http://www.ustreas.gov/education/faq/taxes/taxes-economy.shtml
I recently did my taxes and I found this article rather intersting and confusing. The first confusing part that caught my eye was the marginal tax that they attempted to explain. I interpreted it as there are intervals on ones income that they have to pay a certin percent of that income as tax. So say there is a cut off at 6000 dollars, and at 6000 the rate jumps from 10 to 15 percent. This would mean that a person earning 6001 dollars per year would pay 10 percent of 6000 and 15 percent of 1 dollar as their marginal tax.
The article also states that this type of marginal taxing discourages new businesses and new ideas requiring large investments as even if a new business is succesful, the owner will end up paying a higher percentage of that profit back due to the marginal taxing.
Sunday, February 24, 2008
Sunday, February 10, 2008
Opportunity Costs
http://www.nuwireinvestor.com/articles/top-5-reasons-why-timeshares-are-horrible-investments-51227.aspx
This article discusses the 5 leading reasons that timeshares are horrible investments. The first reason is listed as "Time Value of Money". They say this because if one invests their money in what they believe to be a wise investment (a timeshare) it is tied up and cannot be invested in other things which can be a very high opportunity cost depending on the timeshare that is being invested in. The site states that most people do not know what they are getting into when they purchase a time share and thus are disappointed to learn that they have wasted their money on the timeshare when they would have been better off spending it elsewhere.
With timeshares a chunk of cost is required immediately after purchasing a timeshare. This is similar to prepaying for a vacation which can be very risky as if somehting prevents the vacation from being taken, the money is lost entirely. People sometimes choose to finance their timeshares but this too is not wise as interest rates can fluctuate and cause more money to be lost.
Timeshares seem to be an extremely high opportunity cost for something so uncertain. I don't think it seems right to pay for a vacation long before you take that same vacation.
This article discusses the 5 leading reasons that timeshares are horrible investments. The first reason is listed as "Time Value of Money". They say this because if one invests their money in what they believe to be a wise investment (a timeshare) it is tied up and cannot be invested in other things which can be a very high opportunity cost depending on the timeshare that is being invested in. The site states that most people do not know what they are getting into when they purchase a time share and thus are disappointed to learn that they have wasted their money on the timeshare when they would have been better off spending it elsewhere.
With timeshares a chunk of cost is required immediately after purchasing a timeshare. This is similar to prepaying for a vacation which can be very risky as if somehting prevents the vacation from being taken, the money is lost entirely. People sometimes choose to finance their timeshares but this too is not wise as interest rates can fluctuate and cause more money to be lost.
Timeshares seem to be an extremely high opportunity cost for something so uncertain. I don't think it seems right to pay for a vacation long before you take that same vacation.
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