As a huge fan of the show Mythbusters on the Discovery Channel, I do not know how I didn’t run across this earlier. It is quite an interesting story that we will perhaps never know the details of.

Apparantly, the Mythbusters team set out to test the Myths related to potential security flaws in the new RFID-enabled credit cards, also referred to as “magic wand credit cards.” Some argue that it is possible to hack the card and take money from someone’s bank account from as far a 70 feet away.

Below is a quote from one of the shows host, Adam Savage on the subject:

“Texas Instruments comes on along with chief legal counsel for American Express,
Visa, Discover, and everybody else… They were way, way outgunned and they
absolutely made it really clear to Discovery that they were not going to air
this episode talking about how hackable this stuff was, and Discovery backed way
down being a large corporation that depends upon the revenue of the advertisers.
Now it’s on Discovery’s radar and they won’t let us go near it.”

A short time later, Savage retracted these comments, releasing a new statement:

“If I went into the detail of exactly why this story didn’t get filmed, it’s so bizarre and convoluted that no one would believe me, but suffice to say…the decision not to continue on with the RFID story was made by our production company, Beyond Productions, and had nothing to do with Discovery, or their ad sales department.”

I think the second statement was one that was “required” by legal counsel on the side of Mythbusters. The real question is what would be the purpose of squashing the story?

Are these new RFID cards really so easily hacked? If so, why would the credit card companies issue them. Surely, they tested them before the started sending them out in to the market.

After all, who is on the hook for the fraud? The consumer is limited to $50 and the rest is the merchants responsibility. This of course, assumes that they do a charge back to the merchant. I could not imagine that they would want to put out a product that would subject their merchants or themselves to this risk.

Upon farther investigation, it was not very hard to find some places on the web that would teach you how to hack these cards. I found one that showed you how to do it for $8. I don’t know if their methods worked, since I am not exactly into hacking other peoples credit card accounts, but it makes you wonder – Why did they kill the Mythbusters episode?

Below is video of Adam spilling the beans on the conference call:

As part of the Worker, Retiree, and Employers Recovery Act of 2008, Congress recently approved a one-year suspension of the required minimum distributions (RMDs) for 2009 for taxpayers who are age 70 1/2 or older. Requirements for RMDs for 2008 remain the same.

If you are unfamiliar with what RMD’s are, they are basically the amount that tax law requires that you distribute from your IRA, SEP-IRA and SIMPLE IRA account(s) each year once you reach age 70 1/2. The amounts of the required minimum distribution is generally calculated based on a life-expectancy divisor (if it is your personal account.) This divisor is figured against the previous year’s ending balance of the IRA.

Congress supposedly took this measure because everyone’s account values are so low right now. Unfortunately, for the relief to provide any real bang for retiree’s, they should have made it apply to 2008 as well – since the RMD for 2008 is based on the year end 2007 balance.

I just read an interesting article in the NY Times, about Leona Helmsley’s $8 billion bequest to be used to the care and welfare of dogs. This is great. Or is it?

First off, this is not technically an $8 billion donation from Leona Helmsley. It is technically a $4.4 billion donation from Leona Helmsley and a $3.6 billion donation from us – the other taxpayers. At some point, the $3.6 billion difference is going to have to be made up – and it isn’t going to be from the deceased.

Another major downside to this is that all of the funds are not required to go toward the “dogs” care and welfare. Current law requires that the Private Foundation disburse at least 5% of its assets annually. The kicker is that within this 5% includes administrative cost – including payments to Trustee’s. Who are these Trustees? Well, to my understanding, any one who is appointed. So, basically the Private Foundation can pay a salary to the individuals that Leona Helmsley (or others) selects.

In the Leona Helmsley case, I must point out that the Foundation must distribute a minimum of $400 million in year one. I find it unlikely that all of this will be paid in salary. My point is that on a smaller scale, individuals can use this strategy to avoid paying death taxes. Lets scale it down. Assume someone leaves $8 million to a Private Foundation. Disbursement requirements are only $400,000 in the first year. A large portion of this can be eaten up with administrative cost if salaries for the Trustees are included. This would leave very little funds for the actual charities that are purportedly supported by the deceased and by us – the other taxpayers required to pay into the system.

Of course, I believe that our taxes are way too high and that we pay for an astronomical amount of bureaucracy and government waste. I do not fault any individual, including Leona Helmsley, for finding a way to legally avoid paying the taxes due. Actually, that is my job, to legally reduce peoples tax bills. My issues lie with our elected officials and why these loopholes exist in the first place.

Personally, I believe the estate tax should be abolished. However, if we are going to have it – we should try to keep a fair playing field.

My suggestions to fix this issue:
1) Charitable Donations deductions to Private Foundations should be limited – both at death and while someone is still living. This is not to say that someone can not donate. They just should not get a full deduction for it. Give it to the actual charity where the good is being done, not another level of administrative overhead.

2) Why should one individual get a break because they are helping a charity that educates people on the historical contributions of the tractor, while another loses 45% of their money because they wanted to make sure their grandchildren and their great grandchildren had a quality education and lifestyle? I think there should be more stringent requirements as to what charities qualify for this deduction. There are far too many charities out there that qualify and only a portion of them actually help causes that can better the world.

3) Private Foundations should have a requirement to spend at least 5% of their assets on actual charity work annually – not including administrative overhead. This was introduced into Congress a few years ago but was axed after the Private Foundations (and their Trustees) whined that it would threaten their perpetual existence. Why should they have a right to exist forever? If they run out of money they just run out of money. Perhaps the Trustees can work to lower some of the administrative cost. If the work they are doing is actually beneficial, perhaps they can boost their chances at perpetual existence by receiving donations. Isn’t this how other charities survive?

Also, as a final note, I want to point out that Leona Helmsley did nothing wrong here – to my knowledge. It was actually great tax planning. As I said before, instructing my clients how to legally save taxes is part of my job. My problem is not with taxpayers who legally take advantage of the laws as they are written, but with the individuals in the Congress and the Senate who jack up taxes on the middle class and then leave loopholes open where select individuals can get around paying the tax. As much as I love dogs, I would rather the money have gone to help poor and disadvantaged children thatn dogs, but that was not my call. If Leona Helmsley liked dogs better than children, that is her business.

As recently as 1994, I was told by my auto-dealer to get my oil changed every 3000 miles. With my last couple of vehicles, I have noticed that this has slowly creeped up, first to about 5,000 miles and now it is 7,000 miles – which seems like an eternity between oil changes.

Well, this morning I saw a headline on MyYahoo! that discussed the 3,000 mile oil change myth.

The article discusses how the vast majority (73%) of Californians get their oil changed far more frequently than recommended – resulting in 153.5 million gallons of waste oil annually (although 60% of this is recycled). I would love to see how much this amounts to when looked at nationwide – or even worldwide.

The article sites that years ago, the 3,000 mile “myth” was actually the standard. Basically, in the past, the oil used as not as good as it is today. Today, greatly improved oils and better engines increases the interval in which one needs an oil change.

This is good news for consumers and for the environment. Less frequent oil changes means that this expense can be almost cut in half for consumers [remember to invest this savings!]. It should also cut the waste oil in half too. Gotta love a win-win!