell refers to lying about the costs of items, or inappropriately charging for them, in order to move money from one country to another. No money is lost here, because there is one large company with many subsidiaries. One subsidiary can sell computers to another for pennies, and the other can sell printer paper back for millions, depending on where they want the profits according to taxation. Because the companies are international, Nations don’t have the authority to properly audit those companies (or so they think). So, we take their word that they are being honest. Z&N suggest the solution to this is the unitary method, through which taxes are calculated based upon company sales, assets, and payroll within the country. This is visible, determinable, and while still vulnerable to other loopholes, quickly becomes more honest and beneficial to American taxpayers.

This chapter also discusses the Cayman Islands and Bush’s support of terror. With the Cayman Islands, one can simply pay their corporation fees, establish their official address (but nothing else), and become a foreign company, while maintaining operations in the United States. What I’m not clear on is how beneficial this move would be, without getting cheaper labor, or having subsidiaries or places to hide money. Z&N claim that G.W. Bush weakened international treaties on money laundering, which effectively (though perhaps not intentionally) protects drug dealers and terrorists. This keeps them covert and active internationally, and provides them a base through which to successfully fund themselves. The reason stated for these actions, was to remove what U.S. corporations, who filled his campaign wallet, might consider “undue discomfort.”

Capital gains tax is what I see as the biggest subsidy of the rich. I could be wrong, but this is where fat cats make their money, hide their money, and don’t pay their fair share of taxes. I just learned a great deal about capital gains taxes, in my finance class, and in pursuit of analyzing candidates’ goals. When I heard about Huckabee’s “Flat Tax” proposal, I was mildly worried about its intent (not about his chances of election though). My understanding is that a flat tax would destroy our currently graduated tax. It would hurt homeowners, not that I care, because many people would lose deductions, which are valuable. Plus, the tax rate of this flat tax was very high (in any state that also had State Income Taxes). But, when I found out about his reduction for capital gains taxes, in order to “encourage investing”, I knew his idea was a built to shift the tax burden to the poor on several fronts. The man who was running on religious principles didn’t have servitude, caring for the poor, or “the first shall be last…” type of ideals in mind after all. This chapter of the text basically confirms my views on the inadequacies and misuse of the capital gains tax. The book “The Richest Man in Babylon” speaks of a prosperous and healthy nation, which is financially fair, and in it is pointed out that any fair nation taxes wealth on one front, or wealth and income on two equal fronts, but never income alone.

A friend of mine has a near-millionaire brother and multimillionaire parents who have complaints against capital gains taxes for stocks, as well as for second and third homes. However, my friend and his sister make between $12,000 and $35,000 as a dog sitter and pizza delivery guy. I explained to him that I believe his parents don’t have a leg to stand on in the complaint department, given that they are hardly taxed for the transfer of hundreds of thousands of dollars on second and third homes, while he is taxed much higher on his income, keeping him out of his first house. While he has similar “political values” as his parents, the political ideals he has been taught to hold to don’t match his interests, and won’t help him achieve the American dream.

The insurance loopholes, against terrorism, and for Wal-Mart employees are deplorable. The government needs to stop bailing out insurance companies. According to the right wingers, businesses have to be allowed to fail, or the free market system doesn’t work. But the left wingers have a point that it doesn’t set a good precedent that people be allowed to fail, because that failure affects others (usually through crime, and court and prison costs). I don’t know where to draw the line on letting insurance companies fail, because there is a good argument that then a lot of people go down hard with them, and perhaps the federal government is one of the few possible sources of aid. However, this chapter ends by increasing the suspicion toward the conspiracy about the possible planned demolition or allowed attack of the trade center. Something also later discussed by this author, with regards to Bush’s plan needing a free and clear excuse to exorbitantly increase military spending.

I didn’t learn anything new, except a few statistics from the short chapters on business meals and entertainment, and tax-free muni-bonds, but they are probably valuable additions. I thought it was interesting that when business meals were no longer funded as well, restaurants and food industries didn’t hurt at all. Wherever money is allotted, it will be spent on something that provides work (and theoretically a job). This was also more proof that people don’t need to be encouraged to do what they want to do, although I’m sure the argument was only made the other way, as a desperate attempt to not lose business-paid meals. With the tax-free money bonds, I was amazed that “before the mid-‘80s, there was almost no limit on what states could authorize tax-exempt financing for…there was no reason for the states not to go hog wild.”

With regard to export subsidies, I was once again reaffirmed about the evils of Enron scandals, the Bush administrations strong attachments to oil, and even Clinton’s expansion of the budget of the federally funded Overseas Private Investment Corporation. On one end of our government, we’re helping companies sell crap consumers overseas don’t need, we’re helping them advertise those products, and we’re apparently helping companies that are helping people buy that crap. One mentioned welfare-king is the 9.3 million dollar subsidy from OPIC which is financing Kimberly-Clark’s overseas operations. According to Z&N they have transferred 600 jobs out of the United States, thanks to our government assistance to business. My father lost one of those 600 jobs after 10 years at the Draper, UT branch. Kimberly-Clark is not the only guilty party in removing jobs from the states, but the guilt more accurately lies with the government assistance that provided for, if not encouraged such actions.

Military waste and fraud is one of the issues that seems incredibly easy to solve, but by continuing to exist, heavily backs the populist conviction that our nation is divided by “the haves and the have-nots.” The elites who “have” are more interested in protecting their own interests than the people’s because it isn’t the people that gets them into congress or in the oval office. As far as they are concerned, their campaign runners, PRs, party affiliation, and financial donation contributors are the only people they owe anything to. They show this by their actions, not necessarily by their words. This chapter provides a heap of evidence against the stupidity and loyalty of our military spending, based on the shenanigans of war profiteering, wasting of military supplies, overpricing, or inaccurate pricing for “black budget” funding, the admitted fraud, then the wrist slapping fines of 2 billion dollars against 56 billion dollars of profits. The Bush administration seems to have gone to any all lengths to contribute back to contractors who supported the GOP. The bribery section describes how blatant, easy, and cheap it is for large, subsidized, multinational corporations to buy off senators. What’s the point in investing in buying and selling, when you can just take ungodly amounts of handouts from governments around the world (one in particular) -when you can make phenomenal returns (several billions) on a quarter of a million dollars spent on a U.S. senator who will throw business, and funding your way.

Another great criticism of the pentagon and the Strategic Defense Initiative is that they makes evident the size and waste of our military government at the federal level, as well as concentrating high paying jobs far from the rest of the “united” states. According to Z&N, the Congressional Budget Office reports $1 billion spent by the pentagon promoting arms exports creates 25,000 jobs. However, while job creation is touted by many a philanderer, this same $1 billion could create 30,000-47,000 jobs if spent on mass transit, housing, education, or health care. The SDI has spent $35 billion in one decade, with nothing to show for it.

The best parts were saved for last, between the article, “Making a Killing on War” and the section, “Selling the Story to the Public.” In 1940, Franklin Roosevelt said, “I don’t want to see a single war millionaire created in the United States as a result of this world disaster.” I wish the same could have been said by Bush in light of the World Trade Center attack. Instead, he declared a war, enacted restrictions of civil rights, created millionaires several times over through no-bid process, contracts with billionaire corporations like Halliburton, who had also done business with Saddam Hussein (a Bush-identified terrorist). Finally, it was incredibly enlightening how Vandenburg answered Truman’s black-hearted dilemma about keeping war industries afoot during times of peace. “Scare the hell out of the American people.” For over 50 years now, this has been the agenda through threats such as the bomber, missile, antiballistic missile, fighter, mega tonnage, submarine, survivability, strategy, and security gaps; all of these are suspiciously reminiscent of the threat of “Weapons of Mass Destruction.” To boot, we now have a never ending “War on Terror” scare to validate military funding, much like our never ending, ever depleting “War on Drugs” fought by law enforcement.

The introduction of the book delineates from categories of wealth and income, pointing out that many people making over $100,000 a year wonder where all the money goes, and why they aren’t rich. Why can’t they become millionaires? It then examines seven factors common to those who become wealthy. 1) They live well below their means. 2) They allocate their time, energy, and money efficiently in ways conducive to building wealth. 3) They believe that financial independence is more important than displaying high social status. 4) The parents did not provide economic outpatient care. 5) Their adult children are economically self-sufficient. 6) They are proficient in targeting market opportunities. 7) They chose the right occupation.

The first chapter, allows us to “meet the millionaire next door”, giving us a portrait of the wealthy as people who don’t eat, dress, act like, look like, or behave like millionaires. When, in fact, they are the millionaires. Billions of advertising dollars have gone toward giving people the desire to achieve the high life, a status position of wealth and leisure. This has become so popular, that many who actually do get rich based off of luck or talent that is highly marketable, many live the high life right into bankruptcy. This chapter defines wealth based off of net worth. According to the text, one’s net worth should be one’s age multiplied by realized “pretax annual household income from all sources except inheritances. Divide by ten. This, less any inherited wealth” is what one’s net worth should be.

The aspect of frugality is covered in pointing out that millionaires are pragmatists. They do the sensible thing when making purchase decisions. They buy vehicles for money by the pound (Ford Crown Victoria), because of safety, reliability, quality, and cheap costs. They don’t buy only the best, rather, the best for the money; whatever is the smartest long term purchase. This is also a great theory on buying tires. While they are incredibly important for anyone traveling on the roads at high speeds, or near others of high speeds, quality tires are of huge importance. However, the second best available tires can be almost $40 cheaper than the best, and be almost identical. Rich people don’t buy for the name brand, but for the quality, and only when that is important.

Prodigious accumulators of wealth (PAWs) are for more active in making financial decisions that affect them long term than are under accumulators of wealth (UAWs). Also, they spend much more time simply working to accumulate money to invest. When they’re not working, they’re usually working, and when they’re not doing that, they’re making the best of their free time. The tax code is written to protect and encourage investors. If all you want is a big pay check, you’ll also be hit the hardest in taxable income.

Another important aspect for accumulators of wealth, which I see everywhere now, due to increased costs of living, is outpatient care. Parents, who provide outpatient care to their own parents or bad seed relative, but most commonly, to their adult children, do not become PAWs. In fact, they may become poorer than they already are. Plus one key ingredient to not ending up in this situation is to invest your money, not live high status or showy lifestyles, and thus, not let your children know what your finances are like. When your money goes straight from your paycheck to investments and you only pay for things in cash, and only carry small amounts, then people can’t get money from you even if you are a pushover.

Finally, the book addresses finding your niche, as well as how to best help your child becomes professionals in their niches. Find work that you enjoy; no matter what it pays, as long as it allows you to work a lot without high stress, and takes care of your needs (which includes healthcare, insurance, retirement, and the ability to put a little more aside for yourself). The book cautions against high paying jobs, which are also high status jobs, since they require you wear fancy suits, drive expensive cars, appear to be people’s misconceived view of success. For example, a landlord might do better than a real estate agent, because he brings in similar amounts of money, but doesn’t pay out any toward appearances and salesmanship. For children of any age, if you are going to provide them “help” do so with investments that they can’t touch for some time. So that they have to work to survive for quite some time before they reap the benefits. Otherwise (and more important for young children), gifts which go toward education or tuition are the most valuable gifts that can be given according to millionaires. While PAWs did not always get much or the best of education, they share the common view that education is one the most important factors in all walks of life, as well as for becoming wealthy. Also, education level is proven to be a major contributor to income levels in the United States.

I read all four books on the reading list early on in this semester, and the two I liked the most are definitely “The Millionaire Next Door” and “The Richest Man in Babylon.” The reason I chose to write on this book though, is that it makes a lot of sense. While it doesn’t get deep into parable-style values of investing, it gives a common sense look into the real world, and how people who have actually made great accomplishments in personal financial goals in relation to people with high incomes who live paycheck to paycheck, or even people that highly value status. These two books have helped change my perspectives a bit; I bought both of them after borrowing them and reading them from the library, and have already started re-reading “The Millionaire Next Door.”

The Market Review section provided 5 mini articles, 3 of which I found interesting. “Retail Sales Mostly Flat” pointed out that energy and food costs are keeping people from shopping. Gasoline service stations are the only relatively booming retailers. “Rising Prices” stated that we are facing the worst food inflation in 17 years; with an average 2.5% annual rise for the last 15 years, then a 4% increase in 2007. The U.S. Department of Agriculture says 2008 could be worse. Finally, “Average $3.373 a Gallon” points out that gas prices seem to be on their way to an average of $3.50 per gallon, possibly peaking at $3.65 within the same month. The current average, as titled, is 53 cents more than 1 year ago.

This article shows the results of 3 different surveys about how Americans plan on spending their tax rebates. Between H&R Block, NPF, and CCH’s surveys, three major categories from highest to lowest percentages are those who plan to pay down debt or pay bills, those who plan to save or invest, and only slightly less are those who plan to spend or take vacations. However, these are plans that don’t seem to happen according to data by the IRS and credit card companies. They estimate that 80% of the money is spent quickly, while only 20% is saved long term or invested. They conclude that Americans don’t save much unless money is “whisked” into an account automatically. The reasons for not stimulating the economy include rising debt, higher gas prices, and sky rocketing healthcare costs. The short burst of a little spending doesn’t help the economy nearly as much as getting personal debt under control eventually will.

This article discusses the value of a tax-free health savings account (HSA), in conjunction with high deductible insurance plans. The spending is flexible with deductibles, uninsured procedures, coverage between insurers, or toward retirement –making it worth at least as much as a traditional IRA. Costs of healthcare are on the rise anyway, so its time to take charge of your healthcare, your costs, and to shop around with coverage plans, and operation costs.

Although I made the list from my regular shopping habits at Smith’s across the street from my home, I was surprised at how many of the items I expected to find at the other stores were not being sold. These items included the “Anti-Perspirant” variety of Brut Deodorant Spray, a brand of whip cream spray carried by all four contenders, and the “with Bacon” variety of Kraft Ranch Dressing. Also, the only exact match of my Tyson Buffalo Wings from Smith’s is at Sam’s Club, and it was $2 more. I was surprised at any significant price differences, including the pork prices and whip cream at Dan’s, and the deodorant and Miracle Whip at Albertson’s (on clearance). I caught Smith’s cheeses a week before they bounced from $4.99 to $9.49 per 2lb block. I like to stock up at Gossner’s factory when in Logan, and then freeze it (way cheaper, tastes much better). I learned manufacturer package price keeps it the same across the board, Bak’nets are 2.19 even at 7-Eleven.

Wal-Mart is almost exactly like Sam’s Club in the food sections now. They have large boxes on the shelves, with an open end toward the isle, and they have greatly decreased variety on all condiments (at least at this location). There is one type of ketchup, relish, Fry Sauce, and Ranch Dressing, but with the amount of people grabbing from the cases, streamlining is in their best interest. However, Wal-Mart isn’t that cheap in price anymore (with food).

The most important aspect I learned that lowest prices aren’t the only concern. One must consider the cost of commute, time spent devoted to shopping, and how often one shops. The patience quotient also comes into play with availability for speedy check-out, safety crowding in parking lot, crowded isles, and ease in finding what you need. I shop more often. I save because in buying less, nothing goes bad. Also, sales on items shift constantly, so I only buy what I like, only when its cheap, and I buy a lot of it at that time.

Conversion from a traditional IRA to a Roth IRA makes the most sense in lower tax brackets, because you must have a modified adjusted gross income of $100,000 or less, and have paid the income tax that year. The difference is that with a traditional IRA it is tax-free when invested, but taxed on withdrawal. With a Roth IRA you pay may only submit taxable income (so it has already been taxed) but is then free from taxes and gains upon withdrawal. The article recommends discussing with an investment advisor or tax pro to workout whether it is right for you.

This article covers the financial work of John Rogers Jr., a man who beat the S&P 500 by 4% simply by sticking with the same reliable, though unpopular, stocks of Clorox and T. Rowe Price for 20 years. He made an average of 10% return per year. Rogers has since founded the Ariel Capital Management fund. This is a minority run and owned mutual fund, which has proven well through less popular, yet steady and profitable corporate stocks. He predicts his investments will not do so well during the recession or economic slump we are in now, but as people find their high risk and cyclical names going under, the market will shift back into his direction. Rogers has proven that playing the market is often more dangerous than taking an interest in health profits from healthy businesses.