How Will The Resignation of Steve Jobs Affect Apple?

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On Wednesday, Apple announced that CEO Steve Jobs will be stepping down from that role.  Jobs has been battling health issues – including pancreatic cancer – for several years, so the move was not completely unexpected.

For most people, Steve Jobs IS Apple.  Co-founder Jobs was forced out of Apple during a 1985 power struggle with CEO John Sculley (whom Jobs had hired).  By 1997, Apple was in a death spiral and its stock was hovering around $13 per share.  At  the close of day yesterday, Apple’s stock has trading at $373.60.  That’s impressive enough – but there have been two stock splits since then, meaning that a single $13 share has turned into 4 current shares worth a total of $1494.40.  As a longtime fan of Apple products, it was great to see Jobs initiate such a dramatic turnaround.

The big question is how this will affect Apple long-term.  Will the company endure a  recurrence of Jobs withdrawal?  I think things will be different this time, and these are the reasons:

This separation is different – The separation in 1985 was far from amicable.  Jobs was essentially fired.  This is a very different situation, with Jobs continuing as chairman of the board, as well as an Apple employee in some capacity.  He’ll be around to mentor new CEO Tim Cook as needed.  Barring a dramatic downturn in his health, Jobs is not going to simply fade into the background – he’ll still represent Apple.

The company culture is different – When Jobs was forced out in 1985, Apple was a company with a lot of infighting.  The Apple II division and the Macintosh division considered themselves to be rivals, with the Macintosh division flying a pirate flag over their building.  There was no strong sense of direction.  In fact, the Apple IIe line was not discontinued in 1993 … nine years after the introduction of the Macintosh.  While I loved the IIe as a kid, the Mac was an exponentially superior product by the time 1993 rolled around.  At the time Jobs left, the company was just 9 years old – still not fully mature.

The company is more diversified – When Jobs took over in 1997, Apple basically offered just Macs.  Jobs streamlined the number of different Mac models (at the time, there were a large number of models being sold, creating confusion for customers).  Since then, Apple has branched out into new areas (iPod, iTunes, iPhones, iPad, etc).  This diversification makes the company less vulnerable to a downturn in a specific market.

In a nutshell, I expect Apple to continue to charge forward.  Tim Cook has been with Apple since 1998, had been serving as Chief Operating Officer, and was the man Jobs had hand-picked to succeed him.  I expect that Jobs will still be involved in a lot of design decisions, while distancing himself from the more “boring” types of work.

HP Touchpad: Chaos

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HP TouchPad

HP TouchPad (Photo credit: blogeee.net)

On July 1, 2010, Hewlett Packard finalized a deal to buy Palm for $1.2 billion. Palm was a relatively small company struggling to keep its footing in the smart device market – competing against behemoths like Apple and Google (Android). Finally, the financial resources of industry titan HP would allow the Palm OS to thrive. My buddy Lazy Man over at Lazy Man and Money is a longtime Palm enthusiast, so this was great news for him.

Exactly a year later, HP launched a tablet based on their mobile WebOS – the HP Touchpad.  The 16 GB (storage) model debuted at $499 and the 32 GB model at $599.  This would be the tablet that would threaten market leaders Apple (iPad) and Google (makers of the Android OS that power most non-iPad tablets, such as the Samsung Galaxy).  Right?

Unfortunately, sales were lackluster.  While the Touchpad has nice integration with other WebOS devices, the fact of the matter is that there aren’t a lot of people with WebOS devices.  There were also other differentiation features – such as support for Adobe Flash (a technology that Apple steadfastly refuses to support on the iPad), but it wasn’t enough.  Faced with a TouchPad priced at the same level as an iPad or Android device, customers grabbed the Android or iPad.  A big reason for this was a lack of apps (although an emulator does allow the TouchPad to run many apps written for WebOS based phones).  While the iPad and Android devices might not have had a huge assortment of apps at launch, they do now.  HP was bringing an entry-level assortment of apps to the table while joining the race halfway through.

On August 18 – a mere 49 days after launch – HP announced that they would produce no more WebOS devices (although they will continues to develop the actual OS until they figure out what to do with it).

The next day, clearance prices were announced.  $99 for the 16 GB model and $149 for the 32 GB model.  People gasped – and raced to buy one.  What followed ended up being a huge debacle, with angry cutomers, crashed web sites, and orders cancelled hours or days after being made.  What went wrong:

What HP did wrong 

I really don’t understand HP’s logic.  Did they really underestimate the difficulty of competing with Apple and Google?  If so, that’s a pretty colossal failure.

Throwing in the towel after seven weeks on the market seems to suggest a minimal commitment to the effort.  Perhaps they could have included coupons good for $100 worth of TouchPad accessories from the HP store?  A lot of accessories are very high margin, so this would have looked great to customers without costing HP much.  Or perhaps they could have given new buyers a $100 credit toward the purchase of new apps.  Perhaps even a big discount on a wireless HP printer to use with the TouchPad (forcing people to buy ink cartridges – a nice revenue stream).  I came up with those three ideas while writing this paragraph – I’m sure HP’s marketing department could have come up with many more.

It seemed pretty obvious at the time of the price cut that they could have probably clearanced the devices at $200 and still sold all of them.  When  you drop down below $100, the device becomes a reasonable subsitute for a lot of other tech items.  Not only is it a cheap substitute for a laptop, but also a possible replacement for the 9.7″ Kindle DX ($379) at less the the price of the cheapest Kindle ($114).  Heck, you could even use it in place of a 10″ digital picture frame when not using the other features.  You essentially have a device with Swiss army knife type of flexibility, and it’s undercutting the single purposes devices that it could replace.

What the merchants did wrong

A lot of people placed orders, received confirmations, and they received a cancellation notice much later.  In my case, I received a cancellation order this morning, more than two full days after placing the order.  Needless to say, a lot of people were angry about this.  I wasn’t particulalry upset, because this seem to be a likely scenario based on what I was hearing from other people.

I’m not really sure what the issue was here.  Some sort of a failure regarding an inventory system, no doubt.  Barnes and Noble’s web site was perhaps in the brightest spotlight.  I saw a comment that Barnes and Noble’s inventory system is set up to handle books, which can always be re-ordered from the manufacturer.  That’s fine – as long as you only intend to sell books.  If you’re planning to sell items that can be discontinued, your system has to have a way to realize that zero stock means that you are completely out.  Sometimes zero means zero.

And maybe toss the affected customers a small gift – a $10 gift card, perhaps – for the inconvenience. 

What the customers did wrong

OK, I understand that you’re angry about stores being out of stock and orders being canceled, but tone down the venom just a wee bit.  It the case of brick and mortar stores, what exactly could you expect?  These stores had no way of know that there would be a mad rush to buy the TouchPads.  It’s not as if this was a planned promotion and the stores were able to stock up beforehand.  Some employees were probably very surprised to see Black Friday crowds in August.

I agree that the online merchants goofed up big time – but some of the rhetoric is out of place.

Then there’s the guy on eBay selling information.  For $99 he’d tell you where you could buy a TouchPad for $130.  No refunds if the information was out of date.  It seems fairly obvious that this was an attempt to trick people into thinking he was selling a $99 TouchPad.  The text of the listing clearly says what he’s selling, but a lot of people likely just saw “TouchPad – $99”.

Then, of course, the people re-selling for a huge profit.  The $99 item could be found online for $200, $300, $400, $500 – and in the case of one web site, $700.  I know people caught caught up in TouchPad mania, but these were devices that wouldn’t sell for $499 – now they are listed at $700?

What’s next?

HP has a waiting list, and you can sign up to be notified when more TouchPads are available.  It actually makes sense for HP to sell as many as possible through it’s site instead of other merchants, since this would keep 100% of the revenue in-house.  Will they?  I don’t know.  How many more devices will be available?  Again, no idea.

Where do we go from here?  Suddenly, HP has an installed base of excited tablet customer.  Do they retract their withdrawal from the market?  The 16 GB touchpad has a materials cost of around $300, so the $99 price point is not sustainable long term without some other sort of revenue stream.  Could HP siphon off enough revenue from a data plan and app store to make up the difference?  Could they save a few bucks by using cheaper parts?  They’d have to position themselves as a cheaper alternative to the iPad and Android devices – but maybe there’s a spot in the market for that.

Another point is that not only does HP have a lot of tablet customers, but they have a unique blend of customers.  They not only have the tech crowd, but also a big chunk of the general population who hadn’t previously considered a tablet.  I work in IT, but really hadn’t considered a tablet.  At $500, it’s a really expensive toy.  At $99, it’s not hard to justify the cost.  We don’t own a laptop, so it would have been convenient to connect a TouchPad to a hotel WiFi network while traveling.

Then, of course, WebOS itself.  Will HP find a way to license it?  Will they wring out a few dollars and sell it outright (I’ll bid $99)?  Or will they throw it over the wall to the open source community?  Making it open source is probably the best way to ensure that it will actually survive long term – open source labor (volunteers) is very cheap …

 

What are your thoughts regarding the TouchPad soap opera?

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2011 Fall TV – What Are YOU Looking Forward To?

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With the Fall TV lineup fast approaching, I figured (well, maybe Kosmo SUGGESTED) that I’d talk a little bit about what I’m looking forward to…and some changes we’ll see.

Changes? What changes? Well, at least one HUGE change. Ashton replaces Charlie on Two and a Half Men. Will the show ever be the same? Do you think it’ll be better, or worse? Personally, I don’t think it’ll ever be the same. Not that I’m a huge Charlie Sheen fan, or a fan at all. I just think that role couldn’t have been more perfect for him, based on his personal life (did the show make his personal life, or did his personal life make his role on the show?). And, once somebody plays a character on a sitcom for so long, it’s hard to imagine the show without said character. My favorite sitcom of all time, The King of Queens, could never have replaced Doug, Carrie, or Arthur. It just wouldn’t have been the same. And I get that Charlie will be “killed off” and isn’t just being “replaced”, but……I don’t know. I’ll give it a go, but my hopes are really really low.

My favorite new show from last year, Mike and Molly, will be making a triumphant return this fall, and could be one of the top rated sitcoms on TV. Like I said earlier, it’s difficult for me to like any show as much as I liked The King of Queens (TKOQ), but this one is fairly close. It does have a love story, but it’s more funny than anything and that’s what I like.

Speaking of a show close to TKOQ, The Big Bang Theory is extremely close. How funny can a group of nerds be? Very funny! If you haven’t given this show a chance, please do. I highly doubt you’ll be disappointed. Personally, I’m hoping for a Penny/Leonard reunion…..wonder what this season will bring?

Taking a break from comedies, my favorite non-comedy show has to be Criminal Minds (the original show, not this new Suspect Behavior nonsense). How the writers for this show can come up with so many crimes/storylines is beyond me, but they do. And they’re very good at it. And don’t get me wrong, I’m not saying the Suspect Behavior spinoff is a bad show, because personally I’ve only watched a few episodes. I just like the original Criminal Minds so much that I don’t feel like the “new” show can come close. Maybe I should expand my horizons….

Last, but certainly not least, FOOTBALL! I know, I know, it’s not a “show”, but it’s TV/entertainment. I can’t wait to spend every weekend from September to January watching nothing but football (I think the wife is as excited as I am….OK, maybe not). When the NFL lockout first started, I thought to myself, “you know what, these overpaid bums need to just play the GAME that they have the opportunity to play…..I’m not going to watch if they ever start playing again”. I was wrong! I’ve never been so excited for a season in my life. Do you think they planned the lockout on purpose, to give fans a sense of what they might not have, and when the lockout ends the fans are more excited than ever?!?! Conspiracy, I say…

Fan Violence in San Francisco

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For years fans in the United States would see highlights on soccer fans outbreaks across the globe. Mass riots, fires in the stands, and mobs were not uncommon. This seems to have moved to the West Coast of California where two exceedingly violent events have occurred in a very short relative time frame at sporting events.

Just this past week a huge fight broke out in the aftermath of an Oakland Raiders – San Francisco 49ers game. These fights escalated into two people being shot in the parking lot areas. The motives for the shootings are yet unknown, but may be gang related. One person who was shot was reportedly wearing a F— the Niners T Shirt. This person was shot 4 times in the stomach. A 2nd victim was also wounded in a separate incident.

Raider fans are to put it lightly – unusual to say the least. They dress up in studded leather, black paint, and look like a 23rd century version of a Capital One Commercial, except with a much more foul attitude.

The foul attitude may have somewhat led to recent fan violence.

The recent attacks come as the city still watches the progress of Giants fan Bryan Stow, who was brutally beaten in an altercation outside Dodger Stadium nearly five month ago.  Stow, who suffered brain damage, remains hospitalized in serious conditions as he continues down the road to recovery.  After months of police investigation, 28 year old Louie Sanchez and 30 year old Marin Norwood have been charged in the crime.  Both suspects have pleaded not guilty.

Living in the sheltered Midwest as I do, it is hard to imagine that fans are so rabid that they would take to shooting one another in a parking lot after a game. I also don’t foresee a lot of fans in Nebraska wearing shirts telling Michigan Fans to “F” off.

Here is hoping that the NFL, the local communities, and the authorities take harsh and swift action to deter from this sort of violence continuing in the future. Just another reason to live in the good ol’ Midwest.

Will the Raiders ever learn?

The Jamarcus Russell Experiment was a total flop so now they burn a 3rd round draft pick on Terrelle Prior. Prior shows up as a black sheep of the Ohio State Program who is still awaiting word on the final tally of what will come down on their program due to the “tattoo-gate” scandal. Players have left the program, coaches have been fired (call it what it is Jim Tressel..by the way I am still waiting for your apology.)

Pryor will have to sit out five games. He has always held an attitude in his own mind that he is better than the next guy and deserves special treatment. His above the law way of going about his business is a large reason he was prompted into the problems he was accused of at Ohio State, and a large reason why some college programs shied away from even recruiting him in the first place.

Well this should be no problem then for the Raiders who have rolled the dice on plenty of young and old players throughout the years. Some have worked out but more often than not they have been busts.

The Raiders are still run by the prehistoric dinosaur like creature known as Al Davis. Decades ago when the Raiders were a proud franchise and successful Davis was the figurehead and a key component to their Tradition of Excellence. Davis has always been active in the organization, and his coined “Just Win Baby!” has always been a popular battle cry of Raider Nation. Unfortunately this has not been heard a lot around those parts lately.

Until next time, stay classy Temecula, California (shout out to my buddy – Happy Birthday Smither!)

School Is Back In Session

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Across most of America, students have headed back to school. This is significant in many ways. For the drivers out there, it means that there are school buses to watch out for and avoid, not to mention the kids getting on and off. On the positive side for drivers, there will be fewer children on the streets during school hours. There was also an up tick in retail sales as school supplies and new clothes were on the list over the last few weeks. Although it is only a temporary boost, any economic good news is important these days. Finally, and most import to some, college and professional football are on television again.

I for one am relieved that the diversion of football is back. Although I seldom go to games, I do watch on television. Baseball on the other hand, I will go to see live, but seldom watch on television. In baseball, the stadium activities are part of the overall entertainment. For football, the only entertainment you can watch that is not the actual game, is the half time show, but that is the time for bathroom breaks and food call.

This is the time of year where baseball is wrapping up with the excitement of the pennant, football is starting, the state fairs are underway, and politicians are kissing babies. Living in Iowa, I am in the center of all of those activities. We are bout four hours from four professional baseball team, with lots of minor league teams even closer. The same distance from five professional football teams with lots of college division I and II near by. We are currently the center of political activity with the straw poll and the jobs tour by the President.

In some ways this is a comfortable routine that we have every year (except for the politicians of course). We get to the school year and think back to our own school days. We start to reminisce about our friends and the good times we had. So, it is time to cheer on our school, or our kids’ schools, go to recitals and rallies. All of this will create new memories, mostly for the young people, but we oldsters will gain some as well.

 

NCAA Football 12 Review

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When I purchased NCAA 12 Football for my PS3 recently, the guy that helped me at the game store said (yes, I quote) “This is the best football game I’ve ever played. If you’re a Madden addict, you won’t be anymore”. While I was skeptical, I thought to myself … Hmmmm, if this game is better than any Madden game, it’s must be REALLY good.

I could hardly wait to get home to play it. I have to say … I’m a little disappointed that he said that because it did nothing but raise my expectation to a level that were way too high. Don’t get me wrong, I think the game is good and I enjoy playing it. BUT, gameplay-wise, the game is very much equivalent to what NCAA Football ‘11 was.

EA did do some cool things with the graphics. Supposedly the grass on the field is 3D … but I honestly couldn’t tell a huge difference. There is a huge addition in adding in each school’s traditional game day routines, the LSU tiger in its cage for example. While that stuff is cool and overall they’re good additions to the game, it obviously doesn’t add anything to the gameplay itself.

When reading about the upcoming release of Madden, they’re seems to be a focus on a new tackling system. Playing NCAA 12 gave me a preview of that system, and I think it’s pretty cool. They’re calling it a collision system, but really it’s about making tackling/blocking/etc more lifelike. It definitely does that, but doesn’t take the game to the next level.

If you’ve read any of my other sports games reviews, you know I’m a fan of the Franchise mode in any game. Become a coach, and in this case, recruit players all while still playing the games. The big difference in this year’s Franchise mode is you have the ability to start off like most coaches do in real life, and that’s as an offensive or defensive coordinator. I haven’t played an entire season yet so I don’t know how it’ll play out, but it does add to the “cool” factor. If there is a downside to that, it would be that you then only get to play offense or defense, whichever coordinator you are. But in my eyes, that’s not much of a downside.

Overall, I’d give the game 4 stars on a 5 star scale, and that’s saying a lot. I guess I just expected more…..thanks a lot guy that helped me at the store!!

Maybe the most exciting part of my game buying experience … I gave my $5 to reserve a copy of Madden and CAN NOT wait until August 30th so I can get my copy!! Check here often for my review … because I am expecting BIG things.





The Iowa Straw Poll

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This weekend I attended the Iowa Straw Poll. It was the first time I attended and didn’t have to “work” at the straw poll. Although I was tweeting for CAPE PAC and Soapboxers, so I guess I was working. But I didn’t have VIP Credentials like in previous years. It was also the first time my husband was able to attend with me. Four years ago he was in Iraq and missed out on all of the Straw Poll fun. He had no idea it was “such a big deal”.

Everyone was there, including Benjamin Franklin. He asked if I wanted a picture with him and I said, “Sure.” He put his arm around me and said, “Benjamin LIKES the ladies.” http://twitpic.com/65j85c Which is why my face is half scared, half laugh.

Before the results were announced, a friend asked who I thought would win. I said, “Bachmann one, Paul two, Pawlenty three.” My friend responded, “Interesting.” And then the results came down. “Bachmann one, Paul two, Pawlenty three.” My husband turned to me, jaw wide open and said, “How did you do that?” I laughed. Ten years in politics and you learn to read the crowds.

But yes, while I was there I tweeted the following:

“I keep having to remind DH that the candidate in last place’s name was “Thad McCotter” not “Scooter McGee”.”

“Ron Paul folks have left Hilton. Place smells a little better.”

“Overheard at the #IAStrawPoll “Ron Paul has brownies!” But what is in those brownies?”

Was I a little to harsh on the Ron Paul supporters? Maybe. They’re passionate and that’s good. But now they’re upset that Paul isn’t getting the media attention “he deserves.” I’ll let you in on a secret Ron Paul supporters, he’s not going to get the nomination.

Now, don’t get mad at me. That’s just the way it is. Ron Paul is what I like to call the “Drunk Uncle” (or “Drunkle” as my brother says) that everyone has at Thanksgiving. You know what I mean. It’s the guy you’re forced to invite, you never know what he’s going to say and you don’t know how to react when he goes off on one of his tangents. But it’s true.

So there it is, Ron Paul supporters. You’re passionate, and that’s awesome. That IS what we need in politics. But Ron Paul is not the guy. He’s not going to get the nomination. And getting second place in the Iowa Straw Poll is great, but if Paul runs as an Independent, he’ll only split the votes and we’ll get four more years of Obama.

It’s time to face the facts. He’s not going to get the nomination. There are too many other good candidates in the race. Ron Paul isn’t one of them. As my dad always told me before a big swim meet, “Second Place is the first loser”.

What Percentage Of Taxes Are Paid By The Rich?

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Tax

Photo credit: 401k

There is no debate that the rich pay a disproportionate amount of income taxes in the United States. Whether this is fair or not is a political discussion that I won’t address in this article. I’m more concerned about the reliability of statistics that are floating around.

You’ve probably heard that the top 20% of earners pay 80% the taxes and that the rich pay half the taxes. Are these comments true?  What percentage of taxes do the rich pay?

To answer this question, let’s to go the authority on tax statistics – the Internal Revenue Service. The data used in this article comes straight from the IRS web site.

Before we get started, I’d like to make a few points:

  • These statistics are based on returns, rather than people. The lower levels of income tend to have fewer people represented by a return (single people are over-represented in these levels). This means that you can’t say that 8274 EARNERS had an AGI of more than $10 million or more. This could be a dual income household where each spouse earns $5 million.
  • Data is from tax year 2009. The is the most recent data available at the time this article was written.
  • I’m not exactly sure what to make of the returns with no AGI. I have included this data for the sake of completeness, but this group likely includes a hodgepodge of exception statuses and the stats for this group might not make much sense. Caveat emptor!

Let’s take a look at the first table. This lists the percentage of returns for each income level, as well as the group’s percentage of the nation’s aggregate AGI ($7.6 trillion) and individual income taxes paid ($865 billion). Dollar amounts are in thousands. What data can we glean?

  • The top 20.57% of returns – those with AGI of $75,000 or more – earn 62.37% of the nation’s AGI and pay 83.96% of the taxes. So the much quoted stat about the top 20% paying 80% of taxes is true (assuming it means 20% of returns).
  • What about the rich paying half the taxes? This depends on your definition of “rich”, but returns with more than $200,000 in AGI represent 2.79% of all returns, earn 25.76% of AGI, and pay 50.14% of taxes.
  • Returns claiming AGI of more than one million dollars represented 0.17% of all returns, but paid 20.49% of all taxes.

Here’s the data:

  # of returns % AGI
(thousands)
% Taxes paid
(thousands)
%
All returns 140,494,127   7,626,430,723   865,948,695  
No AGI 2,511,925 1.79% -198,958,452 -2.61% 85,376 0.01%
$1 –
$5,000
10,447,635 7.44% 27,218,608 0.36% 40,278 0.00%
$5,000 –
$10,000
12,220,335 8.70% 92,407,278 1.21% 379,851 0.04%
$10,000 –
$15,000
12,444,512 8.86% 155,465,805 2.04% 848,075 0.10%
$15,000 –
$20,000
11,400,228 8.11% 199,017,560 2.61% 2,516,274 0.29%
$20,000 –
$25,000
10,033,887 7.14% 225,167,737 2.95% 4,669,410 0.54%
$25,000 –
$30,000
8,662,392 6.17% 237,994,230 3.12% 6,827,564 0.79%
$30,000 –
$40,000
14,371,647 10.23% 499,879,773 6.55% 20,151,883 2.33%
$40,000 –
$50,000
10,796,412 7.68% 483,088,798 6.33% 25,404,305 2.93%
$50,000 –
$75,000
18,694,893 13.31% 1,149,068,817 15.07% 77,962,073 9.00%
$75,000 –
$100,000
11,463,725 8.16% 990,337,913 12.99% 80,492,622 9.30%
$100,000 –
$200,000
13,522,048 9.62% 1,801,446,897 23.62% 212,290,589 24.52%
$200,000 –
$500,000
3,195,039 2.27% 905,347,402 11.87% 176,322,148 20.36%
$500,000 –
$1,000,000
492,568 0.35% 332,037,478 4.35% 80,458,186 9.29%
$1,000,000
– $1,500,000
108,096 0.08% 130,149,237 1.71% 32,755,871 3.78%
$1,500,000
– $2,000,000
44,273 0.03% 76,148,200 1.00% 19,393,235 2.24%
$2,000,000
– $5,000,000
61,918 0.04% 182,986,391 2.40% 46,943,630 5.42%
$5,000,000
– $10,000,000
14,322 0.01% 97,493,167 1.28% 24,617,005 2.84%
$10,000,000
or more
8,274 0.01% 240,133,885 3.15% 53,790,324 6.21%

 

OK, but what rate does everyone pay? In the next table, I’ve simply divided the taxes paid by the AGI to determine the effective tax rate.


A couple of observations:

  • Returns with an AGI of $10 million or more have an effective rate significantly lower than several other income levels. Why? Capital gains. Note that this income level doesn’t have an upper bound, and the more extreme outliers are generally going to be the result of capital gains. It’s much more difficult to earn $1 billion in wages than $1 billion in capital gains (I’m speaking in relative terms; both are extremely difficult to do).
  • There’s a noticeable jump between the 100-200K group and the 200-500K group. Not only are there some rate increases in these levels, but you will also see the effect of phase-outs of certain itemized deductions.

Here’s the data:

  # of returns % AGI
(thousands)
Tax paid
(thousands)
Effective
rate
All returns 140,494,127   7,626,430,723 865,948,695 11.35%
No AGI 2,511,925 1.79% -198,958,452 85,376 -0.04%
$1 – $5,000 10,447,635 7.44% 27,218,608 40,278 0.15%
$5,000 – $10,000 12,220,335 8.70% 92,407,278 379,851 0.41%
$10,000 – $15,000 12,444,512 8.86% 155,465,805 848,075 0.55%
$15,000 – $20,000 11,400,228 8.11% 199,017,560 2,516,274 1.26%
$20,000 – $25,000 10,033,887 7.14% 225,167,737 4,669,410 2.07%
$25,000 – $30,000 8,662,392 6.17% 237,994,230 6,827,564 2.87%
$30,000 – $40,000 14,371,647 10.23% 499,879,773 20,151,883 4.03%
$40,000 – $50,000 10,796,412 7.68% 483,088,798 25,404,305 5.26%
$50,000 – $75,000 18,694,893 13.31% 1,149,068,817 77,962,073 6.78%
$75,000 – $100,000 11,463,725 8.16% 990,337,913 80,492,622 8.13%
$100,000 – $200,000 13,522,048 9.62% 1,801,446,897 212,290,589 11.78%
$200,000 – $500,000 3,195,039 2.27% 905,347,402 176,322,148 19.48%
$500,000 – $1,000,000 492,568 0.35% 332,037,478 80,458,186 24.23%
$1,000,000 – $1,500,000 108,096 0.08% 130,149,237 32,755,871 25.17%
$1,500,000 – $2,000,000 44,273 0.03% 76,148,200 19,393,235 25.47%
$2,000,000 – $5,000,000 61,918 0.04% 182,986,391 46,943,630 25.65%
$5,000,000 – $10,000,000 14,322 0.01% 97,493,167 24,617,005 25.25%
$10,000,000 or more 8,274 0.01% 240,133,885 53,790,324 22.40%

 

As a whole, the aggregate effective tax rate is 11.35%. For each $100 of AGI, the government will collect $11.35 in taxes. The 100-200K group is basically right at this level, but the other income levels drift far away from this baseline. What percent of the “expected” taxes are paid at each income level (based on the expectation of $11.35 in taxes paid on each $100 of AGI).

I’ll let you peruse this data without any observations, other than pointing out that 100% would be equal to the expected 11.35% effective rate.

All
returns
% AGI % tax % baseline
No AGI -2.61% 0.01% -0.38%
$1 – $5,000 0.36% 0.00% 1.30%
$5,000 – $10,000 1.21% 0.04% 3.62%
$10,000 – $15,000 2.04% 0.10% 4.80%
$15,000 – $20,000 2.61% 0.29% 11.14%
$20,000 – $25,000 2.95% 0.54% 18.26%
$25,000 – $30,000 3.12% 0.79% 25.27%
$30,000 – $40,000 6.55% 2.33% 35.50%
$40,000 – $50,000 6.33% 2.93% 46.31%
$50,000 – $75,000 15.07% 9.00% 59.75%
$75,000 – $100,000 12.99% 9.30% 71.58%
$100,000 – $200,000 23.62% 24.52% 103.79%
$200,000 – $500,000 11.87% 20.36% 171.52%
$500,000 – $1,000,000 4.35% 9.29% 213.41%
$1,000,000 – $1,500,000 1.71% 3.78% 221.65%
$1,500,000 – $2,000,000 1.00% 2.24% 224.30%
$2,000,000 – $5,000,000 2.40% 5.42% 225.94%
$5,000,000 – $10,000,000 1.28% 2.84% 222.38%
$10,000,000 or more 3.15% 6.21% 197.28%

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Jim Thome Reaches 600 Homers

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A major milestone occurred yesterday in Major League Baseball.

Six Hundred Home Runs were hit by Jim Thome of the Minnesota Twins. He became just the 8th player to reach this significant milestone, although most now on this list have done it very recently. Even with that said, the list of folks in front of him as members of the 600 club is quite impressive.

Aaron, Ruth, Mays, A-Rod, Sosa, Bonds, and Griffey.

A couple off of this list are considered the best to ever play the game regardless of what era you are talking about in the history of baseball – Yet others have the tainted cloud of steroid use hanging over them.

I think it is safe to say that NEVER has a player who has hit 600 homers done so with so little fanfare or media attention. Thome played the most years in Cleveland, where he played 12 seasons. Since then he has had brief stops in Philadelphia, Chicago with the White Sox, Los Angeles with the Dodgers and now in Minnesota.

Thome has been consistent only hitting over 50 homers one time (he hit 52 blasts in 2002) , but having many years in the mid 30 to mid-40 home run totals. When you do this for a span of 20 years, do the math….you basically get to 600.

Most power hitters by their nature have a short shelf life in the majors. Swings get slower with age, younger players are always showing up to push you out. Many times the media attention that comes with being a slugger in the bigs is the same media coverage that starts to throw a player under the bus when they get into the twilight of their careers – and the production numbers start to wane.

After all, chicks dig the long ball…..

But Thome has seemingly escaped much of this. A popular player – but not necessarily a household name outside of the venues he has played in. He appears to be fairly quiet and un-assuming. Most casual observers would have no idea that he is a career .277 hitter (better than most big time power sluggers to be certain)

A lot of debate will happen over the upcoming weeks as to his all-time status in the game. Before the McGwire, Palmeiro and Sosa debacle of Performance Enhancing drugs, 500 Home Runs Pretty much got you into the Hall of Fame. 600 dingers I would think would make you a lock, yet questions abound on a variety of on-line sports sites as to if Thome deserves to be in the Hall of Fame.

Since I am not a member of the Baseball Writers Association of American no one really cares about my vote. With that said, I will take the quiet 600 Home Run guy who seems to be a throwback type of player any day of the week.

Congratulations Jim Thome

Until Next time,

Stay Classy Peoria, Illinois

The Carlos Zambrano Meltdown

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Once again, Carlos Zambrano is persona non grata in the Cubs clubhouse.  He was suspended for 30 days without pay following his most recent blowup.  After giving up five home runs against the Atlanta Braves, he began using Atlanta icon Chipper Jones as target practice before getting ejected from the game.  Mind you, Jones wasn’t even one of the guys who hit a homer.

Cubs GM Jim Hendry took the somewhat unusual step of apologizing to Jones (via Braves GM Frank Wren) for the incident.

This isn’t the first blowup for Zambrano.  He has a long history of failing to control his temper.  The problem with baseball’s guaranteed contracts is that it’s very difficult for a team to part ways with a problem player.  If the Cubs were to release Zambrano, they’d still be on the hook for his contract of $18 million+ next year.

Zambrano’s statistics put him in the “potential hall of famer” category.  If he pitches until he is 40, he could surpass 250 career wins and even make a run at 300.  However, he needs to stay focused and remain on the field for this to happen.  I sincerely hope Zambrano can put his anger issues behind him.  He’s making $18 million per year – hire a personal psychiatrist to travel with him during the season.

Sad day for the Huskers

Last night was the deadline to sign baseball draftees.  The future of Nebraska football took a hit when multi-sport star Bubba Starling signed with the Kansas City Royals, dashing the dreams of Husker fans who envisioned him behind center for the Nebraska football team.  Starling, the 5th overall pick in the draft, used his status as a football player as leverage in negotiations and was able to secure a $7.5 million signing bonus.  I have suggested the nickname of “Clarice” for the newest member of the Royal family.

The Pirates signed top overall pick Gerrit Cole to an $8 million bonus.  Interestingly, Cole was drafted in the first round by the Yankees in 2008, but failed to come to terms with the team and elected to go to college instead.  Imagine that – the Yankees losing a player to the Pirates because they wouldn’t pay the money.

Thome Hits #600

Jim Thome of the Twins reached the 600 home run plateau last night.  There wasn’t much publicity leading up to the event, other than a handful of articles pointing out that there wasn’t much publicity leading up to the event.  Thome is generally regarded as one on the nicest guys in baseball, and this might be working against him.  You never read news stories about him criticizing teammates or getting into a fight at a strip club.  He just goes to work and does his job every day.  Congratulations to the most low-key future Hall of Famer you’re likely to encounter.

49ers Add Seasoning With ‘Pepper?

The 49ers worked out quarterback Duante Culpepper on Monday, with an eye toward possibly adding him to the roster.  I was a fan of Culpepper when he was leading the high octane Vikings offense, and I still like the guy.  I think it would be smart for the 49ers to add Culpepper to their group of quarterbacks.  It’s a low risk, high reward situations.  Hoping for a triumphant return for Duante!

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