Saturday, November 4, 2017

Saturday At The Fortress

     Apologies for the lack of a post yesterday. I didn’t feel well and didn’t have anything even vaguely interesting to say, so I restricted myself to reading, consuming lots of hot fluids, and increasing the price of Kleenex.® This morning I’m feeling much better – a good thing, as the pantry is all out of bouillon cubes and I’m thoroughly sick of tea – so I won’t let not having anything interesting to say impede me any longer. Accordingly, have a few random items of entirely personal and local importance.

     Long Island is in a tizzy over one of the revealed portions of the current GOP federal income tax bill: specifically, the one that limits the deductibility of property taxes to a maximum of $10,000 per year. Our property taxes are the highest in the nation. Few Long Island homeowners pay less than $10,000 per year in property taxes. (To give you a sense for the extortionate nature of our rates, I live in a fairly ordinary three-bedroom ranch on an acre of property, and my annual property tax bill is just over $12,000.) The taxes imposed on more recent purchasers of homes have often been over $20,000 – and not because their homes are places of palatial magnificence. So this provision of the bill will hit Island homeowners hard.

     Yet it must be done. The federal deductibility of state and local taxes has allowed states and localities to squeeze their residents that much harder, for no return the victims would value. Here on the Island, the major complaints are about our roads, which are wholly inadequate to the traffic burden and are therefore infrequently and sketchily maintained. (Yes, therefore. Think about it.) Yet as our property taxes have skyrocketed, the roads have become poorer. Clearly, the problem has not been mitigated by throwing more money at it...but Island politicians like the set-up just fine.

     I have no doubt that the residents of other regions have similar complaints, and that they anticipate considerable pain from a cap on the deductibility of their state and local tax burdens. Yet it must be done. The deduction is a form of collusion between Washington and the “donor class:” a way to benefit wealthy persons who live in opulent areas, but without being obvious about it. The same goes for the deductibility of mortgage interest, a special-interest subvention to the housing industry that originated after World War II and was rationalized as a “recovery measure.”

     It will hurt me. It will hurt most of my neighbors a lot worse. Yet it must be done. And given the pseudo-sanctity that surrounds the deduction, it will take considerable political courage from GOP Congressmen to vote for it.

     The C.S.O. wants a new barbecue grill for the coming year. (Our 17-year-old Ducane looks like something dredged out of a pig wallow and has been performing wheezily, to boot.) As usual, they who sell barbecue grills are discounting them to support sales during the “non-barbecue” portion of the year. It’s had us scanning circulars and Websites while dithering over whether we should buy now for the savings, or defer it until the good weather has returned.

     Amazon, which seems to sell just about everything nowadays, has entered the grill market. Some of the prices are quite attractive. Yet I have a great reluctance to buy anything that large and heavy over the Web. What if we should need to return it?

     The C.S.O. dismissed the possibility with a flip of the hand. “Amazon is very good about returns,” she drawled, and went back to her shopping. Of course, it wouldn’t be my lovely wife who had to package the beast, get it to the shipping center, and arrange for the return. The very thought makes my back ache.

     This sort of consideration is a large part of the reason for patronizing local merchants for certain commodities, even if their prices are higher than what can be found on line. That has implications for the near-term viability of “brick and mortar” retailers willing to back their products with strong warranties and trustworthy at-home service.

     There are other reasons for buying locally, of course. Perhaps the largest of them is customer intimacy: the development and maintenance of a trust relationship between the merchant and the locale he services. A merchant whose customers trust him to “own the product,” together with all its consequences, even long after the sale will do well at margins considerably higher than his competitors. At least, it worked for IBM.

     Precious has reminded us that in monetary terms, there’s no such thing as “free.”

     We had to pay the animal shelter about $135 for this “free” dog. We’ve had her to the veterinarian twice, with a third visit scheduled for the end of the month. Total vet bill so far: $690, and according to all those expensive tests there’s nothing wrong with her: no diseases and no parasites. She’s also managed to upset the C.S.O. by snagging and eating a freshly baked 1.5 lb. chocolate babka while we weren’t looking.

     Robert Sheckley had the right take on it:

     In New York, it never fails, the doorbell rings just when you’ve plopped down onto the couch for a well-deserved snooze. Now, a person of character would say, “To hell with that, a man’s home is his castle and they can slide any telegrams under the door.” But if you’re like Edelstein, not particularly strong on character, then you think to yourself that maybe it’s the blonde from 12C who has come up to borrow a jar of chili powder. Or it could even be some crazy film producer who wants to make a movie based on the letters you’ve been sending your mother in Santa Monica. (And why not; don’t they make movies out of worse material than that?)
     Yet this time, Edelstein had really decided not to answer the bell. Lying on the couch, his eyes still closed, he called out, “I don’t want any.”
     “Yes you do,” a voice from the other side of the door replied.
     “I’ve got all the encyclopedias, brushes, and waterless cookery I need,” Edelstein called back wearily. “Whatever you’ve got, I’ve got it already.”
     “Look,” the voice said, “I’m not selling anything. I want to give you something.”
     Edelstein smiled the thin, sour smile of the New Yorker who knows that if someone made him a gift of a package of genuine, unmarked $20 bills, he’d still somehow end up having to pay for it.
     “If it’s free,” Edelstein answered, “then I definitely can’t afford it.”

     [From “The Same To You Doubled”]

     There’s also this memorable snippet from the first Jack Reacher movie:

     Beware “free” stuff. It could prove to be the most expensive purchase you’ll ever make.

     That’s all for today, Gentle Reader. I’ll be spending the rest of the day on home maintenance and matters fictional. It’s been a month since the release of Innocents, so it’s time to get back into harness and see what other absurdities I can generate. (I’m still trying to come up with a plot that will make use of a dozen oysters on the half shell, a gallon of white, latex-based paint, and the Eiffel Tower. Nothing’s occurred to me yet, but research continues.) Until tomorrow, be well.


furball said...

Karl Denninger over at has a pretty damning article about how Amazon is forcing competitors out of the market by operating Amazon at a loss and cross-subsidizing it with profits from Amazon Web Services, which is illegal.

In another article, he's highlighted how Wal-Mart and others now offer online prices that rival Amazon's with delivery to your local store within a couple of business days.

I've never bought from Amazon or EBAY despite lower prices. I like the peace of mind knowing that I can return a defective product hassle- and postage-free to a local firm. That article about Amazon's operating at a loss was a real eye-opener, though.

Nairb said...

How about rebuilding the grill you have? I did this with my 13 year old kenmore grill. New burners, heat plates, ignitor boxes. Just use a search engine for Ducane grill parts.

Francis W. Porretto said...

Nairb / briaN, the last thing I rebuilt was 41 years ago: a Chevy small-block V8. These days, I write checks. It's simpler, faster, and doesn't involve getting dirt under the fingernails.

Scott said...

A couple of random baseless assertions/hypotheses --

-- I kind of think that the treatment of 'personal' (vs. business) income is misguided. Basically, I have slowly come to the (tentative) opinion that personal income should be treated as revenue, and not income, the reason being that the income one makes through employment largely serves as the 'revenue' of operating a household -- which is itself a productive enterprise (though people tend not to see this, because generally money is not involved except on the 'cost' side).

The more favorable tax treatment for the processes of running a household (childcare, education, etc) is given to external entities, the more those entities will be employed to do those tasks, rather than have them be done within the household (and the more personal income will tend to become just that, because it is being treated that way).

With respect to the mortgage deduction (for example), I appreciate where this line of thought comes from, but I fear that it will wind up simply removing that out of the 'household production' category and more people will simply become renters, as I seriously doubt that interest paid by businesses will become non-deductable to compensate. And the process becomes one more step towards Belloc's servile state. But maybe just a cap isn't a terrible idea.

I can think of two pretty good solutions (more generally) -- 'one deduction to rule them all' -- maybe a massive standard deduction one the order of ~$125K, and eliminate the rest. Or tax personal income on the order of a revenue tax -- only a few percent, no deductions. Taxing personal income on the same order as corporate or business income as if they were analogous is starting to seem crazy to me, though.

But anyway -- taxes are hard...

-- I've generally started thinking of the business models of places like Home Depot, car parts, grocery stores,etc, like you -- as becoming more of a warehousing model. They provide a warehousing service more than a product, and it is often a very good service and worth paying for. They aren't going anywhere anytime soon, IMO.

Linda Fox said...

That tax bill makes me cringe. I own a two-BR house on an acre of land in Rock Hill, SC, and my entire mortgage payment (which includes taxes AND home insurance) is less than that.

I've only owned homes in 2 states, SC and OH, both comparatively lower in housing costs than the coastal regions. SC's coast is even worse than your price and taxes - there are people who have inherited paid-off homes, that have to sell them, because the taxes are more than their annual incomes. OH only has small pockets of high-cost housing.

That tax change is really going to hurt. I'd expect that the lower end of the middle class is really going to hate it. There is little give in their personal budget.

But, it's a change that was long needed. Why should high-tax states be subsidized by the rest of us? This could be a long-time game changer in politics.

jabrwok said...

I've never used the mortgage deduction. The standard deduction always exceeded itemization for me (I'm in Texas, Land of the Free and No Income Tax!).

My property tax for this past year was around $1,500 for a 1,000ft^2 house on a third of an acre, and apparently this is a somewhat higher tax area (I live in Brenham, which is nowhere near as bad as Austin or the other other metropoli).