Trump Tax Proposal – Plan or Parody

gop-tax-break-richRecently, the Trump administration unveiled its self-imposed 100-day deadline broad tax cut plan.  In doing so, Mr. Trump appeared to be thumbing his nose at the two states that overwhelmingly rejected him in the November election – California and New York.  To wit, eliminating the federal deduction for state and local taxes, including property taxes. Because California and New York are among the highest tax states, the pain of this $100 Billion revenue grab will be disproportionally felt by New Yorkers and Californians relative to the rest of the nation. Meanwhile they propose retaining the mortgage interest deduction on mortgages up to $1 Million. Repealing this would most surely upset his political support base.

What is interesting is that it remains a well-guarded secret as to where Mr. Trump calls his home state for tax filing purposes. What do you want to bet that it is Florida and not New York?  Florida has no state income tax. Get the picture?

Then there is the plan to roll back corporate taxes from their current rate of 35% to 15%. This is not as big a deal as it seems. Corporate income taxes only account for around 11% of federal revenue. Contrast that to 80% from individual and payroll taxes. Now here’s the rub. Besides reducing the rate on top earners from 39.6% to 35%, the administration is proposing a pass-through provision. Currently big law firms and hedge funds organized as Limited Liability Companies pass their income through to the individual partners where they pay taxes at their individual income brackets. Now under the new tax cut plan, those partners will pay taxes at the same corporate rate of 15%. So, is it fair for this select group of highly paid individuals to be taxed at 15%, well below the rate of their lower paid employees?

Americans are very resourceful when it comes to avoiding higher taxes. An unintended consequence of this pass-through rule would be for employees in the middle to higher tax brackets to request reclassification to independent contractor status and thereby qualify for the 15% tax rate.

The elephant in the room with respect to corporate taxation is how to deal with the $2.5 Trillion in cash currently parked overseas by U.S. companies led by the likes of Apple, Google, and Microsoft. There has been no clarity provided on this issue. What must be avoided is a repeat of the tax holiday mistake of 2004 when $300 Billion was repatriated from overseas only to be returned to stockholders in the form of dividends and share buy backs. The goal should be to bring this money home for the purposes of growth and expansion to benefit the overall economy such as rebuilding our decaying infrastructure and not just for the benefit of a few elite stockholders.

To the administration’s credit, doubling the standard deduction from $12,700 to $25,400 for joint married filers is probably a good thing for many filers as it relieves them of the arduous task of itemizing.  But, it will likely come at the cost of eliminating the personal exemption of $4,050 for individuals and their dependents which would hurt larger families. The jury is still out on this.

Much remains to be done before this hastily prepared proposal becomes an actual viable plan.

Uncle Bill… “You Were Somethin’ Else”

Last Sunday, my Uncle Bill passed away.  Uncle Bill was 88 years old, in failing health, and legally blind.  He knew that it was his time and was in full acceptance of this final stage in the cycle of life. His last years were spent in Ohio under the watchful and caring eye of his beloved daughter, Kimberly. I wasn’t there when he passed, but I am sure that he was feisty till the end.

I suppose most everyone has or had an Uncle Bill in their life.  You know, that special family member that was always a little eccentric, rough around the edges, but someone that you simply adored like no other. My first vivid memories of Uncle Bill were at the age of 4. I lived in a small town just outside of Los Angeles, called Artesia. Artesia in those days was a dairy farming community heavily populated with first and second generation Portuguese. I was the oldest of four kids, which included three younger sisters. Uncle Bill, who was my Mom’s younger brother lived somewhere in East Los Angeles. In those early memories of him, I can still hear his loud booming laugh as he lovingly slapped me around in order to “toughen” me up, as he said. I idolized him. He was my hero.

When Uncle Bill came to visit us in Artesia, it was the equivalent of a trip to Disneyland for me, even though there was no Disneyland in those days. As soon as he arrived, he and I would hop back in his 1946 Ford and head to the corner grocery store to buy an apple pie and ice cream. Let the party begin.

Somewhere between my ages of 5 to 6, Uncle Bill and Aunt Barbara moved to Artesia and bought a house right next door to ours. I’m not sure how long they were there because we moved away first, but it seemed like a long time to a 5 year old. As I recall, I would hang out with Aunt Barbara after school and wait for Uncle Bill to get home from work so that we could “rough-house”.

Uncle Bill was about 6 feet tall and skinny as a rail. I can still picture him as a young twenty something in dirty jeans and a t-shirt.  He always had greasy hands from working on cars. In fact, in his spare bedroom in that Artesia house, I remember spare engine parts scattered all over the floor.  I would sometimes play in that room and pretend to be working on those parts, just like my Uncle Bill.  It was one of those episodes in that sacred room that got me in trouble one day.

It was a few days before Christmas and I was 5 years old. I was at my house and Uncle Bill came over and told me to “get my butt over to his place”. He proceeded to chew me out and demanded to know if I was in his “auto parts bedroom” that day. He told me that if I was, he would have to throw everything away in there and it would be all my fault.  I had no idea why he was so upset nor why he would have to throw everything away.  I was very confused and began crying and ran back to my house. Apparently, there was something in that room that I was not supposed to see.

As it turned out, the thing that I was not supposed to see was my first bicycle that my grandfather had bought me for Christmas. Uncle Bill was the designated assembler and it was his job to make sure it was a surprise. I don’t know how I missed the bike in the room, but seeing the bike under the Christmas tree was truly a surprise.

There were many isolated memories of those Artesia years with Uncle Bill living next door. I think I was about 7 years old when my Dad and Uncle Bill built a wooden patio cover attached to our house. When it was time to paint, I was recruited to help out. Uncle Bill didn’t paint as that was too slow for him, so that job was relegated to my Dad, Mom and me. I can remember being on the top rung of the ladder and leaning backwards to reach a remote area of the structure with my paint brush. My Mom yelled at me to be careful.  My reply was “this is how Uncle Bill would do it”.  I can still remember saying those words.

My parents, Uncle Bill and Aunt Barbara would have adult late night parties under that patio. Maybe it was just one or two but it seemed like more. I can remember getting up early on the morning while my parents were still asleep and sampling the left over Tom Collins cocktails scattered around the patio area.  I recall hearing a story about Uncle Bill getting rowdy at one of those parties and that one time he drank champagne out of my Aunt Maxine’s shoe, much to the anger of her husband, Uncle Gene. Aunt Maxine, who is still alive and well, is my father’s sister.

Uncle Bill had lots of interests.  You might say he was the ultimate jack of all trades. For example, there was the time that I went over to Uncle Bill’s house to discover a baby calf in the back porch area of his house. My job was to feed the calf milk from a bottle. I don’t know what the greater plan was for the calf or if we were going into the dairy business, but that phase passed quickly and no more calves showed up.

Fast forward three years to 1954.  I was 8 years old and we moved away from Artesia and I had to leave my beloved Uncle Bill.  The reasons for the move were not clear to me at the time, but as I would learn later, it was the prelude to the breakup of my parents. Shortly after arriving to our new home which was a second story apartment in Concord, California, we began to see less and less of my father. He spent most of his time with his new girlfriend that he eventually married. We had it pretty rough, moving around a lot during the first year, until we finally settled in a little town called Port Chicago.  Port Chicago was a navy town located on the Suisun Bay about 30 miles from San Francisco. Our family now consisted of me, my 29 year old Mother, and three younger sisters. I was 9 years old and now the man of the family.

It was the summer of 1957 when my Uncle Bill and Aunt Barbara drove up and visited us in Port Chicago. He showed up at our place in a brand new red and white 1957 Corvette – a fitting arrival for this audacious, larger than life personality. After a couple of days, it was decided that I would go back with them and spend the summer back in Artesia. I was elated and little did I know; I would embark on the most hair raising exciting journey of my life.

The distance between Port Chicago and Artesia is about 450 miles. That was before the Interstate 5 days, so the only direct route was Highway 99. Riding with the top down, with me seated in the middle of the two-seater Corvette, we made the trip in 6 hours, which calculated to an average speed of 75 miles per hour – including stops for gas and lunch. There were stretches where we exceeded 100 mph. One can only imagine how thrilling that is to an 11 year old boy. More than once, we eluded the California Highway Patrol, by outrunning them and pulling off the main drag until it was safe to resume. Yes, that was Uncle Bill, and that is a true story.

Uncle Bill worked in construction. He could build or fix anything. That summer of 1957, at 11 years old, I went to work with him every day. We poured cement slabs, installed aluminum awnings and patio covers all over the L.A. area. By the second week he had me installing awnings on my own. “Figure it out kid”, he would say. If I screwed up, he would make me tear it down and start over. Business was good, and he took on a helper.  The three of us would ride together in Uncle Bill’s pickup to the residential job sites and do our thing. We went through two or three helpers that summer. I had become pretty proficient at installing awnings it was my job to train the young adult helpers. They never lasted long as they just couldn’t keep up with Uncle Bill and his 11-year-old nephew.

I can’t remember if I ever got paid for this work, but it didn’t matter. Hanging out with Uncle Bill was an adventure and it was payment enough. Soon the summer was over, and I had to leave Artesia and return to Port Chicago. The train ride back was fun, but nothing like the ride of my life in that red and white ’57 Corvette.

Although we always stayed in touch, I didn’t see that much of Uncle Bill as I moved through my adolescence and high school years. My Mom had remarried and we eventually returned to Southern California, settling in Orange County. In 1965, just a year after graduating from high school, I enlisted in the army. After training, I was sent to Vietnam in 1966. After returning from Vietnam, the next Uncle Bill story begins.

Within days after returning home from Vietnam, I rekindled my love affair with Sandi, who is my wife of 48 years. The story of us getting back together is a long one, but the short version is that we eloped to Las Vegas in September of 1967, much to the dismay and objections of her parents. We were young and in love, but broke as hell and nowhere to live. Further, I still had two years remaining on my army hitch which would be a tour in Taiwan. Who did I turn to? Yes, it was Uncle Bill.

I would only be home for 30 days before I would have to ship out again. Uncle Bill and Aunt Barbara had long since left Artesia and were living in Norco. They happily put us up and I spent much of my remaining time working with Uncle Bill in his construction business.  This time, I did get paid.

So at age 37, Uncle Bill must have mellowed with age from that brash young man that always seemed to throw caution at the wind and reveled in the challenge of outrunning the cops in his Corvette. Well, yes and no.

In the few weeks that we worked together, we had our share of adventures that are still indelibly etched in my mind.  There was the time that we were working at a job in Hemet. Now that I was 21, I was legal to have a beer. We stopped at this roadside bar after work and walked in finding no one in the place. So rather than go somewhere else, Uncle Bill just went behind the bar and drew a pitcher of beer just as if he owned the joint. We drank beer and shot pool for an hour or so, until someone finally showed up. Uncle Bill laid a $10 bill on the bar for the beer we had helped ourselves to.  The bar began to fill up, and before long we were best friends with everyone in the place, mostly red-neck types. We shot pool, made bets and generally raised hell. It wasn’t long before Uncle Bill got too frisky and challenged someone to a fight.  The odds were definitely against us with the red-neck bar patrons easily outnumbering us at least 8 to 1. The wise thing to do was leave.  We did so in haste with someone named Ernie and his buddies chasing us with pool cues.  The reason I know his name was Ernie, is that Uncle Bill returned to this dive after I shipped out and became best buddies with this guy named Ernie. That was Uncle Bill.

After I finished my tour in the army, Sandi and I would see Uncle Bill and Aunt Barbara from time to time. They moved from Norco back to Orange County. Uncle Bill adored Sandi and the feeling became mutual. I can still hear his deep baritone voice repeatedly saying to Sandi – “You’re ‘somethin’ else!”  Sometime in the mid 70’s, Uncle Bill and Aunt Barbara moved to Nevada. We sort of lost touch for a while as families often do.

I think it was the summer of 1983 when Sandi and I drove up to Topaz Nevada to visit Uncle Bill and Aunt Barbara. Our two sons, Mark and Jeff were 15 and 11. Mark had his learners permit and was bragging about how good a driver he was. In typical Uncle Bill fashion, he tossed the keys to his truck to Mark and told him to show us how good he was.

“By myself?” Mark asked.

“That’s right big shot.  Show us what you got.”

We all got a good laugh at watching Mark try to drive the truck while repeatedly popping the clutch and stalling the engine. Not once did Uncle Bill come to his rescue, but Mark eventually figured it out.  That is how Uncle Bill did things.

Jeff, at 11 years old was quite a clothes horse even back then.  I remember Uncle Bill playing rough house with him and teasing him about his pink Izod golf shirt with the alligator logo.

In 1988, Kimberly threw a surprise 60th birthday party for her Dad, my Uncle Bill. I drove up to Topaz for this, but unfortunately Sandi could not go. His first words after seeing that I was there were “Where’s Sandi?”

So that was and is my Uncle Bill. He was unconventional, brash but had a heart of gold and was larger than life to me. He loved his two kids, Jimmy and Kimberly dearly. I know he loved me and I loved him very much as well. He was “somethin’ else!”

May he rest in peace.

Redshirting Raises the Bar For All

In colleRedshirtingge sports, redshirting is the practice of holding back a student athlete from actual competition in order to preserve an additional year of eligibility while his or her skills improve.  In everyday life, redshirting kindergarten aged children has become an increasingly common practice among middle-class parents as they attempt to give little Jacob a competitive edge over his 5 year old peers.

Malcom Gladwell, in his book “Outliers” makes a case for this practice citing the superior development and performance of Canadian Hockey players throughout their career whose birthdays occurred in the first four months of the year versus those born in the last eight months.  He contends that because the cutoff age in youth hockey is almost always January 1, the older, more physically developed players tend to excel, which leads to more all-star team selections, better coaching, better opportunities, and so on.  Further, he documents this fact with an example where 72 percent of the roster of the 2007 Medicine Hat Tigers had birthdays in the first four months of the year.  He goes on to provide similar examples in baseball and the results appear to be consistent with those found in hockey.

As the redshirting practice proliferates, it seems that it is having the effect of just raising the bar for everyone, often at the expense of the younger ones that struggle to compete with their older classmates. Then there is the unintended consequence of having the older, more physically and mentally developed child playing down to the level of the younger ones. I have personally witnessed this over and over as a coach in organized youth sports.

Moreover, it seems that the overall stress level of young middle-class families has been elevated, due in large part, to overscheduling of their kid’s activities. The term “Soccer Mom” was born in the 1996 presidential election. It was coined by the Clinton campaign to describe the overburdened, working, middle-class, minivan driving moms.  This high octane activity level of activity has now progressed to the whole family while reducing quality family time – a time when the whole family gets together at the dinner table every evening to communicate with each other. While the marvels of technology now allow us to be always available and plugged in, text messaging has now taken the place of face to face conversations.

The pressure put on our children and grandchildren to excel should be carefully evaluated.  All too often, it is the parent’s interests and agendas that are forced upon the kids, while they dismiss the true talents and interests of the child. Not every 12 year old boy will be an all-star shortstop or a world class hockey player. We should work harder to recognize and understand where our kid’s true abilities and interests lie so that we can help channel them in the right direction.  In the process, we just may just get to know them better and even have an actual conversation from time to time.

One thing I have learned over the years with my two sons and five grandsons is that each has their own special set of skills and interests, and one size does not fit all. You learn these things as a grandparent that you were too busy to recognize as a parent.

A brief history of food safety

Valley Voice, Feb. 25:

Recently, an article appeared in the Wall Street Journal, “Fresh Ingredients Came Back to Haunt Chipotle.”  Since going public in 2006, Chipotle has built a near cult following with its fresh fare burritos trumpeting natural ingredients and a commitment to purchase locally grown produce.  The cause of the E. coli outbreak last November that sickened 55 people remains a mystery.

This is neither an indictment on Chipotle or locally grown produce but rather a discussion of food-safety as it applies to the fresh produce supply chain.  After spending over 40 years in the fresh fruit and vegetable industry at the farming and distribution levels, I have witnessed and participated in nothing short of a quantum leap in industry practices.

One catalyst that transformed food safety practices at the farm, distribution, and retail levels was the 2006 E. coli outbreak that was traced to spinach grown and packed in California’s Salinas Valley. I will never forget that October day when the doorway to my office was darkened by two federal agents – one from the FDA and the other from the FBI. I was asked to step away from my computer and our entire office complex was subsequently placed on lockdown.

MICHAEL GERSON: The problem with Chipotle’s anti-GMO stance

The purpose of the joint FDA/FBI raid was to search for a smoking gun or any evidence of complicity to knowledge of the contaminated product and failure to act. Later in the day, the feds were convinced that our firm had not grown or handled any spinach during the period in question.  It seems that we were singled out because our firm provided food-safety guidelines and record retention services to other growers in the area that would otherwise be unable to effectively organize such a program.

As it turned out, the best guess as to the cause of the outbreak was wild pigs running through manure at a cattle ranch and then into a spinach field.

That incident was the dawn of new initiatives in food safety.  Efforts were made to reduce animal intrusion and increase sampling of product prior to and post harvest. The most notable initiative was called the Produce Traceability Initiative, or PTI.  The initiative was launched with compliance milestones intended to provide the ability to trace all fresh produce from retail back to a specific point of origin, including the farm, the field, the grower, the harvest date and so on. In fact, our firm developed the technology to trace a single head of romaine lettuce back to a 100 square feet of a field using GPS technology at the harvest point.

A whole new industry was created on the back of this initiative.  Food-safety firms popped up much like the dotcom boom 15 years ago. They eventually consolidated and we were left with two or three. The final milestone was for retailers to begin scanning bar codes on cases at arrival to their distribution centers. This never happened.  The complexity of the produce supply chain simply thwarted that final phase from being universally adopted.

Today, the price of admission for a grower to service a retail grocery chain is to have a fully staffed food safety department. This comes at a significant expense and can conservatively add 2 percent to 5 percent to the cost of product. This is a burden that many independent small farmers simply cannot afford.

Those Annoying Prescription Drug Ads

Is it just Prescription Drugsme, or is anyone else getting sick of being bombarded with prescription drug ads on TV?  It has been reported that prescription drug companies spent $4.5 on TV ads in 2014, with that figure expected to top $5 Billion in 2015.  From toenail fungus to erectile dysfunction, it just never ends. And then there are those obligatory recitals of side effects in fine print or rapid fire speech intended to take advertisers off the hook from any legal challenges to the safety or actual efficacy of these drugs.

The tactics of targeting the general population with these ads implies that consumers are capable of making their own decisions about prescription drug choices. Oh but then, they say “talk to your doctor about….”  Has anyone tried to get an actual doctor on the phone lately to have a discussion about prescription drugs? With any luck, you may reach an assistant, and with a little more luck, you may get a return call in a day or two asking you to make an appointment, which will probably be a month from now.

And then there are those annoying E.D. (Erectile Dysfunction) ads. Two out of the top four advertisers on television are Eli Lilly and Pfizer hawking their Cialis and Viagra products during the timeout commercials of major sporting events. The spending of just these two companies on these products alone accounts for over ten percent of all prescription drug ads on TV.  Has anyone else had to field a question from their 8 year old grandson about why you should ask your doctor if “Viagra is right for you?”

Without a doubt, prescription drugs have improved the quality of life for many people, present company included.  But they are powerful tools that are often abused.  Targeting drug ads to general audiences promotes the possibility of over medicating or improperly medicating a variety of health issues. Advertising prescription drugs should be targeted only to physicians and health care providers who are much more qualified to assess the medical needs of individuals and prescribe the appropriate medical treatment.  That treatment, more often than not, may be a generic equivalent drug at a fraction of the price of the brand name versions.

So, the next time you see one of those pervasive ads with the tanned and toned middle-aged couple happily bouncing out of their golf cart or lounging in separate bathtubs on the beach as a backdrop to the latest and greatest drug claim, think about what is really going on here.  It is a money battle being waged by the drug companies to coerce you, me and the health insurers to accept the confiscatory pricing of brand name drugs in this country.

Whatspeedyalka-344 ever happened to “Plop Plop Fizz Fizz, Oh What a Relief it is?”  I apologize to all of the Millennials that have no idea what that means.  Alka Seltzer 60’s Commercial

A Tale of Two Josephs and What’s Up with Aunt Matilda

family-tree-vector-25541964Like a lot of us entering our twilight years with a little extra time on our hands, we begin to develop an interest, or in my case, an obsession with our family history.  Now that we have the likes of Google and the online genealogy websites, the task of researching our family trees becomes mere child play.  Or is it?

Let me start by saying that I grew up in the 50’s and 60’s believing that I was one-quarter Native American – Blackfoot to be specific. My sisters and I were quite proud of this fact as it gave us certain bragging rights not accorded to our friends and classmates. After all, we were the true Americans and everyone else was just an immigrant. Besides that, it was really cool to be able to check off that box on all those applications stating that we were of Native-American ancestry. Surely that fact would give us an edge over the competition from those immigrants.

Our other claim to fame that we enjoyed was that our great great uncle was none other than that famous cowboy movieJack_Hoxie star from the silent-screen era, named Jack Hoxie. Surely you have heard of him. After all he paved the way for the likes of Hoot Gibson, Lash LaRoo, and Hopalong Cassidy. Still stumped? Well, if you’re stumped but interested, here is a link to his life history.

So, as I navigated through the branches of my family tree, I ran into a contradiction that is still unresolved despite logging countless hours of research to reconcile my predicament – a predicament which, as you will see, forms the basis for the title of this narrative.

It seems that there were two Joseph Hoxies that can each lay some historical claim to being the father of John Hartford “Jack” Hoxie and, incidentally, his older brother William Manon Hoxie, my great grandfather. The one fact that seems to be consistent and resolved is the identity of their mother. Her name was Matilda Emeline Quick, a half Nez Perce Indian, and my great great great aunt. That throws out the Blackfoot theory.

There is very little ancestral documentation on the first Joseph Hoxie. According to various online historical sites his name was Joseph H. “Bart” aka “Doc” Hoxie.  He was a veterinarian born in 1824 and died in 1885 due to a horse accident just weeks before the birth of his son Jack. The only official corroborating evidence that I was able to uncover to verify the existence of “Doc” Hoxie is the 1880 US Census. That census listed a Joseph Hoxie as the married head of the house, age 56. His wife Matilda Quick Hoxie, age 18 was listed along with “Willie”, age 2, and Crawford, age 6 mos. It looks like Doc and Matilda got hitched when he was 53 and she was only 15. If this account was accurate, “Willie” would have been William Manon, my great grandfather. Aunt Matilda would go on to marry twice more, first to Calvin Scott Stone, and later to Oscar Jenkins. Before her passing in 1942, she had 5 more children, presumably with Calvin Stone.

Now it gets interesting. The second Joseph Hoxie was Dr. Joseph M. Hoxie, MD. All records indicate that he was born in 1839 and died in 1909. Most every family tree found in Ancestry.com lists Joseph M as having been married three times. The first marriage was to Maria Cecila Rust around 1859. They had 5 children.

Joseph M’s second wife is listed as (guess who?), Matilda Emeline Quick around 1877. They are shown as parents of the same three little Hoxies as those that Doc and Matilda claimed to have parented, with one more for good measure, which was George Edward.

Around 1886 Dr. Joe met and married his third wife – Henrietta Marie Graham. Together they had 5 children, the last one being Marvel R. Hoxie in 1900. Dr. Joe died in 1909 so he would have been 61 years of age at the birth of his last child. So if we are to believe that Dr. Joseph M. Hoxie was married to all three women as described above and sired all of the children listed in the various family trees, his total offspring count would have been 14.  He was a busy guy.

There are a number of different scenarios that one could speculate on to reconcile this confusion. One semi-plausible one is that Dr. Joseph M did not marry Aunt Matilda at all and he just had the two wives, Maria Rust and Henrietta Graham. That would have meant that he only had 10 children between them, none of which would be related to me or my siblings. But if that is the case, how does one explain the childless gap between 1873 and 1887 for Dr. Joseph M?

The other scenario is that Joseph H. “Bart” aka “Doc” Hoxie did not exist at all. But it is that 1880 census data that keeps me believing that there is more than a shred of truth in the legend and existence of Bart “Doc” Hoxie, despite any record of his previous ancestors.

Then there is another scenario. Could Joseph H. and Joseph M. be the same guy? Did Bart “Doc” Hoxie really die in that horse accident in 1885?  Could he have faked his death and go on to marry Henrietta Graham a year later in 1886? Did he alter his birth date from 1824 to 1839 when he met Henrietta?  If so, he would have actually been 85 at his death in 1909 instead of 70 as previously supposed. Then there is that childless gap between Maria and Henrietta that somewhat supports the Matilda era.

So there you have it. The mystery remains unsolved.  Unfortunately, those that may add some clarity to the two Josephs and Aunt Matilda story have all passed on. However, my dogged intellectual curiosity will not allow me to just let go and accept. But at least it’s nice to know that there is some smidgen of Native American blood in me, even though it has been reduced to 1/32 from ¼. And as my sister recently pointed out, the Nez Perce tribe was among the most peaceful Indians well known for the timely refuge they provided to the Lewis and Clark expedition in 1806.  Thank you Aunt Matilda, wherever you are.

Gimme Some Slack

I don’t know about you, but I’m getting a little tired of being overcharged and victimized by the “Slack Pack” phenomenon currently the rage in consumer packaged goods.  Slack packing is the practice of bloating the size of the packaging to masqueradSlackPacke the fact that the amount of product inside is actually shrinking.

Recently, Proctor and Gamble was cited and ordered to pay $850,000 in civil penalties as a result of their packaging a 1.7 ounce jar of the company’s Olay high-end face cream in a box twice the size of lower-end face cream that contained a 2 ounce jar. Another recent example is McCormick, the nation’s  largest spice company, deceiving consumers by stealthily slashing the amount of black pepper in its tins, without shrinking the container or lowering the price.  Examples of this practice go on and on.

But here is another dirty little secret that the slack packers don’t tell you. By reducing the amount of actual product in a multi-use package like potato chips, pepper, or ice cream, the fact is that you, the consumer, will now consume the contents quicker because there is less of it, thereby boosting the need to purchase more frequently.

Moreover, the raw ingredients in a package usually represent just a fraction of the retail price you pay. For example, the cereal folks (you know who you are) start out with 12 cents worth of corn, and after processing, end up with a box of crunchy corn flakes at a cost of around $1.25 per unit.  Then by the time you add $.25 for packaging, $1.00 for distribution and marketing, and $.40 for profit you’re now looking at a total of $2.90 delivered to your friendly neighborhood supermarket. The grocer then adds $1.00 for his profit and another $.10 in state and local taxes and alas I give you a $4.00 box of corn flakes. The cost of product in that box, at most, only accounts for 31% of the total retail price.

So by keeping the package size constant (even with less product), unit profit margins remain virtually the same throughout entire the production and distribution channels, and… (drum roll please) …they end up selling more units!

Aint capitalism grand?

Fair Tax Reform

Featured imageWell, it’s about time! Rand Paul, a Republican from Kentucky and a candidate for the Presidential nomination has introduced a fresh and sensible alternative to our convoluted tax code. By adopting a broad based 14.5% flat tax and abolishing the payroll tax, the 70,000 pages in the current IRS tax code could and should go the way of the recycler.

No doubt, given the practicality of this plan is and its appeal to the average citizen, you can bet that the special-interest groups are already lining up to protect their sacred cows. I like about 90 percent of Mr. Paul’s plan, but there are some shortcomings that need to be addressed. Further his plan amounts to a $2 Trillion tax cut that bets on increased economic activity to make up the revenue difference. I’m not so sure that will happen.

Let’s face it.  The payroll tax has no chance of sustainably funding social security in its entirety.  It should be abolished in favor of a graduated flat tax with the recognition that social security must be paid from the general fund. Its time to get serious about throwing out loopholes and special interest deductions as well.  The only deductions that should be allowed without an income qualifier are charitable contributions, and state and local taxes.  All other deductions or exclusions from income, including mortgage interest, should be subject to an income qualification. So here is my plan.

I would propose a modified two tier flat tax plan.  Income would have two classes. Class 1 income would include traditional middle class items such as wages, salaries, dividends and interest, retirement income, social security benefits, etc.  Class 2 income would be business related, eg. Capital gains, rental income, etc.

As to deductions, with the exception of qualified charitable contributions and state and local taxes, all would be subject to an income exclusion of 5%.  For example, for someone earning $100,000 with $8,000 in mortgage interest, the allowable deduction would be limited to $3,000.

Next, there would be a $20,000 earned income credit for all income groups. For someone earning less than $20,000, their taxable income would be zero, and they would pay no tax.  For the taxpayer with $250,000 income, the taxable income would be $230,000.

Finally, there would be a two-tier tax rate.  Tier one would apply to the first $50,000 of taxable income and would be taxed at 15%. The second tier is that income over $50,000 which, after qualified deductions, would be taxed at 20%.  A detailed example of an actual filled-in tax form at various income levels can be viewed at www.wjexchange.net/wjtaxreform.pdf

Can you imagine how much simpler all of our lives would be with this kind of system? Think of all the time, money, and resources that are spent on ways to circumvent taxes. Like it or not, taxes are necessary and we all need to pay our fair share. Fair – that’s the operative word here!

An Open Letter to My Great Granddaughter

Featured imageI haven’t met you because you have not been born yet. But while I still have clarity of mind and the blessings of good health, I wanted to take this opportunity to reach out and apologize for the mess that my generation has left you with. I am writing this letter to you in the year of 2014, but I suspect it will be somewhere around 2030 before you are old enough to read and understand what I have to say here.

Your Great Grandfather, that’s me, was born in 1946. That was the first official birth year of the generation known as the Baby Boomers. The Baby Boomer generation followed the Greatest Generation. The Greatest Generation was made up of those brave and hardy Americans that struggled through the great depression of the 1930’s.  It was also the generation whose soldiers stormed the beaches of Normandy in 1944 at great human sacrifice, in what turned out to be the pivotal battle leading to the defeat and destruction of Hitler and the Nazi party in World War II. The French people hailed the American soldiers as heroes as they liberated them from the oppressive Nazi tyranny.  Today, they don’t like us much. Go figure.

The Baby Boomer years lasted until 1964, which incidentally was the year that I graduated from high school.  The two most influential events of the early sixties were the Cuban missile crisis and the assassination of President Kennedy, both occurring in 1963. While we didn’t know it at the time, these events set the stage for what would be a massive political and cultural divide among the citizens of our country.

There was a war going on during the middle 60’s in Southeast Asia in a place called Vietnam. It was a very unpopular war. Unlike the soldiers of the Greatest Generation, those of us that were deployed to serve in this conflict were not looked upon as heroes and patriots. In fact, we were despised in many circles, including our own citizens.  But, we were just doing our job and answering the call of duty, just like our fathers did in WWII and their fathers before them in WWI.  After my discharge from the army in 1969, which included three consecutive years in Southeast Asia, I returned home to a country and society that I barely recognized.

Those born after 1964 were referred to as “generation x”.  This was the generation of your grandparents.  After the “x’ers” came the “y” generation and so on. I’m not sure what label they will assign to your generation, but I hope it is one that will be remembered in history for the courageous and dedicated efforts to fix the awful mistakes of your ancestors and a commitment to avoid repeating them in the future.

As I write this letter at the age of 67, I am two years into retirement. I retired at age 65, which is the age that most of my generation began receiving social security payments and government paid health care benefits under a program we called Medicare. I doubt that these programs will be available to you to the extent that they were for us, but I hope so. You see, the United States is currently $17 Trillion in debt and counting, and no one has a clear plan on how to fix this. Our treasury keeps issuing more debt because we simply don’t have enough money to pay for our expenditures. It is projected that by the year 2025, the interest on our debt plus the cost of Social Security and Medicare will exceed all revenue collected by the federal government. Meanwhile, our politicians are intent on keeping interest rates low, so our federal reserve is actually buying a large portion of that debt on a regular basis. You’re probably asking yourself, where did they get the money to do that? They printed it. Really! Have you ever heard the expression, “robbing Peter to pay Paul”?  I think this practice is dangerous and could ultimately destroy the purchasing power of our dollar, and it is clearly unsustainable. Regarding sustainability, we actually have a host of other problems of global proportions which, by the time you read this, should be of no surprise to you.

The dinosaurs roamed the earth for 160 million years, and along with decaying vegetation, were largely believed to be the source of fossil fuels, i.e., oil, coal and natural gas. The first commercial oil well was drilled in Pennsylvania in 1859. But it was the discovery of vast oil reserves in Texas at the turn of the 20th century that started the oil boom.

Until recently, it was believed that peak oil production occurred in the United States during the early 1970’s, which implies that most of our country’s oil reserves were used up in less than 100 years. That is a pretty scary thought especially when viewed against the backdrop of 20,000+ years of known human history on the planet. Since then, we have feverishly pursued additional fossil fuel supplies around the globe, by whatever means possible, in order to feed our addiction and sustain our lifestyle.

As oil prices climbed over $100 per barrel a few years ago, the technology of hydraulic fracturing began to take hold which suddenly made it economically feasible to tap shallow shale oil reserves in our country. This is going on now, and I guess it’s a good thing because it reduces our dependence on foreign oil from countries, many of which are considered hostile to ours. As I write this, the United States makes up less than 5% of the world’s population, but we are consuming 25% of the world’s oil production. I hope this newfound supply of oil doesn’t lull us to sleep to the point that we fail to acknowledge and address the greater systemic issues, the most important of which, should be to focus on reducing our consumption of fossil fuels.

Climate change is a topic of great debate today.  One’s opinion of the cause of these phenomena largely depends upon which side of the political spectrum you fall. The Left attributes the drastic weather patterns to global warming caused by humans.  Those on the Right that accept the notion that our climate is changing, say it is just due to natural weather cycles.  Nonetheless, the problem is real and clearly getting worse. Among my chief concerns, besides the prospects of more devastating floods, tornadoes, and earthquakes, is the future of farming and our ability to produce an adequate food supply that is both safe and sustainable to feed an ever growing population.

In my lifetime, the world’s population has tripled from just over 2 Billion to the current level of 7 Billion. That is a staggering 250 percent increase in just 67 years. Clearly this growth is not sustainable and no one expects it to continue at anywhere near that pace. There has been meaningful progress to bring that rate down during the last few decades. In fact, by the time you read this in the year 2030, it’s my guess that the world population will be in the neighborhood of 8.5 Million, given the current rate of growth. Nonetheless, an increasing world population and the ensuing competition for scarce and declining resources will most surely pose serious challenges to future standards of living, while further straining the planet’s overtaxed and fragile ecosystem.

Continuing along the theme of natural resources and climate change, I should note that we are currently experiencing a very severe drought here in California.  Water is a resource that seems to be taken for granted – that is until it is scarce. Although the heavens supply our world’s population with four times the water that is needed in the form of rain and snow, it doesn’t all fall when and where it is needed. Water is a finite resource and nonrenewable. New water is not created. All the water that exists in the world is either in the oceans, lakes and rivers, aquifers, or the atmosphere.

Sea levels are rising.  Although I am not a scientist, I believe that this is probably due to of higher water temperatures, violent storms at sea, and glacier meltdown associated with climate change. I suppose that when the cost of water gets high enough, we will then get serious about desalination of sea water as the preferred method of supplementing existing freshwater supplies where they are needed.

So, other than apologizing for my generation’s misdeeds without offering specific blueprint of solutions, why am I writing this letter to you? Well, it is my hope that others that are either now, or will be, in a position of power or influence will read this and gather some inspiration from it. And in doing so, will accept the challenges and vow to make a difference before it is too late. Meanwhile, I promise to do what I can to make things a little better for you, your children, and your grandchildren.

Subterfuge in the Supermarket

When we go to the supermarket and shop the produce department, we, as consumers, have certain expectations. At the top of the list is that we expect fresh fruits and vegetables in the department to be just that – Fresh!

On April 6th of this year an article appeared in The Packer, which is the leading trade publication for the produce industry.  The headline of the article read as follows:

DelMonteFruitNaturalsDel Monte vs. Del Monte: What makes fruit fresh?

Before delving into the issue, it should be noted that there are two Del Montes. Prior to 1989 there was only one Del Monte and it was a subsidiary of RJR Nabisco Inc.  As a result of a leveraged buyout by the legendary KKR, the company was split into two.  Ownership of the brand remained with Del Monte Foods along with exclusive rights to produce and sell processed food products with the exception of “fresh fruits and vegetables”.

The other company created in this breakup was Del Monte Fresh Produce.  Del Monte Fresh received a royalty free perpetual license for exclusive use of the Del Monte brand on fresh produce. At the time of the breakup, the bulk of Del Monte Fresh’s business was bananas and fresh pineapple.  They were a distant number 3 in the banana business behind Chiquita and Dole, and second in the fresh pineapple business behind Dole, then called Castle & Cooke Foods.

After several iterations of shaky ownership that included the infamous Carlos Cabal (that story here) and his gang of thieves in Mexico that nearly broke the company, Del Monte Fresh survived and was rescued by a relatively small and unknown fruit exporter called United Trading Company, headquartered in Chile. Ultimately, UTC management launched a successful IPO in 1997 and became Fresh Del Monte, Inc. trading on the New York stock exchange under the symbol FDP.

So much for the background and now to the story.  In the mid 90’s, Del Monte Foods began packaging their processed fruit products in colorful high graphics mason jars, and pushed for placement in the produce department. Initially the products were marketed under the Orchard Select brand but eventually added the heritage-rich Del Monte brand.  Around the same time, Fresh Del Monte began development of their fresh-cut fruit line from “pineapple only” to include a variety of fresh fruit blends with limited shelf life requiring disciplined refrigeration.

As Fresh Del Monte began to ramp up their fresh-cut fruit business, Del Monte Foods viewed this as a threat to their “fresh cut canned fruit” business [sic]. A lawsuit ensued, and in 1999 a judge ruled in favor of Fresh Del Monte granting the company exclusive rights to sell fresh-cut fruit under the Del Monte brand. There was nothing in the ruling limiting or restricting Del Monte Foods from continuing their existing practices of using the Del Monte brand for processed fruit.

Beginning in the year 2000, both companies headed down their separate paths to build their respective cut fruit businesses.  Del Monte Foods began producing their processed fruit products in single serving deli style cups and achieved a high level of success getting placement in the refrigerated section of retail produce departments.  Even though the products were shelf stable and virtually identical to those  merchandised in the unrefrigerated dry foods section, they added the phrase “must be refrigerated” to their packaging.  An obvious contradiction to the “need to  refrigerate” was indicated by shelf lives exceeding one year, as evidence by the “best if used by” dates printed on the packaging.

Common sense, then,  would seem to conclude that fruit products with shelf lives exceeding one year are not truly fresh.  Further review of the fine print labeling on the packaging revealed the use of preservatives which included potassium sorbate and sodium benzoate on many of the products. The items without preservatives were those packaged in a heat treating pasteurization process in various offshore locations.

Meanwhile, Fresh Del Monte, through a series of acquisitions of regional fresh-cut processors and startups began building a national network of fresh-cut fruit processing operations.  The operative word here is “fresh”, as their products contained absolutely no preservatives. The typical shelf life for fresh-cut fruits was a reasonable 5 to 7 days. Compare that with the one-year plus lives indicated on  the Del Monte Foods’ products and draw your own conclusions as to what is truly fresh.

Now, this is not intended to be an indictment of Del Monte Foods, in fact, quite the contrary. They have not violated any labeling laws and  have done a great job in product development. From a marketing perspective, I think their strategy was brilliant. After all, when Mrs. Consumer is shopping the produce department looking for good tasting healthy alternatives to processed foods and spots Del Monte branded fruit in the produce department, the reaction is quite predictable. With its colorful packaging allowing full view of the product inside along with the statement to “keep it refrigerated”, what else is she supposed to think other than this is truly a fresh fruit product. If she chooses to read the label in detail, she would learn otherwise.  But then again, would she even care?

No, it’s not Del Monte Foods, but rather the multitudes of mainstream retailers, knowing full well the nature of the Del Monte Foods products. But, they choose to stock it anyway in the refrigerated fresh-cut fruit section of the produce department, which in my opinion, makes them guilty of  subterfuge. By the way, Webster’s dictionary defines subterfuge as “deception in order to conceal, escape, or evade.”  While there is nothing illegal about this practice on the part of supermarkets or Del Monte Foods, their actions are clearly an act to conceal, escape, and evade by promoting a product purported to be fresh when it isn’t.

And that is what the jurors in a federal district court concluded in their recent ruling that “Del Monte Foods’ fresh fruit claims are fraudulent.”