Tuesday, August 30, 2011

Texas declares the "Pole" tax constitutional.

Notice the spelling: P O L E, not P O L L. 

We are not speaking of the POLL tax, or the requirement of a fee to vote in elections, the Jim Crow-era attempts by some states to prevent minority groups from exercising their new 15th Amendment given right, which existed nationwide in federal elections until the 24th Amendment was ratified, and what took the  Harper v. Virginia Board of Elections decision to make the use of such taxes unconstitutional in state elections 1964. 

No, this time its the POLE that is making the news. 

In 2007, the Texas legislature enacted the Sexually Oriented Business Fee Act, of which,  Section 102.052(a) states: “A fee is imposed on a sexually oriented business in an amount equal to $5 for each entry by each customer admitted to the business.”  

 A “sexually oriented business” is specially defined as a nightclub, bar, restaurant, or similar commercial enterprise that:

    1. provides for an audience of two or more individuals live nude entertainment or live nude performances; and
    2. authorizes on-premises consumption of alcoholic beverages, regardless of whether the consumption of alcoholic beverages is under a license or permit issued under the Alcoholic Beverage Code.

It's only $5, right? Where it gets dicey is that the money goes to something called "the sexual assault victims fund", which seemed to imply that strip clubs cause sexual assault, and more specifically, "rape, sexual assault, prostitution, disorderly conduct, and a variety of other crimes and social ills ."

Naturally, strip clubs were up in arms, and claimed their First Amendment freedom of speech rights were being violated. This issue made national news then, but the fight was still up in the air until last week. 

On August 26, the Texas Supreme Court reversed the Court of Appeals and held that the tax was constitutional. Here is what they reasoned, (paraphrased):

    1. We aren't saying you can't dance naked, that would by tyranny, and would limit freedom of expression. Some even call it art. 
    2. If you want to dance naked, don't serve booze: that's not expression or art, its conduct, which we can police. If you do it anyway, we are charging you $5. No big deal. 
    3. Dancing naked isn't what causes sexual assault, dancing naked and booze causes sexual assault, so we really aren't talking about dancing naked, but what happens AFTER dancing naked is combined with booze. Get it?
    4. When you think about it, this isn't politics or religion, its strip clubs. If the law really hurts strip clubs, the intention wasn't too hurt them that bad, just a little. 
    5. It's not a tax, it's a "statutory fee," kind of like going to a state park. 
The full text of the opinion can be seen here.

In purely legal terms, I think the argument is a stretch, and does single out a specific class of people or businesses, and the excuse of a "de minimis" impact on protected speech to further the legitimate state interest of limiting the evils of what happens when there is nude dancing and booze just is not a good enough legal argument. 

In reality, the legislature, like many or legislatures, is trying to find money from anywhere it can as states are broke, roads need paving, jails are overflowing, and schools can't pay teachers. So they decided they could pick on strip clubs, a likely unpopular villain in a conservative state. I don't blame them for this, and I can't really blame the Supreme Court for going along with it. However, that's not the Supreme Court's job. 

Also in the opinion, was that "The Comptroller estimates that there are 169 (strip club/erotic dancing clubs that allow alcoholic beverage) businesses in Texas." I honestly thought there would be more, but its the number they named. The New York times claimed that lawmakers hoped to raise some $44 million from the tax.  

If my math is correct, $44 million / $5 = 8,800,000 prospective strip club attendees per year, in Texas.  Divided out between each establishment, amounts to an average of 171,598 patron's per club per year, or just over 142 patrons per club per day. Including Christmas, and Sundays. Maybe I am in the wrong business. 

Either way, 8.8 million is not a majority of the nearly 26 million Texas residents, so even if every strip club attendee, assuming each person only goes one time per year (which is a terrible logical fallacy, but just for illustration's sake) votes against their current state representative, they are all safe to get re-elected. 

From a policy standpoint, I see motivation behind the "statutory fee." I just don't like the way they legally justified it. Lets hope they get certiorari, I'd love to see what Scalia says on this one. 

What do you think about the law? 

Monday, August 15, 2011

So you were adopted?

Question: I was adopted when I was young. My birth and/or adopted parents are millionaires, and both just died, simultaneously, without a will. I might have some other blood or adopted siblings. What do I do?

Answer: Texas law is actually very favorable to adopted children. Sec. 40 of the Texas Probate Code States in part:

§ 40. INHERITANCE BY AND FROM AN ADOPTED CHILD.  For purposes of inheritance under the laws of descent and distribution, an adopted child shall be regarded as the child of the parent or parents by adoption, such adopted child and its descendants inheriting from and through the parent or parents by adoption and their kin the same as if such child were the natural child of such parent or parents by adoption, and such parent or parents by adoption and their kin inheriting from and through such adopted child the same as if such child were the natural child of such parent or parents by adoption.  The natural parent or parents of such child and their kin shall not inherit from or through said child, but, except as provided by Section 162.507(c), Family Code, the child shall inherit from and through its natural parent or parents.

Nothing herein shall prevent any parent by adoption from
disposing of his property by will according to law.  The presence of this Section specifically relating to the rights of adopted children shall in no way diminish the rights of such children, under the laws of descent and distribution or otherwise, which they acquire by virtue of their inclusion in the definition of "child" which is contained in this Code.

Recap: If there are not any wills, an adopted child inherits from both her natural and adopted parents. The natural parents do not inherit through the child.

The only wrinkle is if the adopted person is an adult, in which case the adopted adult gives up his inheritance rights through his natural birth parents. The relevant Texas family code section states:

§ 162.507. EFFECT OF ADOPTION.  (a) The adopted adult is the son or daughter of the adoptive parents for all purposes.
(b)  The adopted adult is entitled to inherit from and through the adopted adult's adoptive parents as though the adopted adult were the biological child of the adoptive parents.
(c)  The adopted adult may not inherit from or through the adult's biological parent. A biological parent may not inherit from or through an adopted adult.

Takeaway: Adopted kids inherit from their adopted family AND their natural birth parents, assuming there is no will. Adopted adults only inherit through the adopting parents. This makes sense, from a public policy standpoint.  Don't want your kids to inherit anything? Make a will. Are you an adopted child whose parent's passed away without a will? Contact an experienced estate planning attorney before your inheritance goes to someone else. Just because you were adopted, doesn't mean your rights terminate as well.

Friday, August 5, 2011

Congress leaves us hanging, and Tech companies have all the money.

In the days after the crisis of a US default being remedied, the market is still collapsing, and August 4th was one of the worst single days in stock market history. All the hard work Congress put in didn't do much to help the investor or those counting on their retirements to support them in their golden years.

So what do your representatives do, in this time of economic crisis? They go on vacation. Early.

Job numbers are ghastly. When jobs are bad, we try to get more educated. Good luck, seeing as the cost of education has outpaced just about every other comparable sector.

So, in times of crisis, there are no jobs, you can't pay for school, and Congress is on vacation. What to do?

What seems interesting is where the actual money is, and what people are spending it on.
Apple allegedly has more money than the US Government. Or maybe it does not. Either way, tech companies, your Apple/Google/Facebooks of the world have a ton of money, and they take in more than they spend, unlike the U.S. Government. But what, in real terms, are they adding to our economy, except distractions and ipads?

Here is an excerpt from the Founder of Facebook's sister, Randi Zuckerberg, on leaving the most profitable website in history and starting her own new venture:

"My goal is to launch my own innovative programming and work with media companies to develop their programming in new, and more social ways."

What does that even mean? Her brother is one of the world's youngest billionaires, and I have no doubt she is also independently wealthy, and will only become more so as a result of her new venture. But why?

These companies don't make guns or butter. They do not grow corn or pave roads. If your power goes out, your computer crashes, or your internet slows down, they disappear.

However, as much as I despise them, these internet companies and "social media" outlets have become a necessary expenditure for business and commerce. Society now spends the bulk of their waking hours using some form of media. The phone book is becoming obsolete, so now you "google" things or see what sort of review a business has online. If you are invisible in that world, someone else will gladly take what could have been your clients and make them their own (hence why, after years of being anti-website/blog, I made a blog).

Wait, I thought Google and facebook were free? How do you think these companies make money? Advertising, and it isn't cheap.

The story I always heard was the back of the phonebook lawyer gets 80% of the fist calls, the next guy gets 15%, and everybody else picks up the scraps. After reviewing one facet of my own firm's internet advertising, I discovered we were paying about $400 per actual view or click from a potential client, and of those views,  this avenue had generated a grand total of 0 clients since we started using it in 2008.

The takeaway: when thinking of your retirement or how to make your current business grow, there are a slew of new marketing, advertising, and customer feedback mechanism's available. I am very against buying into the hype of Paying a Randi Zuckerberg or the like a king's ransom to develop my company in "new, and more social ways," but maybe that is what is necessary to compete in an internet-driven world. Talk to a professional before you make any decisions, and then talk to a couple more.

Monday, August 1, 2011

Debt ceilings, and taxes. Where will the money come from?

How bad does that chart look? And that is pre-deal.

If you haven't heard what is going on, here is a run down:

The government borrows money to pay for things. It has over-extended itself.  It needs to borrow more just so it can pay for what it has already committed to, as it is not taking in as much tax revenue as it has committed to pay out. However, to borrow more it needs permission.

A partisan (and tea party factioned) Capitol Hill saw this looming crisis as a chance to lobby and push for reforms, budget balances, and tax or no tax agendas.

We have until tomorrow to fix it, else the government won't/can't pay its bills, the markets will likely keep crashing down, our credit rating goes worse, the dollar is further devalued, interest rates spike, social security checks could not come...all bad things and more.

But it was avoidable, and this is why you, the conscientious planner should call and or write your Congressman either way this thing turns out.

Whenever a silly thing like this happens, your retirement gets hit. You could've lost 10% last week, maybe more. What would that have paid for? 2 years of retirement? The boat or RV you have always wanted?

Maybe. Or maybe you hedged and bought gold and silver! What great foresight. But for lots of folks, your golden years took a hit this week, after taking a big hit a couple years ago.  Not to mention the jargon filled "QE1, QE2, and their youngest sibling, QE3" that we have had the pleasure of experiencing, which the government thought that by calling printing more money and further devaluing the dollar "quantitative easing," no one would notice.

Here is the secondary problem:
Even if the Republicans are successful in a "no tax raises" compromise, the revenue has to come from somewhere. Congress is too scared to raise taxes, because they want to stay in office. Way too expensive to not get re-elected. Take a step down, to the states: State reps and senators won't raise taxes, because its way too expensive to not get re-elected.

What's left? Cities and municipalities. How do they raise money? Property taxes. Who sets these? Appraisal districts, who are not elected. No accountability, and very little recourse. Have you tried to protest your property taxes/valuation recently? Good luck. Having a bad day, and want to see people more angry than you are? Walk into a county appraiser's office. Its awful.

So, that house you have finally paid off, that second home,  and that little investment real estate you and a partner bought in the 80's just became a little more expensive to own, out of thin air, even in a depressed real estate market. Make sense? It shouldn't, but tax revenues are going to have to come from somewhere, and they will come from the bottom if Congress doesn't force them at the top.

There is no such thing as not raising taxes in a time when revenue is needed as badly as it is now.