Tag Archives: Bill Tracy

Virginia Gothic

by Bill Tracy

Following up on Steve Haner’s discussion of Virginia’s handling of the new federal tax laws, I decided to do a “hypothetical” sample calculation.  “Hypothetical” is in quotes, because this example is somewhat similar to my own household, where we are grandparents in retirement.

In this simplified example, the annual income is assumed to be $150,000 withdrawn from retirement savings. Itemized deductions total $28,500 including $7500 state income tax, $7500 property tax, and $13,500 mortgage interest and charitable donations.  Thus the SALT (state and local taxes) exceed the new $10,000 federal limit.

Our hypothetical taxpayers are filing a Married-Joint tax return, and they are Age 65 or older.  Due to being over Age 65, this couple benefits from a larger 2018 Federal Standard Deduction of $26,600 vs. the normal deduction of $24,000 for younger couples.   In our example, the couple’s itemized deductions total $28,500 in 2017, but which is reduced to $23,500 in 2018 with the new SALT deduction limits.  Thus the $26,600 Standard Deduction looks better, but only on the surface.  As you will see below, the plot thickens in 2018 for many Virginians.

Using 2017 as a Base Case, let’s look at the tax payment options available to the couple in 2018:

Option-1 above is currently the best for our couple in 2018, but they are not very happy. Upon completion of their Federal FORM 1040 they are temporarily pleased see $801 tax savings, courtesy President Trump. However, upon filing their Virginia FORM 760, the couple owes Virginia an extra $863, courtesy whomever wants to take the credit for that. So the overall loss is $62 versus the 2017 Base Case.

Option-2 uses itemized deductions, and presents our retired couple with an interesting and rebellious alternative. If they are mad at Virginia, they could elect to itemize deductions, and pay more tax to the Feds, and less to the state. In my actual personal tax projection, right now I think Option-2 probably saves me a few bucks.

Option-3 is the most preferable option for our retired couple, but it requires the General Assembly to change the Virginia tax laws. Virginia tax law currently stipulates that a taxpayer who takes the Federal Standard deduction, cannot itemize taxes for Virginia purposes. It is this Virginia law that prevents our retired couple from taking the modest tax reduction that the new Federal tax law tries to achieve.

(Calculations based on a shareware 2018 Federal Tax estimator, and using 2017 Virginia tax calculator with adjustments for itemized/standard deductions.)

Bill Tracy, a retired engineer, lives in Northern Virginia.

I Want to Say Two Words to You: Plastic Reycling!

Reportedly, 90% of the plastic that reaches the world’s oceans gets flushed through just 10 rivers: The Yangtze, the Indus, Yellow River, Hai River, the Nile, the Ganges, Pearl River, Amur River, the Niger, and the Mekong (in that order).

by Bill Tracy

I  want to say one word to you: plastics!”

That’s the famous 1967 quote from “The Graduate,” which ranks #42 in the American Film Institute’s list of the top 100 movie quotations. Evidently, it was good career advice, because it now seems like just about everything in our homes and vehicles is made from plastic.

But plastics leave society with a number of waste problems including litter and ocean contamination. I have had some personal experience with plastics recycling, so here are some of my thoughts.

Misconception #1: Americans are disposing a lot of consumer plastics in the ocean. Answer: Not true.

As an affluent country, the United States has many landfills, incinerators, recycling centers, water treatment plants, and weekly trash pick-ups. The horrific videos we are seeing — oceans and beaches literally buried in tons of plastic waste — is originating from developing countries. In some parts of the world, unfortunately, dumping trash in the nearest river is the best waste disposal option.

How does America handle its waste problem? One way is to export it to less affluent parts of the world with cheap labor and weak environmental regulations. However, 90% of the waste plastics sent to China comes from Europe. This suggests that recycling works better than the U.S. is usually given credit for.

Misconception #2: Land-filling of plastics is a serious problem due to the non-biodegradability of the plastics. Answer: Not true

Even a hot dog will last for decades in a landfill. Worse, a hot dog will biodegrade creating methane,which eventually leaks to the atmosphere. Some environmentalists contend methane is the greatest threat to mankind, worse even than the greenhouse gas CO2, which is paradoxically non-toxic.

Additionally, some feel strongly that hydrocarbons (fossil fuels) should be left in the ground to prevent release of CO2. If you believe that, what’s wrong with carbon sequestration by putting plastics in a landfill? Apparently eternal hot dogs are morally OK, but plastics are immoral. Alternatively we could switch to biodegradable plastic silverware made from corn. But then, what’s going to happen in the landfill? A corn-derived plastic spoon will degrade eventually… and release methane. (Admittedly, some of the methane is in fact recovered.)

Solutions: Let’s move on to discuss potential solutions to the problems of plastic wastes. As a former “waste min” engineer, I know there is much merit in the Environmental Protection Agency’s classic waste minimization hierarchy.

  1. Reduce
  2. Reuse/Recycle
  3. Treat
  4. Dispose of Residuals

Many recycling and treatment technologies are under-utilized. One of many technically feasible treatments is energy recover, e.g.; trash incineration,  as practiced by Fairfax County. Plastics have enormous energy content which can be recovered to generate electricity and play a significant role in the alternate energy picture.

But recycling and treatment require tax dollars to help solve the waste problem.  Enter American Conservatives and their staunch anti-tax views.  The unworkable Conservative view is partially supported by the backwards Liberals who feel treatment (incineration) represents an unacceptable pollution source. Liberals believe the ultimate solution is not making any waste at all. While waiting for this utopia, Liberals and Conservatives both like landfills.

Who gets the landfills? Virginia loves landfills. I assume the infamous trash train still hauls trash from New York and New Jersey through Washington, D.C., and then on into southern Virginia. Hampton Roads has Mount Trashmore Park as a testament to our support of making new mountains from imported trash. If we account for all the trash we bury, we can say that Virginia has accomplished more for carbon sequestration than any other state in the nation!

Whichever strategy we pursue, we’d better get cracking. China has recently stopped importing contaminated waste plastics from the U.S. and Europe, which  in my view is a valid attempt to take control of their boundaries and concentrate on solving its internal waste problems. Meanwhile, developed countries are under greater pressure to solve their own waste-handling problems, and within their own boundaries.

Bill Tracy, a retired engineer, lives in Northern Virginia.