Rants, Raves and Rambling…

I was recently lucky enough to see a raise to my paycheck.  My gross salary increased by $99.20 — but my take home only went up $27.66.  I don’t feel that my tax burden is outrageous and I’m lucky to be able to contribute towards 401(k) and employee stock plans, but you have to wonder where 72% of it goes.

This (and the recent tax deadlines) got me thinking about marginal tax rates and the benefit of earning additional money.  Playing around with the numbers for a couple different states, you can estimate the total tax burden.  Here is a rough estimate for federal taxes, as well as three states in which I have lived (California, Indiana and Oregon).  Numbers assume married filing jointly in 2012, except for California which still uses 2011 rates.

Federal Tax burden

Income Tax

FICA Witholdings

Besides income tax, there are Social Security and Medicare withholdings on any earned income (salary, but not dividends, capital gains, etc.).  In addition to the amount withheld from your paycheck, a matching amount (or more) is provided by the employer.

Example

This means that a hypotetical couple making $220,200 ($110,100, each) would be paying a marginal tax rate of 38.65% on their last dollar (and their employer would also be contributing 7.65% in FICA taxes). If they make $388,350, this would actually be a marginal tax rate of “only” 34.45% (and their employer would contribute 1.45% of that last dollar), as they will have maxed out their social security contributions.

Note that marginal tax rate is very different from total tax rate. In these examples, the $220,200 couple would have paid $62,013.80 in federal income/FICA taxes (and their employers, $16,845.30), while the $388,350 couple would have paid $119,941.48 in federal income/FICA taxes (and their employers $19,283.48). This works out to an effective tax rate of 35.81% and 35.85%, respectively. So the higher earning family does pay a higher overall tax rate, but not by much.

[Note that these incomes were chosen because of the impact they have from FICA deductions. $220,200 is the least a couple could make and max out their Social Security contributions. $388,350 is the most a couple can make, maxing out Social Security but not entering the 35% federal tax bracket. Perhaps later I can update the calculations with more reasonable income values.]

State Tax burden

Income Tax

Not every state collects income tax on ordinary income (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming are the ones that don’t). For the states in which I’ve personally lived, the tax rates vary quite a bit.

Sales Tax

Not every state collects sales tax (Alaska, Delaware, Montana, New Hampshire, and Oregon do not).  Sales tax is very different from income tax in that it only affects money that you spend.  So someone who is saving for retirement should worry more about income tax and less about sales tax (since they should be earning more than they spend) while someone who is retired may worry more about sales tax than income tax (since they may be spending more than they earn).

Example

Using our earlier examples, we can estimate the state tax burden of the couples listed above. For sales tax estimates, I am assuming that they spend 100% of their post-tax income, which isn’t a good idea, but may represent the typical consumer more than I would like.

For the couple earning $220,200, they would pay income taxes of $15,774 to California, $7,486.80 to Indiana (plus $3,082.80 to Hendricks County), and $19,384 to Oregon. Assuming they spent everything left after federal and state taxes, they would pay an additional to $10,324.88 in California sales tax ($11,036.95 in San Diego), $10,333.16 in Indiana sales tax, and $0 in Oregon Sales tax. It’s interesting to note that you may pay more in Indiana sales tax (at 7%) than California sales tax (at 7.25%). This is because there is more income remaining to spend in Indiana, after income tax is withheld.

For the couple earning $388,350, the tax burden would look like the following. In California, they would pay $31,412 in income tax; in Indiana, $13,203.90 (plus $5,436.90 to Hendricks County); in Oregon, $35,762.65. The sales tax burden would be up to $17,182.25 for California ($18,367.23 in San Diego), $17,483.74 in Indiana, and $0 in Oregon.

Summary

Taking all of this data, and trying to consolidate it into specific comparisons, we can gauge the relative expense of the three states.

As you can see, the state in which you live can make a significant difference to your tax burden. In this comparison, Oregon has consistently higher tax rates that look the worst, up until sales tax is included. Once that is taken into account, it actually becomes the lowest tax burden in these examples. Of course, that will change based upon income level. One other item of interest is that, due to Indiana’s flat tax system and the phase-out of the Social Security tax, a couple in that state earning $220,200 actually pays a slightly higher percentage of their salary in taxes than a similar couple earning $388,350!

Unfortunately, these are just estimates and doesn’t reflect the full tax calculation. I have oversimplified the tax calculations in several ways, but I feel that many of these simplifications lead to offsetting errors. For example, I’ve ignored that state income tax is typically deductible on your federal taxes and not all purchases are subject to sales tax, leading to an overstated tax burden; however, I’ve also ignored Alternate Minimum Tax, property taxes, gasoline taxes, car registration, and alcohol/tobacco taxes, causing this to understate your total tax liability.

 Once there, the Tamarack Lookout consisted of a single room cabin (that originally was a storage building, but was converted into housing when the original cabin burned in 1966) and a fire lookout.  Unfortunately, the trap door into the very top of the fire lookout was locked, but that didn’t stop me from climbing up as far as I could to take a peek.  The cabin had no electricity or running water, but it did have a large propane tank as well as a propane refrigerator, stove, and lights.  The bathroom was a public pit toilet located about 50 feet from the cabin.

The cabin. You can see the double-set of bunkbeds through the window.

The cabin had been recently maintained, and apparently they had just finished when we arrived.  It was clean and they had clearly been working on updating the interior lights, as there were several sets of additional ceramic burners and tie-on mantles out when we got there.  Additionally, the smoke and CO2 detectors had all been removed, and were sitting on the table for us.  I was glad my wife had packed extra batteries, as the batteries were either missing, or dead.  We had read a report that there were previously a major problem with pack rats in the ceiling of the cabin; there were still some critters up there, but after they managed to go out around dusk (making lots of noice and exciting us more than the dog) things would quiet down for the night. 

The tower. It's windy up there!

I guess the closest thing to an “issue” that we had was that it wasn’t nearly as secluded as we thought it would be.  While it is out by itself, this particular section of the national forest is open to both hunting and all sorts of off-road vehicle activity.  While we had the cabin all to ourselves and there was no one else camping nearby, the public toilet attracted more traffic than I expected on the small access road.  I’m probably being overly sensitive, since there were maybe 12 vehicles that went by the entire weekend — but since the cabin lacked curtains, it made you hurry as you were changing or getting ready for bed.

We really enjoyed the views out over the John Day river, and when it was clear Friday night, the stars were absolutely phenomenal!  While it is probably a little too far away to justify going back, I’m very glad we were able to visit once!

Shooting star towards the tail of the milky way...

I have a fairly robust backup solution setup here, performing nightly backups on all of the machines here in my house.  Each of the laptops, desktops and servers gets backed up separately and everything ends up on a multi-terabyte RAID5 disk array.  I would need to lose at least three hard drives (one on the host machine and two on the RAID array) before I actually lost any data.

However, in order for the network portion of the network-attached storage to be efficient I have most of the machines cabled to a full-duplex gigabit switch.  This helps speed the backups along, but it also means that most of my hosts are co-located with my backup device.  In the case of theft or natural disaster, anything that affected my server would likely impact the backup server sitting right next to it.

So, I’ve been looking into setting up some sort of secure off-site storage.  There seems to be no shortage of options out there — Amazon S3, ReadyNAS Vault, etc.  Even my ISP offers a network backup solution.  Unfortunately, I’m looking to keep around 1.5TB of data out there, and much of it is too sensitive to trust to “the cloud”.  I have yet to find a network storage solution that works for that amount of disk space in an even halfway affordable manner.  1.5 TB on the cheapest tier of S3 would still run almost $115/month. 

The basic requirements that I am looking for are:

• Ability to store 1.5TB of data in a cost effective manner.  I am willing to spend up to $25/month or so, but not more than that.  Mostly because with that $300/year, I can buy two giant hard drives, perform two full backups of everything and give the drives to friends for safekeeping.
• Ability to encrypt the data prior to storage.  Because uploading the data somewhere outside of my control makes me nervous, I require that the data stored on the remote host be useless to anyone without the decryption key.  Unfortunately, encrypted files don’t play well with incremental backups, so it will require specific encryption support.
• Since the off-site backup will only be used in truly dire circumstances, I don’t require that it be particularly fast or convenient to access.  I’ll still do nightly backups, but the off-site backup will only be updated weekly or monthly.
• Since I am backing up a lot of data, I’ll need to be able to restore a lot of data.  Whatever is used should support reliable, bulk restore of data.

I have yet to find anything that meets all of my requirements, but I did find a friend looking for similar off-site storage.  Because we both have extra storage space, we agreed to share backups to one another’s server.  I was able to setup duplicity on my server, and am now able to reliably backup and restore encrypted files.  Finally, I wrote a couple of scripts to automate the backup and restore process.  It appears that I’ve found a solution that will mostly work for me, at no cost!

As always, there is a catch.  While I have a pretty solid downlink provided by Qwest (20 Mbps), my uplink speed is a paltry 896 kbps.  This means that in a perfect world where I am getting full utilization and there is no other traffic, my 1.5TB of data would upload in… *drumroll* 166 days!  *sigh*  It looks like shipping a hard drive every six months is going to be just as fast, if not faster…

Update 9/6/2011 – Just over a month and I have been transferring almost the entire time.  I’ve had to throttle the output of scp based off of the time-of-day so I wouldn’t saturate my uplink; I’m averaging around 50% uplink utilization for that time.  I’m currently working on getting all of the photos transferred – 136G of 229G so far.

I’ve been travelling a lot for my job over the last three years, and I have to say, I’m baffled how the entire travel industry can continue to mislead and mistreat their customers. I truly believe that if some company were to treat their customers as people rather than cattle, that they would quickly establish a strong following.

- Prices should be disclosed up front. The *entire* price, including taxes, luggage fees, upgrade fees, etc. Airlines, now that they all seem to charge for baggage, snacks and drinks, are awful at this. However, rental cars, hotels and other providers go out of their way to hide the true price until you have purchased. Prior to purchase, you should know what it will cost, how much room you will have, what is included, and what is available for an additional (disclosed) cost.  Taxes, in particular, should be disclosed up front as they are often the largest “hidden” cost.

- I understand the upsell, but lately, this seems to have gone over the top. Airlines use a credit card for check-in, and then offer first class upgrades for only $75/leg right there at the kiosk. Rental car companies are drilled to offer you a larger car (just $5/day!), gas (pre-pay for a full tank, no matter how much is left!) and then try to scare you into the insurance. I sometimes wonder (usually when a rental car line snakes around the room but only one of the six employees there are servicing customers) if they are intentional inefficient in order to sell you on their MVP/gold/frequent traveler program.

Over the Memorial Day weekend, I drove out to the John Day Fossil Beds National Monument: Painted Hills Unit — aka, the Painted Hills outside of Mitchell, OR.

Absolutely beautiful place, even though I was sprinkled on a little bit.  It’s a fairly unique section of high-clay soil amongst a predominantly volcanic area.  The impurities in the clay give it some very striking colors, colors that change based upon the moisture content.  Because of the hard-packed clay, very little is able to grow on the hills, giving them a very barren look.

A few of my favorites…

The bald eagles down at Ankeny NWR seem to be doing pretty well this year!  Here you can see this lovely convocation of eagles – 5 juveniles (#2 through #6), and 2 adults (#1 and #7)! 

Seven Bald Eagles over Pintail Marsh, Ankeny NWR

Given the way that the juveniles were playing with one another, I’d love to think that this was a particularly successful spring for the lucky couple, but from what I’m reading, it sounds like two eggs is the norm for bald eagles.  Having five offspring seems like a bit of a stretch, unless some of the juveniles are second season and are still hanging around with the parents.

Closer view of the adult female with two immature bald eagles.

OK, so it’s not a raptor (I’ll get back to those eventually — I really enjoy those birds) but I got a pleasant surprise today down at Ankeny.  I’ve been looking for a bittern for over a year now, without success.  They have remarkable camoflage, and I’m sure there were days where I was there with them, but never did find one.  Today, on the other hand, I just got lucky.  As I was starting to drive home, one flew over Buena Vista Road and landed in the drainage ditch, right in front of the car.  Conveniently, there was a turn-out right there, and so I got proof!

It isn’t a great picture, but I’ll take it for a handheld shot out the passenger window of a car, on a rainy day.

Osprey in flight... good thing I'm not a fish.

The osprey is an impressive bird, usually found around water.  Their native range is enormous, spanning North America, South America, Europe, Asia and Africa.  That said, they aren’t a particularly common bird, with only about 460,000 wordwide.  Good thing there are several nests around this area — I know of at least three in a 10 mile stretch of the Willamette River.

Osprey hovering over Ankeny NWR

One of the things I really like about the Osprey is that it will occasionally “hover” in the air searching for prey.  I know it isn’t the only bird to display this behavior, but I’m always impressed when I see it from a bird this size.

Osprey in nest, Willamette Mission State Park

Last week I was in Southern California, and went on an excursion with a friend to the airport in Hemet.  We were looking for the burrowing owls that nest just off the runway.  I really thought that was an exaggeration, but lo and behold, there they were — right next to the tarmac.  They didn’t seem to mind the airplanes at all; case in point, this photo (a poor photo, admittedly) shows one of two burrows that we saw up against the taxi lights.

There was a "parliament" of owls, but the other two don't appear in this photo.

Well, I’ve covered the American Kestrel and Turkey Vulture, so I might as well stick with the raptor theme.  This particular bird is a juvenile Bald Eagle that was hanging out over Pintail Marsh at Ankeny NWR this January.  Based on the partial white hood and the darker bill, this eagle looks to be between the seond and third plumage, so it’s probably close to 3 years old.  When born, Bald Eagles are almost uniformly dark in color.  As they age and molt, the head and tail will turn white, and the initially dark bill will turn yellow.  It takes about about 4 years for the bird to lose all the dark feathers in the head and tail and for the bill to be uniform yellow.