kens*ten: a political blog

Archive for the ‘Taxes’ Category

A Political Ad That Says it All

Forget the grainy black and white photos, out-of-context quotes and menacing background music of the typical attack ad.  This is the type of political ads we really want to see. 

So, get busy Republicans.

© 2010 by kens*ten. All rights reserved.

Vote Yes on I-1053 / “I’m Government When You’re Not Watching”

Written by kensten

10/11/2010 at 6:36 pm

Posted in Election 2010, Taxes

Even More Trouble in Bell

Bell City Council: Not So Public Servants

As if the good people of Bell, California didn’t have enough trouble.

In July, the Los Angeles Times disclosed that officials in this poor Latino town of 37,000 residents were among the highest paid local officials in the US. The city manager (2009 salary: $787.637), the assistant city manager ($376,288) and the police chief ($457,000) were forced to resign amid public backlash over their lavish compensation.

As a result of the negative publicity, the State of California required local governments to post payroll details on their websites. The City’s director of administrative services  and director of general services both are paid over $420,000. The director of community services and the deputy city engineer were probably chagrined to learn they were paid just over half — $240,000 plus each — of  their colleagues.

The Police Department was no stranger to the municipal largesse. Two police captains are paid over $235,000 per year. A police lieutenant is paid just under $230,000. Two police sergeants are paid over $165,000. In total, forty-five city employees are currently paid salaries over $100,000. Meanwhile, Bell is one of the poorest communities in Los Angeles County.

But, this tale of greed at the public trough doesn’t end with ridiculous salaries.

KTLA-TV reports that city officials overcharged Bell residents nearly $3 million in property taxes. An audit by the State Controller  found the city raised the municipal pension portion of the property tax level nearly 48% from 2007 to 2010. The increases were in violation of state law which froze those rates at 1983-84 levels.

In another development, the Los Angeles Times reports that fifty city employees received “loans” from city funds. For example, the former city manager received loans totaling $160,000 due to “financial difficulties”  despite his $787.000 salary. The assistant city manager received loans of $200,000. Other employees received loans to assist them in purchasing homes, and as Bell has no city residency requirement, most were homes outside of the city.

It seems clear we haven’t reached the bottom of this cesspool yet.

© 2010 by kens*ten. All rights reserved.

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Written by kensten

08/18/2010 at 12:49 am

Welcome to the United States of Greece

The International Monetary Fund (IMF) released a report on the American financial situation in July which garnered little public attention — until this week. Each year the IMF collects and reviews economic data and then meets with government policy makers to provide their recommendations. 

This year, buried within bureaucratic econo-speak the IMF provided a rather stark wake-up call:

The United States is facing major fiscal and generational imbalances. The combination of high fiscal deficits, an aging population and rapid growth in government-provided healthcare benefits have put the fiscal accounts on an unsustainable path. (emphasis added)

Translation from econo-speak: The US government consistently spends more than it collects in taxes, and promises even more money for benefit programs it can’t possibly afford.

Since we can’t do anything about the population aging (short of death panels), the alternatives are cutting spending and ending the government-run healthcare benefits. Hmm, sounds like the Republican agenda.

The IMF Report continues:

The main drivers of the fiscal gap are rising healthcare costs that under current law will boost mandatory spending to above 18 percent of GDP by 2050. Since the federal government has historically collected about 18.4 percent of GDP in tax revenues, this means that mandatory programs may absorb all federal revenues sometime around 2050, or as early as 2026 when the cost of servicing the debt is added. (emphasis added)

 
Translation: The benefit programs the government has promised will soak up every single dollar the government collects in taxes as early as 2026 — in sixteen short years.

And now, the IMF’s coup de grâce:

The fiscal adjustment would entail significant adjustments in taxes and/or transfers.

We estimate an adjustment between 7 ¾ and 14 ½ percent of every future year’s GDP to restore sustainability and fiscal equity. (emphasis added)

Translation: Either the US government has to raise taxes in an amount equal to 7.75 to 14.5% of GDP or else cut benefits by a similar amount. Keep in mind, that the IMF found the US government already collects revenues equal to 18.4% of GDP.
 
Therefore, the IMF recommends that tax increases or benefit cuts of 43% (7.75/18.4=0.4305) to 79% (14.5/18.4=0.7880) are required to bring us back to even.
 
How does that “Recovery Summer” feel now?
 
In a Bloomberg op-ed, Boston University economics Professor Laurence Kotlikoff writes:

So the IMF is saying that closing the U.S. fiscal gap, from the revenue side, requires, roughly speaking, an immediate and permanent doubling of our personal-income, corporate and federal taxes as well as the payroll levy set down in the Federal Insurance Contribution Act.

Is the IMF bonkers? No. It has done its homework. (emphasis added)

Even assuming the best case scenario (7.75% GDP adjustment) and splitting the difference – equal parts tax increases and spending cuts — results in a 23.5% tax rise along with a similar sized benefits cut.

And this isn’t a one-time deal. The IMF is talking about an annual (i.e. permanent) commitment because we still have to pay down the huge structural debt.

Given the state of American politics, what is the probability of elected officials prescribing this foul-tasting fiscal medicine?

Answer: None at all.

Thanks to the Obamanomics response to the “Great Recession”, the United States faces the same future as Greeceminus the European Union bailout.

© 2010 by kens*ten. All rights reserved.

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Written by kensten

08/11/2010 at 8:00 pm

Dem News Flash: Bush Cut Everyone’s Taxes

I'm gonna lower all y'alls taxes.

Some Democrats have made a fascinating discovery: It turns out President George W. Bush (R-TX) cut taxes for everyone — and not just “the wealthiest Americans”.  

Those tax cuts passed in the economic downturn following the 9/11 terror attacks are set to expire. And, three Senate Democrats don’t want the tax cuts to expire. However, Senator Harry Reid (D-NV) and Representative Nancy Pelosi (D-CA) don’t agree. Neither does President Barack Obama (D-IL).  

The Bush Tax Cuts, much derided by the Obama administration and the press, lowered tax rates on all federal income tax payers. For example, the lowest bracket of 15% was lowered to 10%. If Congress doesn’t re-authorize the tax cuts the rate will revert to 15% — a 50% increase. These are families making under $35,000 per year, the “hard-working Americans” the Dems are always claiming to protect.  

The Bush Tax Cuts eliminated the marriage penalty, cut the tax rate on small business owners who pay much of their federal burden in the form of income taxes, and increased the child tax deduction. The capital gains tax cut on investment profits helped millions of retirees. All helped families and seniors — not fat cats. Each of these improvements in the tax code will expire at year-end.  

The Bush Tax Cuts were a true stimulus to the post-9/11 economy. Most liberals are pretty bad at math in that they view the economy as a “zero sum” game. To them everything is a transfer of dollars from one hand to another. In other words, they totally discount economic growth. And this is despite many decades of data which indicate that capitalism doesn’t transfer dollars — it multiplies them.  

From the day Bush proposed the tax cuts, Liberals predicted doom and gloom for the American economy. Instead, with more money in their pockets working Americans bought more goods — and their employers invested in order to make those goods — thereby growing the economy. In fact, federal tax revenues DOUBLED in the four years after the Bush Tax Cuts took effect!  

On September 12, 2008, then presidential candidate Barack Obama said:  

I can make a firm pledge. Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax. Not your payroll tax. Not your capital gains taxes. Not any of your taxes.  

The payroll tax increases for ObamaCare start in January 2011. If the Bush Tax Cuts are permitted to expire, this tax hike double whammy will become painfully obvious to all those who still have jobs and pensions in April 2011.  

So that promise is on its way to the trash bin of American political history. It may prove to be Obama’s “Read My Lips” moment.  

© 2010 by kens*ten. All rights reserved.  

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Obama: “No Tax Increase” Pledge   

Written by kensten

07/31/2010 at 1:10 am