Advice for Procrastinators: Get The Monkey Off Your Back and Sleep Better At Night

The ‘monkey on the back’ is an expression we all hear from successful friends and family.  Unsuccessful, unresourceful people do not feel the monkey. Or they think its their personal back-scratcher. Successful people know, somewhere in their souls (feel, somewhere on their shoulders, pulling their ears, reaching into their pockets), that it is important to have their act together – to have a will (or “one of them-there living trust thingies”), some sort of instructions if they become incapacitated, and some sort of oversight on their family financial structure (“have I hired the right tax preparer? the right financial adviser?”) – this is the blueprint in our world known as an estate plan.  Successful people make sure that it is prepared correctly, updated regularly, and administered by a competent professional firm that will be around when they are not (or when they are unable to manage their situation).

But then this pesky life (career, important appointment, illness, etc.) gets in the way.  ‘Its too darn busy to think about these ideas’ – and to think about how this accumulation of savings, a house, maybe some other property, a retirement plan, a business, and these employees should be managed or controlled when the owner no longer has the capacity to do so.

And so we (yup, happens to me too) move on to the next crisis.  We put out the next fire.  And it goes from fire to fire, or perhaps “from the frying pan into the fire.”  Have you noticed that the most effective people are those who, despite the fires, the crises, and the constellation of complexity that is the 21st century, manage to do their planning and organizing each day to make the next day that much safer?  And eventually the fires do not even start?

That’s the wall you need to get through.  The wall that says, ‘nah-nah-nah-nah-nah-nah.’  The wall of not enough time, too hard to get to, too emotionally exhausting to think about, and gosh, it will all work out eventually because my VP/controller can run this place . . . and my spouse can handle the bills (and won’t fall in love again and remarry and get taken advantage of by someone else’s kids) . . . and my kids/grandkids can handle a big lump sum of dough at age 18 . . . and their spouses won’t ever divorce them  . . .  and so on.

This is a message from a professional monkey-remover:  the people who are legally entitled to control – whom you think can handle – everything and everyone you care about perfectly and wonderfully without any instruction or direction from you . . . probably, in our monkey-removing experience, cannot.  Not at least without a few hours of thoughtful direction from you:  Where are the accounts?  How are these properties titled?  Who are the designated beneficiaries? How much belongs to me and how much belongs to my spouse?  How old should these kids be before they are allowed to manage all this?

You know, its time to just bear down and do this.

A Trusts & Estates Joke

Some of you know about STEP – the Society of Trust and Estates Practitioners.  I was fortunate to attend their conference last Friday (in Century City, LA).  It is a great group, with lots of experienced international practitioners, and this conference was no exception.  But to give you a feel for the tone of the conference, I will restate a joke that one of the speakers made in the afternoon of day 1.

Here it is, The STEP Conference joke:

An ambitious but somewhat homely and unsocial man was living a single life in his family’s villa in the Costa del Sol.  A successful banker, he enjoyed his life but wasn’t very successful at making friends or girlfriends. He learned one day that his father had been diagnosed with a terminal illness.  His father advised the son that, because of the illness, the son would soon come into a substantial inheritance.

One day while at an investment banking conference, the son noticed a stunningly beautiful woman sitting across the room, making furtive looks in his direction.  He decided it was his big chance.  He was anxious to find a bride with whom he could share his good fortune, settle down, and enjoy an intimate relationship.  He approached the woman and, after a brief and awkward conversation explained that he would soon be inheriting more than 200 million dollars from his ill father.  He suggested they could date, and eventually marry, and he would make her very happy. The woman expressed interest in the proposition, asked for his business card, which he readily gave to her.  She thanked him.

Three days later the beautiful woman became his stepmother.

Practice Value, Cessation, and Succession for an Estate Planning Practice

We spend time and interest in the early part of our estate-planning practices thinking about “marketing ideas” and business-development projects that would generate more leads and ultimately more revenue for the firm and its business.  Little did we know that, after the first few clients, most of what we needed was and is already there, in the intake forms and files, in the people’s lives we touch.

How can that be?

Estate planning is not the practice of word processing, asset allocation models and life insurance; it is the practice of relationships.  Sadly, many practitioners with dozens of years of experience, some very technically solid, do not understand this.  They struggle for financial value to their ideas and techniques; they worry about estate tax repeal; they dislike legislative liberalization of administrative procedures; and they try to mine the vast middle class through ever more elaborate retail marketing and ever faster document assembly programs.[1]  Simple mathematical analyses of the economics of living trusts and “efficient frontier” modeling don’t work to bring in consistently good clients.  It seems that good, long-term clients do not choos advisors out of a textbook.

Relationships have their own life and reality[2], and under a relationship-centric perspective[3], the parties to the relationship are the reactors at the ends of the reality.  The value is all in the relationship itself,[4] and the relationship extends beyond the clients and their families to the clients’ other advisors, the heirs and administrators who hold, manage and receive the wealth of the society.  An experienced wealth advisor will recognize that relationships continue after the death of any party to the relationship.  The client can choose to express that relationship as they wish: their legacy can be lasting and thoughtful (or reckless and irresponsible).  So, too, can the estate planner control their legacy.

The harder advisors try to assert their client-centricity, the worse it seems to get for the client. If the advisor cannot be reached during business hours, then the client bears all the stress!  We as a profession often pay lip service to putting the client first.  Some practitioners actively seek to insulate themselves from any actual client contact. Clients are often trapped in a gauntlet of technology the moment they try to contact the adivisor, with voice and email response systems often impeding, not facilitating, human connections.  (“Press ‘1’ for a firm directory by last name; press 1-0-1 for Aaron Aarkin; press 1-0-2 for Alexander Able . . .”).

Firms that deploy consciously low pricing models often encourage their employees’ (and their own) indifference to the client by inadvertently or subconsciously rewarding faster, not better, service.  Customer experience consultant Jeanne Bliss puts it in her book, Chief Customer Officer, “The organizations we’ve built, the ways we’ve compensated and motivated people, and the accountability we’ve demanded have created a neat and ordered world for us to run our businesses. But for the most part, we’ve let down our customers.”

More new relationships are not necessarily the holy grail of the successful estate planner’s practice.  I personally find it unrewarding to seek a high volume of clients with shallow attention paid to each client.  Relationships are like so many wonderful experiences in life:  they continue to improve with time and attention.  Good clients will give you ‘points’ just for being around long enough to demonstrate that you did not go to law school to “get rich quick” and retire.  In other words, they choose you because you think similarly.  They like you and your firm – and you like them.  They have a family and they understand you do, too.  You are willing to spend a little time with them and they understand the magnitude of the “wealth preservation compact,” and that in return the value of their legacy is something for which you demonstrate a high degree of respect.

Sometimes just taking care of your good clients is all that you need to do to create tremendous value for yourself and your practice.  And, what is wonderful about the steps necessary to care for good clients (listening, being available and open, proper drafting (for lawyers), investment performance (for financial advisors), maintaining their records and files, completing their funding (for both), keeping them informed on changes in the law, the markets, changes to your firm, and generally being available to answer questions they may have about anything pertaining to preserving their wealth) is that those same steps accomplish your own business development.

Specifically, there are two marketing principles that dovetail well into ethical compliance of succession of the advisor’s practice.  Both marketing principles involve maintaining excellent processes for handling client information and updating:  (1) “Top of Mind Awareness” (aka, “TOMA”); and (2) “Drip Marketing.”  These genres of marketing are focused on keeping in touch with older and existing relationships, so that when the reader or recipient has a need for estate services (or seeks an update to their previously obtained services), you have provided quality material to them over a period of time, your contact information is handy, and you are at the ‘top’ of their mind when an estate question or problem comes up in their life or the life of a referral.  Both forms of marketing are “agriculture”-type marketing:  you have to plant seeds, water them over a period of years, and eventually be prepared to gather the harvest.  They take time.  As does good estate planning.

Rooms full of succession attorneys (attorneys who assist business owners in their succession plans) mostly do not have their own succession plans.  Don’t be embarrassed if you don’t – you have lots of company, even among succession attorneys.  In addition to writing about it (CEB, Business Succession Planning), I teach succession planning regularly – perhaps 6 times a year.  The largest group thus far to raise hands was 20% (At the Southern California Institute’s annual program known as The Gathering, San Diego, February 2006).  But you have to consider your sincerity and credibility at issue if you are beating the drum of the importance of succession and estate plans and you have neglected to consider your own.  Clients get this:  you have to be sincere.

Fortunately, years ago I was grilled into humiliation by an outside Board of Directors to develop my own practice succession plan.  Consulting with regard to winding down other professionals’ practices and assisting them in developing procedures for the smooth succession of their clients has helped.  I am a kid watching his friend ride his bicycle over the “Evil Knevil” ramp – ‘I’m sure glad I didn’t go first (and I won’t be riding that fast).’

As the baby boomers age and retire, there will be a tremendous amount of wealth preservation, estate planning and administration to do.  The business is there, regardless of the simplicity of probate procedures or the looming changes in the national transfer tax.  People become incapacitated and die, and, by and large, do not plan adequately for either event.  Congress cannot repeal death.  Lathering a bunch of strangers into a frenzy because of their fear (rational or otherwise) of “getting their documents all wrong” is not good advising or counseling.  Maybe it makes more money in the short run; there are lots of advisors who attest that ‘it works.’  But the best clients are the ones with whom you develop and nurture a relationship before they become your clients; they implicitly trust you in everything you recommend; and their interests – not yours – are truly first in your mind.  No silver bullet is going to magically transform a lackluster or careless practice into a booming business.  Mundane things like answering the phone, listening, drafting properly, correctly maintaining records and holding client data are critical to developing a lasting, growing practice of satisfied, continuing clients.

Along with all those clients and prospects, there will also be a number of estate planners among the generation of boomers who will be looking for successors to carry on their practice after they’re gone.  Turning your good intentions into actions requires strategies.

1.         Ask the client what they think. If you want to know what the client wants, you have to ask.  How is it that nothing is more terrifying to many advisors than to ask, “Are you satisfied with what we are doing?”

Whatever the reason for this hesitation, get over it.  I have a concept I call “Knock and Talk.”  Make an appointment – or just drop in, where appropriate – with your best referral sources and clients. Put a client questionnaire together, and deliver it personally. Do a formal survey with a company like survey monkey. Ask the kind of questions you’d like to be asked if you were the client.

2.         Put your client in charge. Patricia Seybold, author of “,” “Customer Revolution” and “Outside Innovation,” has taken relationship centricity to a new level by proposing that clients should run the show and actually drive innovation within your firm.

The ‘outside in’ approach is to flip the innovation process and (1) assumes clients have outcomes they want to achieve, (2) they have deep knowledge about their own circumstances and contexts, and (3) they are not happy with the way they have to do things (or the way they are treated) today.  They will innovate — with or without your help.

As an example, ask your trusted clients and referral sources to co-design your own succession plan. They can weigh in on everything from the fears they want addressed to the services they need on a regular basis to the look and feel of your website (including navigation to information content). Many are happy to be asked, and the end product will be a product of your relationship with your clients, not your own ego.

3.         Share client communications with your whole team. It’s not enough that advisors learn about the unique needs of the client.  They need to diffuse the knowledge gained from each interaction throughout the enterprise. It can be as simple as sharing a client perspective or comment at a weekly staff meeting, or in a “To All Staff” e-mail.

Partners often have the most meaningful client conversations, and they shouldn’t hoard this gold in a vault. Incorporate client conversations into internal team meetings. Write about them (conceptually, of course, not uniquely, so that you are not revealing any privileged information) in your newsletters and blogs.

4.         Record, measure and track.  In surveys, ask clients to suggest your service goals and refine the survey to track your progress against the client’s metrics.  Allow them to evaluate you in areas that they define as important to them, and track your progress in improving these scores from year to year.

5.        Have fun and work with passion.

All relationships are human and, by definition, they are never perfect. Like any living organism, relationships grow and change and morph.  The key is to take the time to measure and assess your relationships as they evolve.


[1]  This “blue-light special” phenomenon, for some demographic reason, appears to have much more traction in the Southern California suburbs than in the Bay Area.

[2]  It was suggested in one of my early presentations that this idea is too “eastern” (as in Buddhist) for us to grasp, which is why we struggle with the idea.  I then looked up a passage I had remembered from a homily some time ago – and it is in Matthew (18:20) that it is said, “For where two or three are gathered together in my name, there am I in the midst of them.”  There is nothing particularly unique about this idea – what is unique is finding people who live their lives consistent with this truth.

[3]  “Relationship-centric” is a term used most frequently when discussing a type of marketing focused on services that cannot be commoditized.

[4] The reality itself, not merely the value, is the relationship.  See also, David Bohm’s book Wholeness and the Implicate Order and Gary Zukav’s mid-70’s classic, The Dancing Wu Li Masters for further exposition of these ideas.

The Five-Trust Solution for Same-Sex Married Couples in California

Unique estate planning issues are experienced by same-sex married couples.  After considerable internal deliberation among our firm's five (5) estate-planning lawyers, we believe we have found a default solution.  The solution involves preparing up to five (5) separate trusts to facilitate compliance with both federal and California law. 


Many same-sex couples who had been together for an extended period of time took the opportunity to marry their partner during the brief five-month window in 2008 when, prior to the passage of Proposition 8, same-sex marriage was legal under California law.  Thus, unlike the overwhelming majority of opposite-sex marriage couples, many same-sex marriages in California occurred later in the individuals’ lives. These marriages have been deemed valid under California law, but remain invalid under federal law and the Defense of Marriage Act. As a result, the treatment of the community property of same-sex married couples is treated differently under federal law and California law.

This blawg suggests a 5-trust solution for such couples.

Separate (federal)/Separate (state) Trusts: 2 Required

Due to the fact that both spouses often enter into the marriage later in life, they possess greater separate property at the time of the marriage than average opposite-sex couples that married young. When opposite-sex couples with separate property engage our firm to draft an estate plan, we are able to fund a trust with both spouses’ separate property as the income from either is reported by the couple in their jointly-filed tax return. However, same-sex couples are not afforded this luxury and must file separately under federal law. Thus, same-sex couples must segregate this property as it is treated as separate property under both California and federal law, the income of which reportable only by one spouse. Segregation is achieved through the establishment of two “separate” property trusts, each containing the separate property of one spouse.

Separate (federal)/Joint (state) Trusts: 2 Required

Property held in the name of one spouse acquired as a result of the labor of that spouse expended during the marriage is considered community property under California law and separate property of the spouse under federal law. Under California Family Code §§ 1100 and 1102, such property much be managed and controlled by both spouses. However, income derived from this property is considered separate for taxation purposes under federal law (reportable individually), although reportable as community for taxation purposes under California law (thus reportable jointly in a California state tax return). Therefore, two “hybrid” trusts must be established to segregate this property with both spouses as co-trustees of each trust, one containing the community property held in the name of one spouse and the other containing community property held in the name of the other spouse.

Joint (federal)/Joint (state) Trust: 1 Required

Any California community property held in the names of both spouses will be treated as community property under California law and jointly-held property of two individuals under federal law. Thus, a final fifth “community” trust must be established to hold such property.

In conclusion, under this proposed solution, five similar and interrelated trusts are established to accommodate the five different characterizations of property held by same-sex married couples.

The Pesky Salesman is Your Buddha

Even the lowliest servant views with disdain a vendor's marketing pitch.  The same servant wonders why his employer does not respond to his entreaty for more paying work.

I have joined, belonged, participated in, etc. many marketing groups, tip groups and networking groups the purpose of which is to drive business to each of the members of the group.  After more than 15 years of participation in such groups, I have come to realize that the best business comes and goes to those who believe they are there to give referrals, not so much as to receive them.

The hackneyed term for this phenomenon is "giver's gain," but I think its bigger and broader than that.  It has to do with being viewed with sincerity, and this sincerity is what naturally attracts people to you.  If there is a perception that your participation is phony, only a few people in the group will not notice, because your subconscious will off-gas deceit, while your mouth attempts in vain to correct the odor.

So my pithy thought for the day is that the next time you are at a conference or a seminar, and you meet people whom you perceive to be obnoxious salesmen peddling their business cards about like an underemployed lapdancer in Las Vegas, consider the possibility that you might need a dance.  Because it is sometimes that sincere open-mindedness you exude that will bring the next customer to your booth.

Referring Clients and Others to Financial Advisors

I hope I will continue to say that I am learning something 20 years from now.  This past quarter, I learned how to refer different kinds of people to other professionals.  This is my synopsis of the experience.

First, there is no right referral for every situation.  Any referral depends upon who you (client, prospect, fellow advisor, colleague) are and what you are looking for.  This is because there are different types of advisors (insurance, stocks, wealth management, personal financial, coach types, etc.) and services you can use. 

I generally begin with the licenses they have, because this tells you what their duty is to you, the referee, the client.

1.    The highest duty in the law is a "fiduciary duty."  It is the duty a parent owes to their minor child.  Only certain licenses carry a fiduciary:  Lawyers owe a fiduciary duty to their clients and the case law generally holds them to the highest standard in the law.  This is why our errors and omissions insurance is so expensive.  You are treated like our child, even (or perhaps especially) when you behave like one. 

Professional fiduciaries have a very high fiduciary duty, but are often not cross-licensed or trained in all the areas where we need expertise.  But their duty is that of a trustee and is only limited by the governing document that appoints them (e.g., the trust or the Court).

Toggling down our list, a Registered Investment Adviser (RIA), or an Investment Advisory Representative (IAR) also have a fiduciary duty.  Most Certified Financial Planners (CFP designation) ascribe to rules of practice that require them to put the interests of their clients ahead of their own, although their disclosure obligations are not as extensive as one would like to see. 

Good investment advisers in my view are smaller groups, perhaps independent of, but who use “clearing brokers” (Schwab, JP Morgan and Fiserve are common clearing brokers) to handle their trades.  An example would be Mosaic Financial Partners or Wetherby Asset Management in San Francisco.

2.    Series 7 licensees are stockbrokers.  They must be supervised by a single "broker dealer," and can get disciplined or sanctioned for "selling away" (selling something that broker has not authorized as an appropriate investment).  The concept here is that someone is supposed to be watching them and making sure they don’t harm their customers.  Beware the compliance officer watching them may not have your interest as highly in mind, so using a broker-dealer that has a decent compliance system in place is critical.  Many Series 7 brokers are also licensed IARs.  Some are also licensed insurance agents.  Stockbrokers nowadays are not usually the advisor of choice the way they used to be.  Nevertheless, I like some stockbrokers for some client profiles.

3.    Insurance agents often call themselves "financial advisors."  There is no requirement for a license to call yourself a "financial advisor" (or an estate planner, for that matter).  This is why there is a lot of confusion about who is an estate planner and who is a financial advisor.  Anyone can be either, so the result is a taint on the entire profession.  Insurance agents are held to the lowest standard of care in the industry: the duty of reasonable care as determined by the standard of care of other insurance agents.  They are not required to disclose commission, and they are not required to put their client's interest ahead of their own.  Nevertheless, sometimes insurance agents can be great, but it would be up to them personally to hold themselves to that standard, because the law does not. 

Annuities are often sold by persons licensed as insurance agents.  Annuities can be great, but they are often very problematic because they come with very high commissions.  The commissions are a drag on the performance of the contract, in most cases.  And they often motivate a recommendation that is otherwise inappropriate.

4.    Discount brokers (Schwab eTrade, Ameritrade, TD Waterhouse, etc.) are only appropriate for people who already have some feel for the financial industry.  If you avidly read mutual fund prospectuses and like to evaluate performance of different money managers of different funds, with investable net worth of say $10,000 to $1 million, discount brokers may be your bag, Ideally, everyone with financial assets would educate themselves on the different types of investment products and services available, and then select the investments they need from a discount broker.  However, this is not reality.  Most people do not have the inclination (not always a matter of intelligence – they just don't really care to learn about this area) to learn about the financial world or their personal investment options and choices. 

Getting Going:

Some CFPs and IARs (RIAs) charge two fees: one fee for doing the financial planning component itself (what you sock away, what you need in retirement, kids' college, how much do you make, when are you going to sell the house, buy the house, yada yada yada), and then a percentage of the assets they manage (sometimes just the financial assets, sometimes more (“assets under advisement”), particularly if they work for Trust Companies). This is, as I will discuss below, not necessarily a bad thing.

Sometimes "financial advisors" (check their license - they may be insurance agents with little or no additional expertise) offer to do this for free.  I would be wary of anyone who offers to do anything for free, because you know there is something in it for them somewhere (perhaps the recommendation is "buy a deferred variable annuity," with enormous surrender charges and, not accidentally, enormous commissions).  Nevertheless, that does not mean every complimentary report is a scam;  it just means you have to assess the bias inherent in the information.

Good luck, grasshoppers.  It is a minefield.  Meet at least three people, and check references.  FINRA maintains a database of infractors called the "CRD" (Central Record Depository), where you can determine whether they have blemishes on their "U4" (the form that lists their former customer complaints).  A decent recommendation from, for example, your trusts and estates lawyer, would probably go a long way to getting you to the right fit for your situation.  If you don’t have a trusts and estates lawyer, then feel free to call me (415-896-1500) and I will find a good one to whom to refer you. [insert shameless-looking smiley face here].

Winehouse’s Divorce Motivated Proper Estate Planning

It appears that Amy Winehouse actually had a working, current estate plan.  According to this US News report, it was Britain's default laws that favor ex-spouses that motivated her and her lawyers to actually do her planning.  Her ex-spouse is apprently in prison.  That may be evidence of something, although I am not the guy with the details on him.

Just a reminder to re-do your planning after the divorce.  Make sure you comply with the provisions of your Marital Settlement Agreement ("MSA") which often requires, for example, that you maintain life insurance for the benefit of your minor children for a period of time.  Ideally, you come to me (or someone like me) before you negotiate the terms of the MSA.  You can build language into your MSA that specifies exactly what you need to do – for example, you can say your ex-spouse serves as a co-trustee with your siblings (if you trust them all) over the kids' insurance trust.  Or you can say your ex gets the firat $X (the cash immediately needed to deal with your loss – which is often around $100K-$200K for a working professional parent), and the balance goes into a trust for your kids.  You can set out the beneficiary designations of retirement accounts, and integrate the whole agreement into your shareholder agreements and other business continuity documents.

If Amy, of all people, can do it, then you sure as hell can.

A Warm Wind At the Backs of Some, Generated Off the Backs of Others

Yesterday, I learned in this Mother Jones article that workers have increased their contribution to government revenue disproportionately since 1980.  In other words, payroll tax (paid by workers) is a larger portion of government revenue than it used to be.  That's a macroeconomic analysis, which still doesn't answer the question of whether rich people are being treated "unfairly" by the current tax system.

So to elaborate a little, let's take two people who make exactly the same amount:  $100,000 in taxable income (after the standard deduction – let's not get complicated).  "Worker Taxpayer" earns her money by working (getting compensation by way of a W2) and "Investor Taxpayer" earns her money from dividends in a $4 million stock portfolio she holds (its about 2.5% in yield – about right).  Let's say they are both unmarried.  Investor taxpayer does not work and has no compensation income.  They are otherwise "equal," right? (except that investor taxpayer fits the description of those who vituperate about lazy welfare recipients who sit on the couch all day and watch TV, right?)  I'll keep the rhetoric down, because the facts are outrageous enough to speak for themselves.

Worker taxpayer will pay $7650 in payroll tax, plus $21,617 in income tax (2011 brackets), for a total tax burden of $29,267. 

Let's look at investor taxpayer.  You would think they would be taxed at the same rate as worker, right?  Wrong.  Because investor taxpayer receives all of her income from qualified dividends, they get a "special" tax treatment.  Bear with me, we're almost done.  Generally, the maximum tax rate for qualified dividends is 15%, BUT HERE it is actually 0% because investor's other income (remember she doesn't work) is taxed at the 10% or 15% rate. 

To refresh:  worker making $100K pays about $30K in tax.  Investor making $100K in qualified dividends pays $0 – no – tax.  Huh?  Yup.  

What this means is that rich people – who are incented by tax policy to remain on their couches (too much earned income would otherwise trip them into the 15% dividend tax bracket) – are now getting off their couches and going to tea-party rallies to maintain this unfair redistribution of wealth in their favor.  For if they work, they risk having their dividends taxed at 15% (still half of what, say, worker taxpayer paid in taxes, but confiscatory in their view).  Perverse incentive?  Yup.  Does it sound like the rhetoric of the right wingers about unemployed persons and welfare recipients laying on couches and not incented to work?  Hm. . . .

Now let's say you didn't work, or you worked very little, and instead you made all of your income from qualified dividends.  The "magic number" (the income threshold you need to stay under to avoid paying any tax on your dividend income) is $69,000 (married), $34,500 (single or married filing separately) or $46,250 (head of household).  Thus, you can actually work a little, and you have all this extra time – to attend rallies, political functions, cook your food, clean your house or do other things that people who actually earn their income from working have to: (a) pay someone else to do (which is not deductible), (b) do in the evenings or on weekends, or (c) simply let it slide.

I will now illustrate how it is almost impossible for someone who is already rich to not get richer, in fact much richer.  Both working taxpayer and investor taxpayer have identical lifestyles and thus spend the exact same amount of money (not likely, given that worker has to pay for commuting expenses – again NOT deductible).  Let's assume that's $70,000 per year.  We know that worker taxpayer already paid $30K in tax, so let's see what they have left to save:  uh, nothing.  Investor taxpayer paid no tax, so what do they have left over to save: $30K.  Exactly the same amount that worker taxpayer paid in taxes.

The rationale for the tax policy you see illustrated above is George W. Bush's.  In 2003 he said that "double taxation is bad for our economy and falls especially hard on retired people." He also argued that while "it's fair to tax a company's profits, it's not fair to double-tax by taxing the shareholder on the same profits."

Its odd to me that the above disparate treatment of otherwise similarly-situated earners is defended on the basis of "fairness."  Is this 1984?  And I also wonder whether there is a joke in there somewhere – i.e., given that a zero-percent tax bracket would apply to someone who made all of their money from dividends and capital gains, why wouldn't they retire?  I sure as hell would.  Working too much would bump all of their dividend income into the 15% tax bracket.  Volunteering for the tea-party rally, or perhaps some other Republican cause, would be a far better use of one's time.

Class Warfare in Tax Policy

I agree with Republicans on many things, one of which is that tax policy should avoid re-distribution of wealth.  However, the conclusion this policy impels is not what most wealthy Republicans would like. 

Have you ever noticed when you are riding a bicycle that you cannot tell when the wind is at your back?  You just go so much faster and you think it all has to do with you – your pedaling, your skill, your endurance.  So it goes with tax policy and wealthy Americans.

Let's take 1980 as a benchmark for this principle.  Mind you, we could go back to 1950 and my premise would still carry weight.  It is generally accepted that the payroll tax is "regressive" – meaning that it taxes working people at higher rates than either the independently wealthy or high-income earners (say, lawyers and doctors, just to address those who would say I have a bias).  This is because you do not owe payroll tax on income above a certain threshhold – around $100K for our purposes (it was indexed a while back around $92K).  So if I make $200K, the first $100K is payroll-taxed at 7.65%, and the balance above that – no payroll tax.

Its bad enough that we have a regressive tax system with the payroll tax – its one of a dozen examples I could give (cigarette taxes, alcohol taxes and sales taxes all disproportionately fall on the working class and poor).  Basically, once you make more than about $500K per year, a trained monkey cannot help but get extraordinarily rich, unless said monkey spends incredibly wildly.  That a lot of bananas.  So you would think with the growth in the economy since 1980, the percentage of government receipts (tax revenues) attributable to the payroll tax would be relatively constant?  Um, no.

Because, since 1980, the tax policy has been redistributing wealth (towards the more affluent, by the way), the payroll tax as a percentage of government revenues has actually risen.  Mother Jones has put together some fairly nice charts and graphs for those who prefer picture books to novels (for example, me).  In this article, we see that the payroll tax used to account for about 30% of government revenues (in 1980) and now accounts for 42%, while the income tax used to account for about 47% and now accounts for about 43%.  The corporate tax has fallen off a cliff, but because I don't share the liberal orthodoxy of taking corporations (except with respect to retained earnings – mine is a difficult position to put into a 5-second sound bite, so that's for another day), I am not going to complain that "big corporations" don't pay enough tax.  Not the complaint of this radical moderate.

My complaint is the dis-ingenuity of the rich folks who are funding the tea party "debate" (not really a debate, but more like a one-sided shouting of superficially appealing policies shrouded in this historical idea that the Bostonians' revolt against the British Parliament's Stamp Act in the 1770's somehow has something to do with rich people paying too much tax today – its not historically accurate, but that is not relevant to these people).  They contend that any effort to "raise taxes" (the sound bite used to describe the effort to restore tax policy to pre-Bush-tax-cut levels) amounts to "class warfare" and an effort to "redistribute wealth."  Yet, as the Inequality article shows, the tax policy for the past 30 years has actually performed quite well at redistributing wealth – to the highest 1% of the wealthiest Americans.

If anyone should be throwing tea into the harbor, it ought to be the 90% of working-class Americans who are shouldering the increased tax burden since 1980.  But, in this Orwellian world where "class-warfare" cries create some sort of "wedge issue" that political advisers have cynically calculated gets them that extra vote, the connotations of redistribution of wealth are instead socialist and egalitarian (rather than classist and aristocratic, which has been the historical truth since 1980).  This Kampf of Kochs is remarkably good at obfuscation. 

Judge Harpo Myers

I thought about running for judge today. I would have to run – the governor wouldn't likely appoint me (although we share a lot of similar thinking). So in my fantasy world of "Judge Myers," I came up with these ideas:
1. We only use court call. It is a complete waste of time for attorneys and litigants to be present in court. It costs money for litigants and lawyers to get to court, to park, and to sit around. It costs the government money to staff security, Marshalls, have all these places for people to sit and pretend to be comfortable. There is nothing comfortable about sitting in court. Commissioner Kaplan reminded me of this when she admonished me not to (silently) view my email while sitting in the back row of the gallery, behind the water cooler (my favorite spot). Huh? Not efficient. Especially when you cut my fees for not being efficient. Its efficient to multi-task. You can do that on court call.
So I would require court call for everybody unless some statute required physical presence. Court call also has the benefit of paying for itself – it charges the lawyers a fee which it shares with the court. The lawyers are happy because they save valuable time in not having to commute, park, and pretend to be comfortable while they are decidedly polite in NOT viewing their EASILY and QUIETLY accessible email on their cellphones.
2. Every courtroom should have a clown-type horn. One of those old Harpo Marx horns, where you squeeze a red rubber ball and it makes a goofball sound. Instead of interrupting the lawyers or clients, the judge could just squeeze the red rubber ball, and this big HONK would tell everyone to knock it off – they are irritating the judge. It would not show up on the transcript, so there would be no "record" that the judge cut someone off. It would be the judges' version of "nightstick justice." "Appeal this, counsel . . . HONK!"
3. Court personnel, including judges, would be subject to the same sanctions, or reductions in pay, as the litigants and their counsel for screwing up. This is the pet peeve of all probate lawyers. There is no mutuality of remedy when the examiners or the court messes up. If a case got reversed on appeal, the Superior Court would forfeit its filing fee back to the party who incurred the fee. This might encourage more careful thinking in jurisprudence, and would definitely help with ridiculous points (and unnecessary continuances) occasionally made by examiners.
4. Hearings would be set every 15 minutes, or at least every 30 minutes. You would not have to sit through much of a calendar to be heard. It wastes a lot of time and money to have 40 lawyers sitting around listening to a couple siblings squabble over who got the better pacifier. After the 20th time, its not funny any more.
5. My judge cellphone would be available to all parties at all times, with the caveat that it would be a 900 number. If you want to get a ruling on an objection in the middle of a deposition, go ahead and give me a call. But it will cost $10 per minute (cheap relative to the cost of litigating the objection otherwise), and the revenue would go to the court's general fund. The fee would go up to $100 per minute for any calls made after 8 p.m. and before 9 a.m. Thus, you could depose someone in the middle of the night – that's your decision, counsel – but if you want to wake me up to fight about the objection, that will be $6,000 per hour. And there is no guarantee I will be as sharp as I would be, say, at 9 a.m. I would probably insist on a small cut of the action for the inconvenience to me and the interruption to my beauty sleep.
6. Every law firm with at least 3 lawyers that regularly appeared in my department would have to send a paralegal into court once a month to assist with my department's research. They would need to work on other cases, not their firm's. They would get a sense of the importance of fair and balanced research. They would see what other firms are doing, and it would be a forced CLE. It would likely improve the quality of their own firm's filings with the court.
In honor of the tea party, I would create a new political party, the Coffee Party, and run on a platform of fast and efficient justice. We can do more with less. We have no choice. Peet's would be my official sponsor.