Tax Scams Make Sensational News But Media Fails To Mention Adjusting Withholding To Reduce/Eliminate Refund

When we watch television (vs Netflix, etc) it’s usually CBS — KMOV 4.1 here — unfortunately their promos on tax scams/cheats seem nonstop. Wednesday morning I checked local news sources for similar reports. KMOV had 3 mentions on their homepage, the others didn’t — but many had stories from this month:

•  KMOV: Taking a stand against tax cheats
• KMOV: Tax Cheats: St. Louis Metro rises to #3 in identity theft cases
• KMOV: Why is it so easy for crooks to steal your tax refund?
• KMOV:  News 4 Investigates: Using tax credits to steal tax refunds
• KSDK: Crooks find loophole in tax fraud safeguard
• Fox2: Avoid tax scams with Wamhoff Financial
• Post-Dispatch: St. Louis woman admits tax fraud conspiracy
• Post-Dispatch: Florida couple indicted in St. Louis in ID theft, tax fraud scheme

These stories are designed to frighten you into worrying about someone steeling your refund — you go to file and someone else has already filed a return for you — taking your refund.  Meanwhile, commercials for auto dealers talk about using your refund as a down payment — some will even double it.  So a $3,000 refund becomes a $6,000 down payment.

Many get excited by a big refund — the bigger the better. The ideal, however, is little or no refund. Why? If you get a huge refund it means you’ve lent the federal & state governments your money interest-free.  A $7800 refund means you could’ve had another $15 in your pocket every week — $65/month.  I know some people use their refund as a savings plan, if so, put that amount into a savings plan every pay period rather than letting Uncle Sam hold it. In savings it’ll earn interest and should an emergency arise  — like car trouble — you can access your money.

You want your withholding set so you get little to nothing back at tax time. You can use the IRS’s Withholding Calculator to determine how your W-4 should be completed.

If you get a big annual tax refund you are leaving yourself vulnerable to fraud.

— Steve Patterson

Readers: The Public Shouldn’t Build & Own Any New Stadium

Stadium week continues with the results of the Sunday Poll:

Reaction to the following: The public should build & own a new stadium to keep the Rams in St. Louis

1. Strongly Disagree 47 [65.28%]
2. Strongly Agree 9 [12.5%]
3. Neutral 6 [8.33%]
4. Tie 5 [6.94%]
   1. Somewhat Disagree
   2. Somewhat Agree

An overwhelming majority disagree with Missouri Governor Jay Nixon, who thinks a stadium should be a publicly-owned asset. I agree — I’m ok with long-term local & state government incentives helping Kroenke finance a stadium, but we don’t need to be stuck owning another white elephant. Let him build, own, maintain it — much harder to walk away that way!

— Steve Patterson

Federal & Missouri Fuel Taxes Should Be Raised Now, Indexed To Inflation

In the last twenty years many things have increased in cost, including steel, concrete, asphalt, labor and other expenses of transportation infrastructure. Still, the main funding mechanism (fuel taxes) haven’t increased since 1993 (federal) and 1996 (Missouri). It’s no wonder our infrastructure is falling apart. Plus, we have more infrastructure than we did 20 years ago — more to maintain.

On the federal fuel tax:

It was last raised, in the year 1993, to 18.4 cents per gallon. That’s over 20 years ago, and gas prices at the time were close to the now unimaginable $1.00 per gallon mark. Yet the amount of the gas tax was fixed and not tied to inflation — so it has not changed since. (U.S. states also charge gasoline taxes; the national average is about 23.5 cents.) (Washington Post)

Fuel taxes have never been tied to inflation, but they need to be!  Politicians don’t like raising taxes, voters seldom approve increases. Yet we want nice roads and bridges that don’t collapse. Guess what folks, that requires money! Waiting a couple of decades between increases make raising the rate much more painful and shocking, we’re better off increasing incrementally every year or two.

Why now? Gas prices at the pump are at a 4-year low right now, but it’s likely temporary.

By holding production steady amidst very low global oil prices, Saudi Arabia and its OPEC allies have indicated that they will not take the U.S. assault on their market share lying down. Despite all the advantages of advanced U.S. hydraulic fracturing technology, Middle Eastern oil still has a definitive advantage: production cost. While OPEC countries could tolerate oil prices as low as $60 per barrel, analysts predict the U.S. will see a decline in new drilling if the price falls below $70 per barrel.

In the wake of OPEC’s announcement, the U.S. West Texas Intermediate crude oil benchmark price fell below $66 per barrel—right into the sweet spot between $60 and $70 per barrel that OPEC hopes will curb U.S. oil production. (Scientific American)

U.S. production, through “fracking”, has been impressive. Still, we’re a net importer of oil. Fracking is an expensive way to extract oil from the earth, if prices are too low it doesn’t pay to continue. Something will change that causes the supply to be reduced, causing gas prices to go back up. We need to get fuel taxes increased and set to go up automatically with inflation so we can maintain our existing infrastructure.

— Steve Patterson

We Shouldn’t Finance A New Stadium To Keep The Rams In St. Louis

Last week Gov Nixon took steps to try to keep the Rams NFL franchise in the St. Louis region:

Two civic leaders who played major roles in bringing the Rams to St. Louis have been tapped to play  similar roles in trying to keep them here.

Missouri Gov. Jay Nixon discussed the future of the football team  during a teleconference this morning.

Nixon is giving attorney Bob Blitz and former Anheuser-Busch executive Dave Peacock 60 days to develop options to be presented to the Rams before Jan. 28, when the team is scheduled to announce if they’ll convert their Edward Jones Dome lease to year-to-year. (KMOX)

I have no doubt the Rams will go year to year, recently readers agreed (see Readers: St. Louis Rams Will Opt Out Of Dome Lease). They’re going to want a new stadium somewhere, no incentive to lock into an old facility for another decade.

It appears many think it is important to keep an NFL team here — at taxpayer expense.  I’m all for investing in the region, but only those investments with a high rate of return. For example, historic rehab tax credits.

From 1997:

Sports facilities attract neither tourists nor new industry. Probably the most successful export facility is Oriole Park, where about a third of the crowd at every game comes from outside the Baltimore area. (Baltimore’s baseball exports are enhanced because it is 40 miles from the nation’s capital, which has no major league baseball team.) Even so, the net gain to Baltimore’s economy in terms of new jobs and incremental tax revenues is only about $3 million a year—not much of a return on a $200 million investment. (Brookings Institute — Sports, Jobs, & Taxes: Are New Stadiums Worth the Cost?)

From 2012:

This is an altogether too common problem in professional sports. Across the country, franchises are able to extract taxpayer funding to build and maintain private facilities, promising huge returns for the public in the form of economic development. 

For instance, just three of the NFL’s 31 stadiums were originally built without public funds. In two of those cases, public funding was later used to upgrade the stadium or surrounding facilities, even as all 32 of the NFL’s teams ranked among Forbes’ 50 most valuable sporting franchises in the world in 2012. (Only MetLife Stadium, shared by the New York Jets and New York Giants, received no public funding.) (The Atlantic — If You Build It, They Might Not Come: The Risky Economics of Sports Stadiums)

Study after study confirms that public financing of major sports facilities is bad economic policy. I get it, we have people here that like football. For this to make any sense we’d need a team to attract significant new money from outside the region more than a dozen times per year. If Kroenke wants to build a stadium somewhere in the region on his dime then great, otherwise thanks for the one Superbowl win in the last 20 years. Best of luck wherever you end up.

— Steve Patterson

Updating Parking Garage Lighting

Yesterday I posted about a parking garage attempting, poorly, to look like numerous buildings. In researching the garage I discovered in June Cheyenne WY approved spending a little more than $130,000 to upgrade the lighting from metal halide fixtures to LED.

Bob Bradshaw, the city’s special projects director, said the current metal halide bulbs are “burning out at a rate of a couple a day” and can cost up to $260 each to replace.

Not only are the LED bulbs more energy efficient, they last longer and require less maintenance, Bradshaw said. That means the city would save money on both energy bills and maintenance costs with the new lights. (source)

The new lighting is estimated to save $253,077 over the next decade, with the break even point “in just over four years.” While in Colorado & Wyoming electricians finished replacing the old halogen lights in our condo parking garage, located underneath both buildings.  The lights are on 24 hours a day, between electricity and replacements representing over 16% of our annual budget.

A rebate from Ameren reduced our upfront costs about 30%, but it was still a substantial investment. With a payoff of just 18 months the majority of us voted to proceed.

Once our inventory of compact fluorescents (CFL) has been depleted, we’ll begin using LED bulbs in our stairwells and hallways.

— Steve Patterson