Tag: taxes

I Missed An Option

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When I listed the options yesterday for how to deal with the AIG bonuses I obviously missed one. One member of the house thought up the idea that we could tax AIG bonuses at 100 percent. The beauty of his bill is that it is written to apply to large bonuses at any company receiving TARP funds. I like the concept because it leaves private businesses (meaning those not being propped up by Uncle Sam) free from any new restrictions in compensation and id does not affect the people getting small bonuses (the ones least responsible for the problems). The biggest change I would have made to this idea would be to lower the threshold from $100,000 to $25,000 or less.

Tags bailout, legislation, money, taxes

State

Public Transportation

I have just changed my commuting from riding the bus to driving. This was not due to my own choice – my office moved and I was unwilling to take an extra 2 to 3 hours per day to get to and from this highly underserviced area. Coincidentally I had to buy gas on my way to work on my first driving day. It threw some real perspective on the price of riding the bus

At my old building the bus took 30 to 45 minutes each way while driving took 20 to 30. At my new location the bus would take at least 90 minutes each way but more likely 2 hours while driving takes 25 – 35 minutes. Of course the bus has never been portrayed as the fastest method of commuting so lets look at cost. The bus cost me about $6 a month because my employer paid the other $70 for my pass. I no longer have that option so a bus pass costs me almost as much as my gas ($60) plus my insurance while taking 3 or 4 times as long to make the trip. Imagine if I were paying on a per trip basis for my bus riding – that would be $99 a month to ride the bus – not counting the taxpayer money that supports UTA. Notice that all the prices I am quoting for the bus are not the express passes or the trains, just the regular bus system.

As I started to put all that together I realized that despite the fact that I believe that good public transportation is a good idea, it is notanywhere near economically competitive with private vehicle ownership. Whatever money we spend as a society to prop up our public transit system we need to realize that we are not making any significant economic benefit to those who use the system – they come out a little bit ahead of simply hiring a taxi every time they need to go somewhere.

I still favor the idea of public transportation in theory, but in practice I’m not sure that our taxes should be used simply to hide the fact that the system is not economically competitive. If we are unwilling to pay enough to make it beneficial then our tax support is wasted.

Tags economics, taxes, transit

culture National

Disturbing Trend

I want to be supportive of our President. I just want to make that clear because I don’t expect this post will convey that feeling.

I’m sure part of it is the spirit of partisanship, and part of it is the media propensity to focus on the scandalous, but I don’t think that any other President has had as pervasive a problem as President Obama is having in getting appointees who have not made very basic financial mistakes.

- Timothy Geithner, the Treasury Secretary owed $26K in back taxes
- Bill Richardson withdrew his name from consideration as Commerce Secretary because of a grand jury investigation into a pay-to-play scheme
- Hillary Clinton’s nomination as Secretary of State was contingent upon some disclosure issues regarding foreign donors to Bill Clinton’s foundation – her confirmation was held up by one day because of lingering concerns
- Tom Daschle will likely still become withdrew his name from consideration to become the Secretary of Health and Human Services despite the fuss about his failure to pay $140K in taxes on a political gift
- Nancy Killefer withdrew her name from filling the position of Chief Performance Officer because of failure to pay unemployment taxes for her domestic help

I’m not sure if it’s comforting or disturbing to think that this may have much less to do with poor picks by the president and more to do with the culture of "anything you can get away with is fine" in Washington.

Tags Clinton, corruption, money, Obama, political figures, taxes

General life Local National pictures

Federalist Nos. 30 – 36

Federalist 30

Money is, with propriety, considered as the vital principle of the body politic; as that which sustains its life and motion, and enables it to perform its most essential functions. A complete power, therefore, to procure a regular and adequate supply of it, as far as the resources of the community will permit, may be regarded as an indispensable ingredient in every constitution.

We do not seem to recognize the corollary today that excess money, like excess food, leads to gluttany and an unhealthy government.

Federalist 31

I love the direct logic in the opening here. The assumptions are laid out and unless you can dispute the assumptions it is difficult to dispute the conclusion.

IN DISQUISITIONS of every kind, there are certain primary truths, or first principles, upon which all subsequent reasonings [sic] must depend. These contain an internal evidence which, antecedent to all reflection or combination, commands the assent of the mind. . . Of this nature are the maxims in geometry, that "the whole is greater than its part; things equal to the same are equal to one another; two straight lines cannot enclose a space; and all right angles are equal to each other." Of the same nature are these other maxims in ethics and politics, that there cannot be an effect without a cause; that the means ought to be proportioned to the end; that every power ought to be commensurate with its object; that there ought to be no limitation of a power destined to effect a purpose which is itself incapable of limitation. (emphasis added)

I also think it is interesting to note that the idea of the federal government seeking handouts from the states seemed repugnant, but today we see the repugnance of states which are almost entirely financially dependent on the federal government as was warned by the opposing argument that "an indefinite power of taxation in the {federal government} might, and probably would in time, deprive the {state governments} of the means of providing for their own necessities; and would subject them entirely to the mercy of the national legislature."

Federalist 32

It is interesting to see that even where he is wrong (believing that this danger was not real), Hamilton illustrates the very dangers that we face today as the states have almost entirely melted into the background in the face of the federal government.

Federalist 33

I found this to be an insightful and succinct delineation of the difference between laws and treaties:

If a number of political societies enter into a larger political society, the laws which the latter may enact . . . must necessarily be supreme over those societies . . . It would otherwise be a mere treaty, dependent on the good faith of the parties, and not a goverment.

Unfortunately today most of our laws are apparently nothing more than treaties that are being ignored – including the Constitution as a whole (only the form – three branches including a bicameral legislature – remains).

Federalist 34

When Hamilton explains that 93% of the expenses of the British government are dedicated to paying for war, war preparation, and war debts it should open our eyes to the foolishness of our perpetual expansion of our domestic expenses as if we could add increased military expenses when the need arises.

Federalist 35

I was interested in the recognition that representatives would not be elected from different professions in proportion to how those professions were represented in society. There is an inherent degree of inequality dues to the differing demands of different professions. Hamilton argues that those who understand money and financial realities are the best able to produce good government.

Federalist 36

Hamilton makes a passing remark that makes me think twice about the merits of expanding Congress as suggested by Thirty-Thousand.org – a larger body eventually reaches a size where they are unlikely to have any wisdom beyond the general populous – the only real question is what size is that?

Tags documents, economics, federalist, government, history, taxes

National

A Budgetary Hat-Trick

Jason shared a link to Budget Hero and I had to go take a look. If the game is to be believed, all is not yet lost in the quest to get a balanced budget without abandoning all vestiges of the social safety net that we have been spinning for the last 80 years.

I managed – with a little effort – to balance the budget, increase security, achieve energy independence, and eliminate government waste at the same time so that the budget bust date was pushed back from 2033 to sometime after 2070. I don’t know how accurate the game’s assumptions are, but it really gets you thinking.

Go see if you can achieve your goals (you get to pick your own goals) as a budget hero.

Tags connections, economics, fiscal restraint, government, taxes

General

Incentives to Get Off Welfare

Post author By David
Post date August 13, 2008
38 Comments on Incentives to Get Off Welfare

Another spinoff from the discussion about Equality Under the Law clicked a switch in my brain. Nothing that Anti-PC Infidel says in his post should surprise anyone who has seen the discussion already, but for some reason the following statement made a connection to another issue that I have struggled to resolve for a long time:

This is often combined with the sin of destroying the recipients of {welfare} by encouraging them to be lazy and unproductive, irresponsible and greedy, by putting them on the dole.

I have long wished for some way to make it more difficult to vote for those who do not care to take the time to become informed. The thought struck me that we could make the right to vote contingent on paying at least as much in taxes as we receive in government handouts. This does not directly solve my original conundrum, but it would give incentive to those receiving welfare to find a way to become independent from government handouts if they desire to vote. Essentially, in addition to current requirements for voting, the payment of taxes equal to or in excess of any money received as welfare, food stamps, social security, unemployment benefits, rental assistance, etc. would give each person the right – like a shareholder – to vote in elections. This same rule should probably apply to board members of corporations that receive subsidies from the federal government as well.

I recognize that some will complain that such a plan would favor Republicans since poor people are statistically more likely to vote Democratic, but I would appreciate it if arguments for and against were framed in a way that was independent of party politics.

Tags civic participation, connections, responsibility, taxes, voting

National

Federalist Nos. 11 – 12

Federalist Nos. 11 – 12 follow the same overarching argument that many of their predecessors followed. It can be boiled down to the truths concerning economies of scale. A larger union has great advantages over a smaller nation in many aspects of government. Number 12, which deals with government revenue, reminded me of a few issues related to taxes that I had not remembered and a few that I had never considered.

One of the things that has always been a pet peeve of mine is the incessant focus on the necessity of an ever expanding economy. I was reminded of why that would be when I read:

The ability of a country to pay taxes must always be proportioned, in a great degree, to the quantity of money in circulation, and to the celerity (speed) with which it circulates. Commerce, contributing to both these objects, must of necessity render the payment of taxes easier, and facilitate the requisite supplies to the treasury.

Money is only valuable because of the fact that it acts as a lubricant in the mechanisms of commerce. Because of our ever expanding demands for government services and intervention the government has an ever increasing need to generate more and more revenue through taxation and that is best done by faster and faster monetary circulation – although they are not above inserting more otherwise worthless paper into the system to increase their revenue when they feel it is necessary.

What I had never considered was the following:

It is evident from the state of the country, from the habits of the people, from the experience we have had on the point itself, that it is impracticable to raise any very considerable sums by direct taxation. Tax laws have in vain been multiplied; new methods to enforce the collection have in vain been tried; the public expectation has been uniformly disappointed, and the treasuries of the States have remained empty. . . . No person acquainted with what happens in other countries will be surprised at this circumstance. In so opulent a nation as that of Britain, where direct taxes from superior wealth must be much more tolerable, and, from the vigor of the government, much more practicable, than in America, far the greatest part of the national revenue is derived from taxes of the indirect kind, from imposts, and from excises.

It is that understanding about the difficulty of collecting direct taxes (such as income tax) that led our founders to codify in the constitution that the federal government should not have the power to levy an income tax. Indeed, reading that statement makes the FairTax proposal look all the more enticing since it rests on indirect taxation.

If anyone doubts the reality of the assertion that direct taxes are harder to collect consider the amount of money and time that Americans spend each year in tax preparation in an effort to pay as little income tax as they can and then combine that with the amount of money and time the IRS spends trying to ensure that nobody failed to pay their allotted share of income tax. Now compare that vast sum with the amount of time and money that people spend trying to avoid indirect taxes like a sales tax.

That explains why the only patriotic thing to do with our stimulus checks is to spend them the day we get them if not before.

Tags documents, economics, federalist, taxes

National State

Messed Up and Out of Touch

Post author By David
Post date April 16, 2008
4 Comments on Messed Up and Out of Touch

Okay, so the “messed up” and “out of touch” refer to two different things, but I think they both point to the kind of systemic problems that exist in our political system. In response to a post about the Bush tax cuts an anonymous comment reveals this:

I made about $47,000 and I paid $1700 in taxes so I effectively made $45,300. If I had made $45,000 in your scenario I would have effectively made $47,400. So if I had made $2000 less I would have come out with $2100 more money in my pocket for the year.

I can vouch for the fact that this is true because last tax year I did make $45,000 and I got a huge return (everything I had paid in plus about $2400).

That’s what I call messed up.

Not long after I ran into that post I saw one from Kip Meacham that five days after sending in his perspective as a party delegate on the delegate email list policy of the Utah Republican Party he still has not received so much as an acknowledgment. This just reinforces the image that party leaders don’t feel the need to respond to regular citizens -or even grass-roots party members.

I can’t imagine a more effective way to be viewed as out of touch.

A messed up system is easy to find at many levels of both parties as well as the current party system as a whole. It is also too easy to find counter-intuitive (sometimes even destructive) practices being perpetrated at all levels of our government. The perception that the leaders of our parties and our elected representatives are out of touch with all but the most short-sighted needs of our nation is easy to maintain when everything they do is either because the party said so, or because the latest poll said so. We are almost devoid of principled leadership in the political arena.

Tags government, parties, taxes

General

Block Grants

When I read The Coming Crisis of Big Government I gained a measure of hope that there might be some possibility left for averting the crisis of our soon-to-balloon costs for social security and Medicare. One of the central examples in the article relate to the use of block grants to restructure some of the programs.

Ferrara emphasizes the shocking success of the 1996 reforms of the old Aid to Families with Dependent Children (AFDC) welfare program. Based on concepts developed by my long-time friend and Reagan welfare guru, the late Robert Carleson, AFDC was “block granted” back to the states. This means the share of Federal spending on the program was sent back to each state to be used for a new welfare program designed by each state based upon required work for the able bodied.

The key is that the Federal block grant for each state is finite and does not vary depending on how much the state spends. If the state welfare program costs more the state must pay for the extra expense. If the state welfare program costs less then the state keeps the savings.

The required work for the able bodied has been powerful in moving people off the welfare rolls. But even more powerful have been the new incentives for state bureaucrats resulting from the finite block grants. Under the old system, where Federal funds were increased to match whatever the state spent, signing up new welfare recipients at the state level meant bringing more Federal funds to the state. But with the state itself paying for any extra expenses, or keeping any savings, state bureaucrats moved aggressively to get welfare recipients into jobs.

I agree that matching funds methods of financing federal programs only encourages program growth – the states have great incentive to stretch their budgets by putting everything they can think of toward 2 for 1 programs (for every state dollar they spend they have two dollars to spend because of federal matching – at least for 1 to 1 matching programs). The block grant method was apparently useful for welfare, but states are naturally going to balk at the idea of having their budgets limited when their needs feel unlimited.

I also wonder how well block grants will work with other programs such as transportation funding? Here in the Wasatch front we are keenly aware of the need for more funding for roads and transit. Would block grants encourage the state to spend their money on the best solutions, or would they simply shortchange our burgeoning needs?

So here’s the question – do you think that block grants are a widely applicable tool to control the growth of government spending, or do we need to come up with more tools in order to close the lid again on this Pandora’s box?

Tags economics, government, taxes

State

Proud To Pay My Share

I liked the sentiments expressed by Chad at UtahOpinions about paying a fair share for government. It’s easy to accuse those who advocate for smaller government of being stingy, selfish, or just not wanting to work for the best good of society, but many people feel like this:

Believe it or not I am proud to pay taxes to support our national interests (i.e. national security, immigration, roads, airports, etc.). But my pride ends there. . .

It is also a reminder to me why I joined the Republican party in the first place. As part of the Republican platform are these statements:

I BELIEVE government must practice fiscal responsibility and allow individuals to keep more of the money they earn.

I BELIEVE the proper role of government is to provide for the people only those critical functions that cannot be performed by individuals or private organizations and that the best government is that which governs least.

I BELIEVE the most effective, responsible and responsive government is government closest to the people.

Huh? You mean Republicans stand for these principles? Well, at least I know I do and I thought Republicans did.

Chad does a nice job of breaking down how much he’s paying in taxes for various government programs. Like Chad I’m proud to pay my fair share for government. I won’t go to any lengths to minimize my tax burden, I just take whatever deductions are simplest and that makes it easy for me to forget why most people find tax season such a headache – I do my taxes in a matter of two hours because I don’t do any financial contortions to reduce my tax burden.

That does not stop me from doing anything I can to remind my representatives that I’m looking for government to do as little for me as possible – I’d rather be responsible for my own success or failure without paying for a government safety net (with all it’s inflations of inefficiency) for everyone regardless of the legitimacy of their need.

Tags connections, government, taxes