As featured in The Wall Street Journal, Money Magazine, and more!

avatar You are viewing an archive of articles by Michael Pruser.

Michael Pruser

Earlier this year, I wrote an article discussing the new Philadelphia Soda Tax that had just been put into effect.  At the time, the discussion focused on the possibilities the law would present: from having more people drink water and getting more funding for the school system, to Americans losing money to the tax and companies like Pepsi taking it on the chin.  After almost three months of evidence, here’s what we know.

philly soda

The Cash is Flowing (Early)

The revenue coming in from the Philadelphia Soda tax has exceeded early expectations, bringing in $5.9 million in January and another $6.4 million in February.  However, the estimated annual projection was $91 million, which means for the next 10 months, the average amount of revenue coming in from the tax would average $7.9 million.  This is certainly possible, but there are a lot of other effects from this tax that may cause revenue to drop drastically.

It will be interesting to see what happens if revenue begins to falter.  Right now, the main selling point of the tax is that the majority of money generated will go to fund youth programs and school programs in Philadelphia.  Should revenue decline, that means sales are declining (even more so that expected) and all of the other consequences from the tax are magnified, in a negative light.  Revenue MUST continue to climb — or at least remain steady — in order for this tax to succeed in the eyes of the policy makers.

Consumers are not healthier

One of the secondary advantages to the soda tax was the idea that more consumers would drink healthier products.  Through 2+ months, though, there has not been any indication that it’s actually happening. In fact, bottled water sales have remained stagnant.  It is certainly possible that more consumers are drinking water from their homes, but that’s not supported by any evidence.

In addition, as the revenue is coming in higher than was projected early on, it means that soda and sugar drink sales are also higher than expected. Plus, many consumers have already resorted to buying their beverages outside the city of Philadelphia. Either way, it doesn’t appear there’s a boycott of soda just yet.

Philadelphia Soda Tax

Grocery Store Owners are Not Happy

Grocery stores have voiced their opinion about the tax over and over; they hate it.  Many stores cite evidence that their sales on beverages have been cut by 30% to 50%, and layoffs are imminent. However, proponents of the tax suggest that after sticker shock sets in and consumers understand what the soda tax is all about, business will return.  That may or may not happen, but sales data suggest that customers are leaving town for more than just their beverage sales.

The only option for grocery store owners to salvage their consumer base is to eat the tax themselves, and independently owned stores are unlikely to be able to shoulder that burden.  Consider if you lived on the outskirts of the city: would you travel 2 miles to your local store to do your shopping — where all of your sodas, teas, and energy drinks are more expensive — or would you travel 10 miles to the store outside the city?

Soda Company Layoffs, Sales Down, Products Off Shelves

PepsiCo has already laid off ~100 workers in their Philadelphia distribution centers, and more are expected.  In addition, they are the first company to decide to pull product off the shelves, determining that 12-packs and 2 liters no longer have value to consumers.  This is likely to reduce sales even further, and cause consumers to travel outside the area of Philadelphia if they want these particular products, affecting all of the other consequences we’ve already discussed.

Another option for drink manufacturers is to simply make them smaller.  Instead of selling 16 ounce bottles, focus on selling mini eight ounce cans.  Packaging costs decrease only slightly, but they will be able to minimize the tax felt by consumers (and accomplish the idea of being healthier by drinking less).  As of today, the only real push-back from drink companies has been through PR; product development has not been impacted.

The Bottom Line

Whether for or against the tax, the results should not be a surprise to anyone.  This IS a tax after all.  The millions of dollars now going toward the Philadelphia school system have to come from somewhere, and that somewhere is made up of grocery stores, soda distributors, and people who buy the products they both sell.

This is what the tax was designed to do. So, if the revenue generated continues to come in at high dollar amounts, I think there’s a very good chance we see this tax surge in widespread use.  In fact, come July 2017, soda taxes are expected to take effect in Oakland, San Francisco, and Albany, with dozens of other cities trying to pass the same legislation.

It’s coming for everyone.  Get ready!

{ 0 comments }

AMEX Blue Cash PreferredWhen the Credit Card Act was passed years ago, many thought it would be the end of credit card rewards programs. Despite increased costs of operations, credit card issuers continue to beef up their attempts to attract new customers, with bonuses for signing up and growing perks. The best cards you’ll find today seem to include the same 1% cash back on most purchases with 5% cash back for select spending categories that change every three months. The Blue Cash Preferred® Card from American Express is a nice surprise, offering a welcome bonus and up to 6% cash back on everyday purchases. It’s simple and straightforward with no rotating reward categories and no enrollment required.

American Express offers new cardholders of the Blue Cash Preferred® Card from American Express a welcome bonus. They’ll give you 150 Reward Dollars after you use your card to make $1,000 in eligible purchases in the first 3 months of card membership. The welcome bonus offer is not available to applicants who have had this product within the last 12 months, or any other consumer Blue Cash® Card account within the last 90 days.

Learn More: Compare this and other rewards cards, and apply online HERE.

Also included with this offer is a 0% introductory APR on purchases and balance transfers for 12 months. Once that introductory period has expired, the purchase APR will vary with the market based on the prime rate. It is currently at 13.49% to 23.49% variable, based on your creditworthiness.

The best feature of the Blue Cash Preferred® Card from American Express is its cash back rewards program. This is truly unmatched right now, and is actually even better with a limited time offer of 10% cash back at restaurants for the first six months (up to $200 cash back earned)!  Every eligible purchase earns cash back in the following amounts:

  • Limited Time Offer: Apply by 5/3/17 — Earn 10% cash back on purchases at U.S. Restaurants in the first 6 months, up to $200
  • 6 percent cash back at US supermarkets up to $6,000 per year in purchases
  • 3 percent cash back on gasoline at US gas stations
  • 3 percent cash back at select US department stores
  • 1 percent cash back on other purchases
  • Terms and limitations apply.

Your cash back is received in the form of Reward Dollars that can be redeemed as a statement credit and is earned only on eligible purchases. Unlike previous versions of the Blue Cash Card, where rewards could be redeemed only once a year, cardholders can redeem rewards as soon as they’ve accumulated $25 or more.

Unfortunately, the Blue Cash Preferred® Card from American Express is not free. It comes with a $95 annual fee. However, considering the savings at the grocery store and gas pump, this card can potentially save you hundreds of dollars every year, even with the annual fee.

The Blue Cash Preferred® Card from American Express — when you add up the 150 Reward Dollars and the cash back program — might be one of the most rewarding credit cards offered by American Express. Be sure to review the terms and conditions for restrictions that apply to this offer. Terms and restrictions apply.

learn_more

Disclaimer: This content is not provided or commissioned by American Express. Opinions expressed here are author’s alone, not those of American Express, and have not been reviewed, approved or otherwise endorsed by American Express. This site may be compensated through American Express Affiliate Program.

Important Note! The information in this article is believed to be accurate as of the date it was written. Please keep in mind that credit card offers change frequently. Therefore, we cannot guarantee the accuracy of the information in this article. Please verify all terms and conditions of any credit card prior to applying.

{ 11 comments }

Apple CashIn 1977, Steve Jobs and Steve Wozniak incorporated a little start-up company called Apple Computer. For the first 25 years of Apple’s existence, they were simply a personal computer company, one which plugged in millions of Americans across the country.

For the last 15 years, however, Apple has been everything else. They’ve been music players, phone creators, watch makers, etc., and the success of the company has exploded to the tune of a $718B current market evaluation.

Strangely though, Apple has always (even now) hoarded cash. The most recent quarterly report shows Apple (APPL) sitting on a whopping $245 billion in cash. To put this into perspective, only one other US corporation has over $100 billion in cash, and that’s Microsoft — at just under $105 billion.

This means that Apple has more than double the amount of cash on hand than any other company in the United States, and this really isn’t new for them either. For the last decade, Apple has led the US in cash hoarding, slowly and steadily increasing their cash reserves year over year by about 10 percent. For a company to have a third of its value come from cash is not uncommon. What is uncommon, though, is for a company to have $245 billion on hand, with no apparent plan or desire to spend it.

Apple is currently the highest-valued company on the NYSE. In fact, the amount of cash they have on-hand could buy all but about 15 current corporations. So, will Apple ever actually decide to buy a few companies, and expand itself beyond the tech industry? Let’s play around a bit.

Three Possible Landing Spots for Apple Cash

 

Netflix LogoNETFLIX – Years ago, when Netflix made its entrance, its stock could be had for under $3 a share. Today, it’s a company valued at $61 billion, which does a whole lot more than deliver DVDs through the mail. House of Cards, Orange is the New Black, and The Crown are just some of the original programming Netflix is offering up today, and Netflix recently signed a music publishing deal with BMG Rights Management. Emmy awards be damned, Netflix is coming after the Grammys!

So, how does Apple fit in? Well, there might be a way for Apple to use its technology to enhance the current Netflix portfolio, in terms of streaming or making it more accessible on the iPhone or Apple Watch. The most likely reasoning for Apple to acquire Netflix, though, is simply expansion. Just as Apple was tired of building computers only 15 years ago, they may have grown tired of building just computers, watches, and phones now. Perhaps they are looking to increase the breadth of the company. With Amazon attempting to do a little of everything these days, Apple could consider something similar.

Tesla LogoTESLA – Shhhh, don’t tell anyone but Apple has likely been working on an electric car for a while now. Rumor has it that a few years ago, Apple purchased a lot of property in Sunnyvale California under the shell company name “SixtyEight Research.” Under the name “Project Titan,” Apple appears to be developing software for autonomous vehicles, and the hope is to have a release date somewhere around 2021. If, however, things take a turn for the worst and Apple is not able to develop the software or the car they desire, I think a company like Tesla is a terrific fit for the Apple portfolio.

Not only is Tesla an automaker, but it’s also an energy company with the acquisition of Solar City. Imagine a day where you drive home in your Apple car, enter your home using a code on your Apple security system, and then power your entire house with a single, solar cell battery. That’s the vision of Elon Musk (without the Apple part right now)… and if Tesla can deliver on their promise of an affordable T3, I truly believe the company will be Apple’s number one target for years.

Twitter LogoTWITTERTwitter is in a tailspin. Quarter after quarter, the company continues to lose hundreds of millions of dollars with no end in sight. For a website and a business that draws some of the most online traffic, it’s becoming more of a Shakespearean tragedy than a solid business model. CEO Jack Dorsey appears to have only one viable method for making Twitter profitable for investors: a sale.

Is there a way for Apple to swoop in and make Twitter a successful company? Maybe. And it’s clear that the constant talk of a Twitter sale is doing the company no favors; in the last three years, the company has gone from a $43 billion evaluation to just $11 billion. So, Apple may want to wait another few quarters to try to buy Twitter at an even lower price tag.

Working online for 10 years myself, I can only imagine the kind of revenue and potential a site would have when it drives millions of visits a day. I believe Apple is the kind of innovative company that could make Twitter a winner.

What the Future Holds

It’s somewhat concerning to me that a company of Apple’s size and magnitude is hoarding as much cash as they are. We’ve gone from the original iPhone to the soon-to-be-released, $1,000 iPhone 8, and there hasn’t been as much innovation as you’d expect from the most valuable US company in existence. Sure, the new iPhone might have a curved screen and will ditch their proprietary lightning port in favor of a standard USB charger (why, I have no idea), but it’s still just a phone. It would be nice to see them go bigger and better on other technological advances and the acquisition of one of the three above companies could do the trick.

Besides, if Apple buys a company like Twitter and it still bleeds money, Apple will “only” be left with $230 billion. I think they’ll manage.

{ 1 comment }

Former President Barack Obama signed an order into law back in March 2010, which later became known as Obamacare. He did so with the hope that it would revolutionize the way Americans handled their healthcare.  However, if Obamacare was to ever survive, it required a large number of healthy individuals to sign-up for healthcare.

To “persuade” healthy individuals to sign up for plans, Obamacare included a mandate. This required everyone in the United States who didn’t have other healthcare to sign up for healthcare on either the state or government exchanges… or else.

trumpcare

This meant that if you had healthcare from your employer, you were covered. If you signed yourself and/or your family up on the exchanges, you were covered. But if you currently had no health insurance, and did not have an employer that offered it to you, then you either had to sign up for healthcare on the exchanges or face a financial penalty. In 2016, the penalty for not having health insurance was $695 per adult, $347.50 per child, OR 2.5% of your adjusted gross income (whichever number was higher), with a maximum amount per family of $2,085.

Now, on its face, that amount might make you think, “Geesh, I better get health insurance.” The sad reality of the mandate, though, was that it wasn’t punishing enough.  Let’s take a healthy individual, who hypothetically needs to pay $500 a month in health insurance premiums. Many of them would rather just pay the $695 one-time penalty than fork over $6,000 for health insurance premiums in a given year.

Related: Another Insurance Giant Pulls Out of Obamacare

The end result was tens of millions of Americans still declining to sign up for Obamacare, which meant the amount of money in the health insurance pool was far lower than what was predicted.  To compensate, health care providers increased the costs for existing exchange owners, sometimes as much as 115% year over year.  Hanging by a thread, the law needed Hillary Clinton to be elected president in order to survive. Instead, it was given Donald Trump.

Obamacare Mandate

Goodbye Obamacare Mandate

It may feel like Donald Trump has been president for four months and not four weeks. However, if you can think all the way back to President Trump’s first executive order, it was one to remove the enforcement of the Obamacare mandate. To put it simply, President Trump ordered the U.S. government to defer to the individual, rather than the government, should a dispute arise regarding the enforcement of the mandate. This didn’t really mean much the day he signed it because its implementation was unclear. However, last week the IRS put out a statement that said, “If you don’t answer the healthcare question on your tax return, we will still accept your return.”

Wait… what?

So, Line 61 of your 1040 tax return will ask if you had healthcare coverage for more than 9 months in the 2016 tax year.  Before this change in policy, you had three options to answer the question:

  • You can check YES, and show proof of coverage
  • You can check NO, and expect the penalty amount above to be included in your return
  • You can check EXEMPT, and show proof of exemption

Now, there’s a fourth option for every US taxpayer:

  • Naa Na Naa Na Naa Naa, I’ll never tell you

To be clear here, there is no guarantee that if you leave the question unanswered, the IRS will simply look the other way.  The IRS has not explicitly said they will be avoiding all Obamacare penalties for the 2016 tax year. However, considering they’ve decided to allow taxpayers to leave this question blank, it’s highly unlikely that they plan to create more work for themselves and audit individuals who choose to avoid the question.

Thus, in one stroke of the pen, the mandate is done. This all-but-means that Obamacare has been effectively killed, and the need for a replacement healthcare plan is of great urgency.

What Will a Trumpcare Mandate Look Like?

Knowing that the end is near for Obamacare (you might say it’s already here), the next logical question is: Will there be a Trumpcare mandate and, if so, what will it look like?

Well, I’m here to tell you that a gentleman by the name of Tom Price proposed a conservative healthcare plan back in 2015…and wouldn’t you know it, he’s just been confirmed as the new Health and Human Services Secretary. Without getting into specific detail about the entirety of the plan, I’d like to focus squarely on his idea for how to make a mandate work in the future.

The crux of Obamacare, and the part that Republicans have always hated, was that it forced people to buy health insurance, even if they didn’t want it. But you see from the text above that the only way a national healthcare plan would work is if everyone contributed, healthy or otherwise. So, how can a Republican plan provide enough money so that those with Obamacare do not lose coverage AND people that don’t want health insurance don’t have to buy it?

Tom Price proposed two main ideas:

  • This should not be national health care. It should be private and sold across state lines, which is expected to increase competition and lower prices.
  • Pre-existing conditions should be included, so long as the consumer has had 18 consecutive months of healthcare coverage.  If someone without healthcare suddenly gets sick and tries to buy coverage, they can be charged appropriate rates based on a previous medical condition. Also, their current healthcare costs can potentially be increased by 50% annually, for up to three years.

The best analogy I can think of is comparing this idea to your auto insurance policy. If you’ve just signed up for auto insurance and get into a big accident, your insurance provider is likely to increase your rates substantially. However, if you’ve been with your auto insurance carrier for years, you likely have small (or large) accident forgiveness, so your rates are not increased. Similarly, if you’re healthy and have avoided buying health insurance for years and then get sick, don’t expect to walk through the door with a low-cost health insurance policy.

Resource: 15 Auto Insurance Discounts You May Be Missing

Now, this is not to say that the healthcare proposal Congressional Republicans put forward will include a mandate specifically like the one above. It is simply an idea on how to go about getting people to pay for health insurance, without forcing them to pay for health insurance. You can bet any plan that we see proposed in the next few weeks will receive extreme scrutiny from tens of millions of Americans, so the benefits and drawbacks will be widely known.

Make sure that when the dust settles, you’ve done your research on whatever 2018 health insurance looks like, and do the best for you and your family. Something tells me you won’t be short of options.

{ 1 comment }

Starwood Preferred Guest Credit Card from American Express – 35,000 Starwood Points Review

by Michael Pruser
starwood

The Starwood Preferred Guest® Credit Card from American Express is continually one of the best-reviewed cards from this issuer. Card owners are also the most likely to rate high on customer satisfaction surveys. This is probably due to the fact that the card offers excellent incentives and a low interest rate. NEW LIMITED TIME OFFER […]

0 comments Read the full article →

Where Can I Buy Bitcoin Online?

by Michael Pruser

Full disclosure alert, I’m a bit of a bitcoin junkie.  Globally, access to bitcoin is much easier with dozens of funding methods for international investors. However, the US of A has yet to embrace the bitcoin, so being able to buy and sell the cryptocurrency is a lot harder than you might think. When bitcoin started […]

2 comments Read the full article →

The Philadelphia Soda Tax Is Now In Effect – Time to Start Drinking Water

by Michael Pruser

Last year, the city of Philadelphia decided to pass into law a “beverage tax,” which taxes the sugary drinks you consume at the rate of 1.5 cents per ounce.  At the time, there was some considerable outcry from residents of the city. Nevertheless, the government stuck to their guns. Well, at the turn of this new […]

0 comments Read the full article →

Credit Karma is Offering 100% Free Tax Software – Look Out Turbo Tax

by Michael Pruser
cktax

The first time I filed my very own taxes was with Turbo Tax, back in 2003. I was 18 years old at the time, attending college, and it was the first year my parents could not claim me as a dependent. I had earned a fair amount of income from my jobs on campus (and […]

0 comments Read the full article →

The Price of Oil is on the Rise. Is That Good for You?

by Michael Pruser
oil-rising

After a lull in the price of a barrel, we are seeing the cost of oil begin to once again increase. With it comes increased revenue and, in turn, money being pumped into both the stock market and the economy. So, is this good news for the average person? Well, the immediate answer is no, probably […]

0 comments Read the full article →