Entries Tagged 'Taxes' ↓

Apparently, as part of the new budget that increased taxes on everyone there is a tax credit for people who purchase brand new homes.  This means that the home cannot be occupied previously by anyone.  This seems like it would be a boost to home builders.

Here are the specifics:

1) The home has to be brand new, but the tax credit applies to all buyers who intend to live in the home.  You do not have to be a new  homebuyer to qualify.

2) There is no income limit to qualify for this tax credit.

3) You have to close escrow on the home between March 1, 2009 and Feb 28, 2010.

4) There is a total of $100 million assigned to this credit, so that means only 10000 homes will qualify.  It is first come first serve by closing date.

5) You have to live in the home for at least 2 years and you will receive the $10000 in 3 installments of around $3,333 each for the next three years.

6) This tax credit can be combined with the Federal Tax credit of $8000 for new home buyers.

This tax credit actually makes me quite angry because right now California is not even paying tax refunds to people who qualify.  Now they want to use all this extra money to help home builders sell homes?

Additionally, there is a very small supply of new homes here in the Bay Area so I do not see this helping many people here.  This is definitely beneficial to some friends we know in Southern California, where the markets have a glut of new homes that are not selling.

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Just when I thought that my husband and I have been paying too much taxes, we are having another tax hike in California.  This is a basic run down of the new taxes.

•  The vehicle licensing fee is doubling to 1.15%.
• Sales tax is going up 1%, which means in San Mateo County I will be paying 9.25% on services and non-food goods.  So guess what, my hubby and I will probably shop more on Amazon for the non-essentials.
• Income tax is going up by 0.25% so the top bracket is now 10.55% for those making over $1 million per year and 9.55% for everyone else.    For the hubby and I the extra amount we will pay is just under  the paltry  stimulus package we are getting from Obama.  So our net stimulus would be around 50 cents a week.  Haha!
• The dependent tax credit is reduced by $210, so families with tons of kids will see a hit in their tax bill.

It is unfortunate, but this state has way too much debt and something had to be done.  Raising taxes is a almost inevitable.  Supposedly these tax hikes are temporary for two to four years, but the economic crisis might make them permanent.

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I was at work all day today and I only caught a little bit of the inaugural parade on the internet when my coworker showed it to us during a release meeting. I did read Obama’s speech online and here are some of my thoughts.

First of all, Obama’s speech was very well written and that is no surprise because it was probably slowly crafted by a team of highly skilled writers including Obama. I actually liked it because it was more realistic than what I would have expected. He acknowledged that this country is in a crisis and that “the challenges we face are real, they are serious and they are many”. He also saluted immigrants and soldiers as people “who have carried us up the long, rugged path towards prosperity and freedom”. He also seemed optimistic that America will bring in a “new era of peace” and that American people will need to enter a “new era of responsibility”.

Obama also did not promise too much policy in his speech, and I think that is wise. However, this the excerpt where he talked about the role of the government, and I think it was somewhat sad:

The question we ask today is not whether our government is too big or too small, but whether it works, whether it helps families find jobs at a decent wage, care they can afford, a retirement that is dignified.

Where the answer is yes, we intend to move forward. Where the answer is no, programs will end.

And those of us who manage the public’s knowledge will be held to account, to spend wisely, reform bad habits, and do our business in the light of day, because only then can we restore the vital trust between a people and their government.

Basically it says that the government will determine whether its programs are useful and move forward or end them.  This brings up the question of who watches the watchmen.  How will those in power be held accountable?  I think many Americans today feel powerless to do anything about the situation they are in, and I am not sure if the government is the answer.  Generally, people have less freedoms as governments grow larger, and I don’t see that changing under Obama.  Case and point are the newly released $350 billion TARP funds and the proposed $825 billion stimulus.  This rampant government spending is obviously not being controlled and more government spending generally increases the size and influence of the government.

Finally, I saw on many blogs and news outlets that say that the inauguration costs somewhere around $160 million to $170 million, and I think that’s just a bit too much no matter who is getting named president.  $160 to $170 million could fund many companies here in the Valley, but instead its being spent on a big party in Washington D.C.    How is that for spending wisely?  I do hope that Obama will usher in a government that’s moral, wise, and frugal, but I don’t know how much one man can do to change this giant lumbering institution that is the United States government.  I also don’t know if Obama wants to actually make the government more efficient because he is pretty much the CEO of a giant non-profit organization.   This organization has no need to be more efficient because it has a giant endowment in the tax revenues of the American people, and its CEO acquires more power as it expands.
Will  we see a new era?  Only time will tell.  Meanwhile, the parties  rage on in Washington D.C.

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I’m sure you have heard about President-Elect Barack’s Obama’s new push to pass a $770 billion to $1.3 trillion stimulus package.  I couldn’t find a a comprehensive article about the details of the plan, but what’s being reported the most in the media are the tax cuts which make up about 40% of the package.  Here they are, and here is why I think they are mostly nonsensical and probably would not do much to lift the economy.

1. $500 tax rebate per worker or $1000 tax rebate for families - I know that every bit of money helps, but is this really the best way to spend billions of dollars in stimulus money?  $500 per person works out to be about $40 per month.  I guess it’s good for a cable bill, but will $40 per month stop a family from going into foreclosure?  Will $40 per month be enough to stop local shops from closing?  Another thing is, didn’t we just have a round of stimulus like this from the Bush administration?  That one was actually $600 per worker or $1200 per couple plus $300 per kid.  Just look at how much that helped and you’ll see how much this one will help.

2.  $3000 tax rebate for each job a business creates – This one has so many holes that it’s like a piece of moldy Swiss cheese.  First of all, if a person lost a job at business A and then finds a job at business B, is business B really creating a job? It seems like that would be a net gain of 0 jobs to me.  Additionally, some businesses are doing well and some are doing poorly.  The ones that are doing poorly are very unlikely to hire someone just for the tax benefit because adding an employee is very expensive and it would only make sense to add an employee if the employee’s output of work can bring a profit.  On the other hand, the businesses that are doing well may already be planning to hire people and they will get stronger due to the tax rebate, but they probably did not need that money to begin with and again this tax rebate would have been pointless.    Another thing is that it’s unclear how long a company needs to keep an employee to claim this tax benefit and what type of employment it would be.  If those details are not clear I can see shady businesses exploiting this by hiring some person part time for half a month and then claiming the credit for a profit.  Anyway, I don’t think this tax stimulus will actually be an incentive for any logical business to add to their payrolls and I highly doubt that this will bring about a net gain in employment numbers.

3.  Corporations get to use losses in 2008 against profits obtained 5 years prior - This particular item isn’t mentioned a lot on the big news sites probably because it’s just bizarre.  I see this particular clause benefiting the giant financial firms the most because they have had the most significant losses in the last year, and they also had the biggest profits in the years prior.   A lot of companies in other industries did not suffer as badly, and the good responsible companies that were still making a profit in 2008 will not get a boost.  Again, there is no guarantee that the companies that receive this benefit will create jobs and expand the economy.  In fact, I think in this economy only the strong companies that still have a profit are still hiring because they know that they can get discounted labor and they are in a good position to use the extra labor effectively.  It is almost like Obama wants to punish the companies that had good management to make a profit despite difficulties by giving their tax dollars to those who may have been extremely irresponsible and I think it’s plain stupid.

Finally, there is a question that everyone should be asking “WHERE THE  (insert your favorite expletive here)  WILL ALL THIS MONEY COME FROM?” Oh that’s right, they will just add it to the national debt, and that will be paid by Americans for generations to come.  I know that Obama’s plan isn’t finalized, but so far I haven’t heard a single good idea from him, yet.

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Happy new year everyone!  I have been away from my blogs for a while since I spent the last couple weeks in our new home down in Southern California.  My inlaws are moving to the Philippines in about 10 days and this may be the last Christmas we will spend with them in California.  This year we do  plan to go to the Philippines to visit them for Christmas.   The last two weeks was filled with a flurry activity.  We saw my sister in law get married in Temecula to her Navy seaman and then my parents made a drive down for a couple days.  We took them to the San Diego Zoo and also Hollywood Blvd.  My husband also had the chance to see quite a few friends and have dinner with them.

Christmas was lean last year because everyone is trying to save money.  The only shopping trip we went on was after Christmas at the local mall.   I lounged a bit in the Bath & Body Works since they were having a sale, but ultimately did not buy anything.  In the end, we went to  TJ Maxx with my parents since my mom is a big fan of that store, but I have never been in one.    TJ Maxx is kind of like Ross where brand name goods  are heavily discounted for consumers. I was surprised that they had a huge selection of beauty products including AHAVA brand moisturizers that my hubby got me from Israel one year.  My mother often buys the cosmetics there as gifts for friends in China because they are really into brands in China.   Anyway, this was the place I did the bulk of Christmas shopping.  I bought two large bottles of shampoo, a camera case for my dad, a shirt for my mom, and a pair of  PJs for myself.  Everything came under $45 since the store is so discounted.  You do have to dig a bit through the many multicolored shelves, but there are plenty of heavily discounted goods to be found.

For my inlaws we waived their rent payment on the house for these last few days and didn’t really buy anything new for them because they are  trying to get rid of everything in the house right now.  They actually gave us one of the presents we got them last year for Christmas because they can’t bring it to the Philippines.  Every single day we were doing some packing and sorting because a lot of things had to go.

On New Year’s day we drove a caravan back up here to Northern California with quite a bit of furniture and kitchen goods.  My inlaws also sold one of their cars to an aunt so they’re going home with less stuff.  It took us another half day to sort everything into our closets and storage spaces.   So basically we have been quite busy.

We also found a family that agreed to be caretakers for our house after my inlaws leave.  We reserved the right to use the downstairs guest room at anytime and they will be taking care of the gardening, pool, and utilities.  It is really an awesome deal for them, but we’re hoping it will not be long term.  The hubby is really contemplating moving down south, but we would need to secure employment there and that seems to be a lot tougher than getting jobs in the Silicon Valley.  Also, the hubby is waiting for his company’s games to be published this year so that he could say on his resume that he has shipped a couple games.  So basically we won’t be moving for at least one year.   Honestly speaking, if we both had jobs with comparable pay the quality of life is a lot higher there because the cost of living is quite a bit lower.   We could actually just live on one income if we moved into our house because it’s cheaper than renting a two bedroom apartment here.  The public elementary and middle schools there also have pretty high ratings so my hubby says that it’s more likely we’d move after we have kids.   As my friend Michael jokingly (or maybe seriously)  said once, “the Bay Area is where you work really hard for a crappier life”.

Even though this year  has just begun, I already have a list of things I’m planning to do.  First, I am seriously looking into a refinance even though we just bought the home a few months ago.  The reason is that interest rates have come down significantly in the last month because of the Fed’s plan to buy mortgage backed securities.  If you have significant equity in your home, good credit, and good income then it may be a good time to refinance, also.  I’m specifically looking into a no-cost refinance and right now I’m watching the rates at IndyMac and Technology Credit Union.  IndyMac quoted me a no-cost refinance rate of 4.75% a couple weeks ago but it was impossible for me to get all the paperwork through and their phonelines are always busy. They’ve also been sold to a bunch of private investors so I’m not sure the rates will ever get that low again.   Technology Credit Union is a local Silicon Valley credit union and they have a pretty straightforward online application so I’m watching the rates there.  They also answered phone calls pretty quickly when I called so I may do the no-cost refinance with them when the rate drops a little lower.  Their rate is currently at 5.25% for the no cost and lower than 5% with costs.  This credit union is for people who work or live in Santa Clara, San Mateo, Santa Cruz, San Francisco, Contra Costa, and Alameda, so pretty much most Bay Area folks can qualify for membership.

The next beast on my list is taxes for the year of 2008.  I may hire a professional this year to do it because I exercised some stock options last year and  bought the house with the hubby.  Seriously, I really hate taxes.

I think the rest of 2009 should be quite interesting since Barack Obama will be the new president.  Will the United States be revitalized or go down the tubes?  No one knows yet, but we will be okay as long as we trust God and be responsible with our own actions.  This is a year that will be filled with challenges for everyone around the world, and hopefully these events make us stronger and more prudent in the years to come.

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