The first half of 2026 was eventful. Gild and Silver hit all time highs then dropped big, the Nasdaq, S&P and Dow hit new all time highs and war in Iran brought an oil scare with per barrel prices soaring to $120. Personally, I visited the Philippines again and had a great time visiting iconic places with a friend tagging along or should I Tagalogging along…clever hey?
I preparing the 2nd qtr 2026 P&Ls for clients which also closes out the 6 months YTD 6-30-26. In past years, this 6 month period could help project the remaining 6 months, but I am not as confident in that as I once was. If I am believe or accept the BLS statistical data, we are in a string economy, yet I see my clients struggling to maintain their expected flows and the seasonal aspects that some have in their businesses seem exaggerated this year. I am doubting the veracity of our national statistics as provided and that includes Inflation. In my own shopping for instance, food is noticeably up and continues to rise. My rent though stable for the lease period was increased for 10th year running and over my 10 years has risen by 48.5%. This correlates to home prices which rose even more than my rent at 60-80% depending on the exact market location. Some even more. Coupled with high mortgage interest rates, home ownership has become a very difficult game for newbies. Factually, there is a more or less permanent renter class which incidentally is populated by those who cannot cover a $1000 emergency or a $400 immediate expense. These folks are those living from paycheck to paycheck. Here is AIs conrribution to this subject:
- 33% would have to go into debt (using credit cards, taking a personal loan, or borrowing from friends and family).
- 30% would pay using existing cash reserves or savings.
- 17% would pay the cost directly from their regular monthly income or cash flow.
- 20% would have to reduce other spending or rely on another approach. [1, 2]
Would you like help creating a customized monthly budget or finding the best high-yield savings accounts to start building your emergency fund?
I follow my own clients of course and though many are in good shape, these are primarily entrepreneur business owners who have more control over their finances, both business and personal. If a person is functioning as an employee, their practical control is limited, plus the Government wants to be paid their pound of flesh and uses the Employer Withholding laws to be first in line. This is often overlooked as the wise maneuver that it is. Getting paid before something else, even a flat screen tv, gets the cash is smart and necessary. My first line of advice to employees is that they figure out a side business which adds income and allows expenses as reported on a Sch C. Beyond that, forming an S Corp is a step up from there because it allows sheltering from the 15.3% self employment tax imposed on Sch C Income. This and other tax structuring can make a big difference in as is said, “not what you earn but what you KEEP”.
Indeed, what you earn as an employee is an easy target for the tax agencies who voraciously go after your cash. And they don't wait until the year ends and is in full view, they take their share every pay period. If they took too much you must wait until you file to claim a refund. That equates to an interest free loan so at least review your W4 to see if you can adjust your withholding to maximize your take home pay. Yes, some like their refunds but if it is actively preventing the ability to cover an emergency than the W4 should be reviewed for the opportunity.
We are in a time of innovation and it is sold as bringing great change and improvement to our lives. If we are to believe that it is a good change like the Rail Roads of the 19th century or the automobiles of the 20th century, then bring it on. But what appears to be the case is that it is effecting jobs slowly at first then more so as applications of AI replace the white color class which are less dependent on physical skills as found in the broad blue collar class. Yes, attorneys, engineers, coders, accountants and more admin riff raff are under siege. Plumbers, not so much. Yet. The introduction of Humanoid AI driven robotics is no longer the stuff of Science Fiction. It is here now. Have you seen the Chines factory floors of late? WOW!
So this semi-annual period will wrap up with lots of plates spinning. For now, tax law is known and methods to improve taxation situations are available. Will that persist? My best guess is that robotics will have to be taxed as they replace the Withholding Employees that are the low hanging fruit taxmen eat.
The world is not one country, not one tax set up and not one society. Who wins in the next 6 months or 6 years will in part depend on who embraces this Brave New World and finds ways to maintain a productive earning capacity that might be competing with a bot that doesn't eat or sleep and has a minimal wardrobe. Who wants that world? It is being driven fast toward a cliff of “smarter than thee and me” brainiacs who may not give a shit about whether you can or cannot cover a $400 expenses. Is this an exciting or terrifying time? We have no long wait to find out. The next 5 years will point the the next 50 years to the path. Stay in tune with the times in every aspect of your life and USE AI to improve your won lot.
Best,
Donn Marier
DM- Your Own CFO