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Friday, November 16, 2012

Who Does The Tax Increase Punish?

The wife and I had an interesting discussion yesterday about the coming fiscal cliff, or even the coming solutions to it.

The President was railing once again about the evil rich folks who don't pay their fair share, and how going back to the Clinton era tax brackets is our solution. If they just pay more, everything will be good. He didn't tell the whole story (of course). For instance, IF; and it's a big IF; everyone in those brackets paid the additional taxes he wants, it only takes care of about 2.5% of the deficit.

He also failed to mention that the Clinton era brackets wouldn't start higher taxes at $200,000 and $250,000 for couples. The 33% bracket from that era started at $150,000 and $178,000 for couples.

The biggest thing he missed though is that it's not those people that get hurt by the tax increase, that's where our discussion started. We go out for breakfast every weekend, there are about 10 or so contractors, all self employed who are in that restaurant with us every Saturday and Sunday. Most of them are actually there about 5 times a week. They all fall into those tax brackets, not because they make a ton of money, but because their business income is taxed at the personal rate.

Most would see a tax increase of about $30 per week. Not a huge deal, really. But how do they adjust for it? What if they decide that to save that $30  they just stop going to the restaurant except on weekends? Well, they each save their $30 by cutting out 3 trips a week. However, the restaurant just lost $300 a week from just that group.

Since the restaurant has 2 waitresses, 2 cooks, a dishwasher and a busboy, and isn't huge, the easiest way for them to make up for the lost money would be lay off the busboy and have the waitresses bus their own tables.So that lost revenue doesn't really hurt the restaurant, it hurts the busboy, who didn't see his taxes go up, he sees his entire paycheck go away.

Then their is the waitress. She doesn't make enough to see her taxes go up, but since these guys aren't spending $300 a week there, she loses the tips from them, even at 15% that's a $45 hit to her pocketbooks, 50% higher than the tax hit the "evil rich guys" took from the new brackets.

On a bigger scale, think about Richard Trumpka, the labor leader who, with the President, has decided "evil businesses" need to pay more in taxes. Who does a business tax really hurt?

Say the company I work for (which employs 48,000 people) had it's taxes increase by $25 million dollars. The company is profitable, but does have an obligation (by law) to shareholders to maximize their return, so they have to find a way to put that money back into their bottom line.

As an example, there is a planned plant expansion in central Illinois, but to make up the $25 million they decide to forgo it. Now, did the company get hurt by the tax increase, or did the guys Trumpka supposedly represents, the labor force get hurt? No electricians, bricklayers, laborers and pipe fitters are going to be hired to do that work. So instead of 9 months of good paying work building that new building, they get to sit in the union hall wishing they had work.

Admittedly, the current workers at the plant may benefit by getting increased overtime, but there won't be new workers hired to work on the expanded area of the plant, either.

One of the biggest problems liberals have always had is they see everything as a static equation. If I raise tax A income will go up to the government. They never look at the other side of the equation, which is that the person paying the tax has to do something to account for the lost money.

 For those who've forgotten, President Clinton decided in the 1990's to punish the rich by putting a luxury tax on yachts, expensive cars and other purchases. The tax collected almost nothing, but it did manage to put a fairly large number of companies that built those big boats out of business. The rich still bought their boats, they just bought them from other countries. The only folks who were punished by the tax were the workers in the US.
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Sunday, February 12, 2012

About That 26 Million....

The Foreclosure Settlement reached last week by 5 major banks and 49 States looks to be a decent deal for a lot of people affected by some pretty shoddy work by the banks, and a good deal for the banks since it limits liability they'd face from individual states.

There is of course, some political points to be scored from it also. In Wisconsin Democrats immediately jumped on Gov. Scott Walker for the fact that $26 million of the State's cut of the pie is going to go to cover a budget shortfall.

Newpapers jumped on it as a flip-flop, after he'd criticized a previous governor for wasting the tobacco settlement funds by putting them into the general budget to shore up a (much bigger) deficit.

Being of a generally rational mind, I though that was probably a bad idea, but also understanding partisanship, I decided to look up the terms of the settlement, and see how he could get away with such a dastardly deed.

As it turns out, it only took 1 search with Google to find out he was actually putting the money where the settlement said it should go. ZeroHedge has a nice little breakdown of how the settlement money is divided.

Specifically, from Zero Hedge:

$3.5bn will go to state and federal governments to repay public funds lost as a result of servicer misconduct and to fund housing counselors, legal aid and other similar public programs.


Wisconsin's share of that 3.5 billion is 31.5 million. Of that $5.5 million is going into various programs across the state, the other $26 million is going to the general fund, to "repay public funds". What a concept, actually using the money where the settlement said it should go.

I understand Wisconsin Democrat's problem with this; they spent years raiding transportation, retirement and patient settlement funds to play 3 card monte with the budget and make it look good. The idea of actually putting money where it is designated to go is somewhat of a foriegn concept to them.

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Wednesday, February 08, 2012

Could Walker Recall Be in Doubt?

A funny thing could happen on the way to getting a recall of Wisconsin Governor Scott Walker, it might not be a "sure thing" like we've been told.

Since the Union Activists grass roots organizers marched to the Government Accountability Board (GAB) with their "1,000,000" signatures the media and the left (I know, redundant) have claimed that the election in inevitable. Except no one seemed to count the signatures, hell the GAB claims it's not their job.

Well, a few grass roots groups on the other side have been counting, and their math, along with some basic work from the Milwaukee Journal Sentinel makes me wonder if we'll even see a recall election in Wisconsin.

A number of people, from different groups doing independent verifications of the petitions have come up with an average number of signatures per page of 4.9; sounds like a lot with over 152,000 pages submitted; but doing the math shows that instead of a million signatures, that only comes out to 750,000.

The Milwaukee Journal Sentinel did a randomly generated check on 500 signatures, and found with what was no more than a cursory look that about 15% of them were obvious fakes. The didn't look for duplicates or verify address or names, or go through the Verify The Recall database for folks who didn't want to be on it. Just using their number, and the verifiers rate of signatures, you are already down to 635,000 signatures.

If 750,000 is closer to the true number submitted, that means that Walker would have to eliminate 28% of the submitted signatures to have the recall effort fall short of the 541,000 they need to get it through.

How do 28% get eliminated? What's leaking out so far from the groups verifying the signatures are tales of large numbers of errors that fall out of the "clerical error" category that can be corrected. For instance, dates on signatures that fell after the document was signed as complete. Dates on the top signature lines that were done after the bottom line. Every document by Lena Taylor being wrong, with the wrong address and district listed on them.

So if the Journal comes up with 15% failing common sense checks, and reviewers find 10% of the pages are flawed due to items as above, you now only need 3% to end up with less than the necessary number. Considering news stories of people signing 80 times, or people who've signed up on Verify the Recall who shouldn't be on the list being there, 3% won't be hard to come up with.

The thought of exploding unionista heads if the GAB is forced to say that there aren't enough valid signatures makes for some sweet dreams.

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Saturday, February 26, 2011

Wisconsin Senate Passes Budget Bill

The Wisconsin Senate passed a budget repair bill, on a straight party line vote, with no input from the minority party, no floor debate between the parties.

Confused? That was May 12, 2008. About an hour after a conference committee made up only of Democrats and Governor Jim Doyle's staff came up with a repair bill it was brought to the Senate floor, and voted on with two readings, no amendments allowed, and no input from the minority party. The bill passed on a 17-16 vote with 0 Republicans voting for the bill, and 1 Democrat voting against it.

The GOP knew they'd lose the vote, and knew there was nothing they could do about the bill, but did their jobs and voted. Then, in 2010 they beat the Democratic party over the head with it to take control of both chambers and the governors mansion.

The Wisconsin Jewish Conference has a nice summary of the bill and timeline of it's passing, and the vetoes the (then) Governor used to reshape it.

State Representative (now State Senator) Leah Vukmir had this take on the bill. It's a warning from 3 years ago that this year's day of reckoning was coming.

That folks, is how our Democracy works. If the current bill is so flawed, the Democrats have about 18 months to sell that case to the voters, and take back control and undo the bill. I think the problem is they know the majority of the voters like the bill. In 10 or 12 months they won't be able to show that it wasn't a workable solutions, and that the state is still spiralling out of control.

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Tuesday, February 22, 2011

Illinois Budget Solution Found!

The solution to Illinois' budget woes (another 8.5 billion in debt) has become clear since last Friday. Tourism is the answer. If we can get enough states to follow the lead of Wisconsin; as Indiana did today; and export their Democratic representives to Illinois in a few months we should be able to make a lot of extra money on hotel, restaurant and transportation taxes, helping to fill that shortfall.

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Sunday, February 20, 2011

Abandoning Wisconsin's Unions

Wisconsin's public employee unions are being abandoned by the media. Not the Glenn Beck/Rush Limbaugh media, instead liberals like Time Magazine's Joe Klein and The Washington Post's Charles Lane have dumped their support for the unions and their methods.

Klein kind of summed up the irony of the moments:

I mean, Isn't it, well, a bit ironic that the protesters in Madison, blocking the state senate chamber, are chanting "Freedom, Democracy, Union" while trying to prevent a vote?

After the Tuscon incident of only a few weeks ago we were all worried about civility in politics. Suddenly Madison has opened some left leaning journalists eyes, showing them their own group is as uncivil as any. John Jagler on Twitter points out that staffers at the capital in Madison have been told not to wear ties to work, evidently to avoid them being used to to assault them.

Lane points out the hypocrisy of the left coming out so quickly:

This is hypocrisy on an epic scale. I can't think of a more overwhelming refutation of the claim that incivility is the unique province of the American right -- as opposed to what it really is and always has been: a two-way street with both right and left lanes. No wonder so many Americans in the broad center of the political spectrum are turned off by both parties and their sanctimonious "bases."

Both at different points call out the Ed Schultz/Rachel Madow wing of the left for spewing false information, having it proven false, and refusing to acknowledge it.

President Obama, during the health care reform debate last year reminded us, as do Klein and Lane, elections have consequences. Though listening to the President this week you'd think he doesn't agree with that idea anymore; or at least the consequences when they aren't the one's he'd like.

The New York Times points out, it's not just Wisconsin going after public sector unions; though Walker is going farther than others. California and New York, led by liberal icons Jerry Brown and Andrew Cuomo are both attempting to reign in their unions lavish pay and benefits packages also, looking at 8 and 10% pay and benefit cuts. They didn't really mention Chris Christie in New Jersey, who's also gone after the pay and benefits packages, in a much more vocal way.

While the Times isn't quite as blunt as Klein and Lane, read the undercurrent of their article and you see little sympathy for the union's position.

Back to the President's (earlier) thought that elections have consequences. The whole reason Wisconsin flipped both chambers of their legislature and the Governor's office was simple, the people are tired of living in a tax hell. A big chunk of that hell is the personal income tax, which is still higher than neighboring Illinois' after a 66% increase in the Land of Lincoln.

The people saw that the only job growth in their state was in government employment, and realized it's an unsustainable model. Many probably looked at their neighbors to the south and saw that kind of dysfunction heading their way if something wasn't done, soon.

If more recent (than 2 months ago) evidence is needed, again, look to Illinois who did increase taxes considerably, but still has to borrow nearly $9 billion to pay it's past due bills because they didn't do anything about their spending when they jacked up taxes.

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Friday, February 18, 2011

The Union's Real Problem

Anyone watching the news in the last few days has seen the sleep ins, protests, and general unrest in Madison, Wisconsin.

The cause of the consternation is the "budget fix bill" proposed by the Governor, Scott Walker, that would require union members to pay 5.8% towards their retirement, and 12% (up from 6) of the cost of their health care premiums.

It would also restrict collective bargaining to wage packages only, other currently bargained items would fall under the same state laws (some of the most restrictive in the country) that non-represented employees are covered under.

If you spend a little time reading the articles, and especially the comments, in places like the Milwaukee Journal-Sentinel you'll see many union members commenting that they'd be happy to bargain for those concessions, but not have them rammed down their throats.

I believe them, I think a good chunk would agree that they right now have a sweet deal that they can't justify to their friends in the private sector. At the same time, they don't want to lose their collective bargaining leverage on other issues, which I can't blame them for.

The problem is, it's not the rank and file pushing the issues, it's the union leadership, and frankly, they'd cave on the whole thing except for one small provision in the bill. That provision makes Wisconsin essentially a right to work state. It forbids the deduction of union dues from paychecks, and requires annual certification votes by members.
Once people start writing checks for due, it becomes personal. They start wondering what exactly they are getting for the money. When it happens unions generally fold, because workers doing their own cost-benefit analysis figure out they aren't getting much for that check.

They also don't like this because for years they failed to unionize many public employees. During the eight years of Jim Doyle's administration a number of laws were passed that took that choice from the workers, and put them in unions without a vote by anyone but a Democratic controlled state legislature.

How did they manage that? It was actually easy, just find a group of non-represented workers who work in an area with a union presence; the University system's admin and some support staff for example; and reclassify their positions into a group that's already represented. Voila! You suddenly have thousands of new dues paying members without needing a vote by the affected people.
So when you listen to the news reports about AWOL legislators, protesting teachers, and sick-outs, keep in mind that the rank and file union members probably aren't the biggest obstacle in Madison, the union leadership and their reduced funding is.

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Friday, December 03, 2010

Sell Your Stocks December 14th

With Congress messing around with extending the "Bush Era Tax Cuts" there is a stock market crash being brewed that could wipe out any gains you've seen this year.

Unless Congress acts before then, on January 1st the capital gains rate will go up from 15% to 20% for most people who claim them, and from 0% to 10% for the lowest two tax brackets. This means that folks will look to realize any gains in 2010 to avoid the higher taxes. Don't believe it, look back to the 1987 increase.

Here's my thought, I'm pretty sure that those rates are going to jump. Why? To get a compromise to get none of the personal income tax rates raised the GOP will have to give in on something. Capital gains taxes are the easiest, because the general public doesn't understand them, and doesn't think they pay them.

So December 15th looms as the big day for the market; for a bad reason. That is the day most options contracts are due, which means people who have an options contract, and will realize a gain, will probably sell it instead of hanging on. Think of all of those getting dumped in one day....Uh Oh.

So, if you want to avoid the Christmas Rush so to speak, sell on the 14th when the market will be teeting on the edge instead of fully falling. But sell if you want to get a lower rate on the gains. Or, you can hang on to the stocks, and hope that in 2012 there is a change in Senate and Whitehouse occupants that would restore the lower rates.
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Saturday, November 20, 2010

A Bielema Dig?

I believe Bret Bielema, head coach of the University of Wisconsin football team took a dig at his critics today. Not to a reporter, but on the field of play.

Last week Wisconsin rolled Indiana by a score of 83-20, and many national media pundits were up in arms about that score. Many complained that Wisconsin still passed the ball in the fourth quarter, with a huge lead. They didn't mention it was 3rd and 4th string players still scoring on Indiana, only that Wisconsin kept scoring. Evidently the players were supposed to take a knee after any gain of more than 2 yards to give Indiana the ball back.

This week Bielema took a shot at them by calling 29 straight running plays in the second half against Michigan (31 if the victory formation is counted). They still scored four more times, with only 1 pass in the half. The message was pretty simple, run, pass, whatever, the defense has to stop us, and they haven't been able to lately.

Bielema would have been justified throwing this week, Michigan was making a run and got to within 2 scores a couple of times. They continually stacked the box with nine men. They still ran, and still scored.

LSU, Stanford, TCU and Boise State will all be looking at the films from the last two games; those are the most likely opponents for Wisconsin come bowl time. My guess would be each will hope one of the others gets to play the Badgers.

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Thursday, November 11, 2010

Thank A Veteran Today

Today is Veteran's Day. When you see one, thank him or her for their service.

My daughter put her thoughts on the day into a poem.

Look around and see the beauty,
Take a look at the joys we have,
Be amazed at what we can do,
Think of what it took to have all this.
Our freedoms, our rights, our lives,
Stop and think of why you enjoy a life as such
A man, a woman, a father, a mother,
A son or a daughter gives their life each day
A life taken so another can be fulfilled
Freedom isn’t free, but fought for and died for
To the men, women, fathers, mothers, sons, and daughters
Thank you for paying for our freedom,
You are not forgotten,
You are not forsaken,
Thank you for the lives that we enjoy today.
**Stop today and thank a Veteran for the lives we’ve become accustomed to**

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