SULLIVAN'S SALVOS
January 25, 2018
Sullivan’s
Salvos 1/30/18
In this edition:
*Government Shutdown, CHIP, and DACA
*Iowa Caucuses
*What is a Millionaire?
*Did You Know?
*Government Shutdown, CHIP, and DACA
Republicans:
you have majorities in the US House and US Senate, and the Presidency. If you
cannot keep the government running, that is on you!
Democrats
– thank you for fighting to extend the Children’s Health Insurance Plan (CHIP)
for 6 more years! This is a critical policy that was not going to get done
without extreme measures!
Now
we move on to DACA. I hope the Dreamers get the justice they deserve, but I am
nervous.
*Iowa Caucuses
Iowa's
precinct caucuses are best known for their first in the nation role in the
presidential nomination process. The parties also hold caucuses in
non-presidential years to choose party officers, debate platforms, and conduct
other business. The three full-status political parties will host
caucuses on Monday, February 5,
2018. Democrats and Republicans will meet at 7 pm; Libertarians will meet
at 5:30.
The
caucuses are a function of the political parties. The Auditor's Office
does not conduct the caucuses, report results, or play a direct role. The
parties are required to report caucus locations to that office, and must turn
in any voter registrations they receive.
To
participate in the caucuses, you must be a resident of the precinct, 18 years
old as of the general election date (born on or before November 6, 2000) and
registered to vote with the party whose caucus you attend.
Caucus
participants must actually attend the caucus in the precinct in which they live
- there is no absentee voting. You
can register to vote or update your registration on caucus day. The parties are
then responsible for returning the voter registration forms to the Auditor’s Office.
Caucus
participants discuss issues and candidates, choose party precinct officers, and
elect delegates to the party's county convention. County conventions elect
delegates to congressional district and state conventions. Rules and procedures
are set by each respective party.
The number of county
convention delegates elected from each precinct is determined by each party,
based on how many votes the party's candidates received in that precinct in
recent elections.
The
Libertarians will have one caucus for all 57 precincts on February 5 at 5:30 pm
at the Iowa City Public Library, Meeting Room D. Democratic and Republican
locations can be found on the Auditor’s webpage.
*What is a Millionaire?
In light of the dreadful
Tax Bill recently passed by the Republicans in Congress, we are going to be
hearing more and more about “millionaires”. But what do we mean when we use
that word? Do we mean $1 million in annual income? Do we mean $1 million in net
worth? Those are VERY different definitions.
I
turned to Wikipedia, and found it quite helpful on the subject:
“There
are multiple approaches to determining a person's status as a millionaire. One
of the two most commonly used measurements is net worth, which counts the total
value of all property owned by a household minus the household's debts.
According to this definition, a household owning an $800k home, $50k of
furnishings, two cars worth $60k, a $60k retirement savings account, $45k
in mutual funds, and a $325k
vacation home with a $250k mortgage, $40k in car loans, and $25k in credit card
debt would be worth about $1,025,000; and every individual in this household
would thus be a millionaire.”
I
like the fact that they offered an example of how one might calculate $1
million in net worth, but I find the example itself to be a bit unrealistic,
especially for Iowa. It does not reflect how people in Iowa do things.
Let’s
go with a $500,000 house – still very much within the top 1% of all home
values, but more in line for our area. Furnishings at $50k is pretty low if you
ask an insurance agent; let’s say $100k. We’ll keep two cars at $60k.
$60k
in a retirement account is REALLY low for someone with these resources. In
keeping with the Iowa way, our millionaire would be a saver. We will say she
has $200k in a retirement account. We will also keep the $45k in mutual funds.
We
are going to make the “vacation home” a cabin, and reduce the value from $325k
to $150k. We will correspondingly decrease the mortgage to $50k.
$40k
in car loans? Are you serious? This person pays cash for a new vehicle, minus
the trade in. $25k in credit card debt? Are you serious? This person pays the
balance on her card every month.
This
puts our Iowa millionaire at $1,005,000 in net worth, if I am doing my math
correctly. While this certainly does not describe most Iowans, we can all
visualize someone in this position. It is probably a two-wage earning family
who are nearing retirement. And frankly, this is a person who can afford to pay
some taxes.
Why
do I say that? I am almost 52 years old, and by my calculations, I have earned
about a million dollars over the course of my lifetime. Assuming I keep a job
that pays a similar amount (definitely no sure thing) and work another 15 years
(definitely no sure thing), I could get close to another million. And while I
am not likely to reach millionaire status per say, I can afford to pay some
taxes.
A
million bucks sounds like a lot, and it is. Most Americans will not be lucky
enough to earn anywhere near that. But even a perfectly healthy person in
retirement can run through $30-40k per year. And a nursing home costs $200/day.
Stay there 3 months, and you have run through $20k. A year will run you $80k.
So one’s older years are expensive!
Going
again to Wikipedia: “However, according to the net financial assets measurement
used for some specific applications (such as evaluating an investor's expected
tolerance for risk for stockbroker ethics), equity in one's principal residence
is excluded, as are lifestyle assets, such as the car and furniture. Therefore,
the above example household would only have net financial assets of $105,000.
Another term used is "net investable assets" or working
capital. These practitioners may
use the term "millionaire" to mean somebody who is free to invest a
million units of currency through them as broker. For similar reasons, those
who market goods, services and investments to High Net Worth Individuals (HNWIs)
are careful to specify a net worth "not counting principal
residence".
Now
we are talking about a much wealthier person. While a millionaire in net worth
is right around the top 1% of all Americans, the second definition gets closer
to the .1% or even .01%. We are talking rarefied air. And we are talking
greater and greater benefit from the recent Tax Bill.
*DID YOU KNOW?
At the end of 2011, there were
around 5.1 million HNWIs in the United States, while at the same time there
were 11 million millionaires in a total of 3.5 million millionaire households, including
those 5.1 million HNWIs. (Source: Wikipedia.)
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---Rod
posted by Rod Sullivan @ 12:30 PM
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