Last year, the “True Cost of Christmas” rang in at $78,100. The “True Cost of Christmas” is the price of all of the items mentioned in the song “12 Days of Christmas” assuming that you sing all of the verses. The 78 items are mentioned over and over – if you count them one at a time, there are 364 items.
This year, it’s a bit more expensive to buy the whole kit and caboodle. To buy the “True Cost of Christmas” this year would put you back $86,609, an increase of more than 10%.
What explains the increase? Mostly those darn swans. Seven swans a-swimming have increased in price more than 33.3%. Also on the rise? The eight maids a-milking. There was a minimum wage increase this year for unskilled labor, remember? Other performers, like the eight pipers piping, were just a few percentage points more expensive.
In contrast, gold has dropped since last year, making those five golden rings 11.4% less costly. The three French hens and six geese a-laying have also dropped in price.
If that’s a bit too much for your wallet, you might consider purchasing just the 78 items (1 partridge in a pear tree, 2 turtle doves, 3 French hens, 4 calling birds, 5 golden rings, 6 geese a-laying, 7 swans a-swimming, 8 maids a-milking, 9 ladies dancing, 10 lords a-leaping, 11 pipers piping, 12 drummers drumming) for a mere $21,080. That’s a $1,573 increase over last year.
Pennsylvania’s own PNC Financial Services, located in Pittsburgh (Go Steelers!), maintains the annual Christmas Price Index. The PNC CPI (not to be confused with the Consumer Price Index) has noted the costs of commodities, labor and goods listed in the “12 Days of Christmas” for the past 24 years.
Boy, am I glad that the government pumped billions of dollars into the banking industry!
Since that time, borrowing has become significantly easier. Wait, that hasn’t happened?
Well, at least the Dow regained its faith in the market. Wait, that didn’t happen either?
What did happen? Oh yeah, banks made more money.
Need proof? I mean, beyond the loss of bad debt and influx of capital, courtesy of we, the taxpayers? Look no further than PNC Financial Services Group Inc. According to reports, PNC will save billions in federal taxes after its purchase of National City Corp now that the IRS has issued a controversial notice following the failure of the original bail-out package.
So here’s what happened. It used to be the case that the built-in loss that a buyer could use to offset income after an acquisition was capped at 5% of the purchase price per year for five years. The new rule removes the limit for the banking industry – and only the banking industry – resulting in an immediate and significant tax benefit. The new rule is effective “unless and until” additional guidance is issued, whenever that might be.
How much of a benefit does that give PNC? Tax analysts have tossed around numbers as high as $5.1 billion. And PNC isn’t the only bank to benefit. Banks which gobble up other banks with just bad housing debt (not counting other bad debt) may now save up to $140 billion in taxes – about 20% of the total banking bailout put up by the feds. And who pays for that? Who do you think? Tax savings for those banks equals lost revenue in an already strained economy.
And you don’t even have to be a “real bank” to qualify. All banks, including credit card companies, industrial loan companies, trust companies and thrifts (used for mortgages) are included.
Congressional officials – who weren’t consulted on the IRS notice – are not necessarily thrilled with the results. Senator Charles Schumer (D-NY) who sits on the Senate Banking Committee voiced concerns that the ruling would give some banks an unfair advantage. For example, Schumer claims that Wells Fargo will save $19.4 billion in federal taxes for its win over Citibank to purchase Wachovia, an amount which surpasses the proposed purchase price.
Those cheering the notice say that this gives banks an additional incentive to buy “struggling” banks. But opponents say it just feeds merger mania, giving mega-banks an disproportionate financial incentive to take on more bad debt. Further, those in other sectors of the economy question why incentives were limited to the banking industry; so far, the IRS has not issued additional comment.
I’m not sure where I fall. I believe that something needs to be done to get us out of this mess – but the fixes seem haphazard and short sighted. Plus the timing and process of this tax incentive doesn’t quite meet the smell test: one day after Congress rejects the bailout, the Treasury changes the rules on its own? What do you think?
