Tax Everybody!

I hate taxes, don’t you?  Every year we pay them and pay them.  We pay real estate taxes and sales taxes and income taxes.  What was it George Harrison sang?

If you drive a car, I’ll tax the street
If you try to sit, I’ll tax your seat
If you get too cold I’ll tax the heat
If you take a walk, I’ll tax your feet

We pay taxes to support our Nation, our State and our Local Governments.  We pay taxes because without them we would not have the ability to maintain order and provide for the general well-being of the citizenry.

(Of course, the whole notion that THAT”S what our government is all about is up for debate . . . but not here, in this post)

The biggest problem I have with taxes is not that I have to pay them, it’s that so many others DON’T!  Here, look at this – here are 43 major corporations who paid NO taxes in 2012 (and many of them paid none the year before or the year before and on and on):



Disgusting, isn’t it?  But this is just the tip of the iceberg!  This is just a sampling!

Did you know that Verizon, General Electric, Kraft Foods, Exxon Mobil, and Boeing paid no taxes?

There are dozens of ways these guys – who, by the way, have absolutely NO Loyalty to America – avoid paying their fair share.  My favorite has to do with companies who manufacture and sell ‘stuff.’  They set up a plant to make a component in a tax friendly nation, pay the workers starvation wages (because there, they can), sell the components to themselves for a hugely inflated price which causes a loss on the balance sheet in the US.  In the tax friendly country, the company makes a huge profit on the components and pays no taxes.

Bear in mind that many of these free loaders are also getting U.S. Government incentives and credits – corporate welfare.  We’re paying them for not paying taxes!

What’s interesting is when you look at which politicians receive donations from these jokers.  Here’s a link.  While the list is littered with Republicans (the party of business, you know), it is interesting that President Obama got more than $50,000 from Verizon and $30,000 from GE.

Put it all in blender and shake it up and what do you get?  A government owned and controlled by big business sucking the financial life out of the general population.  If you think ours is a government by and for the people . . . you’re just not paying attention.

Guess who else doesn’t pay taxes?  Non-Profits, of course.  That makes sense, doesn’t it?  Benign, helpful organizations, doing good for the public and making NO MONEY – they shouldn’t have to pay taxes, right?  Sounds good in theory, but in practice, the non-profit designation is often just a tax category (or a no-tax category) loosely applied so that millions can be made while paying nothing.  For example, did you that the National Football League – who had enough cash laying around to pay Roger Goodell $44.2 million in 2012 – is  a NON-PROFIT?  The league has more than $1 billion in assets!  The PGA and NHL are similarly classified as non-profits.  Major League Baseball used to be, but ‘came out of the closet’ so to speak because they didn’t want to have to report the salaries of their top executives.

In my home town of San Diego, the Mission Valley YMCA is a non-profit.  Somehow they managed to pay their top exec more than $500,000 last year, but they didn’t make any money.  I always remember his compensation package when I get the phone call for a donation.

While we’re at it, let’s add another group to the list of tax dodgers.  How about churches?  I know churches are the most sacred of cows and of course we don’t want to burden them with taxes!  I totally agree with that.  I think religious organizations probably ought to be exempt . . . if they are primarily religious organizations.  But over the past 30 years, many have become so political, that I can’t help but wonder why we give them a tax break.  I’m a religious guy (kinda), and I have to pay taxes.  Why not the church who sends protesters to picket the funerals of Marines?

This became very apparent to me a few years ago in the fight over California’s Prop 8.  Regardless what you think about gay marriage, that issue provided a wonderful view of how churches step out of their non-tax paying religious bailey-wicks into politics.   Prop 8 passed largely for two reasons:  it was worded so poorly that, unless you were very careful you would likely vote for it no matter what you really believed, and the donations of churches created a huge war chest of cash in support of the measure.  One of the largest contributors was the Mormon Church.

In America we have the principal of separation of Church and State.  We give churches preferential tax treatment because our religious life is important to us.  It is my opinion that when churches use their funds to influence public opinion and political battles, they should lose their tax-exempt status.

Call me a crazy radical.  I just think everyone should pay their taxes.  Can you imagine how much less we’d all have to pay if everyone paid?  Can you imagine how much good we could do, how much better off we’d all be if we all paid our fair share.

A Beautiful Cataclysm!

I remember when I burned the woods down.  My friend and I were playing in the large, unused cow pasture that stretched out across the street from my family’s home in the country south of Jacksonville, Florida.  We we 1o-ish, I think and were playing cowboys or pioneers or something like that.  We decided we needed a campfire and, of course, had a match.  I remember seeing the flames leap to an ever widening circle, my friend and I stamping and swatting and doing everything we could think of to slow them down, then finally turning and running across the field toward the safety of home.  By the time we climbed the fence by the road our little campfire was roaring through the woods and across the long meadow we’d just come through, shooting flames a dozen feet in the air.

I ran into the house, grabbed the phone and called the fire department.  “I just looked out the window and the woods across the street is ON FIRE!’ I said.  They were there in a matter of minutes.

The firemen did little to stop the fire.  Their efforts were aimed more at containing it, keeping it from jumping the street, and the gawkers from getting too close.  Mostly, they just let it burn itself out, leaving a charred, smoking mess where once tall grass grew.  As they repacked their trucks, questions were asked and soon my friend and I were isolated apart from one another and asked what happened.  I burst into tears and confessed the whole thing and I think my friend did too.  Our stories matched because we told the truth.

I was sure we were going to jail or court or worse . . . but instead we were scolded and turned over to the sternest force in our universe, our parents.  I was on restrictions for three months.

It’s funny what happened next, though.  As the days and weeks went by, as a little rain fell on that blackened pasture, new life sprouted.  Soon the whole meadow was covered with the lushest green grass anyone had ever seen.  It was beautiful!  And no trees had been permanently harmed.  It was as if our unused cow pasture became a little Garden of Eden, a joy to behold in the wake of our wickedness!

And that’s the point.  Sometimes the aftermath of cataclysm is new life and great beauty.

There’s been lots of gnashing of teeth this week about the joining of Trulia and Zillow and what it means for the real estate industry.  Most see it as devastating.  “GodZillow” they call the new company.  But that is a rather naive reaction.  Truth is, this event is just one more step in a process that began in the mid-80s: the elimination of real estate agents and brokers as we know them.

As the real estate industry gradually lost its strangle-hold on listing and sales information, as that information became more and more available to consumers via an explosion in consumer technology, as real estate practice and procedure became more and more standardized, Realtors – who used to rule that roost – have become increasingly irrelevant.

40 years ago, if you wanted to find a home you called a real estate agent who did deep research with proprietary tools only Realtors could access, put you in the car and drove you from home to home until you bought.  It was almost impossible to make a move without an agent.  Today, consumers have access to the same information, do their own research, drive by listings that look interesting on paper and call the agent with a list of homes they’d like the agent to open for them.  The agent’s most important role in the home search process is to open the door.

Real estate purchase agreements although still State specific, have become so standard that typical home transactions involve merely filling in the blanks and getting the signatures on the right lines.  Financing continues to be complex, but few real estate agents today even bother with it.  They usually just turn the qualifying and decision making around the mortgage over to their favorite lender.

What I’m getting at is on the buyer’s side, the agent’s job has gotten far easier and less involved.  But commissions? They’ve stayed the same.

This is true on the seller’s side as well, where the agent’s primary job at time of listing is to help the seller make good decisions about price and staging.  With the maturation of the Internet as a vehicle for exposure, the marketing playing field has leveled between competitors.  Your recently listed property is plugged into the MLS where it is syndicated out to dozens of online real estate portals.  Easy.  Again, your agent is very important helping negotiate a deal, estimating your net proceeds and solving problems as they arise between contract and closing. Still, it is a much smaller job than it used to be . . . but the commissions have stayed the same.

You might end up paying, say, $18,000 to sell your $300,000 house.  Think about that for a moment!  How long does it take you to earn $18,000?  Forget the commission % – what % of your EQUITY is that $18,000?  Is there any fair value for value exchange in this transaction?  Are you getting $18,000 of value for the commission you are paying?  Or are you paying it because you haven’t yet seen the better alternative?  And won’t you be jumping ship as soon as one appears?

And Realtors, the answer to that last question is:  YES!  No matter how much they love you, no matter how great a job they think you did, no matter what a nice review they gave you on Zillow, if they could find a way to do it without paying you $18,000, they would.  And every year we get closer to a world in which they can.  Real estate agents and brokers as we know them are rapidly becoming irrelevant.  In five years they will be extinct.

That’s the cataclysm, the fire storm.  Here’s the new life, the beauty, the Garden of Eden on the other side:

Right now the new way to sell your home is blossoming as the old model crumbles.  It is based on the bizarre notion that it costs no more to sell a $500,000 home than it does a $300,000 home . . . so everybody pays pretty much the same thing (and we’re talking a dollar amount here, not a %).  It’s rooted in the reality that selling real estate is not rocket science and Super Star agents who do 20 deals a year (whoopie) are not intrinsically necessary for the business to function.  It’s focused on creation and refinement of systems that get most of the work in a home transaction done, logically, efficiently, with a minimum of surprise and drama.

That’s the green grass on the other side of the cataclysm.  It is called Help-U-Sell.  And if you’re are serious about not just being in business, but thriving in the new world, you’d be wise to take a look.  I don’t even work for them anymore – but if you’d like an overview, I’d be happy to share one.