It’s time to sit back, relax and enjoy a little joe …
Welcome to another rousing edition of Black Coffee, your off-beat weekly round-up of what’s been going on in the world of money and personal finance.
I hope everybody had an enjoyable week. Without further ado, let’s get right to this week’s commentary …
If you try to sit, I’ll tax your seat
If you get too cold, I’ll tax the heat
If you take a walk, I’ll tax your feet
‘Cause I’m the taxman
– George Harrison
You don’t pay taxes – they take taxes.
– Chris Rock
Credits and Debits
Credit: Did you see this? The “Big Beautiful Bill” legislation passed by Congress and signed into law this week, provides a $6000 boost to senior citizens’ standard deduction from 2025 through 2028. The new tax break – $6000 for individuals and $12,000 for couples – is for tax filers age 65 and older. It starts phasing out for those who earn over $75,000 ($150,000 for couples). Those breaks are definitely appreciated. That being said …
Debit: Alas, many seniors will be disappointed to learn that the provision does not eliminate taxes on Social Security benefits; the income tax deduction is temporary and not a literal cut in the Social Security tax. The trouble is, the federal government needs the cash because it not only can’t control its spending, but there’s also has an army of bureaucrats on its payroll. So the government pickpocketing will continue – but they’ll need to find easier targets until the current provision sunsets.
Gary Larson – The Far Side
Debit: If additional legislation isn’t implemented to increase Social Security fund revenue, the new deduction could also accelerate Social Security insolvency by one year, to 2032, according to some estimates. Then again, that’s a story that’s been around almost as long as Social Security itself. But as long as duct tape and baling wire exists, patch jobs – whether it’s pushing back the designated full retirement age, lowering cost-of-living adjustments, raising the payroll tax, or increasing the payroll tax income limit – are always eventually implemented before the system implodes. Oh … and speaking of insolvency:
This was a cartoon in the Fort Worth Star Telegram by political cartoonist Etta Hume in the 1970s. (University of Texas at Arlington Libraries, Special Collections)
Credit: It’s not just seniors who will be seeing tax relief starting this year. The new legislation also increases the deduction by $750 for individuals, $1500 for married couples, and $1125 for a head of household, effective in the 2025 tax year. Oh… and in case you’re wondering, about 90% of federal taxpayers use the standard deduction rather than itemizing deductions. This should come in handy for those who have been impacted by the relentless rise in consumer prices. Oh, wait …
Credit: Tipped workers such as restaurant servers, barbers and drivers would be able to deduct up to $25,000 in qualified tips. Additionally, the bill creates an above-the-line income deduction for overtime pay of up to $12,500 for hourly workers who put in longer hours. Not that most people today seem to be looking at the big picture when it comes to taxation. Or for that matter, paying any attention at all …
Credit: So much for claims from the opposition that the tax cuts only benefitted the rich. Now you know why most Americans are no longer fooled by the empty rhetoric from the usual town criers.
Credit: Despite the renewed threat of new higher tariffs by President Trump, equities remained relatively unfazed. For the week, the three major stock indices barely budged off their recent all-time highs; the Dow fell 1.0%, the S&P lost 0.3% and the Nasdaq was essentially unchanged. Oh …and in case you’re wondering if there are any bears left, the answer is most definitely “yes!” Well… at least one, anyway. But it’s not on Wall Street…
Debit: Meanwhile, the US trade deficit surged 11% last month – that is the worst May reading since 2022 and accelerated the pace of the National Debt, which surpassed $37 trillion last week. With that in mind, the markets are now estimating that it won’t be long before the pace of debt accrual increases from $1 trillion every 100 days to $1 trillion every 90 days. For now. Since the US debt is on “the business end” of an exponential curve, we can expect the pace to be under 75 days in relatively short order.
Credit: Unfortunately, as macro analyst Greg Mannarino points out, “Other nations are finding new trade partners who don’t want to settle in USD. Larger trade deficits (results in) more borrowing to fund consumption. More borrowing equals a weaker USD and reduced purchasing power. And a weaker USD leads to a loss of global trust.” Never mind that freezing and confiscating the USD-denominated assets of other nations for not behaving “properly” probably had an even bigger impact on the lack of trust. So there’s that. And then there’s this …
Credit: The popular macro analyst who goes by the handle “Graddhy” turned heads last week when he said that he is absolutely “certain that silver will be a fully endorsed monetary metal once again.” So what’ll be the trigger that? Well … financial analyst Victor Sperandeo says, “it will be hyperinflation.” But wait … there’s more: “When hyperinflation hits the US,” he says, “it will happen fast and then be over – which is the only way to go.” We hope he’s correct. In the meantime, the waiting is the hardest part …
Debit: In the 1960s gold was about 5% of total global financial assets. That total fell to just under 3% in the 1980s. Today it’s well under 1% – which suggests the yellow metal’s role in wealth preservation is still unfamiliar to most people in the world at large. If you’re a results reader of this blog, you’re not one of them. Got gold?
By the Numbers
A recent study looked at median income data and typical monthly living costs for the 50 US states. Here are the top 10 states where your salary stretches the furthest based on percentage of earnings remaining after essential expenses:
23.2% Washington
23.9% Wisconsin
24.4% Texas
25.4% Kansas
25.6% North Dakota
27.1% Maryland
28.3% Alaska
28.7% Idaho
34.7% Utah
35.0% Virginia
Source: Chicksx.com
The Question of the Week
Last Week’s Poll Result
Which of these pets have you owned during your lifetime?
- Dog 30%
- Fish 27%
- Cat 25%
- Bird 10%
- Reptile 7%
- None of these 1%
More than 1700 Len Penzo dot Com readers answered last week’s question and it turns out that 4 in 9 of you have owned a pet other than a dog or cat. And 1 in 25 of you have never owned any kind of pet, which is kind of sad, don’t you think?
If you have a question you’d like to ask the readers here, send it to me at Len@LenPenzo.com and be sure to put “Question of the Week” in the subject line.
Useless News: Sad Story
Three writers, Al, Ben, and Carl, who were attending a writing convention, booked a room on the 75th floor of a hotel.
When they arrived back at the hotel from the convention, the receptionist told them, “I’m terribly sorry, but the elevator is broken. In the meantime, you will have to take the stairs.”
Now, Al was a writer of funny stories, Ben was a writer of scary stories, and Carl was a writer of sad stories. The three of them agreed that, to make it less boring, Al would tell the other two his funniest stories while they climbed from floors 1 to 25, Ben would tell his scariest stories from floors 26 to 50, and Carl would tell his saddest stories from floors 51 to 75.
They started to climb the stairs, and Al started to tell funny stories. By the time they reached the 25th floor, Ben and Carl were laughing hysterically.
Then Ben started to tell scary stories. By the time they reached the 50th floor, Al and Carl were hugging each other in fear.
Then it was Carl’s turn to tell some sad stories. “I’ll tell my saddest story of all first,” he said. “There once was a man named Carl who left his hotel room key in the car …”
(h/t: Susan)
Squirrel Cam
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