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The real estate industry is up in arms over a proposal from President Bush to replace the IRS and the income tax system with a national sales tax. The nation’s homebuilders and the realtors who sell their homes are terrified of any system that would replace the income tax with what’s known as “consumption based taxes.” What is that? Some economists believe that the U.S. economy would be stronger if people were taxed only on what they spend, not what they earn. The idea is that it would encourage a lot more saving and investing if people had to pay a 30 percent tax every time your bought something. Clark thinks there would be a great benefit to having a national sales tax. But there is always a law of unintended consequences. Sometimes what happens is unexpected and out of our control. The real estate industry is worried that people would stop buying homes if they have to think about a consumption tax when buying a home. Clark is also a fan of the flat tax system. Our current national tax system is so confusing and backwards that even the most simple return can have mistakes. In addition, there is a huge burden coming for middle class taxpayers. It’s called the “alternative minimum tax,” which requires that you run your tax return twice and you pay whichever tax is higher. Something needs to change. We’ll keep you posted on what happens.

Clark has picked on Blockbuster a lot over the years because the company eats people alive with late fees. The business is set up solely to make a profit on late fees, with the movie rental part being secondary. They bank on the fact that people are forgetful and they made billions off of that. But people have figured Blockbuster out and the company’s sales have been declining in recent years. To its credit, the company has revamped its model and is offering a movie subscription service that is a fair deal. It’s an imitation of Netflix, which started the DVD subscription hype. Basically, Blockbuster has two ways of subscribing. You can subscribe in the Blockbuster stores and, for $25 a month, you rent two videos at a time. There are no late fees to deal with, and as soon as you watch one move and return it, you get another. The second service is through the Internet. You subscribe online and rent three movies at a time for about $20. That is less than the Netflix price. Wal-Mart also has a similar program that is cheaper than both Netflix and Blockbuster, but the service is not well known. So, kudos to all three companies for adapting to the market and making money.

Clark was watching CNBC yesterday and he saw a “countdown clock” for federal interest rates. We hear about what the interest rate is today, or what the Feds are thinking of raising it to. But what does that mean to your wallet? If you have a home equity line of credit, for example, your statement will likely be about a quarter point higher. That means it will be at 4.5 percent for those with solid percent and about 6.5 if your credit is a little more iffy. That doesn’t seem like that big of a deal. What will affect you more is if the Feds stay on the path of increasing interest rates. It’s the cumulative effect over time, if they keep coming every few months. On the other hand, if you’re a saver, you may see a direct positive benefit almost immediately if you have savings with a brokerage house. What about mortgage rates? They are actually in a state of decline because the economy has been a lot slower than people thought it would be. Secondly, there is uncertainty in the world regarding terrorism. Lastly, people who are investing money in mortgages are not as concerned about that investment anymore. So, there is a window of opportunity for you if you want to take it.

You’ve been paying a lot more to fill up your car. Other forms of energy have moved in tandem with the cost of gasoline. Airlines, for example, have suffered, as have factories. Consumers are going to feel a punch in the pocketbook this winter. We should expect a 20 to 25 percent increase in gas. But it’s an area where you are not a sitting duck. Corporate America has become much more efficient in its use of energy. Corporations have changed how buildings are lit, how factories are run, and consumers could learn a lot from them. The only place in America where people have done a better job is in California, where necessity was the mother of invention. But people can make choices, too. Clark is laughed at repeatedly for his compact fluorescent lightbulbs. But the amount he’s saving is unbelievable. The energy savings may be $30 per bulb. Turning the temperature down on your water heater is also a great way to save, as is turning down the thermostat to 55 or 60 degrees when it’s cold. When appliances die, buy an Energy Star appliance. They are much more efficient. So, there are things you can do. Start doing it now.

Do you have a son or daughter in college or are you thinking about going back to college? One of the biggest ripoffs in college is the cost of textbooks. The textbook companies practice what’s called “planned obsolescence,” which means they come out with new editions of books just so they can charge more for them. Essentially, the publishers move things around in a book in order to make it look like a new edition and then sell it for outrageous amounts. It’s like a cartel because it evaporates the used book market. It’s a total racket. The good news is that the Internet has made things cheaper for us, and textbooks sold overseas are usually much less than they cost in the States. Clark recommends buying a past edition of the book, especially in a course where the information doesn’t change much. He thinks college age people can follow along with the reading assignments even though they are in different parts of the book. The cost is drastically less. An old biology textbook, for example, costs $3, whereas the new edition costs $80. Christa disagrees. She thinks students who have an old book can’t follow along and may not be able to do a certain assignment if they don’t have the right book. If you agree, why not try sharing a book. Or at least check out the online sites such as amazon.uk. There are ways around this if you are smart.

When you give to charity, you feel good, right? Sometimes people act in ways that are not directly in their own best interest, and it’s a beautiful part of human nature. But there are also human beings who are, at some level, evil. They come in all walks of life, and, unfortunately, many of them have ended up in the charity business. Some may even do legitimate charity work to make it look sincere. But then they pay themselves with your money when no one is looking. They hurt overall giving because they make people skeptical about giving to organizations in the future. It’s been a problem for years and it happens, in part, because the IRS has been very lax in its standards for giving non-profit status. Basically, it’s an honor system and anyone can claim tax-exempt status. But it has become such a big business with phony charities that the IRS is going through a crack down. The agency has found a couple thousand charities that are fronts for people to siphon off money. According to the New York Times, there will now be 370 people at the IRS whose sole job is to hunt down these organizations. The first targets are the charitable organizations that pay top executives salaries of more than $1 million a year. There are apparently hundreds of them. So, it will take a while to clean up all of the scum. And, there will still be crooks out there. That’s why you need to do your homework when giving money. First of all, get to know organizations. Give to those you know about. Secondly, don’t give money over the phone. Designate one time a year to sift through all of the solicitations you’ve gotten and pick out the ones you’ll give to. Also, check out the site, give.org, which lists charities and what percentage of your money actually goes to the charity and not the administrators. You need to be your own police officer.