Obamacare penalties for small companies that pay Obamacare premiums?

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I’m wondering if small companies have been put at a disadvantage by Obamacare. It used to be the case that a small company could compensate employees with tax-free cash by paying their individual health insurance premiums, just as a big company can compensate employees with tax-free cash by paying their group health insurance premiums. “Large Penalties Await Employers Who Reimbursed Certain Employee Health Insurance Premiums In 2014” (Forbes) suggests that companies that continue to do what they had been doing for decades are now subject to a $36,500/employee annual penalty.

What do readers know about this? This would seem to put small companies at a significant competitive disadvantage to big companies unless there is some straightforward way for a typical small-company W-2 employee to deduct health insurance premiums paid (the 1040 form has a line for “self-employed health insurance deduction” but it seems to be for 1099 workers or S-corporation owners).

Is this another example of the “go big or go home” U.S. economy? Or is there some straightforward way for a small company to get back to parity in terms of the tax treatment of its employee compensation?

[Separately, let’s put the $36,500 into context. The median pre-tax household income in the U.S. is about $52,000 (Wikipedia). So the penalty is a little smaller than the after-tax median household income. But the median net compensation for an individual worker, according to the Social Security Administration, is about $28,850. So the penalty is actually more than what a company would typically pay a worker. Someone who had a one-night sexual encounter in New York State with a partner earning $214,706 per year and obtained custody of the resulting child would collect the same $36,500 in annual tax-free child support. A typical welfare family costs the taxpayers a lot more than $36,500 per year but as of 2013, the total value to the recipient of a welfare package was more than $36,500 in only 11 states (CATO Institute study).]

Why aren’t there a lot of backyard miniature golf courses?

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Everyone (I hope) loves miniature golf. A lot of Americans have big backyards and plenty of time/effort/money to spend on said backyards. Why do we therefore seldom see backyard miniature golf courses? It can’t be more expensive than a lot of the landscaping that one does see, can it?

Could a security-conscious government listen to all citizen conversations via smartphones?

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A lot of smartphones now have explicit “always-listening” modes. There are also devices such as the Amazon Echo whose primary purpose is to listen to what is being said in a home or office.

Could a security-conscious government tap into these devices that citizens have voluntarily purchased, grab the data stream, and figure out in advance who is going to commit which kinds of crime? Maybe that kind of mass data gathering isn’t practical until better AI listening software is developed, but what about a warrant to tap someone’s Amazon Echo stream or smartphone audio stream? Could it be possible for a suspect to effectively bug himself or herself by purchasing a smartphone? No need to go into the suspect’s house; just run some packets out of an Amazon, Apple, or Google server farm.

But what if the day comes when speech recognition software is good enough? Will people decide voluntarily that the government’s robots should listen to every microphone output in order to protect them from terrorist attacks, etc.?

Is Donald Trump running for president mostly for the temporary flight restriction?

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Most articles in the New York Times about Donald Trump have the form “He promised in a speech to do X and here are the horrible things that would happen if X were to occur.” (i.e., the journalist starts from the assumption that Donald Trump would be America’s first political candidate to fulfill all campaign promises). “A President Trump Could Trump His Club’s Fight Over Planes” is interesting to me, though, because of the aviation angle. Ever since 9/11, the FAA establishes all kinds of flight restrictions around places where a U.S. president either is or might be. If the president isn’t around then airplanes may be restricted to overfly no lower than 5000′ (see Prohibited Area P-40 over Camp David).

Trump has been fighting with the FAA and the local airport (Palm Beach International) regarding departures over Mar-a-Lago. It turns out that it was the airport manager who suggested, back in 2011, “The solution for him is to get elected president.”

  • Disney’s private airspace gets some press coverage (Disney has better political connections than other theme park operators, so they have a “permanent temporary” flight restriction over their parks, purportedly for security but in reality to eliminate advertising competition from planes towing banners; i.e., the government has issued regulatory guidance to Al Qaeda that if they want their terrorism flight to be legal until 1000′ above the point of impact (see FAR 91.119), they are required to attack a theme park not owned by Disney)

Globalization of work favors bigger firms?

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Back in the late 1990s our little software company did a project for Hewlett-Packard. Employees on their side of the project were geographically dispersed. Some contributors were in Palo Alto, others in Santa Rosa, and the rest in Oregon. Everyone worked in a fairly sizable physical office surrounded by co-workers, but the co-workers for a given project were not necessarily physically proximate.

I’ve noticed this trend lately in working with some law firms that have between 1000 and 2000 lawyers. A partner in Chicago works closely with an associate in Dallas, for example. In an age where most households have high-speed Internet there is no obvious advantage to both of these attorneys sitting in plush offices rather than in spare bedrooms in their respective homes. However, I’m wondering if larger firms will prosper as the trend is to more interstate and international collaborative work.

If your collaborator works for the same company, but in a different office, it is a lot easier to establish and maintain trust. You don’t have to worry that your collaborator is billing you for time worked but is actually surfing Facebook instead (for one thing these law firms have firewalls that block Facebook! If someone is staring at a computer screen you can be sure that he or she isn’t checking relatives’ photos or friends’ level of righteousness in supporting Hillary). You can take advantage of talent that is located remotely from your location without worrying that your collaborator is handing over documents to a competitor.

What do folks think? Internet was supposed to be a boon to small retailers and manufacturers by creating a level playing field in which consumers and retailers or consumers and producers could meet and interact without friction. Instead it led to giants such as Amazon, Apple, and Google. Is there a similar thing going on where Internet was supposed to help small companies and individuals get paid to do subtasks on larger projects but in fact it will give giant enterprises even more of a competitive advantage?

Why companies hire $1000/hour lawyers

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My work as an expert witness (mostly in software patent cases) occasionally takes me to absurdly lavish offices of the world’s largest law firms. Perhaps partly due to the rent that they pay, the fees are breathtaking even when the stakes are pretty small, e.g., because the accused product does not generate much revenue. A partner at a small firm, which, at least in his opinion, can do work of comparable quality, explained that companies, especially public ones, aren’t very price-sensitive because the decision regarding which law firm to hire is made by Board members rather than the shareholder-owners who will have to pay said breathtaking fees. “If the firm loses the case the Board members are completely protected if they can say that they hired the biggest and best firm. There is no potential for liability if they spend 2-4X more than they needed to. But they can be sued and/or suffer a loss of personal reputation if it becomes known that they approved the hiring of a no-name firm.”

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What is the value of white male privilege in dentistry?

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A friend who is a passionate supporter of Bernie Sanders recently got into an email discussion with some other MIT alums regarding whether it was racist to seek treatment from a black dentist rather than a dentist with some other skin color. He thought that choosing a dentist by (black) race was a sign of virtue while others felt that a dentist should be chosen based on other factors.

Why was it okay to search for a black dentist? “The point is that because of white privilege your dentist is so likely to be white anyway that explicitly searching for a white one is a joke, like ‘searching for a gasoline powered car’ or something like that.” The author also uses the phrase “male privilege” in most arguments.

I pointed out that, according to this statistical study, “white males decided to use their privilege to cut themselves back to about 25% of dental school enrollees in 2012.” and asked “Is a white female dentist privileged because she is a dentist and white or a victim because she is female?”

The Sanders supporter responded with “individual results may vary” and “Is the sun hot, or bright? White privilege and male privilege are not the same thing, though they obviously overlap in some cases.”

I then raised the question “What is the practical value of white privilege and male privilege if people who have both of these privileges had to watch non-white, non-males snatch up 75% of coveted spots in dental schools? What can they do with these privileges if not prevent others from gathering up valuable credentials and cash?” He responded with “Well, privilege is a diagnosis, not a cure. Individual results may vary…”

I pointed out “But those weren’t individual results, Q. That was an aggregation of thousands of dental school applicants and enrollees. If white/male privilege is powerful/valuable, how can you explain the apparent lack of value in this situation? If I enjoy the privilege of being a country club member, I can keep the rabble from using the tennis courts and golf course when I want to use them, right?”

His response was “As usual you fail to understand that just because something exists does not make it universally applicable. To find out how this works, try asserting male privilege with your wife.”

me: “So white/male privilege can’t be used to assure career success, e.g., via preferential entry into dental school. And it can’t be used in the domestic (non-career) realm. But you’re saying that it is somehow powerful in another area?”

him: “It’s a statistical effect, not a secret weapon you can reliably use to slay your opponents. Sometimes it works, sometimes it don’t. … Since we cannot examine every human interaction including the mental states of the participants we cannot individually diagnose every instance of X privilege. Only a general pattern if it appears in the data.”

I think the exchange is interesting because the believer in white/male privilege thinks that it is something that can be confirmed by “data” but his faith in white/male privilege was not shaken by data apparently showing the ineffectiveness of white/male privilege in dentistry. (The apparently contradiction could be resolved if white males were especially unsuited to being dentists and/or underperformed dramatically on the things that dental schools look for among applicants.)

Readers: Does this mean that Americans will be explaining events with statements about “white/male privilege” pretty much indefinitely? If any factual or statistical situation can be shaped to conform to the white/male privilege idea then how could the disappearance of such privilege ever be confirmed?

World’s first personal jet almost ready

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Cirrus has flown its first production jet (Avweb). Certification and customer delivers “by the end of June” (notice that they don’t say June of which year!).

This is kind of exciting, though folks might point out similarities to the 1954 Paris Jet, which typically sells for around $200,000 (one for sale right now). Sourpusses might also point out that a used very light twin-engine jet can be purchased for around the same $2 million price.

Kudos to the Chinese owners of Cirrus for pushing this out the door. I do think that it will be sufficiently simpler to fly than a twin-engine jet (which consumes $30,000 of sim training every year per pilot, for example, plus $40,000 per year of hangar at the higher-end airports) that it will shake up the market. There presumably won’t be a revolution in the single-engine market until someone figures out how to make a much cheaper turbine engine, ideally with lower horsepower and better fuel economy. A $2 million Cirrus is not a replacement for Caitlyn Jenner’s 1978 Bonanza.

Department of American Creativity

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I wonder what the naming consultants were paid for this end-result:
center-for-the-study-of-services

New York Times to employers: Toss resumes from applicants who went to school in poor neighborhoods

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“Money, Race and Success: How Your School District Compares” was presumably written in the same do-gooder spirit that permeates most of the New York Times. But consider the practical take-away of information such as the following:

We’ve long known of the persistent and troublesome academic gap between white students and their black and Hispanic peers in public schools.

Children in the school districts with the highest concentrations of poverty score an average of more than four grade levels below children in the richest districts.

Even more sobering, the analysis shows that the largest gaps between white children and their minority classmates emerge in some of the wealthiest communities, such as Berkeley, Calif.; Chapel Hill, N.C.; and Evanston, Ill.

In some communities where both blacks and whites or Hispanics and whites came from similar socioeconomic backgrounds, academic gaps persisted. Mr. Reardon said that educators in these schools may subliminally – or consciously in some cases – track white students into gifted courses while assigning black and Hispanic students to less rigorous courses.

Consider an employer with a stack of 1000 resumes of applicants for a job. Given the above tips from the New York Times, she can cut her workload considerably without a significant risk of overlooking a great candidate. She tells her assistant “Take the resumes from people who went to school in poorer-than-average neighborhoods and toss them into recycling.” If the stack is still daunting, she adds “The Times says that blacks and Hispanics don’t do well academically so toss any resume that you think is from a black or Hispanic person.”

Given the resistance of America’s public school systems (see “Smartest Kids in the World Review”) to any kind of change, what could the Times editors have been thinking the positive effects of running this article were going to be? What if Donald Trump came out with a long statement about the academic performance of Americans sorted by skin color? Would the Times celebrate Trump as making a thoughtful helpful contribution?

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