It’s Labor Day

Here’s the problem with the whole corporate tax equation. Our tax structure was set up with the idea business would be the driver of employment. Business has decided that’s not part of the deal anymore. Companies offshore and automate and do so to save every penny.

George Jetson at WorkIt’s Labor Day.

I grew up in an apartment complex financed and built by Local 3 of the Electrical Workers Union. I joke now about its Soviet style architecture and warmth, but places like Electchester were needed. The workforce in post-WW2 America was growing like crazy.

Our softball league used to march down 5th Avenue in the Labor Day Parade. It was a big deal in New York City.

It’s not even held on Labor Day anymore.

Labor is vilified today. Unions, more evil still.

All this has come to mind after seeing a Facebook post (then online shouting match) about American corporate taxes. My blood began to boil. Instead of joining the flamewar, let me vent.

Here’s the problem with the whole corporate tax equation. Our tax structure was set up with the idea business would be the driver of employment.

Charles Wilson, a nominee for Secretary of Defense in the early 50s and former GM executive famously said, “I thought what was good for our country was good for General Motors, and vice versa.”

He was right… sixty years ago.

Business has decided that’s no longer part of the deal. Companies offshore, centralize and automate and do so to save every penny.

At your place of employment are there now fewer people doing the same work as a few years ago? My guess is yes. You’re not alone.

When I was a kid, George Jetson drove to work and immediately put his feet on his desk. Wasn’t that our expectation? The future would be less work and more comfort.

That’s not how automation has worked. We have not been augmented. We have been replaced.

The list of non-human jobs grows by the day. Versatile robots and driverless vehicles? Certainly within our lifetimes.

What truly wasn’t expected was the optimization of tasks. Computers have made this possible. Companies learned how to make workers much more productive. None of this is done to the laborer’s benefit.

There was once a class of middle managers who ran departments within stores. WalMart, Home Depot, Target and all the rest have learned how to massively manage from a central location. When stores like Caldors and Zayers closed, that level of job disappeared too.

I grew up in the age of strong labor. The middle class was a good place to be. Hourly employees owned homes.

Our current economic and tax structure can only support a nation of haves and have nots. There are already not enough jobs to go around. And it’s like that in nearly all the industrialized world.

We need to make a decision. What kind of society do we want and how will we make that happen? What level of need and poverty will we accept and for how many?

Whatever the answer is, it’s certainly not what we’re doing now.

I’m Not Mark Cuban… But


Mark Cuban, outspoken owner of the Dallas Mavericks, TV shark and luckiest Internet bubble buyout recipient ever made news with a tweet early this morning.

Cuban is talking about corporate inversions. That’s where a large company buys a smaller company then adopts its favorable headquarters location for tax purposes.

It doesn’t move. It just declares this new place its HQ. By virtue of this paper shuffling they stop paying most federal taxes!

Cuban will sell their stock.

I can’t do that. I own no common stock. However, I pledge to stop supporting businesses that do this.

I’m talking to you Walgreens!

From the Wall Street Journal:

Walgreen is currently thinking about leaving American shores, as part a plan to buy the rest of Alliance Boots GmbH, which operates a U.K. drugstore chain and is based in Switzerland. The move could help Walgreen lower its U.S. tax bill saving the company hundreds of millions of dollars a year—money that wouldn’t flow into the U.S. Treasury.

That’s my prescription bottle at the top of this entry. Walgreens–it will be my last and I’ll absolutely join the boycott of your stores which will surely follow.

I’m not concerned whether your move is legal. I just know it’s wrong.


orange_county_sealWe got a piece of real first class mail from the bank that holds our mortgage a few days ago. They wanted us to know we were a few grand past due on our real estate taxes.

Say what?

Yesterday they followed up with a phone call. You know they were serious, the CSR was here in the states.

It’s all true. The Foxes who’ve never once had a credit ding of any type (because I am not allowed to handle money) were 90+ days behind on our property taxes.

You’ve got to follow this closely, because it makes no sense. The tax collector doesn’t change the address for tax bills at the time a property is sold. It happens all at once, once every year.

I called the tax collector’s office in Santa Ana to straighten things out.

“Parcel number, please?”

The woman on the other end of the phone couldn’t use my address to find it. I was instructed to call the tax assessor’s office.

Back to the tax collector, now with the parcel number. Everything was explained. We’re good now.

I’m looking at the original pages that came in the mail. They’re marked up with names, numbers and notes. The arrows I’ve drawn since high school, maybe earlier, are scattered on the page. This could pass for 1968 Geoff down to the doodles.

The check, including the next property tax installment, is in the mail. It was suggested, if I requested the county would offer clemency on any penalties or interest. This must happen a lot.

A New Credit Card… Again

A New Card Is On The Way  GmailExcuse us while Helaine and I pull all our hair out by the roots one strand at a time!

Our Southwest Airlines credit card is being replaced, again. The new card gets a new number. EVERYONE we do business with on a regular basis must be told.

Maybe you remember the last time this happened? We were driving from Connecticut to California. We were in Lincoln, Nebraska when we got the call.

I’ve lost count how many times this has happened, but at least five. We expect Chase not to extend the expiration date, so this will have to be done again in about a year. Make it at least six times.

What we’ve learned through all this is EVERY website puts credit card number changes in a different place. Each requires different hoops be jumped through and that you understand their particular style of business English. Some changes will take seconds, others will follow long minutes of head scratching.

Part of the reason this stings so much is because each-and-every time this has happened it’s been because of how Chase (and other American banks) issue cards.

It’s my understanding the “Target Caper” couldn’t have happened in Europe or Asia. There, credit card issuers have spent a little money to improve security. Here in the states, their security ends up being part of my job!

Not happy.

Angry Geoff Writes About Economics

To me it is a prime example of what is wrong with the economic policies in this country. It’s part of why we’re in the mess we’re in.

I was reading the Times a few mornings ago. I got really upset. There was an article in the Business Section that described a deal in the making. To me it is a prime example of what is wrong with the economic policies in this country. It’s part of why we’re in the mess we’re in.

The latest — and biggest push so far this year — came on Monday, when the hedge fund Jana Partners, along with a Canadian pension plan, announced a combined 5.2 percent stake in McGraw-Hill. The investment could build pressure for a breakup of the conglomerate.

Jana Partners’ website is among the most beautifully cryptic I’ve ever seen. There’s a place to login, a place to register and a contact form. There’s no “About Us” or names or photos or address or phone number. The page is a little shy in the info category.

Luckily, you really don’t need to know anything about Jana because of the last four words in the Times’ story, “breakup of the conglomerate.”

McGraw Hill has a website too. Its “Corporate Responsibility” tab has ten submenus! I sense a difference in corporate cultures.

The McGraw-Hill Companies is driving the financial services, education and business information markets through leading brands such as Standard & Poor’s, McGraw-Hill Education and J.D. Power and Associates.

If you work for McGraw Hill this is at best bad news for you. It’s possibly terrible news.

By splitting the company into bite sized chunks you’ll basically be chum in the water as Jana looks for buyers. In many cases those buyers are currently your competitors. When they buy you they might already have someone who does what you do.

Your entire business entity could just disappear. Poof. The valuable stuff will be sold, but without you.

I guess it’s a free market, so Jana or anyone should be able to buy and sell businesses as they please. I just want to make sure the tax implications match the actual circumstances.

This may be good for Jana, but it’s bad for the nation. Jobs will surely be lost. Businesses will be swallowed whole. There will be less competition.

We shouldn’t have tax laws that encourage this. This is only a good deal if you define good in a very selfish way!

And yet…

From Forbes: After tense moments in the great tax debates of 2010, two important tax breaks for hedge funds and investment managers survived repeal efforts from Congress and the White House. Although Democrats tried hard

Seriously, why would we make this a favored economic pursuit? Why subsidize this pillage? We’re pissing in the well.

I Hate Preparing My Taxes

Of course the real problem is I always feel I’ve forgotten something or screwed up something. My favor? Their favor? Who knows? Any mistake is money plus or minus.

tax return info on the table.jpgFiling taxes! Is there anything we do more painful or difficult? I hate it and I’m getting a refund. I’d be suicidal if I had to cut a check as well.

For the past few years we’ve been using TurboTax. I logged in, found my account and then realized there are probably online coupons to save money. I found one and reentered the site, but it was too late. TurboTax would only allow me to pay the full price.

Helaine asked if it was worth it to try and undo the $3? No. But this is like the cell companies giving long messages on voicemail so you’ll use more minutes, right? TurboTax rakes in an extra $3 thousands… maybe hundreds of thousands of times. It adds up.

They also charge much more to do Connecticut’s taxes than the federal forms. Let me restate: They also charge much more to do Connecticut’s much shorter and simpler taxes than the federal forms! All the info and questions are already filled-in.
I guess their cost per filer is greater, but this is a little nuts–and by a little I mean a lot.

We only go through this once a year so it’s tough to remember the specific details, but the user interface seems to be a little more sophisticated, more helpful each year. It’s a mature app but they’ve found ways to improve.

Of course the real problem is I always feel I’ve forgotten something or screwed up something. My favor? Their favor? Who knows? Any mistake is money plus or minus.

As the process ends TurboTax invites you to use Mint. The choice is Helaine’s as she’s Secretary of our Treasury, but it might not be a bad idea.

Tough Times In The Biz

The problem with the Internet is, it’s tough for conventional businesses to compete with something being given away for free! The entire cost/revenue structure of the Internet is crazy compared to traditional businesses.

tv-camera.jpgThere’s a big headline, in red, on Drudge tonight: “CBSNEWS IN TALKS TO CONTRACT OUT REPORTING TO CNN.” It’s actually just a link to a New York Times story which says CBS is thinking of outsourcing much of its news gathering.

I’m not sure what’s going on in my business all of a sudden. I suspect it’s not good.

Last week CBS started taking a hatchet to it’s owned and operated TV stations. For five decades, these O&O properties have been cash cows. No more.

Anchors and reporters, people whose services were fought over a few years ago, were dismissed without a blink. Some of these folks were making seven figure salaries. All were household names in their own communities.

For example, in Minneapolis, meteorologist Paul Douglas was let go. Paul had been in the market over twenty years. If he wasn’t making a half million a year, he had to be close.

He was gone before he could say goodbye.

“The simple truth: Like many other CBS employees, I was a target at a time when there are systemic, long-term challenges. No attempt was made to negotiate a lower salary; it was pretty cut and dry. It’s just business, dollars and cents — I get it.”

Writing in an online bulletin board for meteorologists, a former on-air met said:

NO TV weather job is safe. Longevity makes you even less secure (since you make so much more than anyone else in the building). Make sure you have a backup plan and a solid amount of savings (minimum of 6-months) to tide you over. Live frugally now and put away EVERY PENNY in case you are slashed in the next round of cuts which are inevitable.

I’m not sure I’m ready to go that far, but the business has changed. My competition isn’t just the local stations, or The Weather Channel (always a minor player in the general scheme of things), but, and every website with a forecast… which seems to be all of them.

The value of high profile talent, people who could draw an audience to a station, seems to have dropped rapidly. If these CBS firings have little or no negative impact on ratings, other managers will be emboldened to chop away too.

The Internet has changed many expectations. That’s fine, and as it should be.

The Internet has freed information from a schedule. Virtually everything is available on demand. And, at the moment, the Internet reports the news without reporters, shows video without production staffs, and sells products without stores. Companies that pay people say, “why?”

If at some point the Internet drives newspapers and TV stations out of business, where exactly will local news come from?

The Internet resembles the oxpecker, an African bird that lives on rhinoceroses.

“Although the birds also eat blood from sores on the rhino’s skin and thus obstruct healing, they are still tolerated.” – African Wildlife Federation.

The problem with the Internet is, it’s tough for conventional businesses to compete with something being given away for free! The entire cost/revenue structure of the Internet is crazy compared to traditional businesses.

Last year, Google had $16 billion revenue with 18,000 employees. That’s around $900,000 revenue per employee. Their ‘real’ operating expenses were only $2.7 billion, with another $2.1 billion thrown in for research and development. Their pre-tax net was close to $6 billion.

Is Google or Craigslist responsible for what’s going on to newspapers and broadcasting? Maybe. Maybe it’s the appearance of hundreds of channels, each with a tiny audience… but it’s tiny times hundreds!

Maybe it’s the Wal*Mart’ing of America; the disappearance of hundreds of stores in favor of one… and the disappearance of hundreds of local advertisers as well.

It’s not one thing. It’s a variety of things, but they’re reaching critical mass.

At the moment, you can buy two shares of Journal Register (publisher of the New Haven Register and other papers) stock for about the same price as a copy of its newspapers!

Journal Register just announced they’re exploring their ‘options’. I don’t know a lot about finance, but is there anything left to sell?

Sam Zell, who heavily leveraged his recent purchase of the gigantic Tribune Corporation, is now rumored to be selling some of their papers. That’s something he originally said he wasn’t going to do. He needs the cash to pay the debt.

The funny thing is, newspapers, radio and TV stations still make a lot of money, as long as you don’t factor in the financing used to buy them. Many were purchased at what now looks like inflated prices. The assumption was their value (and revenues) would rise. It’s similar to what’s gone on in the housing market.

Tonight on IM, a friend in the business said

Sorry to say this, because this is your income, but, Local TV is DOA.

In a way, I’m glad you are at this stage of this career and this isn’t happening in 1980.

You have many things you can do

Again, I think that’s a little heavy on the melodrama, but times are definitely tough.

I am very lucky to be under contract right now.