Economy Politics

Rothization: Peter? Meet Paul.

The Republicans are proposing massive tax cuts, including a 15-point decrease in the Corporate tax rate from 35 down to 20, in their new tax code “reform” bill. But to do so, they need to at least have the veneer of those tax cuts being paid for.

There have been a few proposals to do this, but one that has gained steam in the Senate is what is euphemistically being called “Rothization.” In short order, this means capping the amount of pre-tax money you’re allowed to invest in your 401k. You can invest more, but that money will be taxable.

Trump, in his predictably self-harming way, has thrown cold water on this idea. But Trump being Trump, that’s far from saying the idea is dead. So what is Rothization? Like everything else about taxes and tax policy, it’s goddamned confusing. Here’s the basics as I see them:

What is Rothization?

What this really means is a cap on the amount of pre-tax deduction a private individual can invest in their 401k. The cap has been proposed at $2,400. After you’ve invested that $2,400, the rest of your 401k money would move into an investment that is called a Roth IRA. Roth IRAs are investments of post-tax money, meaning you’ll be paying taxes on anything above $2,400. The advantage of Roth IRAs, such as they are, is that when it comes time to withdraw your money, you won’t be required to pay taxes on it.

That doesn’t sound bad to me?

It’s not. Roth IRAs are an excellent investment tool if you have the money to contribute to your retirement above and beyond what your 401k will produce. But they’re not a substitute for 401k investments.

So… what’s the problem?

401k was created specifically to incentivize investment in our futures. By making contributions tax-exempt, 401k investments can reduce your taxable income quite a bit, making them an excellent way to both save for the future and also provide a short-term gain for your family’s pocketbook. Taking this tax incentive away deincentivizes investment and raises your taxes. It’s a double hit on your economic health.

This is a very-specifically targeted Middle Class tax hike

Actually, if your employer matches at 5% and you make 30k a year, you’ll only invest about $1,500 a year. You’re fine.

But if you’re in the middle of our tax brackets, this is going to hit you hard. Anyone making over $48k and contributing at 5% is going to see a tax increase. If you’ve been aggressive until now about saving for retirement, investing more than your employer’s match, you’ll see an even bigger tax increase.

Also, it’s unclear if this $2,400 cap holds for dual-income families. If so, even lower-income families could see a tax hike.

This disincentivizes retirement investment

I guess I thought Republicans were always scolding me about not investing my income. I guess I always thought I heard them justify tax cuts because they “could be invested.” But now, Republicans are telling us that, in order to pay for a corporate tax rate cut, we’re going to need to either invest less or pay more taxes. We have those two choices, under their tax plan. That doesn’t seem like a very good deal to me.


The Datagram: Valentine’s Day is damned unfair

Life’s not fair. Your mom told you that. But take a look at these numbers. It’s bad enough that men outspend women on Valentine’s Day – it’s bad enough that we’ve let the Hallmark Corporation get away with this Valentine’s Day bullshit for as long as we have in the first place – but it’s clearly not being spent on anything we men can enjoy.

And before you say it, any sex that happens on this day was absolutely not either paid for nor expected nor even wished for too earnestly. We’re just trying to survive, here, fellas.

[posts post_type=”datagram” loop=”datagrams” taxonomy=”post_tag” tax_slug=”valentines” posts_per_page=”100″]


Everybody, please: stop “paying it forward” at the Starbucks drive thru.

I get it. Spread a little love, do something nice, and make the world a little bit nicer. I’m all about those things, and I appreciate the effort, especially on a bleary-eyed Wednesday morning.

But think about what you’ve just done, for a moment. You paid for my entire purchase at Starbucks. The whole thing. With my son in the car, on the way to daycare, this includes:

  • A venti latte
  • A breakfast sandwich
  • A brownie
  • A chocolate milk

All tolled, this was about a $13 “pay it forward.” If I can afford to take my son to Starbucks on any random morning, as nice a gesture as you might think it is, you’re basically showering charity on a guy who clearly does not need it.

The whole “pay it forward” thing smacks of self-congratulatory nonsense, anyway. Wherever you happen to be in a drive thru, the person behind you is in a car, buying disposable luxury items like fast food. That may not seem like Lifestyles of the Rich and Famous to you – and it’s not – but you and they share at least some of the same good fortune of living in a very rich country. They’re at least in a comparable socio-economic strata as you.

So then, to whom are you providing comfort? Not anyone who needs it more than you. You’re not paying it forward. You’re just keeping your money within your own demographic group. Paying it sideways, you might say. Circle perks, if you prefer.

Why not take that same $13 and just leave it on a news paper machine on Monroe Ave? Someone there will get at least as much use out of it as a guy with a quarter million dollar house in Webster, wasting money on overpriced coffee. Maybe a kid will buy some Monster Energy Drink. Maybe a homeless guy will buy a bottle of booze. Doesn’t sound much like money well spent to you? Neither is buying me something I’m just going to pass in 24 hours or less.

Better yet, why not give that money to the Willow Domestic Violence Center, or the ABVI or hey! What about the Lollipop Farms Seniors-for-Seniors pet adoption program? Use your imagination, there’s lots of places you could be putting that money that will spread far more love than I will.

The point is: “paying it forward” isn’t really all that nice. And doing so at Starbucks is a special exercise in inefficacy. Yes, I got my food for free. No, I did not continue the cycle of silliness. You wasted your money. Just stop.

Economy Politics Rochester

PAETEC: Just Business

To be clear, there is as yet no evidence of criminal activity in the PAETEC / Windstream deal. Which is not surprising. There is also nothing in the deal which, in terms of gross corporate governance, violates any maxim of ethics. Also not surprising.

But is that and should that be the limit of our concern? The Rochester Business Journal seems to think so:

After Paetec, Rochester Business Journal:

But either way, the first obligation of Paetec’s board is to its shareholders. Anyone who thinks otherwise has forgotten that Paetec is publicly held-and has not been paying attention to what Mr. Chesonis has said a number of times since 2007.

This same basic idea is echoed, ad nauseum, by Rochester’s own Corporate Council Mayor Tom Richards. But is that and should that be the limit of our concern? I’ve made the point in the past that getting indignant about the situation isn’t going to make it any better. But somewhere between screeching about Bob Duffy needing to get involved and the bland corporate boilerplate response is what is probably a better position for the leader of a city about to lose its shirt. Again.

No, there may in fact be nothing wrong here, in terms of the rules of the game that lawyers and judges have setup for lo this many centuries. But this is somebody’s home. This is Rochester. And if Midtown wasn’t what we remember its former glory to be, prior to being knocked down, it is still our pride and the center of the town we call our home… even if we’re really from East Rochester or Gates. Business is not just business for us.

We do not need to be told that we lost fair and square. We don’t need “funeral chatter” about how Midtown “isn’t suffering anymore” or “has gone to a better place” or that the result was always a risk with such a tricky procedure. We need someone to stand up with an ounce of pride and, without groveling and insisting “we’ll do all we can to keep them here,” get in the game and find out what it takes to make the sale. Are we really going to beg a company from fucking Arkansas to stay in New York State? Is that the level of pride we’ve been reduced to? Because our leadership can’t come up with anything better?

And lets be fair: I’m not talking to Mayor Richards myself. I’m not a journalist; I’m not interviewing him or watching him be interviewed or editing interview film. I have no first-hand knowledge of how he feels about anything. Perhaps the news media, in its panic to cover such a big story, is missing the nuance of the Mayor’s position. Maybe the effervescent positivity corporate lawyers are so famous for isn’t coming through.

But then, the news media is hardly anyone’s only outlet, is it? Pretty sure that, even in these hard economic times, Blogger accounts are free.

Economy Politics Rochester

PAETEC: No Deception, They Just Left Us the Bag

Of course we knew: this thing was going to look a whole lot uglier once the SEC filings came out. And indeed it does:

PAETEC, Windstream Agreement Has Headquarters Out – Rochester, News, Weather, Sports, and Events –

One of the principles in the demolition of the Midtown Plaza site says in the article that he doesn’t believe there was any deception. Funny: I wasn’t told, were you?

So, how many other people were so forthcoming without telling us?

Economy Journalism Rochester

PAETEC: Seriously, Rochester. Let’s Not Do This.

The Midtown Plaza drama continues, picture via DragonFlyEye.Net

I don’t think anyone in Rochester or the surrounding area needs to explain to anyone else why the PAETEC sale is a big shot in the gut. We get it. And somehow or another, things need to be made right. But we don’t start here:

PAETEC head must advocate for city | Democrat and Chronicle |

Mayor Thomas Richards is absolutely right to say that focusing on keeping jobs here needs to be the top priority. Lt. Gov. Robert Duffy should get involved as part of the state’s economic development efforts.

The second challenge is what will become of the portion of the Midtown plot where PAETEC’s new office tower was envisioned. Here is where PAETEC CEO Arunas Chesonis, who first approached then-Mayor Duffy about moving his company downtown, needs to step up.

Former Mayor become Lieutenant Governor Bob Duffy needs to step up and help out. Former owner of PAETEC and downtown developer become wealthy retiree Chesonis needs to step up…

Holy shit, girl. How many exes are you gonna cling to before you realize you’ve got to handle this on your own?

Economy Journalism Rochester

PAETEC: Rochester is Without a Financial Media Network

As the facts roll in on the PAETEC / Windstream buy-out, the thing that keeps getting under my skin is: Rochester is almost completely devoid of financial or economic news in any real sense.

PAETEC to be sold to Windstream | Democrat and Chronicle |

The CEO of Windstream says they’ve been looking at PAETEC for “a long time,” and both CEOs seem to know each other. I’m not saying that this deal absolutely would have been sniffed out with a better economic journalism team, but certainly, it would have been less of a surprise. Instead, we have people at the D&C and elsewhere who normally cover completely different topics struggling to understand and digest the details of the merger. That doesn’t bode well for an informed electorate.

What passes for economic news in this town ordinarily is the Rochester Business Journal and the D&C’s Business sections: two resources that might as well be RSS feeds for local company’s press releases. That’s when they’re doing good work. When they’re doing bad work, they’re producing dating videos for local businesses. “NonDescriptCompanyX enjoys long walks on the beach, hot cocoa and providing innovative, customized service solutions to its valued customers.”

But in this deference-rich, politely conservative Hobbit culture of Rochester where nobody’s allowed to ask difficult questions without being branded as a kill-joy, is it too much to ask that someone specialize in picking apart the details of the financial underpinnings of our economy? Maybe.

Economy Journalism

Budgets are Not Fixed “Once and For All.”

There is plenty to hate about this article and very little to recommend it. But the following line is just amazingly stupid:

Debt deal offers only small blessings for economy | Reuters.

About $1.5 trillion of the planned savings will be decided by a bipartisan congressional commission, leaving unanswered the question as to whether the United States has the political will to tame the country’s growing debt pile once and for all.

Budgets are living documents. Economies grow and shrink. There is no reason to think that we will ever deal with budgetary problems “once and for all.” In fact, the only reason we’ve been subjected to this whole pointless psychodrama is because Congress attempted to solve the problem in such final terms and has subsequently ignored its own edict 74 times.

Economy Politics

What Passes for Compromise, These Days


Talking Points Memo is currently reporting that the latest “compromise” plan out of the House – this meaning: Conservatives compromising with Very Conservatives – proposes a too-small debt ceiling addition in exchange for a balanced budget Constitutional amendment:

Practically Delusional | Talking Points Memo.

The debt ceiling would be raised immediately but not by enough to get the government through next year. To get the second debt ceiling increase, House Republicans want a balanced budget constitutionalamendment to pass both chambers first and be referred to the states.

Basically, the Republicans in the House want two thirds of a process only known to have happened 27 times in 200+ years to be completed before they’ll raise the debt ceiling again. This is the sound of the wheels coming right off the Speaker Boehner soapbox cart.

Economy Politics Rochester

The Problem with the Fast Ferry Wasn’t the Fast Ferry

The Rochester Fast Ferry, via bobcatnorth on Flickr

Someone wants to try a ferry service in Rochester again. No shit. Really:

Sibley descendant floats idea to restart ferry service | Democrat and Chronicle |

I love Rochester and I love Monroe County. But the problem with the Fast Ferry was never the Fast Ferry: it was us. It is our legacy and our destiny to be fiscally and socially conservative with a small “c.” I don’t mean that we’re all bible-thumping, anti-tax zealots; just folks who don’t figure anything all that grand is ever going to happen here and anyway… how much will it cost? Will there be loud people having fun past nine o’clock?

Yes, there were huge structural, organizational and logistical problems with the Fast Ferry system. But those problems could have been addressed and improved upon by a community that wanted the Fast Ferry. Instead, every small scandal threatened to shut the service down.. until it ultimately collapsed in the epic failure it was doomed to be from the outset.

Other projects follow a similar suit. The Renn Square project literally shrank out of existence, from a four-theater project with a bus terminal, MCC campus and shops to a three-theater project with a bus terminal and campus to a two-theater project with a bus terminal to a bus terminal to….. blink. Frontier Field, nice though it undeniably is, started out as a larger stadium than its predecessor and ended up as a teacup-sized venue 5000 seats smaller than Silver.

There were good reasons to question every one of these projects. There were perfectly logical explanations for why they shrank. But where other communities would have demanded improvements to the plan, our community cried out for each plan to disappear. So developers made them smaller.

Really, the reason they all shrank is because we lack the capacity to dream big for ourselves. I’m sorry. I love you guys. But you know its true.

Economy Politics

National Poll Shows: Gallup Prefers Spending Cuts

So apparently today is Dump on Gallup day. I’m ok with that.

Gallup’s poll data makes the point quite clearly that Americans prefer the idea of shared sacrifice – one third of respondents preferring a combination of tax increases along with spending cuts – to a scheme of simply one or the other. But because the other two options are lopsidedly in favour of spending cuts, they lead with the following headline:

On Deficit, Americans Prefer Spending Cuts; Open to Tax Hikes.

Ah! We’re just “open” to tax hikes? Because when asked, we are predictably disinclined to pay more in taxes? This is an egregious reinterpretation of the data their own polls show.

Economy Media Rochester

The D&C Can’t Find One Health Care Official Who Likes the #HCR Rules

Tom Tobin turns in one of his typical masterpieces. In a three page article on the new ACO rules included with the Health Care Reform Bill, which includes multiple quotes from six different professionals in the health care industry, there is nary a single positive or even modestly open-minded quotation to use in regards to the new regulations. I guess he just couldn’t find a good one:

ACOs get cold shoulder as health reform hits new obstacle | Democrat and Chronicle |

Now, I’m not saying that there isn’t plenty to hate about the implementation of ACOs. I really don’t know. I’m also not saying that none of these interviewees ever said a kind word about the Health Care Reform bill or the ACOs implemented by it. I’m sure they said lots of things that didn’t make the article. What I am saying is that I’m pretty sure I’m no more informed about the issue as a result of reading this article.