When I was younger I was always in a hurry and challenged the posted speed limits. Retired for 13 years and on a fixed income, my driving habits have changed. Now I drive for dollars. It will take me as much as an hour longer on a 500-mile trip, but it is worth it. I admit that in a 55 MPH speed zone I still exceed the limit but never exceed 67 MPH, even in 70 & 75 MPH zones. On uphill slopes, I reduce my speed by as much as 5 MPH.
I own a 2015 Hyundai Hybrid. It is advertised as achieving 40 MPG on the highway. My average so far is just over 47 and I managed 49.6 on one trip. Saving 7 MPG over the 80,000 miles has saved us almost $1,000. I realize this is very low pay per hour of driving, but it pays for one vacation trip.
Other habits that I have developed is to accelerate very slowly from a stop and to look ahead for opportunities to avoid a full stop (like slowing down until the light turns green). According to my MPG meter rate of acceleration makes a significant difference. I also keep an eye on the MPG meter at all times.
Other factors that I have learned about economy: Driving in the rain will reduce mpg by as much at 15%. Gas quality makes a difference. On an identical RT to New Orleans (about 1,100 miles) but using different gas stations I got 48 mpg on one trip but only 44 on the other. I wish I could tell you which brand to use, the the better performance was from a non-brand station while the lesser was a well known brand. Another factor is the road service. A smooth asphalt surphase provides less friction (and road noise).
That said, the most significant factor is driving habit.
Frequent readers will know that Healthcare in our country is my primary soapbox issue. The importance of this most important system not only impacts the quality of life and longevity it is the single largest contributor to both the national debt and the high tax burden on the middle class. The following link will take you to an excellent article regarding the decline of health in our country. Our healthcare system is broken.
In terms of quality care, the USA does not fare well. There are several services that rate countries by quality. None of them rank us above #18 and the WHO (probably using the most credible factors ranks us as 37th). See info on how they define the quality of care at: www.who.int/news-room/fact-sheets/detail/quality-health-services
Since we spend far more per capita on healthcare than any other country we should expect to be number 1 rated by all. What has gone wrong? Why is our per capita costs more than double the average of the EU countries, Australia & New Zealand? Should residents of the wealthiest country in the world expect that quality healthcare is a “right”, not something that is available if you can afford to pay?
The ”Affordable” Healthcare Act was initially a step in the right direction, the final version was a disaster from the perspective of the middle class. Keep in mind that although per capita GDP has doubled in the past 20 years, the average family income has only increased by 8 %. Consider a middle-class couple that earns a typical middle-class income of $80,000 per year, but has no company-provided health insurance. Their insurance premium will run about $800 per month for a silver plan. This plan is only affordable if neither person uses it. The premium only amounts to about 12% of their pretax income. However, If both max out usage then the cost (with co-pays & deductibles) can exceed 30% of pretax income.
Compare this to the situation in most of the EU countries where healthcare is considered a right and not a privilege. The cost of health insurance and copays is less than 5%. This is what I mean when I say that our healthcare system is a “hidden” tax that we are paying.
The situation only gets worse. Healthcare is the single largest Industry (by dollar volume) in our country. At over $3 trillion per annum, this is a massive industry. About 1/3 of this is covered by Federal Programs (Medicare & Medicaid) and slightly less than 1/3 by company benefit plans with the balance paid by private residents via the affordable care act premiums and all insurance copays. In total, we are paying out over $11,000 per capita per year. This is about 2 ½ times the average of the EU countries. If we could cut our costs in half (we would still be higher than most) how would that impact the National Debt? Did you know that the average administrative costs for Medicare & Medicaid are under 3%? Did you know that the average administrative costs plus profits for Health Insurance Companies are over 20%? Did you know that the average nightly room cost in a hospital here (Not including any medical services) is over $1,100 (about 4 times the EU average)? Did you know that the average income of physicians is double the average for EU countries? You probably know how much more we pay for RX drugs here. You may not know that we have 3 times as many lawyers per capita as the EU countries. Do you think any of the previous factors are impacting healthcare costs?
Personal or Family Wealth (as defined by total assets minus total debt) has an interesting distribution as can be seen in the following chart:
Wealthiest 1% control almost 1/3 of the wealth, the wealthiest 5% almost 58%, and the wealthiest 10% 70%. In our capitalistic system, the remaining 90% seem to have limited access to capital. Does this mean that the wealthiest 10% have just worked harder and or smarter to “earn” their financial positions? From an income standpoint all of the “middle class” falls in the 90% category. Are there factors that act as a barrier to wealth accumulation?
I suspect there are. In our system, most wealth is either inherited, gained through intelligent capital investments, or via business ownership. Any of these requires a least a modicum of “seed” capital to get started.
Let’s take a look at the average middle-class family of 3.4 persons. Their pretax income was just over $87,000 with about 1 ½ wage earners. In addition to subsistence issues like food, clothing, taxes, and housing costs (which typically can consume 40% of gross income there are two extremely significant costs that are out of control. The costliest healthcare. If this family had to pay for their fair share at the current per-person cost of over $11,000 it would take about 40% of gross income. Does the family want any portion of their 1.4 children to obtain an advanced education? If so they will need to start saving soon as the average (all-in) cost can easily exceed $30,000 per year. Healthcare & Advanced Education costs have outpaced the rest of the economy by over 2.5 times over the past 25 years.
Does the family need an occasional vacation? I guess they can max out a credit card.
What is a fair distribution of future income? Over the past 20 years, our country’s income as expressed in GDP has more than doubled. At the same time, average middle-class wages have only risen by about 8%. Where did the balance go?
Here’s the point. The vast majority of families have very little or no “discretionary” income. It makes it difficult to save “seed” money. About the best they can dabble in the stock market or buy a few CDs. How do we allow the majority of our citizens to participate in our capitalistic mecca?
While like most of my thinking what I see will not ever become law. However, this solution will work over time. It has to do with income taxes. My solution would only retain the income tax for families with income below a certain level. Let’s assume $300,000 per year for this example and married filing jointly. This would include over 95% of all families.
Income tax would be factored in adjusted taxable (as now) but only the standard deduction would apply. No itemized deductions. Allowances for children would be limited to two. There would be no income tax for zero to $30,000. 10% on income from $30,000 to $60,000, 12% on income from $60,000 – $125,00, and 15% on amounts over $125,000.
The wealthiest 5% would not pay “income” tax, but rather pay an annual wealth tax as follows:
1.5% on the first $5 million, 2.0% on the next $5 million, 2.5% on the next $95 million, 3.0% on the next $900 million, and 3.5% on any amount over $1 Billion. No capital gains tax on holdings for a year or more. No corporate income tax and no dividend tax. The current tax system is only providing about $4.4 trillion with over $1.6 trillion in the budget deficit. This system will produce at least $5.5 trillion in revenue and reduce the burden on the middle class and greatly simplify tax filing.
Admittedly my math is just a “ballpark” calculation and the actual rates will need to be determined by actuaries, but you get the idea.
Why no Long-Term Capital Gains Tax? A couple of factors. This tax is often double taxation when the investment is funds that have already been taxed. Also, all that is happening are assets changing hands. In addition, current transactions are difficult for the IRS to monitor.
Why no corporate income tax? There are numerous reasons. Our economy functions in a Global Economy. We need to support our companies vs. the companies in other countries. No tax will create a cost-competitive advantage. Today, most companies play accounting games to minimize tax payments. The amount of tax revenue that comes from this source is very small (about 7% of the total) and will be more than made up by the system I am proposing.
