Tag Archives: finance

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Black Friday: Beware of Credit With a Catch

Black Friday is probably going to turn into Bleak Friday for some credit users at Oregon retailers. 

“When it Comes to West Coast Furniture Stores, We Have the Best Prices in Home Furniture,” Mor Furniture says on its website. On Nov. 26, the site is highlighting: “IN-STORE ONLY. No interest with equal monthly payments for 61 months on purchases of $6000 or more made with your Mor Furniture credit card. Equal monthly payments required for 61 months. Learn more.”

If you’re not careful, it could be a costly trap

Let’s say you buy furniture that costs $6,800. The monthly payment due for 61 months, Mor told me, would be $112.00.  BUT, if you still owe any of the $6800 at the end of the 61 months, even $1, Mor Furniture will charge you interest on the full $6800 at a 35.99% rate starting from the purchase date. 

Do the math. The total interest on an amortized $6800 loan paid off in 61 months at an annual interest rate of 35.99% would be approximately $7,422.39, more than the cost of the furniture itself.  In other words, that furniture will cost you $6,800 + $7,422.39, a total of $14,222.

Shop at Key Home Furnishings and you will encounter the same problem if you don’t pay off your entire purchase price in the time required. “No interest will be charged on the promo balance if you pay it off, in full, within the promo period.,” Key says. “If you do not, interest will be charged on the promo balance from the purchase date. The promo balance is equal to the promo purchase amount and any related optional debt cancellation fees. “

Wayfair credit card financing also offers 0% interest options for a set period (e.g., 6, 12, or 24 months) on qualifying purchases, but if you don’t pay the balance in full before the promotional period ends, you will be charged retroactive interest on the entire original purchase amount at a high APR. 

A perceptive consumer observed on Reddit, “One really has to study a business structure. They aren’t furniture dealers first, they are credit companies first, predatory lenders that have attached a tangible item or service to their scheme.”

It’s worth noting that deferred financial schemes are not restricted to furniture stores. Numerous other retailers offer it, too. 

For example, Car Toys, a specialty car audio and mobile electronics retailer, promotes “No interest if paid in full within promotional period” but “Interest will be charged to your account from the purchase date if their purchase balance is not paid in full within the promotional period.”

Window company Renewal by Andersen can trap consumers, too. NO MONEY DOWN, NO MONTHLY PAYMENTS, NO INTEREST FOR 12 MONTHS* its website says. Then it adds, “*Interest is billed during promo period but will be waived if the amount financed is paid in full before promo period expires.’

Anybody can be caught in these credit schemes, but the people most likely to be vulnerable are consumers with lower credit scores who suffer a job loss or medical emergency that makes it hard to pay off the balance, triggering the retroactive interest charge. 

The now beleaguered federal Consumer Finance Protection Bureau cautions all consumers to know the difference between zero interest and deferred interest, because the differences can have big effects on your wallet.

A zero percent interest promotion will not add interest based on the balance of your purchase during the promotional period. If you still have an unpaid balance when the promotional period is over, you will start to pay interest on the remaining balance only from the date the promotional period ends. 

In contrast, some retailers offer financing such as “No interest if paid in full in 12 months.” That’s when you need to be wary because it usually means the promotion is a deferred interest offer. 

Caveat emptor.

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Oregon Transportation Bill Would Pummel Vehicle Owners

Democrats in Salem are preparing to dig much deeper into your pocket with a massive transportation revenue bill, HB 2025. Because its multiple parts obscure its impact on individuals, let’s look at what it would mean for car owners, which is about 92% of households in Oregon. There are over two dozen increases to vehicle-related fees in the bill.

  • Planning on buying a new car?  Oregon’s zero percent vehicle sales tax has made it a great state in which to purchase a car. HB 2025 proposes a new Vehicle Sales Tax in the form of a 2% “transfer tax” on the sale price of new cars and a 1% tax on used cars valued at over $10,000. The average price paid for a new car in the U.S. in May 2025 was $48,799, according to Kelley Blue Book (Up from$21,041 in 2020).[1]That would mean a sales tax of $975.98 on your new car. The average price paid for a used car in Oregon is $35,556. That would mean a $335.56 sales tax. 
  • Fees for vehicle registration would go up, too. Registration of a new car would increase from $43 to $113.
  •  Oregon’s current vehicle registration fees for gas-powered passenger vehicles range from $126 to $156. The bill proposes a $66 increase to the existing vehicle registration fees. If you currently pay $126 to re-register your car, the cost could increase to $192 ($126 + $66) under HB 2025.
  • The cost of new license plates would rise from $12 to $33.
  • The cost to take a driver’s skill test at the DMV would increase from $45 to $111.
  • Buying or owning a gas-powered vehicle? Oregon’s current 40 cent per-gallon gas tax would increase to 50 cents per gallon in 2026 and 55 cents per gallon in 2027. The gas tax would be indexed to inflation beginning in 2029. The average vehicle in Oregon uses approximately 489 gallons of gas per year. That would mean a $48.90 increase in gas costs in 2026 and a $73.35 increase in gas costs in 2027.
  • Buying or own an electric or plug-in hybrid vehicle? A Road Usage Charge (RUC), a mandatory per-mile fee, would be imposed on electric and plug-in hybrid vehicle owners starting July 1, 2026 or these drivers could opt for a flat annual fee, initially set at $340. The proposed $340 annual tax is based on driving 18,000 miles a year at 20 mpg at the new gas tax rate
  • A payroll tax that funds public transit via the Statewide Transportation Fund would increase from 0.1% currently to 0.3% by 2030. The tax would increase to 0.18% in 2026 and then to 0.25% in 2028 and 0.3% in 2030.

In a time of growing economic stress for Oregonians, it’s going to be enough to drive you to the poor house.

[1] That was up from the average price of $21,041 for a new car in 2000. In other words, not only will multiple costs associated with a car go up under HB 2025, but you will likely be making increasingly higher monthly payments on your new car because you’ll take longer to pay it off. While 3-year car loans were once common, they are less typical now. Today, the most common car loan terms are 60 months (five years) and 72 months (six years), and increasingly car buyers are agreeing to go with seven and eight year car loans, leading to higher total financing costs. Then there’s the growing cost of repairs. Garage repair costs are up are up over 43% in there past six years and the cost of fixing damaged cars has gone up 28% since just 2021, according to the U.S. Bureau of Labor Statistics.

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Say “No” to Oregon Republican Push for No Taxes on Tips

What’s in the water in Salem?

On one side you have a phalanx of Democrats proposing the ludicrous idea of paying strikers unemployment benefits, which would make Oregon the only State in the country to grant unemployment benefits to striking public and private sector workers.

Not to be outdone in making nonsensical proposals, now you have a raft of Republicans, mimicking President Trump, proposing that the state forego taxing tips.

Here’s a tip – exempting tips from state taxes is a bad idea.

In their determination to position themselves as supporters of the working man (and woman), 21 of Oregon’s House Republicans have proposed a bill, HB 3914, to end taxation of tips, which are generally perceived as discretionary payments determined by a customer that employees receive from customers.

As written, the bill would not count “service charges” as tips. A restaurant, for example, recently added an automatic service charge equal to 18% of my bill. Even if that was intended to cover for a “no tipping” policy, it would be part of the server’s wages because it was not discretionary.

The 129-word Oregon bill gets right to the point, “There shall be subtracted from federal taxable income any amount of tips properly reported as wages on the taxpayer’s federal income tax return.”  That would automatically subtract tips from taxable income in Oregon, too. 

The bill deserves a quick death.

According to the IRS, “All cash and noncash tips received by an employee are income and are subject to Federal income taxes. All cash tips received by an employee in any calendar month are subject to social security and Medicare taxes and must be reported to the employer.” So, tip income is taxable income.

Charges automatically added to a customer’s check by an employer and subsequently distributed to employees are not tips; they are “service charges”. These service charges, which are appearing more often on Oregon restaurant bills, are non-tip wages and are subject to Social Security tax, Medicare tax, and federal income tax withholding.

Many consumers think the expanding pressure on customers to leave tips is already out of hand. A no tax on tips policy would likely expand the use of tipped work even further, potentially leading to consumers being asked to tip on virtually every purchase everywhere. 

A  New York Times article about tipping generated a lot of comments, many of which lamented the seeming spread of tipping expectations to multiple businesses and regardless of the amount of actual service by an employee. “Collectively, we cringe when the iPad is swiveled into our face at the coffee counter or deli; we know it is extortion rather than appreciation for services rendered,” said one person.  

There’s also a sense that some businesses are customizing the tip configuration on screen to exploit customers. Most people tip between 15-20%. If you buy a $2.85 espresso and the screen offers 15%, 20% and 25% tip options, you are likely to hit 15%, generating a tip of 43 cents. If a business wants to jack that up, however, it can give you $1, $2, or $3 options on purchases below $10, instead of a percentage. If you pick $1, you have paid a 35% tip. Devious, but effective.

Despite the massive increase in tipping expectations in recent years at multiple businesses, tax experts say a relatively small share of the workforce depends on tips. Only about 2.5% of American workers are in occupations that depend on tips, according to the IRS.  Among those workers, 37% earn less than the federal standard deduction. So, they already don’t have to pay federal income taxes.

Other tipped workers benefit from the earned income tax credit (EITC) and/or child tax credit (CTC) to the extent that they don’t have any federal income tax liability. In addition, because tipped workers would keep more of their income, employers could use this law as a justification for lowering workers’ base pay if it is currently above the minimum wage.

In fact, exempting tips from taxation can actually lead to situations where low-income workers end up effectively losing income through losing eligibility to tax credits such as the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC).

The Budget Lab at Yale, a non-partisan policy research center, estimates that less than 3 percent of families would benefit from a broad-based income tax deduction for tips in 2026, but it would still cost the federal government more than $100 billion over the next decade. Restricting eligibility to workers in the leisure and hospitality industries would reduce the cost by more than 40 percent, but that would still leave a big hit on the deficit unless taxes were raised elsewhere.

Even the liberal Oregon Center for Public Policy opposes the no tax on tips idea.

In October 2024, Daniel Hauser, Deputy Director of the Center, said that ending taxes on tips “makes the tax system less fair” because workers receiving tips would get a tax break, but not low-paid workers in general.

If you have two workers, one a bartender who earns about $10,000 of his $40,000 annual income in tips and the other a warehouseman who makes all of his $40,000 income in wages, it wouldn’t make sense to give the bartender a tax break but leave the warehouse worker hanging out to dry, Hauser argued. 

 It also “creates openings for people to think about, how can my income be categorized as a tip and get this tax break too?,” Hauser wrote.  Third, he said, “if the goal is to help the economic security of low-income workers, it’s not very effective…and there are much better ways for us to try and help low-income families in Oregon.” 

He’s right.

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Oregon Democrats to Voters: ‘Let Them Eat Cake”

For all its screw-ups, Oregon is damn good at one thing, raising taxes and fees. 

One of the newest gambits, SB 687, would actually remove voters from the decision-making process.  Sponsored by State Senator Sen. Khanh Pham, D-Portland, and State Representatives Mark Gamba, D- Milwaukie and Zach Hudson, D – Troutdale, Wood Village, Fairview and North Gresham, the bill would allow a city or county to enact a fuel tax without going to voters first, eliminating a current requirement that local voters must approve city or county gas tax increases.

I guess in the sponsors’ view, voters just get in the way of sound policymaking.  

In a classic political gaffe, Gamba has already insulted voters, going so far as to tell OPB that voters too often act like “petulant children” standing in the way of taxes that are necessary to replace vital infrastructure like roads, sewage plants and libraries. “Someone needs to be the responsible adult in the room,” he told OPB. 

Oregon‘s tax system already ranks in the bottom half of states, coming in 30th overall on the 2025 State Tax Competitiveness Index and Portland enjoys the distinction of having the highest combined local income tax rate in the nation (4 percent), adding an extra layer of tax burden for residents of the state’s largest city.

You may be thankful Oregon forgoes a sales tax, but the Competitiveness Index points out it doubles down on other forms of taxation. The state has a complex and progressive individual income tax system with four tax brackets, a top marginal rate of 9.9 percent, and a personal exemption structured as a tax credit. Additionally, the tax brackets are not adjusted for inflation. 

The absence of a sales tax in Oregon is offset, the Index says, by an overly complex corporate tax system, which includes a 7.6 percent corporate income tax, a 0.57 percent gross receipts tax (the Corporate Activity Tax), and additional corporate taxes at the local level, particularly in the Portland area. Although gross receipts taxes typically do not allow any deductions from gross sales, the CAT provides a 35 percent deduction for either labor costs or the cost of goods sold. However, this does not significantly improve Oregon’s competitiveness in attracting businesses, as the state’s corporate tax system ranks among the worst in the nation, comparable to Delaware, the only other state to combine corporate income and gross receipts taxes.

Oregon’s property tax system is moderately competitive, the Index acknowledges, though the property tax burden relative to personal income is higher than in California and Washington. Additionally, the state imposes an estate tax with a maximum rate of 16 percent and the lowest estate tax exemption among states that levy the tax ($1 million), which further reduces the state’s competitiveness for high-net-worth individuals.

But what do the Democrats in the Legislature care? They have a supermajority in both  the Oregon House and Senate, so they’ll be able to increase taxes and fees without a single Republican vote. The hell with ordinary voters, I guess. 

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Think Eco-Extremism Is Dead? Not In Oregon.

Oregon Democratic State Senator Jeff Golden of Ashland is confused.

Golden is the chief sponsor of a bill, SB 681, that would prohibit the State Treasurer from renewing investments in or making new investments in a private market fund if the managers of the fund have stated an intention to invest in fossil fuels. Joining him as regular sponsors of the bill are seven other Democrats: Senators Lew Frederick, Khanh Pham, Kathleen Taylor; House members Zach Hudson, Lisa Fragala, Mark Gamba, Travis Nelson.

The bill simply makes no sense. 

In relying on environmental criteria, investing is driven by a political agenda, not the best interests of investors.

In addition, the State Treasurer invests in securities that trade in secondary markets. As the Hewlett Foundation’s Kelly Born and Stanford Law professor emeritus Paul Brest have argued, it is virtually impossible for a socially motivated investor to increase the beneficial outputs of a publicly traded corporation by purchasing, or not purchasing, its stock.

Golden’s bill also undermines logic right off the bat when it justifies itself by citing everything but the kitchen sink as justification for the restrictive policy: 

“Whereas in Oregon, more intense forest fires threaten rural communities and disrupt outdoor recreational opportunities and the tourism industry; smoke from these fires threatens our workforce, our elders and our children; severe droughts constrain our important agricultural and nursery industries and imperil our salmon runs; and businesses are forced to spend millions to mitigate the most pressing climate effects rather than investing in future innovation and opportunities.”

Good grief. 

Then, while it prohibits fossil fuel investments on the one hand; on the other hand it cites the requirement that the State Treasurer is required to manage investment portfolios “so as to maximize investment returns and minimize the risk of loss.” You can’t do both at the same time. 

It also ignores the responsibility of the State Treasurer not to do anything that abrogates the treasurer’s fiduciary responsibilities to make available funds “as productive as possible” and “to diversify the investments of the investment funds”.

The Democrats’ bill is just leftist activism parading as socially responsible investing.

Stop it in its tracks.

 

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Made in Old Town: Just More Corporate Welfare

During the recent Legislative session, lawmakers passed Senate Bill 5701 to set aside $2 million for the Old Town Community Association. The bill proposed putting the money toward establishing a 30,000-square-foot green manufacturing facility in the Old Town section of Portland that would help get new companies off the ground and existing companies develop new products and technologies for the footwear and apparel industry.

WHY?

The proposed facility would potentially be part of a $125 million Made In old Town (MiOT) project that would eventually include 100,000 square feet of manufacturing space, 120,000 square feet of housing and 145,000 square feet of office and retail space in eight largely vacant Old Town buildings.

MiOT’s backers need to raise $5 million from the private sector to fund the green manufacturing facility, which they hope to open by this fall. Elias Stahl, a MiOT Board Member and CEO and co-founder of  Hilos, an Old Town-based 3D-printed footwear company, told The Oregonian in March he was “extremely confident” they could raise the money.

In early April 2024, it looked like Oregon Gov. Tina Kotek might throw a monkey wrench into the deal when she said she was considering vetoing the $2 million item. “My office is awaiting more information from the development group about the viability of financing for the entire project before I make my decision,” Kotek said.

But on April 17, 2024, Kotek announced she would allow the expenditure for the project to move forward. “I am grateful to legislators for responding to our state’s most pressing needs,” she said. “In the days following last week’s notice of potential vetoes, I received adequate information to have confidence in signing…Senate Bill 5701…”

On April 11, 2024, Vince Porter, Kotek’s Economic Development and Workforce Policy Advisor, informed the governor and key staff that he had received a letter from the Old Town Project and followed up with a conversation with Jonathan Cohen, the Old Town Community Association’s treasurer, who made a “commitment that they will not request (state) funding until they have raised their own funding,” referring to the $5 million to be raised from the private sector.

 “I think the letter along with written confirmation from me will meet the requirements we specified for the project, Porter said. “ Hopefully you all feel the same. Jonathan will provide documentation during the DAS funding process demonstrating that the other financing is secured to match the state funds. This will include “seller financing” which they are counting on to complete the project.”

The MiOT project’s website announces it will be building “An Innovation Campus in a Thriving Neighborhood Creating the Next Generation of Footwear & Apparel.” The website says MiOT is currently accepting tenancy applications, with various lease terms and spaces available, and that MiOT plans to announce the first cohort of brands that have signed on as founding members early in 2025.

Democratic State Treasurer-elect Elizabeth Steiner, who previously served as a state senator representing Oregon’s 17th district, including the Old Town neighborhood, said in April, “As somebody who both cares about her district and cares about the City of Portland and the state as a whole, creative ideas like that—that revitalize a part of the city that has really been neglected, if not abandoned for a long time, and do so in a way that meet a bunch of different goals simultaneously—are a very exciting prospect for me.”

The collaborative nature of the project, its potential to revitalize a neighborhood and support re-shoring manufacturing in the U.S. has merit. But, given all the state’s “pressing needs” and the wealth and resources already available to MiOT’s key backers, plus the presence of hundreds of companies in the Portland metropolitan area tied to the footwear and apparel industry, why did the governor sign this ill-advised bill that would siphon money from Oregon taxpayers for private gain?

I can understand why politicians like Steiner would go for MiOT. Politicians love the spectacle of ribbon-cutting ceremonies and the prospect of jobs (and voters). But that shouldn’t drive this corporate welfare. that is more “free money” than “seed” money. Oregon does, indeed, have other “pressing needs” that should take a higher priority in the allocation of public dollars.

If the players behind the entire MiOT project are confident of its viability, let them provide the start-up money. If they make their vision a reality, taxpayers will have been spared the diversion of public dollars and the backers of the project can take full credit for MiOT’s success.

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Don’t Bet on Truth Social Saving You, Mr. Trump

Coincidentally, and perhaps fatefully, the ticker symbol of the newly listed Truth Social company on NASDAQ is DJT, (Donald Trump’s initials), the same ticker symbol used by Trump Hotels and Casino Resorts, which filed for Chapter 11 bankruptcy protection from creditors in federal bankruptcy court in New Jersey in 2004.

Political and financial media are speculating that investor approval of a plan to take public Truth Social, Donald Trump’s social media company, will rescue him from the potentially catastrophic burdens of his multiple court cases.  My view – don’t count on it. 

On Friday, March 22, shareholders of Digital World Acquisition Corp. (DWAC) approved a deal to merge with Trump’s media business, Trump Media & Technology Group. The primary arm of Trump Media & Technology Group is the social networking site Truth Social. The stock, with a ticker symbol of DJT, will begin trading on the trading on Nasdaq next week. 

With DJT expected to start trading with a valuation of about $5 billion, Trump’s 60% stake will be worth about $3 billion at the outset. An amazing potential windfall for Trump.

But here’s the rub.

DWAC is a shell company, what’s known as a “special purpose acquisition company” or SPAC, which will be replaced by Trump Media & Technology Group. And SPACs have had a notoriously checkered history in the market.

During 2020-2021, SPAC’s were “an unmitigated mess for investors,” according to Michael Cembalest, chairman of market and investment strategy for J.P. Morgan Asset Management.

SPACs that went public in 2020 had the worst performance, with a median loss to investors of more than 80 percent, according to Institutional Investor. Of the 431 SPACs that were able to complete a merger during 2020-2021, 90 percent had negative net returns. 

Companies brought public via SPACs also generated worse business results than their IPO counterparts, likely because they needed fast revenue growth to achieve sound profitability and didn’t get it.

The result? The De-SPAC Index, which measures the performance of companies taken public through a SPAC merger, fell 45% in 2021.

In 2022, most post-merger SPACs continued to perform poorly, with the De-SPAC Index falling almost 75%. The following year, 2023, was no more rewarding for SPAC investors, with at least 21 firms that went public by merging with special purpose acquisition companies going bankrupt. 

Likely discouraging the SPAC trend further are regulatory changes approved ty the Securities and Exchange Commission (SEC) in January 2024. 

All this means Donald Trump’s DJT will likely be an outlier in the market this year and the hype surrounding it may well burst in failure for investors, including Donald Trump. It’s best to remember, after all, that Trump Media & Technology Group booked just $3.3 million in revenue for the first nine months of 2023, according to a regulatory filing, and lost $49 million during that period. . 

Worse, Truth Social had only 494,000 monthly active US users in February 2024, and its user total has actually been shrinking, plunging 51% year over year in February,  according to Similarweb stats provided to CNN.

Then there’s the fact that Trump’ has been tied to other businesses that have gone bankrupt . “A number of companies that were associated with President Trump have filed for bankruptcy. There can be no assurances that TMTG will not also become bankrupt,” Trump Media said in its SEC filing.

Truth Social is also inextricably tied to Donald Trump himself, a 77-year-old man with an uncertain future.

The history of another hyped SPAC, EV company Lordstown Motors Corp., may be instructive.

Lordstown reverse merged with a SPAC, DiamondPeak Holdings, in October 2020 with an estimated equity value of $1.6 billion. The stock hit a peak of $31.40 a share on Sept. 21, 2020. 

Things went downhill from there. 

On June 27, 2023, Lordstown filed for Chapter 11 bankruptcy. In September 2023, Lordstown agreed to sell its assets to Delaware-based LAS Capital, whose majority equity holder was Lordstown founder and ex-CEO Steve Burns, for $10 million.

The SPAC merger agreement prohibits Trump Media’s shareholders from selling their shares for six months after the deal is done. DWAC shares closed at a high of $97.54 in March and closed at $36.94 on Friday, March 22, 2024. DJT will likely be erratic as well. And there are no sure things on Wall Street.

In other words, Donald Trump’s 60% stake in the new company could well be worth less than $3 billion six months from now…a lot less.

Maybe even zero.

An added complication, though, is that DJT’s board could grant Trump a waiver that would allow him to sell shares before the six months are up. The likelihood of a waiver being granted is enhanced by the fact that the board includes one of Trump’s sons, three former members of his administration and former GOP Rep. Devin Nunes.

Don’t count on them being too concerned about the impact of a maj0r sale on other investors.