Category: A to Z Challenge

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T is for Taxes

1. True or False: Some parts of the world tax cow flatulence.

Nobody likes to pay taxes. Everybody hates tax collectors. In ancient Sumeria (as I noted in letter “C”), they had to press the taxes inside clay balls because they were “tampered” with, presumably by the tax collectors. Nowadays, the tax collectors–the IRS–has safeguards on top of security measures surrounding robust defenses against tampering. That’s a good thing for us. You might want to be more sympathetic towards the IRS. They’re safeguarding our money.

It’s True, cows are taxed extra in EU countries like Denmark and Ireland because their “expulsion” of methane gases are a significant contributor (some 18%) of greenhouses gases. Strange tax practices in history are a fascinating topic I covered before, in Tax the Peasants with this One Weird Trick!

Today, I’ll share a few fun facts about taxes in my annual post reminding you that the Volunteer Income Tax Assistance program might be able to do your taxes for you, for free.

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S is for Sarbanes-Oxley

Remember the Robber Barons from 11th grade U.S. History? They’re still here. Drawing by Udo Keppler, on Wikipedia.

Sarbox! Sounds like a science fiction warrior–Sarbox looked across the valley of mutants and gripped his tekbar laser sword tightly, ready to lead his small band against the scourge of Junoian invaders…

Sarbox! Is it a new prescription drug? Reduces eczema and weakened spine. May cause dizziness, drowsiness, and uncontrollable twitching.

The Sarbanes-Oxley Act of 2002, enacted in the wake of a series of massive corporate scandals, mandated improvement in corporate governance for publicly-held companies. It required improved internal controls, enhanced financial disclosures, independent auditors, and stiffer penalties for violations. Public corporations hated it, especially the ones who were fiddling their books.

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R is for ROI (Return on Investment)

Graphic from JFitzgerald.com.

ROI is overrated.

Return on Investment (ROI) is one of the most widely used financial ratios, like Earnings Per Share (EPS), Current Ratio (CR), or Debt to Equity (DE). These things grow like weeds, once fledgling MBAs get hold of an HP 12-C calculator. Soon every conversation gets sprinkled with acronyms. Then, executives try to apply financial ratios to everything, and anyone who objects that you can’t put a value on everything is told to take a hike.

Net Profit means after subtracting the Cost of the Investment. Graphic from investinganswers.com.

Not Entirely Useless

ROI can be a useful measure, especially in making choices. Suppose you have a portfolio–that’s investor slang for “bunch of different”–investments that you made of differing amounts. You want to know which one has grown the most consistently over the last five years. An ROI comparison makes the numbers comparable.

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