Professor Elam

The New Civil War Continues

Monday July 12, 2010

The exodus from high tax states continues. The one thing we did not hear discussed in the Lebron James story was the obvious reason to go to Miami. Mr. James is an NBA star who has played with a Cleveland team, he has bolted Ohio for Florida joining the Miami Heat team.  The alternatives, CA, OH, NY are all high income tax states. Florida has no income tax. While Mr. James cites speaking to his Mother as a final reason for his decision, we wonder if his CPA was also a party to the conversation. 

Rush Limbaugh also exited New York this past week by selling his condo. 

Note in the link on this story that there are additional taxes paid to New York on the sale. Limbaugh is mimicking the famous headline from 1976 when NYC defaulted on its bond payments. Then  NYC assumed that the President would bail them out, he did not, and so the headline was

Gerald Ford to NYC, Drop Dead. 

I suspect we are only a couple of months away from financial waterloo for CA, NYC, etc in terms of not having enough  cash to pay the bills. This weekend there was yet another article about Governors pleading for more money from Washington. 

Think of a steamship trying to escape another ship in pursuit. The lead ship exhausts the coal available to fire the boiler (okay it's a steam locomotive, more romance in that...)  What to do?  In desperation, the crew starts chopping up the boat for wood, feeding the wood to the fire under the boiler. The question is, will the ship get to port before it literally burns itself up, and sinks, in the process. This is where cash strapped states like CA, IL, Ohio, and NY are today. The resolution is not far off. 

Our reference to the New Civil War is simply that high tax, high cost states in the north continue to lose jobs and population to lower cost states in the south. 

The New Civil War Continues

Monday July 12, 2010

The exodus from high tax states continues. The one thing we did not hear discussed in the Lebron James story was the obvious reason to go to Miami. Mr. James is an NBA star who has played with a Cleveland team, he has bolted Ohio for Florida joining the Miami Heat team.  The alternatives, CA, OH, NY are all high income tax states. Florida has no income tax. While Mr. James cites speaking to his Mother as a final reason for his decision, we wonder if his CPA was also a party to the conversation. 

Rush Limbaugh also exited New York this past week by selling his condo. 

Note in the link on this story that there are additional taxes paid to New York on the sale. Limbaugh is mimicking the famous headline from 1976 when NYC defaulted on its bond payments. Then  NYC assumed that the President would bail them out, he did not, and so the headline was

Gerald Ford to NYC, Drop Dead. 

I suspect we are only a couple of months away from financial waterloo for CA, NYC, etc in terms of not having enough  cash to pay the bills. This weekend there was yet another article about Governors pleading for more money from Washington. 

Think of a steamship trying to escape another ship in pursuit. The lead ship exhausts the coal available to fire the boiler (okay it's a steam ship, more romance in that...)  What to do?  In desperation, the crew starts chopping up the boat for wood, feeding the wood to the fire under the boiler. The question is, will the ship get to port before it literally burns itself up, and sinks, in the process. This is where cash strapped states like CA, IL, Ohio, and NY are today. The resolution is not far off. 

Our reference to the New Civil War is simply that high tax, high cost states in the north continue to lose jobs and population to lower cost states in the south. 

Clockwork Accounting

Monday July 12, 2010

This is an accounting blog for accounting students. We recently received a request from a Brigham Young grad to link to his blog. So without further ado, would the students in my Intermed II class Sumer II 2010 

please take a look at 

http://clockworkaccounting.com

Nathan would appreciate your posts and thoughts on what he is doing.

Back to 1956?

Sunday July 11, 2010

Mark Steyn recently had a column suggesting that dependence on government could easily change in two generations. He cited how Europe had quickly embraced the state cradle to grave security system, so much for the plucky adventurer in life. 

A recent interview on one of the television business channels offers the same view in different fashion. Without realizing it, government has made employees a liability. Unending unemployment payments, required maternity leaves, and looming unknown medical plans have jobs either disappearing or moving offshore. Here is yet another dynamic on how America is changing its perceptions of the rewards of work. 

The tv anchor was interviewing a head hunter. The recruiter recounted the he called an out of work male engineer about a $60,000 job. Rather then positively respond, the engineer reasoned as follows. 

Well, I am making $400 a week on unemployment (probably tax free I would guess)

I am staying home while the wife works so we do not have child care costs. 

If I take the job, I will be paying the higher progressive income tax on my earnings, higher than my wife pays. 

So if I net out the child care, the money I do make, the increased taxes, and frankly the fact that I don't miss the hassle of working, I would rather stay home. The recruiter was  bit dumbstruck but the anchor could see the point of the engineer. 

Personally, my sister married a German citizen, he rationalizes the same way. He has not had a job in Germany since she married him, she works, for the same reasons, child care ( the kids are adults now), taxes, etc. And so we hurtle towards 1956. In 1956 one parent, usually Mom, was home with the kids. Whatever you think of her advice, Dr. Laura was making this point not long ago, that kids should not be shuttled off to day care, the kid kennel, as she put it. While unemployment payments may not last forever, there has been talk of the government providing stay at home payments for this reason. 

Certainly there are underground economy alternatives of performing various household chores, mowing lawns, painting houses, cleaning offices, etc. And we suspect that the prospect of paying taxes may well be an attraction to some stay at home Dads....

My point in all of this is that two years of paying  unemployment benefits has Americans perhaps thinking that one stay at home partner is not a bad idea. Yet government ostensibly wants people to go back to work, and of course pay more taxes. Hmm, is the genie out of the bottle?  Can the government convince those enjoying the pay me not to work syndrome to go back to work?   This may well be the unintended consequence of the social safety net. 

Accounting Position

Tuesday July 6, 2010

I was contacted by a recruiter today about a part time job for an accounting student, here are the requirements.

Here is an explanation of the position and the requirements.

·        Read and interpret new contracts each month to accurately calculate and record rebates and royalty accruals.  

·        Respond to internal and external client inquiries by researching issues and preparing special reporting.  

·        Perform other related rebate and royalty functions as requited.  

·        Payments, accruals, monthly journal entries

·        Performs vendor maintenance on client accounts.  

·        Perform monthly SOX controls.  

Position requires Proficient knowledge of Microsoft products, specifically Excel and Access

Applicant must have a minimum of 12 hours in accounting (completed CORE Accounting classes).

Please contact me if you are interested and qualified for this position.

Employees are the New Liabilitiy

Tuesday July 6, 2010

Employers are deciding that employees are an expensive liability. We study current liabilities in Intermed II Accounting. As you will see, there are more and more taxes s this article explains. The result is that jobs go elsewhere, or people are simply not hired. There have been recent moves of business to San Antonio from high tax states like California, this is the reason. There are now more Fortune 500 companies headquartered in Texas than in New York, again there is a reason. This is a big change in my lifetime and I see it continuing. 

I suggest that you pay attention during cost managerial as we discuss understanding break even and target profit. What if no one is hiring when you graduate, will you have the tools to succeed on your own?

E book Wars

Friday July 2, 2010

Virtually all incoming students will have an e book in their tuition. now how to read it?  Well one thing for sure, the prices of e book readers are tumbling. The analogy in this article of the razors and the blades is a good one. I always thought the reader would have to bundled with some books at a big discount. For students lugging backpacks or travelers doing the same in airports and train stations, this is a great alternative. I can see the iPad being a sort of downscale computer upscale iTouch, but I can also see the advantage of just a low priced reader, think $5 calculator. 

I do see that office depot has a toshiba laptop for 399, pretty cheap...but the e book would no doubt have longer battery life and weigh a lot less

The J P Morgan Reading List

Friday July 2, 2010

Jamie Dimon sent this reading list to the interns at J P Morgan. How many have you read?