Senator McConnell recently said that he feels we need to tackle "entitlements" and that there's a bipartisan attempt not to because they're too popular....
Ok, I promise this will be quick, there's not much to dig into but let's get started.
1) The GOP Congress last year reduced taxes, especially on corporations and, not surprisingly, the rich. At the same time, they gave a big boost to military spending... spending the military didn't ask for. That's why we are so deep in the red this year. Let's not pretend this is anything but what they planned: reduce the money coming into the Federal Government (and increase non-social spending) so you can claim to e forced to reduce spending on the non-military. It's a manufactured crisis. Don't think of it in any other terms.
2) If a program is popular, and it works, both of which are true for these social nets, why are you so hung up on tearing into them? And boy are they hung up on it... I can't remember a time when the leadership of the GOP wasn't trying to break the contract with the American people. Oh, it's because you feel it has something to do with the deficit spending that Conservatives like to rail against in times of Democrat leadership of the government and love to indulge in when the Republicans are in power.
3) Ok, so, let's talk about their impact on the deficit... there is none. Ok, it's even better than that, these programs are funded by a separate revenue stream to the general tax system and they bring in more money than they spend... so far. That's right, the Social Security and Medicare elements you see in your paycheck more than cover these programs. They never have caused a deficit. They, in fact, have been used to offset the deficit spending from time to time. "But Peter, you said 'so far'... won't they eventually go bankrupt?" Well, sure, if we don't do anything, eventually the money the Government takes in for Social Security won't cover the costs of the program. There are a number of different ways that we can resolve this however, and one of those is to change it from a regressive program to ... less of a regressive program. See, your income is taxed for Social Security but only up to a certain cap... and that's currently $127.200. We could simply remove the cap and those of us fortunate enough to make more than $127,000 would pay an equal percentage into Social Security as everyone else. And the benefits aren't capped in the same way, so a person making $127,200 and a person making $1,270,000 pay the same into Social Security but the former gets back significantly less when they retire. So just remove the cap on the taxable income and you're pretty much covered.
So really, what the fuck are GOP leaders talking about when they say that we don't have the resources to support these programs and need to find ways to cut costs?
Dark Wind Rising
Showing posts with label Taxes. Show all posts
Showing posts with label Taxes. Show all posts
Tuesday, October 16, 2018
Tuesday, November 21, 2017
Tax Reform
They're back at it. Republicans have decided this year that the way to pass big legislation is to jam it through without much debate and without any attempt to reach out to the other side. This time it's taxes. Before we get started, in case you forgot what the Democrats did when they overhauled health care, they adopted a Republican idea and tried to work with Republicans for a year before moving forward (with that Republican originated plan).
Alright, so, taxes. Let's start with the build up: Republicans, in particular the President, have been saying that they would overhaul the tax code and give the average worker a huge tax cut. There are a couple things wrong here:
1) It's temporary. Republicans love this tactic. Make the tax cut for people temporary so that it doesn't seem as bad for the government's budgeting as if it were perminant and then, when the tax cut is about to expire, announce that anybody not wanting to extend it is looking to increase taxes. It's sickening to me to see this tactic used over and over again. We know you want to make it perminant, so just do it. Don't be so underhanded about it.
2) Corporate tax cuts AREN'T temporary. As if it weren't enough of a slap in the face to have people's tax cut be temporary, the corporate tax cut isn't. You know why they aren't temporary? I'm sure Republicans will say it's because the markets hate instability and so changing the tax rate repeatedly would be bad for business.... the real answer, however, is that raising the corporate tax rate is not as big a deal to the average voter as raising individuals' tax rates... so... it's my first point of being upset made even more clear.
3) It's not a huge tax cut for individuals. The main benefits continue to go to the top. I'm not really sure if I need to say anything more here. It's always going to be this way when Republicans are in charge for one reason: They don't see a progressive tax structure as a good thing. They think it's unfair for the richest among us to pay a higher rate than the average and that everyone should pay the same rate. I'm not going to go to far into why I consider a graduated income tax, a progressive tax, to be better here, but I'll make sure to write about that soon. Suffice it to say, I consider progressive taxes to be far superior.
4) They're not paying for it. Remember the mantra of the Republicans for the last 8 years that everything must be paid for? Yeah, that's apparently went out the window as soon as they're fully in power. In other words, they don't actually care about what they claim to stand for: fiscal responsibility.
5) Actually, they are planning to pay for it, they're just not telling you. And here's where we get to the part that really kills me. It's not that the $1.5 trillion over 10 years isn't part of their plan... it is. They want to decrease the federal government's incoming resources by as much as possible. Why? Because then they can explain that we don't have the money to pay for all that the government is doing. We can't spend as much as we do because we just don't have the money to pay for it. They won't say it immediately either. They may even wait until a Democrat is in the White House. There will be many that won't, however. You know that the far right, the Tea Party and the like, will likely start complaining about how we're spending more than we're taking in almost immediately. And $1.5 trillion over 10 years is not chump change, by the way. It's roughly 1/30 of the overall budget and more than 1/10 the discretionary spending budget from 2016. It's roughly 1/4 our military spending or about twice as much as we spend on Veteran's Affairs or about 10 times as much as we spend on food & agriculture or about 5 times as much as we spend on transportation. I could go on and on with comparisons but I think you get the idea. (oh, and it's about 1/4 the current deficit that Republicans had been railing about being too high for around 8 years prior to this year) So where do we cut to make up for this deficit? I'd be willing to bet that it won't be from the military... which brings us to my 6th point.
6) Because the tax cuts, which are making our tax plan less progressive and therefore are already providing more benefits to the wealthiest, are going to lead to spending cuts that will reduce the benefits the average and poorest among us get from government spending, the result is actually more regressive than you think they will be. You're going to pay for reducing the share that the wealthiest among us contribute by reducing the help the government offers those that need it.
And all this while saying that it's going to be great for the average worker.
Alright, so, taxes. Let's start with the build up: Republicans, in particular the President, have been saying that they would overhaul the tax code and give the average worker a huge tax cut. There are a couple things wrong here:
1) It's temporary. Republicans love this tactic. Make the tax cut for people temporary so that it doesn't seem as bad for the government's budgeting as if it were perminant and then, when the tax cut is about to expire, announce that anybody not wanting to extend it is looking to increase taxes. It's sickening to me to see this tactic used over and over again. We know you want to make it perminant, so just do it. Don't be so underhanded about it.
2) Corporate tax cuts AREN'T temporary. As if it weren't enough of a slap in the face to have people's tax cut be temporary, the corporate tax cut isn't. You know why they aren't temporary? I'm sure Republicans will say it's because the markets hate instability and so changing the tax rate repeatedly would be bad for business.... the real answer, however, is that raising the corporate tax rate is not as big a deal to the average voter as raising individuals' tax rates... so... it's my first point of being upset made even more clear.
3) It's not a huge tax cut for individuals. The main benefits continue to go to the top. I'm not really sure if I need to say anything more here. It's always going to be this way when Republicans are in charge for one reason: They don't see a progressive tax structure as a good thing. They think it's unfair for the richest among us to pay a higher rate than the average and that everyone should pay the same rate. I'm not going to go to far into why I consider a graduated income tax, a progressive tax, to be better here, but I'll make sure to write about that soon. Suffice it to say, I consider progressive taxes to be far superior.
4) They're not paying for it. Remember the mantra of the Republicans for the last 8 years that everything must be paid for? Yeah, that's apparently went out the window as soon as they're fully in power. In other words, they don't actually care about what they claim to stand for: fiscal responsibility.
5) Actually, they are planning to pay for it, they're just not telling you. And here's where we get to the part that really kills me. It's not that the $1.5 trillion over 10 years isn't part of their plan... it is. They want to decrease the federal government's incoming resources by as much as possible. Why? Because then they can explain that we don't have the money to pay for all that the government is doing. We can't spend as much as we do because we just don't have the money to pay for it. They won't say it immediately either. They may even wait until a Democrat is in the White House. There will be many that won't, however. You know that the far right, the Tea Party and the like, will likely start complaining about how we're spending more than we're taking in almost immediately. And $1.5 trillion over 10 years is not chump change, by the way. It's roughly 1/30 of the overall budget and more than 1/10 the discretionary spending budget from 2016. It's roughly 1/4 our military spending or about twice as much as we spend on Veteran's Affairs or about 10 times as much as we spend on food & agriculture or about 5 times as much as we spend on transportation. I could go on and on with comparisons but I think you get the idea. (oh, and it's about 1/4 the current deficit that Republicans had been railing about being too high for around 8 years prior to this year) So where do we cut to make up for this deficit? I'd be willing to bet that it won't be from the military... which brings us to my 6th point.
6) Because the tax cuts, which are making our tax plan less progressive and therefore are already providing more benefits to the wealthiest, are going to lead to spending cuts that will reduce the benefits the average and poorest among us get from government spending, the result is actually more regressive than you think they will be. You're going to pay for reducing the share that the wealthiest among us contribute by reducing the help the government offers those that need it.
And all this while saying that it's going to be great for the average worker.
Friday, June 5, 2015
Government creation of jobs
"Government can't create jobs." Republicans are both right and wrong with this statement. It's an interesting situation in which, the only way that it might be right is if the Republicans are the ones thinking things through.... but only to a point.
"Government can't create jobs." Let's walk through the logic that gets us there. Government creates jobs ALL THE TIME... all you have to do is walk into any state legislature, any city hall, any school, go to any street repair, any public bus or train... the list goes on. Government jobs are all around us an impact us in so many ways that the statement seems ridiculous at first.... it always has to me. I think many of those that use it don't understand it and just think of it as the base statement against using government jobs to help the economy because they don't like big government.
O.k., where's the truth in the statement then, if government creates jobs all the time? Well, it comes from going back to where the money for those jobs comes from: taxes. To a conservative, this means a lot. It means we can't count those jobs because ... well.... it's hard for me to articulate because I don't believe it. Essentially.... imagine what would happen if government jobs were all there were... we'd all be getting paid from the same pool of money that we were all paying into.... or something.
Let's go a step beyond that. What makes a job a job? There are a few reasons why I strongly believe that government jobs are jobs.... for one thing, people are working and getting paid... that, to me, is a job. But that's the simplistic view that we started with. Let's go further. When the economy isn't going so well, government has a responsibility to keep things going and to spend more than it's taking in through taxes. A lot of hay has been made in the last 8 years about how when families lose their income they have to reduce their spending and therefore government should be the same way. What those who proclaim this don't understand is that government is a different type of entity from a family or a corporation. A government has the ability to be in debt perpetually because the rate is so low. It has the spending power to keep cash flowing, even in bad times. Government can give people jobs when corporations are forced to downsize because it's nowhere near a corporations responsibility to ensure the proper running of a country's economy (corporate responsibilities are to their shareholders and making a profit). So, what does a forward thinking government do when times are bad? Keep the flow of cash going into the economy so that people employed by the government keep spending money, which keeps other people employed, which means those other people can keep spending money, which keeps other people employed, which... you get the idea. Keep the economy from exponentially shutting down and you stand a chance. Shut down on government jobs and the reversal of a downward spiral is difficult and the improvement of an economy, once the downward spiral is stopped, is equally difficult. Once the economy is on good standing, you start paying off government debt and setting aside some money to offset small downturns.
So how does all this work into the idea that jobs coming from taxes aren't really economically benefitting jobs? Well, let's consider that all jobs are created from people giving an entity money for services and/or products and that entity creating a job to provide those services and/or products. Where does a corporation get the money to pay their employees? Where does the government get the money to pay theirs? In both cases, it's from people. Government does create jobs. Government, in fact, has a responsibility to create and maintain jobs when other entities are cutting them. Sure, a government can't maintain jobs for a prolonged period of time in the absence of other entities providing jobs, but that's the case for any single entity. Imagine, if you will, that Ford Motors was the only company left, would they be able to maintain jobs? Of course not. So we need a mix of many industries, whether they be corporate or government.... and each industry can create jobs.
Government does create jobs. Don't let anybody tell you otherwise... and if they do, ask them what people do with all that free time in China and North Korea. Sure these countries have a lot to improve upon, but they definitively have jobs....
Government does create jobs.
"Government can't create jobs." Let's walk through the logic that gets us there. Government creates jobs ALL THE TIME... all you have to do is walk into any state legislature, any city hall, any school, go to any street repair, any public bus or train... the list goes on. Government jobs are all around us an impact us in so many ways that the statement seems ridiculous at first.... it always has to me. I think many of those that use it don't understand it and just think of it as the base statement against using government jobs to help the economy because they don't like big government.
O.k., where's the truth in the statement then, if government creates jobs all the time? Well, it comes from going back to where the money for those jobs comes from: taxes. To a conservative, this means a lot. It means we can't count those jobs because ... well.... it's hard for me to articulate because I don't believe it. Essentially.... imagine what would happen if government jobs were all there were... we'd all be getting paid from the same pool of money that we were all paying into.... or something.
Let's go a step beyond that. What makes a job a job? There are a few reasons why I strongly believe that government jobs are jobs.... for one thing, people are working and getting paid... that, to me, is a job. But that's the simplistic view that we started with. Let's go further. When the economy isn't going so well, government has a responsibility to keep things going and to spend more than it's taking in through taxes. A lot of hay has been made in the last 8 years about how when families lose their income they have to reduce their spending and therefore government should be the same way. What those who proclaim this don't understand is that government is a different type of entity from a family or a corporation. A government has the ability to be in debt perpetually because the rate is so low. It has the spending power to keep cash flowing, even in bad times. Government can give people jobs when corporations are forced to downsize because it's nowhere near a corporations responsibility to ensure the proper running of a country's economy (corporate responsibilities are to their shareholders and making a profit). So, what does a forward thinking government do when times are bad? Keep the flow of cash going into the economy so that people employed by the government keep spending money, which keeps other people employed, which means those other people can keep spending money, which keeps other people employed, which... you get the idea. Keep the economy from exponentially shutting down and you stand a chance. Shut down on government jobs and the reversal of a downward spiral is difficult and the improvement of an economy, once the downward spiral is stopped, is equally difficult. Once the economy is on good standing, you start paying off government debt and setting aside some money to offset small downturns.
So how does all this work into the idea that jobs coming from taxes aren't really economically benefitting jobs? Well, let's consider that all jobs are created from people giving an entity money for services and/or products and that entity creating a job to provide those services and/or products. Where does a corporation get the money to pay their employees? Where does the government get the money to pay theirs? In both cases, it's from people. Government does create jobs. Government, in fact, has a responsibility to create and maintain jobs when other entities are cutting them. Sure, a government can't maintain jobs for a prolonged period of time in the absence of other entities providing jobs, but that's the case for any single entity. Imagine, if you will, that Ford Motors was the only company left, would they be able to maintain jobs? Of course not. So we need a mix of many industries, whether they be corporate or government.... and each industry can create jobs.
Government does create jobs. Don't let anybody tell you otherwise... and if they do, ask them what people do with all that free time in China and North Korea. Sure these countries have a lot to improve upon, but they definitively have jobs....
Government does create jobs.
Monday, November 3, 2014
2014 MA Candidates for Governor
O.k., I apologize to anybody that thinks a third party candidate is the way to go but you're essentially voting for the greater of two evils by voting for someone other than a Democrat or a Republican... it's the truth and you need to accept it. When instant runoff elections are implemented, then voting for a third party candidate won't be voting for the candidate you would least like to see if office, or when the election isn't close, like it is this year.
Alright, so, let's discuss the 2 actual candidates for Governor this year: Martha Coakley and Charlie Baker.
Say what you will, and I can say a lot about both, there are in fact issues that each has indicated their stances on and we should probably vote for them based on those stances.
Alright, so, let's discuss the 2 actual candidates for Governor this year: Martha Coakley and Charlie Baker.
Say what you will, and I can say a lot about both, there are in fact issues that each has indicated their stances on and we should probably vote for them based on those stances.
- Taxes
- Charlie Baker has proclaimed no new taxes. Congrats, you're the first Republican to take that vow. This means, however, that we're going to see cuts and/or a crumbling of resources (such as state highways, the MBTA, schools). No new taxes, by the way, also includes the reversal of the recent law that Question 1 would override: the updating of the gas tax based on inflation. This is an automatic increase in taxes, yes, but it's not an increase in relation to everything else.... in fact, the whole point is to keep the gas tax up to date with everything else rather than eroding away. See, most taxes are based on a percentage of something, rather than strictly a dollar amount per quantity of a thing consumed. Our income tax is a percentage of our income, sales tax is a percentage of the cost of your purchase... the gas tax doesn't change based on the cost of your purchase but rather is a fixed amount based on the amount of gas you're buying. If it were a percentage of the cost of the gas, that would be a different story and it would automatically increase over time with the increasing cost of gas (or decrease with a decrease in the cost of gas). For more thoughts on Question 1, please consider reading my post on it.
- Martha Coakley is somewhat reticent to say she's in favor of new taxes, but she's in support of the new gas tax law and has indicated that new taxes would most likely lean more toward the higher income residents... similar to a graduated tax. Graduated taxes are great for lower and middle incomes and are what made this country great for most of the 20th century. The degradation of the Federal graduated income tax can be tied to the blowing up of the difference in income between the top 1% and the lower 99%.
- Bottle Bill... simply put...
- Baker's against it because Business
- Coakley's in favor because it encourages recycling (currently 80% of deposit bottles are recycled vs 23% of non-deposit) and increases revenue to the state.
- (For a more comprehensive review of Question 2, please consider reading my post on it)
- Sick time for all
- Baker's against question 4 because Business
- Coakley's in favor because Workers Rights (and disputes the risk to business)
- (For a more comprehensive review of Question 4, please consider reading my post on it.)
- Schools
- Baker's in favor of charter schools... to the detriment of public schools
- Coakley's position is somewhat less exact and she seems to be doing a balancing act to attract more people (though it's been turning people off). She claims to be in favor of some balance between charter schools and improving public schools.
- Essentially, if you're in favor of charter schools and all other things don't matter to you, vote Baker, but if you're not as keen to rely on charter schools, vote Coakley
My suggestion? I know she may not be your top pick of everybody on the ballot, but vote Coakley. She may not be my kind of Democrat but she's definitely not as bad as Baker. One last thing to point out: Do you like how the state has been managed in the last 8 years? Deval Patrick is far to the left of both Coakley and Baker, so there's absolutely no harm in having a Democrat in the Governor's office while having Democrats in power in the House and Senate, especially not one closer to the center than Patrick.
To summarize my posts in the last couple weeks:
Governor: Vote Coakley
Question 1: Vote No
Question 2: Vote Yes
Question 3: Vote Yes
Question 4: Vote Yes
Sunday, October 26, 2014
2014 MA Ballot Questions: Question 1 - Should We Re-Introduce Shrinking Our Gas Tax
O.k., this is really what this question is about: The law has been updated to increase the gas tax along with CPI, aka, as consumer goods prices increase, so will the gas tax. So, instead of having the gas tax shrink in comparison to real dollars, the gas tax will keep up with real dollars, by one standard. A vote in favor of this question would stop this linkage and would return the gas tax to not being linked to anything and therefore lose its power every year, reducing its ability to keep up with the real cost to maintain roads and all other efforts the gas tax is there to assist.
So, why would anybody be in favor of screwing over our crumbling infrastructure? I honestly can't say. They say it's because they don't want to have taxation without representation... but the increase in this tax would be similar to the increase in your income tax as you increase how much you make. Don't understand how that could be? The gas tax is not based on the price of gas, it's a certain amount per gallon (currently 24 cents per gallon). If the price of a gallon of gas goes up, the tax on that same gallon doesn't increase. The general concept in our economy is that worker's compensation will increase as costs increase... at least that's what is supposed to happen when the system works well.
Let's try this a different way. Would it make sense if year-after-year, your office made more money off your work, but your pay didn't increase? How about if someone making 150,000 a year got a raise and started making 200,000 but their taxes didn't increase? So, why does it make sense that when gas taxes increase from $2.00 to $4.00 per gallon, that the tax on that same gallon remains 24 cents?
I understand that gas is expensive, I own a car and drive to work every day. But it just makes sense that we should have the gas tax increase with some form of tracking the real dollar, CPI being one of those methods.
One other thing to keep in mind, we in the US have not been maintaining our infrastructure. A crumbling infrastructure is no good to anybody. Catching up will require more than just a small effort and the gas tax isn't going to do it alone... but at least we can maintain this source, even if we're not willing to do all that it will take.
Please vote NO on Question 1.
So, why would anybody be in favor of screwing over our crumbling infrastructure? I honestly can't say. They say it's because they don't want to have taxation without representation... but the increase in this tax would be similar to the increase in your income tax as you increase how much you make. Don't understand how that could be? The gas tax is not based on the price of gas, it's a certain amount per gallon (currently 24 cents per gallon). If the price of a gallon of gas goes up, the tax on that same gallon doesn't increase. The general concept in our economy is that worker's compensation will increase as costs increase... at least that's what is supposed to happen when the system works well.
Let's try this a different way. Would it make sense if year-after-year, your office made more money off your work, but your pay didn't increase? How about if someone making 150,000 a year got a raise and started making 200,000 but their taxes didn't increase? So, why does it make sense that when gas taxes increase from $2.00 to $4.00 per gallon, that the tax on that same gallon remains 24 cents?
I understand that gas is expensive, I own a car and drive to work every day. But it just makes sense that we should have the gas tax increase with some form of tracking the real dollar, CPI being one of those methods.
One other thing to keep in mind, we in the US have not been maintaining our infrastructure. A crumbling infrastructure is no good to anybody. Catching up will require more than just a small effort and the gas tax isn't going to do it alone... but at least we can maintain this source, even if we're not willing to do all that it will take.
Please vote NO on Question 1.
Tuesday, January 1, 2013
Taxes in Massachusetts
In recent months, I've heard about Massachusetts' sales taxes a couple times. The complaint has been that Massachusetts charges taxes on the value of the item, not the discounted price (namely in regards to phones which are only bought at deeply discounted rates... name for me ANYBODY that has bought a phone for the actual not-discounted price please). The sales tax in Massachusetts is 6.25%. The sales tax jumped to this level from 5% in the last few years. Here's the thing... at 6.25%, we're actually tied with 3 other states for 13th place for the highest sales tax. Yes, that's right, 12 states have higher sales taxes than, Massachusetts, and 8 of those are higher than 6.8%. Of our surrounding states, only New Hampshire really stands out as having much lower sales tax rates (0% for most things, 9% for prepared foods). Connecticut is higher in general than Massachusetts with 6.35%. Rhode Island is higher in general than Massachusetts with 7% and even higher for processed foods at 8%. Vermont is lower in general, with 6%, but higher in some cities (additional 1%, making it 7% total) and has a 9% (or more in some cities) sales tax for prepared foods. You might think that New York is lower with its 4% rate, but in some cities in New York, the overall rate jumps to 8.875%. And all this discussion is over the sales tax on something that's generally around $600... I've heard of pinching pennies but $37.5 doesn't seem that big a deal to me.... admittedly, it's sometimes doubling the amount you're paying for the phone, but that's because the methodology of the sale of phones and phone coverage is broken, not taxes. Still, $37.5 in taxes doesn't seem too much for something you buy every couple years, or am I missing something.
On the other hand, the additional taxes on prepared food could easily have a larger effect on your wallet. Let's say you buy just $100/month of prepared foods per month, that's about 4 small lunches or 2 reasonably priced dinners per week and $1200/year. New Hampshire, Rhode Island and Vermont all charge at least a whole 1% more than Massachusetts. New Hampshire and Vermont each charge 9% or more. So on that food, you're being charged $108/year, $33/year more than in Massachusetts, or $66 every two years, which would cover the sales tax on your phone. And that's a pretty reasonable prepared foods budget. I know plenty of people who buy their lunch at the local lunch place every day and thus spend a lot more on prepared foods without even considering if they order out or go to a restaurant every now and then.
Oh, by the way, not to beat on New Hampshire too much, but they also have a 7% telecommunications tax. Yep, they charge you for telecommunications specifically, making them and Louisiana the only states to do so. I have yet to find any other state that has a tax on telecommunications at all, in fact. But sure, telecommunications isn't a big ticket item... not like many people spend $50-100/month on it, which would be $3.50-$7 per month that New Hampshire residents are charged that Connecticut, Massachusetts, New York, Rhode Island, and Vermont residents don't have to pay (that's $42-84/year, which, AGAIN, covers the tax on the phone you're buying FOR TELECOMMUNICATIONS).
So, just consider that next time you think about the high sales taxes in Massachusetts.
On the other hand, the additional taxes on prepared food could easily have a larger effect on your wallet. Let's say you buy just $100/month of prepared foods per month, that's about 4 small lunches or 2 reasonably priced dinners per week and $1200/year. New Hampshire, Rhode Island and Vermont all charge at least a whole 1% more than Massachusetts. New Hampshire and Vermont each charge 9% or more. So on that food, you're being charged $108/year, $33/year more than in Massachusetts, or $66 every two years, which would cover the sales tax on your phone. And that's a pretty reasonable prepared foods budget. I know plenty of people who buy their lunch at the local lunch place every day and thus spend a lot more on prepared foods without even considering if they order out or go to a restaurant every now and then.
Oh, by the way, not to beat on New Hampshire too much, but they also have a 7% telecommunications tax. Yep, they charge you for telecommunications specifically, making them and Louisiana the only states to do so. I have yet to find any other state that has a tax on telecommunications at all, in fact. But sure, telecommunications isn't a big ticket item... not like many people spend $50-100/month on it, which would be $3.50-$7 per month that New Hampshire residents are charged that Connecticut, Massachusetts, New York, Rhode Island, and Vermont residents don't have to pay (that's $42-84/year, which, AGAIN, covers the tax on the phone you're buying FOR TELECOMMUNICATIONS).
So, just consider that next time you think about the high sales taxes in Massachusetts.
Sunday, December 9, 2012
"tighten the belt" ... reverse the coin and see what it says
Alright, back to taxes and the conservative statement that in these times of need, government shouldn't borrow and should act like every family does and tighten its belt. I mentioned in my November 22nd post how ridiculous this statement is based on just the statement's premise and the role of government, but I'd like to investigate the opposite side of the statement.
If in times of need, government should tighten its belt just like families do, what happens in good times? I actually happen to agree with this side of the coin. Conservatives suggest that we should lower tax rates when times are good... should workers therefore tell their employers "hey, I can pay all my bills and still have some left over, you should pay me less?" That's a horrible idea, right? I completely agree.
In point of fact, in good times, families should invest in their future. For one thing, you want to invest for college, retirement, a new house, but in addition to those things, families should build up some savings so they are at least a little prepared for emergencies. The same is true for governments. Admittedly, they don't have children to put through college or have to retire, but they sometimes have to buy new buildings and vehicles and build infrastructure. These are investments governments have to make from time to time. In addition, governments should prepare for economic downturns by building a rainy day fund.
Massachusetts has a rainy day fund that has cushioned the blow of the recent recession, but the problem for Massachusetts is that the residents decided to lower taxes in good economic times instead of recognizing that those good times would not last forever and that we should plan for the future. In my last post, I commented that we did this and that we should restore our tax rates to pre-2000 levels (in 2012 MA tax rates are 5.3%, in 1999 they were 5.95%).
When times are average, we should make small investments in our future, just as families do. When times are good, we should make larger investments in our future. And when times are bad, we should use some of those investments in order to maintain services government provides to people, and even increase some. We should not cut taxes just because we are bringing in more money than we're spending, just as we shouldn't raise taxes in bad times just because we can't fund everything out of the current tax income. There must be a balance where we invest when we can and use those investments when we can't pay for everything with current tax income.
If in times of need, government should tighten its belt just like families do, what happens in good times? I actually happen to agree with this side of the coin. Conservatives suggest that we should lower tax rates when times are good... should workers therefore tell their employers "hey, I can pay all my bills and still have some left over, you should pay me less?" That's a horrible idea, right? I completely agree.
In point of fact, in good times, families should invest in their future. For one thing, you want to invest for college, retirement, a new house, but in addition to those things, families should build up some savings so they are at least a little prepared for emergencies. The same is true for governments. Admittedly, they don't have children to put through college or have to retire, but they sometimes have to buy new buildings and vehicles and build infrastructure. These are investments governments have to make from time to time. In addition, governments should prepare for economic downturns by building a rainy day fund.
Massachusetts has a rainy day fund that has cushioned the blow of the recent recession, but the problem for Massachusetts is that the residents decided to lower taxes in good economic times instead of recognizing that those good times would not last forever and that we should plan for the future. In my last post, I commented that we did this and that we should restore our tax rates to pre-2000 levels (in 2012 MA tax rates are 5.3%, in 1999 they were 5.95%).
When times are average, we should make small investments in our future, just as families do. When times are good, we should make larger investments in our future. And when times are bad, we should use some of those investments in order to maintain services government provides to people, and even increase some. We should not cut taxes just because we are bringing in more money than we're spending, just as we shouldn't raise taxes in bad times just because we can't fund everything out of the current tax income. There must be a balance where we invest when we can and use those investments when we can't pay for everything with current tax income.
Friday, December 7, 2012
Public Transportation in Massachusetts
Year after year, I hear that the MBTA is running a deficit... like that's a bad thing. First of all, keep in mind this is a government entity, not a for-profit business or even a non-profit organization. The purpose of this entity is not to make money or provide a service at no cost to anybody that doesn't use it. The purpose of government is to provide for the common welfare, and it's a good thing for us to have people have access to public transportation.... let's go into some of the reasons why:
First off, we have a general financing problem. It's not the T's fault that we spent a ton on the Big Dig. It's not the T's fault that we reduced our tax rates in MA. Don't burden the T with the debt. Instead, I would suggest we wipe the slate clean and have all debt for state agencies be consolidated into a general state debt. Start fresh so we can plan properly and respectfully according to the agencies' needs and our interest in the agencies' support of our communities.
Secondly, we shouldn't use a tax on gas to pay for an agency that is supposed to reduce our need for gas. That's just ridiculousness. The budget for the MBTA should come out of the general budget and should not fluctuate with how much people drive. This would further stabilize the agency, again assisting with being able to make planning possible.
One last item, which I'm sure I'll go into more detail later: Massachusetts tax rates are too damn low. We, yes we since it was a ballot measure, cut our state income tax in 1999. The plan was to reduce it from 5.95% (pre-2000) to 5%. We stopped the decreasing in 2002 until tax income met pre-set amounts at which point we would decrease it by .05% per year. Let's think about this for a moment. Why did we stop the reduction in the tax rate in 2002? Because the US economy faultered. In point of fact, the US economy was going through a pretty good period in the 1990's. Between 1992 and 2000, we had a GDP percentage increase of 5% or more 3 times as often as between 2000 and 2008, and we haven't even reached 5% since mid-2006. So, since we were in time of prosperity, it makes sense that we would be bringing in enough taxes to pay our bills, but we should be using those times to build up our rainy day fund for times like we've been going through every since, where GDP growth has been minimal if any. It should come as no surprise to anybody that we've been cutting our budget constantly for the last decade, and this is the reason, we saw some good growth years and thought they were average and therefore decided we could shrink our tax rate when in fact we should have been investing more and preparing for average and even lower than average years. My suggestion, therefore, is that the income tax should be raised back up.
- Environmental: It's true, to some extent, that public transportation is better for the environment than everybody using cars to get everywhere. I say "to some extent" here because it depends on how many people are using it. Definitely, when the busses and trains are crowded, it is much more efficient at people-moving, but what about when the bus is less than 1/5 full? So, rush-hour is definitely better for the environment and off-peak hours are sometimes worse. So this reason isn't as strong as advocates might claim, but it's still strong. Nevertheless, the findings from this claim would suggest that we should only have public transportation at busy times.... but that's only thinking from an environmental perspective, and there's more to public transportation than just environmental benefits.
- Help thy neighbor: Public transportation isn't super cheap anymore, but it's certainly cheaper than some alternative forms of transportation, so it can be seen as a common good in so far as it allows us to more cheaply move about.... but I would suggest this too is not the biggest reason to be in favor of public transportation.
- Traffic congestion and parking: Now we're talking! It's all well and good to say that public transportation is good for everybody and it's instinctual to me to believe so, but for the optimal explanation to someone who's not interested in being nice to people and worried about spending tax dollars on things, here's the big explanation. As you replace cars on streets with people walking/biking/being driven to public transportation, you reduce traffic and you reduce the amount of parking spaces you need everywhere. When I think about people from Boston or Cambridge coming to Davis Sq. for the evening, I'm very thankful that not everybody has to park there and that many people come by bus or train. It's worth a little of my money to help this take place, even if I'm not using the public transportation myself.
First off, we have a general financing problem. It's not the T's fault that we spent a ton on the Big Dig. It's not the T's fault that we reduced our tax rates in MA. Don't burden the T with the debt. Instead, I would suggest we wipe the slate clean and have all debt for state agencies be consolidated into a general state debt. Start fresh so we can plan properly and respectfully according to the agencies' needs and our interest in the agencies' support of our communities.
Secondly, we shouldn't use a tax on gas to pay for an agency that is supposed to reduce our need for gas. That's just ridiculousness. The budget for the MBTA should come out of the general budget and should not fluctuate with how much people drive. This would further stabilize the agency, again assisting with being able to make planning possible.
One last item, which I'm sure I'll go into more detail later: Massachusetts tax rates are too damn low. We, yes we since it was a ballot measure, cut our state income tax in 1999. The plan was to reduce it from 5.95% (pre-2000) to 5%. We stopped the decreasing in 2002 until tax income met pre-set amounts at which point we would decrease it by .05% per year. Let's think about this for a moment. Why did we stop the reduction in the tax rate in 2002? Because the US economy faultered. In point of fact, the US economy was going through a pretty good period in the 1990's. Between 1992 and 2000, we had a GDP percentage increase of 5% or more 3 times as often as between 2000 and 2008, and we haven't even reached 5% since mid-2006. So, since we were in time of prosperity, it makes sense that we would be bringing in enough taxes to pay our bills, but we should be using those times to build up our rainy day fund for times like we've been going through every since, where GDP growth has been minimal if any. It should come as no surprise to anybody that we've been cutting our budget constantly for the last decade, and this is the reason, we saw some good growth years and thought they were average and therefore decided we could shrink our tax rate when in fact we should have been investing more and preparing for average and even lower than average years. My suggestion, therefore, is that the income tax should be raised back up.
Thursday, November 22, 2012
The Role of Government
There's been a lot of talk lately of balancing the budget. This should lead to a discussion of the role of government, but it hasn't. Instead it has led to a lot of people saying that the Government should handle its budget the same way that a family or a business would. My answer to this is that it is the reverse way and these people haven't considered the role of government in our society at all. I would contend that government should spend more than it takes in when the economy is faltering and reduce its debt in times when the economy is booming and to reach this conclusion, there are a number of factors, each having to do with the role of government, so let's discuss that role:
~Protect its Citizens from External Forces~
This task does not change based on the economy. Military spending is not necessarily uneffected by the economy but the requirement for a military to be present to defend us remains unchanged and the amount of money required to continue the required defense is unchanged. As a result, in relation to the economy, the government is spending more in bad times and less in good times, though the exact dollar amount does not change except as a result of
~Provide for the Common Welfare~
This can be split into multiple parts, and most require not simply sustained funding in bad economic times, but enhanced funding:
But, surely government shouldn't be deficit spending when families and businesses can't afford to. Surely government must play by the same rules. You're forgetting that government is not a business nor a person. Government is specifically there to help people and businesses. As a result, government is in a unique position to be able to deficit spend to prop up people and businesses and general demand for services. If government acts as a business, the cycle of recession just increases in intensity. Instead, government SHOULD deficit spend, and do so to a dramatic extent, to offset the loss in demand for services created by businesses shrinking and family budgets disappearing. This doesn't mean we're creating a class of citizens who will never work, it means that we're preventing the economy from falling further into depression so that we will rebound and have more jobs so people have the opportunity to work instead of being forced not to because there are no jobs. By firing teachers and canceling/postponing public works projects, we're just hurting ourselves. By putting public works projects front and center and not firing teachers and other public servants, we're not only stabilizing the economy but improving our national situation.
Yes, the debt is a problem, but a flailing economy won't be able to sustain a smaller debt. Instead, a robust economy must be created so that when we're doing well, we can begin decreasing the debt. This was a lesson we learned under Clinton and failed to understand under W. Bush.
Corporations are not people, and governments are not corporations or families. Let's end the simplification that would suggest that all entities are the same, because simply put, they're not.
~Protect its Citizens from External Forces~
This task does not change based on the economy. Military spending is not necessarily uneffected by the economy but the requirement for a military to be present to defend us remains unchanged and the amount of money required to continue the required defense is unchanged. As a result, in relation to the economy, the government is spending more in bad times and less in good times, though the exact dollar amount does not change except as a result of
~Provide for the Common Welfare~
This can be split into multiple parts, and most require not simply sustained funding in bad economic times, but enhanced funding:
- Safety - To some degree, you might think that fire fighters and police do not need to have increased funding in poor economic times, fires don't increase in commonality and intensity because people don't have jobs. On the other hand, crime tends to increase, so maybe a few more police officers might not be a bad thing. On the whole though, it seems like funding for safety doesn't need to be increased, but it certainly shouldn't be decreased in poor economic times.
- Health - People without jobs tend not to have healthcare, so public funding for health related services is in higher demand in a recession than when we're seeing low unemployment.
- Parks and Recreation - This is an interesting one. Parks don't need more service when people don't have jobs, but there is a need to help keep teens being productive rather than disruptive. Public recreation services play a role in this, as do non-profit and for-profit organizations such as day-care or camps, but I would suggest that increased funding is essential here.
- Protection of the General Welfare - And by this, I mean protection of people against starvation and cold and the like. This is where food stamps, medicare, medicaid, and social security come in. This portion of the budget, by definition, increases in poor economic times. There is also an argument to be made that by providing some capital to those who are not making money on their own is good for the economy because it increases demand, or at least keeps it from dropping as drastically as it might otherwise.
- Economic promotion - Here's the thing that most people forget. Promotion of the national economy is a big part of what the Government does. It's why we have public training programs and build roads and bridges. Here's the key... this one, this one right here is the biggest reason why we should expect increased funding in poor economic times. In these times, we can expect companies to shrink their work force as profits decline. These newly unemployed citizens will decrease demand, even if they get some level of help from the government, and because of this diminished demand, companies' profits will fall. Because companies' profits are shrinking, they'll shrink their workforce. See a pattern here? Corporations won't change this cycle on their own. Instead, it is the government's role in recessions and depressions to prop up the economy a bit by hiring more people, which then has a similar reverse cyclical force (more people are working->more demand->people hired to supply for that demand). This principle of creating more demand than you're creating supply is the foundation of trickle down economics. Simple economics (the kind you learn in MacroEconomics or Economics 101) state that if a government spends more than it takes in, it will improve demand because citizens will have more money to spend.
But, surely government shouldn't be deficit spending when families and businesses can't afford to. Surely government must play by the same rules. You're forgetting that government is not a business nor a person. Government is specifically there to help people and businesses. As a result, government is in a unique position to be able to deficit spend to prop up people and businesses and general demand for services. If government acts as a business, the cycle of recession just increases in intensity. Instead, government SHOULD deficit spend, and do so to a dramatic extent, to offset the loss in demand for services created by businesses shrinking and family budgets disappearing. This doesn't mean we're creating a class of citizens who will never work, it means that we're preventing the economy from falling further into depression so that we will rebound and have more jobs so people have the opportunity to work instead of being forced not to because there are no jobs. By firing teachers and canceling/postponing public works projects, we're just hurting ourselves. By putting public works projects front and center and not firing teachers and other public servants, we're not only stabilizing the economy but improving our national situation.
Yes, the debt is a problem, but a flailing economy won't be able to sustain a smaller debt. Instead, a robust economy must be created so that when we're doing well, we can begin decreasing the debt. This was a lesson we learned under Clinton and failed to understand under W. Bush.
Corporations are not people, and governments are not corporations or families. Let's end the simplification that would suggest that all entities are the same, because simply put, they're not.
Thursday, November 8, 2012
compromise compromise, everywhere, but no sincerity in sight
O.k., election results are in, except for Florida for the Presidential race, because they've only had over 36 hours to tally up the votes and figure it out, not like they weren't expecting to be important or anything, just the state with the most electoral votes of the battleground states. But I digress. This post is not about the ridiculousness that is Florida, it's about the ridiculousness that is the Republican right.
Boehner came out and announced that "we're" eager for the President to lead, that "we" want him to succeed, and that "we're" willing to negotiate within limits. The "we" could refer to the general population of the U.S., but I think it's more likely that he's speaking for Republicans in the House. Let's take him at his word for a minute. He's saying that Republicans are eager for Obama to lead (which he's been doing) and that they'll consider tax increases, but only if the tax increases are not only on the most wealthy. I'm impressed that he actually came out and said it... the Republicans are unwilling to raise taxes unless they can raise taxes on the poor (Scott Brown admitted to this and Massachusetts kicked him out of office). That being said, fine, let's just repeal the W. Bush tax cuts. They helped the rich more than they helped the poor, but they did help the poor somewhat, so Republicans should be fine with it. Admittedly, Obama said he wouldn't raise taxes on those making less than $250k, but that's compromise for ya, sometimes you have to break your campaign promises to avoid the precipice.
That being said, Boehner negotiated with the President before in 2011 and couldn't deliver his end. That's how we got here, remember? Boehner and the President and Reed negotiated the "grand compromise", Boehner came back the next morning and said "nope, can't do it, the Republicans in the House won't accept the compromise, they insist on having it completely their way."... so, with the Tea Party backed ridiculously far right remaining in control of the House, should we really take Boehner at his word that he can negotiate for these wackos? They've just been re-elected, they'll be feeling that their constituents have affirmed their standing firm and not negotiating. They're probably looking at Romney's defeat and saying "he wasn't one of us, that's why he lost, if he had been a true conservative, he would have won." Without having learned anything, with everything the same as it was a year ago, I see no reason to believe Boehner will have any more ability to pull his side to the negotiating table with him.
Election's over, bullshit keeps flowing.
Boehner came out and announced that "we're" eager for the President to lead, that "we" want him to succeed, and that "we're" willing to negotiate within limits. The "we" could refer to the general population of the U.S., but I think it's more likely that he's speaking for Republicans in the House. Let's take him at his word for a minute. He's saying that Republicans are eager for Obama to lead (which he's been doing) and that they'll consider tax increases, but only if the tax increases are not only on the most wealthy. I'm impressed that he actually came out and said it... the Republicans are unwilling to raise taxes unless they can raise taxes on the poor (Scott Brown admitted to this and Massachusetts kicked him out of office). That being said, fine, let's just repeal the W. Bush tax cuts. They helped the rich more than they helped the poor, but they did help the poor somewhat, so Republicans should be fine with it. Admittedly, Obama said he wouldn't raise taxes on those making less than $250k, but that's compromise for ya, sometimes you have to break your campaign promises to avoid the precipice.
That being said, Boehner negotiated with the President before in 2011 and couldn't deliver his end. That's how we got here, remember? Boehner and the President and Reed negotiated the "grand compromise", Boehner came back the next morning and said "nope, can't do it, the Republicans in the House won't accept the compromise, they insist on having it completely their way."... so, with the Tea Party backed ridiculously far right remaining in control of the House, should we really take Boehner at his word that he can negotiate for these wackos? They've just been re-elected, they'll be feeling that their constituents have affirmed their standing firm and not negotiating. They're probably looking at Romney's defeat and saying "he wasn't one of us, that's why he lost, if he had been a true conservative, he would have won." Without having learned anything, with everything the same as it was a year ago, I see no reason to believe Boehner will have any more ability to pull his side to the negotiating table with him.
Election's over, bullshit keeps flowing.
Thursday, November 1, 2012
Taxes - The Options We Face in Election 2012
Taxes are good, they aren't bad. They are the way we help protect our common interests and pay for the common good. Redistribution of wealth is another way of talking about this and is generally viewed in a negative connotation. Redistribution of wealth, however, is how we move wealth from those that are working to those who are retired in a fashion we have benefited from since Social Security was passed into law. Redistribution of wealth is what happens when you pay firefighters and teachers out of a common chunk of change. Redistribution of wealth is how we pay for our military and the salaries and healthcare of those we elect to office. Extreme redistribution of wealth may be more what you're concerned about, so let's talk about what's on the table.
Obama wants to raise taxes on the wealthy to ~gasp~ what they were before W. Bush took office. This is not a huge increase in taxes. It's not even close to what the taxes were 20 years before W. Bush took office. Before Reagan took office, you have to go back to 1925 to find the last time we had the top tax bracket with a rate as low as the one Obama wants to implement. In fact, you'd have to go back that far to find a time when the top bracket was less than 1.5 times the rate Obama is proposing. That's right, from 1925-1981 we had the top bracket being taxed anywhere from 63% to 94% on the money within that bracket.... And there's where the tricky part is.... 63% to 94% doesn't mean that their income is taxed at 63% to 94%, it means that the money they earn over a certain amount (the amount that puts them into that bracket) is taxed at that rate.... the amount below is taxed at other rates, just like everyone. If I make $50,000 and you make $40,000, and the tax bracket break point is at $40,000, then I'm going to pay the same taxes you do, plus $10,000 times whatever the new bracket's rate is. This is, of course, after all deductions are taken out. Deductions and credits are how we say "you are doing something that we want you to do and for which we feel your burden should eased a bit," such as purchasing your primary residence (morgage interest deduction), having kids (larger standard deduction), or paying for college (various options), essentially, we are making it more financially viable for those who make less to take these steps we consider to be beneficial to the greater good.
By contrast, Romney wants to reduce the tax rates of everybody and then remove deductions to pay for those tax rate changes. As mentioned before, deductions and credits are how we help people improve their lives by lessening the financial impact of certain choices, so what Romney is saying is that he wants to reduce taxes to make the tax code simpler and increase the financial cost of certain activities. When it comes time to name these certain activities, he's completely unwilling to do so, but the sheer cost of the reduction in tax rates essentially forces the removal of deductions and credits to be a larger burden for the lower and middle classes than to the upper class.
These are the choices we face. Mind you, with a Republican (and very far right-wing)controlled House and a nearly even split Senate, it's hard to believe that Obama's tax increases will pass, though much easier to believe Romney's tax cuts will likely pass by with cheerful shouts of glee, deficit-hawkishness-be-damned.
Obama wants to raise taxes on the wealthy to ~gasp~ what they were before W. Bush took office. This is not a huge increase in taxes. It's not even close to what the taxes were 20 years before W. Bush took office. Before Reagan took office, you have to go back to 1925 to find the last time we had the top tax bracket with a rate as low as the one Obama wants to implement. In fact, you'd have to go back that far to find a time when the top bracket was less than 1.5 times the rate Obama is proposing. That's right, from 1925-1981 we had the top bracket being taxed anywhere from 63% to 94% on the money within that bracket.... And there's where the tricky part is.... 63% to 94% doesn't mean that their income is taxed at 63% to 94%, it means that the money they earn over a certain amount (the amount that puts them into that bracket) is taxed at that rate.... the amount below is taxed at other rates, just like everyone. If I make $50,000 and you make $40,000, and the tax bracket break point is at $40,000, then I'm going to pay the same taxes you do, plus $10,000 times whatever the new bracket's rate is. This is, of course, after all deductions are taken out. Deductions and credits are how we say "you are doing something that we want you to do and for which we feel your burden should eased a bit," such as purchasing your primary residence (morgage interest deduction), having kids (larger standard deduction), or paying for college (various options), essentially, we are making it more financially viable for those who make less to take these steps we consider to be beneficial to the greater good.
By contrast, Romney wants to reduce the tax rates of everybody and then remove deductions to pay for those tax rate changes. As mentioned before, deductions and credits are how we help people improve their lives by lessening the financial impact of certain choices, so what Romney is saying is that he wants to reduce taxes to make the tax code simpler and increase the financial cost of certain activities. When it comes time to name these certain activities, he's completely unwilling to do so, but the sheer cost of the reduction in tax rates essentially forces the removal of deductions and credits to be a larger burden for the lower and middle classes than to the upper class.
These are the choices we face. Mind you, with a Republican (and very far right-wing)controlled House and a nearly even split Senate, it's hard to believe that Obama's tax increases will pass, though much easier to believe Romney's tax cuts will likely pass by with cheerful shouts of glee, deficit-hawkishness-be-damned.
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