Solar Cells and your IRA

February 3, 2009

An infrastructure built by individuals

Environmentalism. Environmentalism. Environmentalism. Drill. Drill. Drill.
Environmentalists say drilling is detrimental to the environment. The driller claims off-shore and tundra drilling help the animal environment. Friendly drilling needs to continue for the benefit of our society and the animal kingdom.

In the meantime alternative sources of energy “exploration” need to be developed. The solar cell energy industry has advanced considerably. One company claims they can produce a solar cell for $1 and the actual roof-top construction cost is $5 each.

But I have no money. I am working paycheck to paycheck.

You might be saving up some money in a pension plan or in an IRA.
True power lies in the ability of the individual to make decisions. Individual decisions when accumulated collectively can help or hinder a society as a whole. Collectively as the price of “at the pump” gasoline increased the individuals reduced driving habits thus the collectiveness of individual actions reduced the price of gasoline.

In the same sense government actions can help or hinder progress or should I say action or in-action of the individual as well. IRA’s and Roth IRAs have stimulated the non-pension individual to save for retirement. Some individuals have accumulated substantial massive individual account balances tax deferred or tax free. This is good.

But now the government needs to let the individual free up some of their money so the collective strength of the individual can benefit society once again.

An IRA or Roth IRA should be accessible for the individual house construction of a solar panel roof. Costs of solar cells are down and construction workers are looking for work. If the government would allow up to a $25,000 to $40,000 withdrawal from an IRA without a 10% penalty this would be the first step. Step two would be allowing the individual to: 1) withdraw the funds as a loan with payback at the selling of the house; 2) or instead of an ordinary gain charge a capital gain tax on the withdrawal.

If a loan then no monthly amounts would have to be returned to the IRS except monthly amounts received from utilities for excess electricity bought by utilities. In some utility districts the sell back amount might be higher due to the higher cost during daylight hours. The eventual selling of the house would then pay off the difference and the IRS would continue to accumulate wealth at that time with those funds.

If under a capital gain then 2008, 2009, and 2010 with an individual 15% tax bracket no capital gains tax would be paid for the cost of the solar cell roof. This would allow those in lower marginal tax brackets to truly withdraw funds and thus lower their personal costs of living. The lowering of costs may also help in freeing up other funds for IRA or retirement contributions. The higher than 25% tax bracket would enjoy a lower tax on the amount of the withdrawal by not having to pay a tax on the withdrawal of the funds for personal use at the ordinary tax rate but at the lower capital gains rate.

The third way would be the loan and capital gain rate combined. An amount above the 15% tax bracket would be considered a loan and the amount of the loan paid back as previously mentioned. For the amount in the lower tax bracket since capital gains have been calculated this amount would then not have to be paid back. Obviously the calculation would be done at the individual income tax preparation and filing time.

On the Form 1099-R, in Box 7 a code “C” for cell would be used. As with all withdrawals a payment from the trustee directly to the contractor would take place.

The advantage of this would be construction and electricians would get back to work. This collectively would be done in the southern states at first but the construction process might benefit the northern states from reduced solar cell costs. Later on with the lower costs thus this also would make solar cell roofs affordable in the northern states.

When money moves our economy moves. If money does not move our economy is stagnant.

In the meantime let’s drill, drill, drill. Let’s create an oasis for the animal kingdom and stimulate the “freely” using of electricity as previously worded on the mosaic outside of the Seattle City Light Building.


Joe the Plumber

October 17, 2008

Joe the Plumber should stop his purchase of his future plumbing business.  Whether Joe the Plumber owes money to someone else is irrelevant.  That is his business and no one else needs to know about it nor invest their time as a concern of theirs. 

But as a general business principle I would advise Joe the Plumber to stop the purchase of the business until a more stable tax knowledge time has be seen.  If Joe the Plumber buys a business and taxes increase that would be the same as him being required to pay a higher price for the business but much worse.  If you buy a business for $2MM and the government comes along and raises taxes say 20% due to an increase in general income taxes and other health care and social security taxes you have just increased you cost of business.  If the profit on $2MM is $250,000 and the additional taxes are 10% of gross revenue for wages, etc. then this would be an additional $200,000.  This would leave $50,000 in income.  Then the extra 10% in income taxes.  Well now in essence your interest payings on investment debt wipe out any profit potential.  But at a 10% interest rate on $2Mm you would of had $50,000 per year in net profit but now you are in the hole.  

Others might say well his income is lower.  No.  That is not the way it might work.  Just because you have a gross revenue of $2MM you may be forced to pay the extra amounts in payroll taxes anyways.  Do you really think the extra taxes are going to be born by the one man show.  No way.  So after your purchase you might have to downscale your operations and you are the only one working.  The new law may not be in affect for employees under 20 but the purchase of the company has 25 employees.  Now if you downsize to 20 employees you can just barely afford an income for yourself of $30,000.  The interest expense is eating you alive.  Government changed the rules and you were caught in the middle. 

Good luck Joe the Plumber but my advise is to wait until the November 4, 2008 elections are over and then sign the contract or let the contract go and work for yourself. 

One rule of thumb is in the construction trades you will be making more money if you are working for yourself and have no employees until somewhere after you have over five employees.  And having five employees or more only guarantees headaches and in no way does it ever guarantee a profit. 

Beware if the final word.  If you think employees are expensive wait until the government shows you their bill.  They also want to get paid before or at the same time you will be paying your employees.  Beware.

Financial Crisis Short lived.

October 17, 2008

The banking system was put into an upheaval.  Fannie Mae and Freddie Mac virtually disappeared overnight.  Major banks went under.  One day they were vibrant and the next day a bigger bank purchased the remaining assets for small amounts.  An insurance company linked with mortgage securities also went under. 

In the meantime the securities industry or should I say the stock markets in the United States and also abroad collapsed and then the next day they had an all time high for a day.  Joy and sadness, up and down.  Can anything come to the rescue.

Yes, our rescue is coming in November around the Thanksgiving time.  Stories of the turnaround will resonate for milleniums on how quickly the turnaround happened.  Innovations.  Innovations.  Innovations.  Alternative Fuel sources which were being worked on have finally claimed the headlines.  The price of oil thus is plummenting.  Happy are all in the world because the United States is happy.  Well, some in the world who are depending upon oil are not happy.  Is this temporary or this is permanent.   They are speculating.  Some airlines are worried.  They speculated on the price of oil remaining high.  They lost when the price of oil came down.  Their only hope now may be bankruptcy.  Will it work.  Can someone else in the airline industry buy them.  No, the contract is too ironclad.  No one will try.  Can the assets be purchased.  Can the landing rights be purchased.  Can the jets be purchased.  What is the new going rate. 

Detroit is working on advancing production of the GM Volt but production is scheduled for the 2010 model year.  Ford has other ideas which they are ready to put into production for the current model year.  Will this date put the Volt out-of-date.   Are the innovations from Ford going to bankrupt GM.  Will Ford buy GM.  Does GM have other innovations to apply to its list of new car development.  Will the new innovations eliminate the need for tires completely.   

Other innovations are encouraging speculators to invest in new technologies.  Will the alternative fuel industry remain alive if the price of oil goes to “rock-bottom”. 

Funneling of cash to terroist organizations seems to have stopped while individuals attempt to recover personally from years of oil production of which now has a low value.  Terrorist organizations have made advances toward a peace truce.  Can this be real.  The price of oil.  Will it hit $20 or $30 per barrel again. 

The government has started a huge project in solar to build a 20 by 20 miles solar panel in a desert.  Bids are out to the states for cooperation.  Will the final coverage be 10 by 10.  A 20 square mile coverage is supposed to be able to supply all of the electrical needs of the United States.  If 10 by 10 then other sources of electricity will be able to be encouraged for production.  Internal security I believe dictates scattered placement of electrical venues.  Electical cars will demand more and more electrical needs.  Innovative homeowners have now been allowed to pull money out of their IRAs or Roth/IRAs for home solar cell electricity sources. 

A national disaster has turned into cooperation between the political parties.  Everyone is now on board.  The unity was strengthen when two countries tried to rattle their sabers.  The unity was deafening.  They backed off.  The strength of a United United States was too much for them to overcome.

It only took a short time for years of struggling innovations to come in the forefront of completion. 

Medical innovations or alternative medical innovations have also been developed and abundant amount of cures to once struggling medical science will soon be common place cures.  Who needs to worry about health insurance.  It is almost like you just need to eat an apple.  The solutions are readily available. 

The greatest times of the United States are yet to come.  Keep innovation compounding.  And if you don’t believe this then pray God will quickly answer your prayers.  When a nation prays, God listens.   Or better yet look at for a more precise knowledge of what “will” happen.