Wednesday, May 25, 2011

Depression Setting in on the On-Line Poker Front

With Congress worried about how to spend money we don’t have, they have no time to work on legalizing on-line poker. This is a tax revenue stream they have no interest in tapping into, I guess.

Meanwhile, Ultimate Bet and Absolute Poker have shut down cash play to the citizens of the United Peoples Republic of Democrat Socialists States and Illegal Aliens of Amerika.

This puts the kibosh on the Faldo UB Challenge. Just when I was ready to go for the gusto using some of the profits to go for a big score, my site shuts down.

So far in May, I had bet a paltry $2.88, but had $6.75 in cashes.

This raises my $9 starting bankroll to $57.54. Guess I should start with a $9000 bankroll next time, and end up with $57,540.

But we know it doesn’t work that way. The competition and the game availability at the higher stakes would change my profit percentage greatly – unless my game improved greatly.

The lesson I was trying to teach is that bankroll management plays as much a part of your possible success or failure in poker as your poker talent or that of your opponents. Playing “over your head” in stakes your bankroll can’t handle is a fast road to the rail dead broke.

In the movie Rounders, Kinish and Michael had two different mindsets when it came to poker. One thought that “grinding it out on your leather ass” was the way to go. Michael concluded that if you use that style, “your whole life becomes a grind.”

In the movie, Michael roars back from a deep hole and is ready to chase glory and riches in Las Vegas. Kinish stays in New York, beating Greek restaurant owners and mopes to squeak out his rent money and feed his kids.

Kinish had it right for real life. Michael won because it was a movie.

In addition, I have first hand proof of the great amount of unemployment in this country. Especially in the male population. It is a sad commentary that so many men are begging for work. Any work, no matter how difficult.

I saw an ad for a position of Gynecologist’s Assistant for the NCAA – SEC Division of Cheerleader Health. It mentioned no medical training required. The office was in Atlanta, Georgia and it gave a phone number.

I called the number and talked to the Personnel Director, who gave me the lo-down on the job. She said the duties included helping the co-eds out of their uniforms, massaging their tired muscles, and preparing them for the GYN exam by rubbing soothing, moisturizing oil on their most private parts, then helping them on to the examination table. The job paid $150,000 a year. And if I wanted to apply, I had to leave for Butte, Montana as soon as possible.

I said, “Montana? I thought the job was in Atlanta or some other area in the SEC?”

She said, “Oh, it is. But that is where the end of the application submission line is now.”


Mr Nicky said...

Some people claim that capital gains should be taxed exactly the same as other types of income. Sounds "fair"... so why treat it different?

Well, for one thing, is it really income at all? Most people who encounter the tax do so when they sell their house. Typical situation: a family bought a house in the 1950's or 60's. It was very expensive at $30,000, which was the most expensive thing they ever purchased: it was 4 times the annual family income. Now they want to sell to move to a small apartment since the kids have left home. Inflation has raised the price of housing (along with almost everything else), and they sell it for $200,000 (4 times their annual family income!). So they have a capital gain of $170,000 to pay taxes on, probably at the top rate since the year they sell they are those rich that everyone wants to "soak". They may need to live the rest of their live on this money (plus social security), but it wouldn't be "fair" to let them keep it.

The house situation is so obviously unfair that two special exemptions to the normal capital gain are made. But these create their own problems. There is a "one time only" deduction of $130,000 from the capital gain of a house IF the seller is over some arbitrary age (58, I think). If the amount of the deduction is not adjusted for inflation it soon becomes too little to matter much. A more serious problem stems from the other exemption: if the money from the sale is spent on another house, you don't have to pay the tax. This has the effect of driving UP the price of housing in the areas where people move. Sell a modest 2 bedroom house in California or Boston for $500,000, and move to the mid-west, there the same size house costs much less. But you must spent it or pay the tax. Does this make any sense?

Remember that the house, or any other form of investment, was bought with income that had already had taxes paid on it. In that sense, this is taxing it a second time. And much of the "gain" is just the loss of purchasing power due to inflation. If people just blow their money on consumption or at the Casino they won't have to pay this tax.

Maybe the government needs the money to function. But capital gains tax is strange that way. When the rate was lowered from 28% to 20% in the early 1980's the revenue collected rose dramatically. When the rate was raised back to 28% in 1987, revenue fell. Tony Snow had a column on this in USA TODAY, Nov 28, 1994. A letter criticizing the Snow column was printed a few days later. The critic pointed out that when the economy did well, the capital gains tax produced the high revenue and when the economy slowed down the revenue fell.

This tax is on investment, and lowering it makes investment more attractive. Investment is a big factor in why the economy does well. The critic reminds me of the "expert" who announces that they have discovered that, contrary to popular belief, the moon is more important than the sun. Why? Well the moon shines at night when we need the light. The sun just shines during the daytime, when we can see well enough.

JDM said...

Bottom line: you first paid taxes on it when you earned it. After that you are able to risk/invest it without fear that you will be forced to pay more to those who have no skin in the game