Thursday, October 27, 2011

Herman Cain's 999 Plan, Part 5: "I don't trust those businesses..."

Big businesses are just going to take unfair advantage of the new tax code. How do we know Warren Buffet and Wall Street won't just cheat the new system?
There will always be people who are trying to game the system. But trying to cheat the system right now is like trying to cheat at a game of Monopoly with real $5000 dollar bills: The stakes are high, and the game is complicated enough that a clever player just might get away with it. Switch to the 9-9-9 plan, and you've lowered the stakes, and made the rules as simple as tic-tac-toe. Sure, you just know someone is going to try to cheat, but it's harder to see how they'll get away with it.

You just want to help the rich, and step on the poor.
Cut that out, we're trying to have a reasonable conversation here. Nobody sane wants a tax code that helps the rich at the expense of the poor. But that doesn't mean that the only other choice is a system that punishes success. Let's have a simple tax code with a simple purpose: Collecting only the necessary funds to pay for the expense of government. I do want to help the poor, but there are thousands of tools that are better suited for that task. Use the right tool for the job if you want to get the job done right.

Okay, but how do we really know big companies won't just pocket the money, instead of lowering prices?
That's a fair question. Let's deal with it analytically. Remember the spreadsheet from the last article? By replacing the current 35% corporate tax with a 9% corporate tax, my subtotal before sales taxes goes from $208.55 to $172.43. That's $36.12 in savings before taxes, and $21.67 after all sales taxes are figured in.

To try out the "greedy store" scenario, I've copied all my calculations over to a new tab. I've added a new field to test how much the greedy store owner can add into the price, before corporate tax and sales tax, until I'm back to my original bill. With a little bit of experimentation, I see that the greedy store owner could deprive me of my $21.67 in savings, but he's only going to get $18.42 out of the deal, at most, and that's only if he limits his price rise to items that are taxed at the lowest state/local rate. Every dollar he doesn't let me keep is a dollar for which he has to pay some tax.

But still, what if he does keep the money? That money still isn't going to end up in Scrooge McDuck's money bin. Amazingly successful businesses don't increase their success by hoarding money, but by using it. How might they use it? Let me count the ways.

Maybe the store owner wants to give his overworked and underpaid employees a bonus. With the double shifts his staff has been working since the layoffs in 2007, they probably deserve it. Or maybe the store owner wants to expand the business. That means new hiring, and we all want unemployment to go down, right?

But let's say that we're dealing with a real greedy corporate fat-cat here, someone who's only interested in grabbing all the money he can, and increasing the value of his stock portfolio. As long as he's not breaking the law, I can live with that! I'd like to get the stock market out of the tank, maybe then we could shore up a few firefighter and teacher pensions, and help my own 401k while we're at it. If he is breaking the law, let's deal with that in the criminal justice system, not the tax code.

Image from Wikimedia
Here's the important thing: Prices go up and down all the time. When businesses are feeling the pinch, and the cost of production has gone up, then prices go up. When a company wants to engage in a good old-fashioned price war with its rivals, prices go down as far as the cost of production will allow. By changing the tax code, we've reduced the "pinch", and introduced more leeway for price lowering. When companies can produce more for less, prices can go down and productivity can go up. That's the power of microeconomics for you.

Monday, October 24, 2011

Herman Cain's 999 Plan, Part 4: Turning the math up to "eleven"

Since I wrote my first article, I've had some questions and concerns posed to me about my example. I like questions and concerns! It gives me a reason to do more writing!

My friend John wrote to me:
Another problem lies in the sales tax structures of the various states. An erroneous assumption in your calculations is that Georgia does not charge state sales tax on groceries. Only local sales taxes are charged on groceries and I believe pharmaceuticals.
Florida has no sales tax charged whatsoever on groceries or prescription drugs. Varying state tax structures, to me, infinitely complicate the whole picture of whether 999 is good or bad when integrated into the existing taxes that will not go away.
Here's the good news: Unlike Obamacare, we don't have to pass this bill to know what's in it. We can research, we can calculate, and we can prove whether this undertaking is really complicated beyond measure.

My first task will be to research existing sales tax structures in both Georgia and Florida. I will take a real receipt from my own real grocery shopping, with goods taxed at two rates, and replicate the sales tax calculation in a spreadsheet. Finally, I will use the spreadsheet to show a post-9-9-9 cash register transaction.

My "pass/fail" standard for the test is this: I am assuming that grocery stores can handle the pre-9-9-9 register transaction. The post-9-9-9 register transaction must have a level of complication no worse than the pre-9-9-9 transaction.

My grocery store receipt
Where do I start? With Georgia and Florida sales taxes. From the web, from a round of shopping, and from talking with my uncle in Florida, I have learned:

  • Georgia has a 4% state sales tax which applies to all non-grocery, non-pharmaceutic items. Individual  jurisdictions may add sales taxes which apply to everything, including food and medicine. In my area, I've got a 2% "everything" sales tax, which results in a 6% "regular" tax rate and a 2% "food and medicines" tax rate. This is not considering any taxes on alcohol, tobacco, or other "specialty" goods, but expanding from 2 tax rates to 3 or more should be a trivial task, mathematically.
  • Grocery stores are generally the only places which will have to deal with different multiple sales tax rates today. Grocery store registers are tied to databases which provide information on each bar code scanned, including price, item name, and tax category. The tax category is visible on the receipt, in the far-right column: Each item has a category of "B", meaning the 2% tax rate should be applied, or "T", meaning the full 6% tax rate.
  • Florida has more tax categories, but the math is the same. The method of calculating tax does not change. Only the percentages are different.
The math test I performed can be viewed in this Google Docs spreadsheet. If you follow the link and check it out, here's what you'll see:
  1. In columns A and B, I've listed all of the items on my receipt, with the receipt's tax category. "B" indicates a grocery item, "T" indicates a non-grocery item.
  2. The "embedded" tax on items (which comes from the amount that companies have to charge in order to pay their federal taxes) will drop, regardless of the sales tax rate of each item.
  3. After the 9-9-9 tax is implemented, the variables have changed (new subtotal, new point-of-sale tax rate), but the formulas are the same.
If you're still a skeptic, I'd encourage you to copy the spreadsheet and play with the numbers yourself. Adding and changing tax rates is as easy as copy-and-paste.

Are state sales taxes a mess? They can be, depending on your state, county, and city. Does 9-9-9 fix that? No, you'll need to take that up with your own state legislatures. The only thing I can demonstrate here is that 9-9-9 doesn't make the sales tax problem for any state or local jurisdiction more complicated than it is already. If a grocery store or other retailer can handle the existing tax laws, this is a change for no worse, and quite possibly for the better.

Continued in Part 5...

Friday, October 21, 2011

Herman Cain's 999 Plan, Part 3: Aren't sales taxes regressive?

But aren't all sales taxes regressive? 

 Funny, I never hear anyone bring this one up when the state or local governments are trying to get us to approve the SPLOST, or penny sales taxes, or any of those other "temporary but somehow never dying" sales taxes to pay for all of those local projects they love. When politicians want to put a new sales tax on us, the word "regressive" is never heard. It's only when someone proposes getting rid of a complicated income tax system that no one likes anyway that this word even comes up.

Anyway, I want to be careful with this topic. "Regressive" is a politically-charged word. Let's make sure we establish what it means, first. According to Investopedia, a regressive tax is "a tax that takes a larger percentage from low-income people than high-income people". It may be just me, but that doesn't sound like a very precise definition. A larger percentage of what?

Does this mean that, in a regressive tax, a poor person pays more than a rich person for the same stuff? That would definitely be bad. But then, the page goes on to say this:
A regressive tax is generally a tax that is applied uniformly. This means that it hits lower-income individuals harder....
Some examples include gas tax and cigarette tax. For example, if a person has $10 of income and must pay $1 of tax on a package of cigarettes, this represents 10% of the person's income. However, if the person has $20 of income, this $1 tax only represents 5% of that person's income. 
Sales taxes that apply to essentials are generally considered to be regressive as well because expenses for food, clothing and shelter tend to make up a higher percentage of a lower income consumer's overall budget. In this case, even though the tax may be uniform (such as 7% sales tax), lower income consumers are more affected by it because they are less able to afford it.
So,  following this logic, regressive means... everyone gets equal treatment. It's unfair, because it treats everyone the same. If that's what "regressive" means, I don't think I particularly care whether a tax is "regressive". I would rather have fair and equal.

Diving a bit deeper into that analysis, there are a number of assumptions. ""Expenses for food, clothing, and shelter tend to make up a higher percentage of a lower income consumer's overall budget." Well, that's basically a true statement. But usually sales taxes don't apply only to essential expenses. It will apply to all new goods, essential or otherwise. As people get richer, they do tend to spend more money on all those nice little non-essential goods. Also, as my wealth increases, my spending on essential goods may very well increase, as I decide that I can afford nicer food, maybe a restaurant every now and again, better clothes, and maybe even a cleaning service to keep my shelter nice. (I'd love to be able to upgrade my shelter, but we're in a housing slump, and I can't sell the one I've got.) This means that as I have more money, and my spending goes up... drum-roll please... I pay more taxes.

Also, to some degree, the 9-9-9 tax gives everyone some control over how much they pay in taxes. Sure, you can't choose not to buy food, clothing, and shelter... but you can choose to get your clothing and shelter used instead of new, which means tax-free. Families at the poverty line are much more likely to shop consignment than families with private jets. Here's what I'm saying: You can't control your income. You can control your expenses, to a degree. This means that at all levels of income, you have more power over how much you pay under a consumption tax, than under an income tax. Is that "regressive"?

This "regressive" and "progressive" categorization of taxes seems to me to be straight from Marx and other various class warfare ideologies, and it's very disappointing to me that so many of the Republican candidates for President would hang their hats on it.

Continued in Part 4....

Thursday, October 20, 2011

Herman Cain's 999: Testing the Math, part 2

Test 2: But what about that 9% income tax? Won't that hurt poor people who aren't paying income tax now?

One concern raised is that the flat 9% income tax will hurt people who aren't taxed right now. Let's try those numbers out, again keeping the assumptions of the tax calculator intact.

Let's take a household of 4 (same as mine), earning and spending at the poverty level. That is, every dollar they earn in a year, they have to spend. Just to make it worst-case-scenario, let's say that everything they buy is new, so everything they buy is taxed. Most sensible families at the real poverty level are buying used wherever they can, which means the tax doesn't touch everything they buy, but let's take this worst case just for the sake of argument. The latest data I have says that in 2005, this family would have earned (and spent) $25,660. Let's say that this family lives in a state with 0% sales tax, just to keep that part of the math simple. Finally, let's assume that their combined federal and state income tax bill is $0 per year. (With both me employed and my wife hit with the self-employment tax, that's what seems to happen for us often, more or less.)

Using the same ratios and methods as before, with $25,660 in annual spending under our existing tax code, our family will only have to spend $23,125.10 in goods plus sales taxes in a year. Ah, but now the income tax! With 9% of $25,660 we get  $2,309.40 in income taxes. That means only $25,435.50 of their original $25,660 is still coming out of pocket. That's a $224.50 not spent over a year. That's within 0.875% of our original "break-even" point, and erring on the side of savings.

Plus, we're again assuming that this family is spending every dime they have on new goods. Every dollar they spend on used items is not going to get hit with the sales tax. So, let's say that $5,000 of their $23,125.10 in spending is for a used car. That's $450 in sales taxes that they won't have to pay. Looks better and better.

In other words, under the old tax code, if I want to reduce my tax hit, I need to hire a tax accountant, spend money on tax software, and/or spend days and days working through paperwork. With the 999 Plan, if I want to reduce my tax hit, all I have to do is learn how to spend carefully and wisely, the way my parents and grandparents did. That doesn't sound so bad, does it?

Update: The news gets better and better. In this model, we're dealing with a family exactly at the poverty level. From an article I have just read, any family earning below the poverty level will be exempt from the income tax. I like it!

Continued in Part 3....

Herman Cain's 999: Testing the math myself, Part 1

By now, most everyone's heard about Herman Cain's 999 Tax Plan. Some love it, some love to bash it. But who can you trust? It seems everyone's got something to gain. A lot of the negative statements about it have come from other candidates who see it as a great target, or from tax lobbying institutes who depend on the complication of the existing system to justify their existence. But then, even though I like Cain, I don't want to risk trusting his math blindly, without checking it out myself. I mean, sure, he's got a degree in math, another in computer science, and he used to calculate rocket trajectories for the Navy, but he could be wrong this time, right?

So, here's a little experiment. I ran across a 999 Tax Calculator web site, not affiliated with or funded by the Cain Campaign, which lets you plug in numbers and see the effect of the new tax plan on prices. The best part is, you can see the calculations and check them for yourself. Will the poor pay more? Is it regressive? Let's see.

Test 1: Will prices go up, with both state and federal sales taxes?

The Test Calculator has two inputs: Your state sales tax rate, and the price of whatever it is you want to hypothetically buy. For starters, I put in my state sales tax rate of 5%, and a price of $200, which is roughly my family's weekly grocery bill when Granny is staying with us. Three adults and a baby, for reference.

First, the calculator tells me that with $200 of groceries, I'm paying about $10 in state sales tax, so my real bill right now is $210. Good starting point so far.

Now, statistically speaking, 22% of my $200 grocery cost (that is, $44) goes to pay the taxes for all the companies that put those groceries into my hands, from the farmer to the store. That's under a 35% corporate tax rate. The Calculator assumes that those ratios will stay consistent, so with a 9% corporate tax rate, the corporate tax will make up a 6% portion of my bill. (We can test with other assumptions later.)

So, what does that mean in actual dollars? My $200 grocery bill (minus state tax) is really buying me $156 of groceries, when I take out the existing federal corporate tax. The new federal corporate tax will be $9.36. So, the new price is $156+$9.36=$165.36. The 9% Federal sales tax on that will be $14.88, and my state sales tax is $8.27.

Final bill: $188.51, including state and federal sales tax, for groceries that cost me $210 today. A savings of $21.49.

Hey, I wouldn't mind keeping an extra $21.49 in my pocket every week, just from groceries. So far it's looking good. But we've got more questions, more test, and more math to go.

Saturday, September 24, 2011

Jesus and Obama? Again?

I realize I may be doing a bit of troll-feeding here, but I saw this image on a friend's Facebook page, and just couldn't resist the challenge. This is a sign from an anti-Tea Party rally. I believe that I can prove every point on this sign to be wrong, for both Jesus and Obama. As a disclaimer, I am not an official member of any Tea Party organization, but I have attended several Tea Party events, and I do consider myself to be a supporter of Tea Party values.

Just for fun, I'll go in reverse order:

Free Healthcare?
  • Healthcare is provided by doctors, nurses, and other medical professionals, who diagnose your illness, and  take care of you while you get better, or until you die, whichever comes first. Depending on how sick you are, this can be very expensive.
  • Jesus never offered healthcare. He offers healing. Jesus's healing is this: "The blind receive their sight and the lame walk, lepers are cleansed and the deaf hear, and the dead are raised up, and the poor have good news preached to them. And blessed is the one who is not offended by me." (Matthew 11:5-6)
  • Jesus doesn't give His healing away for free, either. First, He requires faith (Matthew 9:22). Then, He expects you to surrender your entire self. (Matthew 10:38.)
  • Obama is not offering to take care of you, either. He's offering to take away responsibility for the costs and decisions of your healthcare.
  • Obama's "healthcare" isn't free, either. When the government takes the responsibility for your costs and decisions, you lose the power you have when you shoulder those costs and decisions yourself. You lose control over when, where, and how you receive treatment. As Herman Cain recently pointed out, this can cost you your life. Not so free now, is it? Oh, and by the way... We still have to pay for it, only in taxes instead of direct costs.
  • Socialists do like to claim Jesus as one of their own. After all, he told a rich man to sell all he had and give it to the poor. (Matthew 19:21) But he also preached a parable which told people, be content with what you have, and don't begrudge others what they have, even if it doesn't seem "fair" to you. (Matthew 20)
  • Sure, Obama's pushed for ever-increasing government control over major American companies and industries. Sure, he thinks the wealth needs to be spread around. On the other hand, the Democratic Socialists of America say that Obama is not a socialist. So that settles it, right?
  • I'll switch modes here, and touch on Obama first. Sure, it can be tough to read his war record when it comes to Afghanistan. (Link leads to Huffington Post video at, how bipartisan is that?) But then, his record has been very clear that he supports the war in Libya. Except, he says we're not at war, because otherwise he'd have asked Congress for a declaration of war. Good luck figuring that out.
  • Jesus is the Prince of Peace, but His peace is not absence of war. "Do not think that I have come to bring peace to the earth. I have not come to bring peace, but a sword. For I have come to set a man against his father, and a daughter against her mother, and a daughter-in-law against her mother-in-law. And a person’s enemies will be those of his own household. Whoever loves father or mother more than me is not worthy of me, and whoever loves son or daughter more than me is not worthy of me. And whoever does not take his cross and follow me is not worthy of me. Whoever finds his life will lose it, and whoever loses his life for my sake will find it." (Matthew 10:34-39)
All that's left is the brown skin. Now, what sort of racist are you, Mr. Anti-Tea Party, to think that Obama's skin color, or Jesus's, should matter to me? My family's skin color runs across the board. I don't give a fig about it.

It's Obama's policies, not his pigmentation, that I oppose. It's Christ's loving self-sacrifice for my salvation, not his skin color, in which I place my hope.

Monday, July 25, 2011

Brief thoughts from a morning commute

Heard on the radio this morning: Police officers unhappy with their pay and benefits may go on "ticket strike" by cutting down on number of traffic tickets issued, cutting into municipal revenue.

  1. When your employer is strapped for revenue, and can't pay what you want as a result, how does it make sense to protest using an action that will leave them even more strapped for revenue?
  2. As a government, how does it make any sense to pass a law, then build your budget on the expectation that people will break that law, giving you income from fines? How does that fit with the idea that we are supposed to be a free society?
I'm just saying....

Tuesday, May 17, 2011

On Immigration

Georgia passes an illegal immigration bill, and of course, some celebrity comes along to raise a fuss, and call it racist. Frankly, Santana doesn't know what he's talking about. The bill says that if an illegal immigrant gets nabbed while committing some other crime, they get sent back home. Big whoop. Oh, and employers have to take some reasonable effort to make sure their employees aren't committing identity theft. Which is, again, a crime, in case you didn't remember.

You know who really gets left out of the immigration debate? The folks who are already trudging on a path to citizenship. The law-abiding immigrants who are here under their own names, who have spent decades and often tens of thousands of dollars filling out forms and making sure they abide by all the rules, waiting to get through "the system". These are the people who really deserve the benefit of immigration reform. But they can't vote, and most of the folks I know on this road aren't Hispanic. They're Indian (like from India, not Native American), or African (like from Africa, not Black American), or East European. So, there's no big block of "minority votes" to court. Yes, they're part of minorities, but their minorities are too small to mean anything to a politician. Every time a bill passes to give a group of illegal immigrants a "step up" in the immigration process, it pushes these law-abiding immigrants further back in line.

Santanta's statement implies that immigration laws mean we don't want immigration. That's like saying that traffic laws mean we don't want anyone to go anywhere. Frankly, the US immigration laws are just about the most generous in the world. Just try becoming a Japanese citizen if you don't believe me. Try working in Switzerland as a non-citizen. Immigration laws just mean this: That there is a right way and a wrong way to do everything. It's not right that we should punish people who are working hard to follow the rules, and overlook or reward law-breaking.

Tuesday, March 22, 2011

A Tale of Two Military Actions

President George W. Bush: Attacked Iraq after obtaining Congressional approval, UN resolutions, and an international coalition.

President Barak Obama: Attacked Libya with no Congressional approval, no UN resolutions, no international coalition.

President Bush was roasted in the media for "unilaterally" starting an "illegal" war by attacking a country that "didn't attack us first". Now we've got a president who really has done the very thing he accused his predecessor of doing. Will Obama face half the criticism Bush did?

Now, I'm not altogether certain what the right move in Libya would be. Certainly doing nothing isn't the right move: When France of all countries is doing more to stand up to a dictator than we are, something's wrong. Maybe attacking their military facilities is the right thing in this case. But after this, maybe Obama supporters should think twice before talking about Bush's "illegal" war.

Saturday, March 5, 2011

On Wisconsin, Ohio, etc.

I've had another thought on the union situation in Wisconsin and many other states. I'd like to frame a situation, and pose a question to many of my more Left-minded friends, if you all will be kind enough to consider what I say.

Let's start with a situation where workers have decided to organize into a union. When the workers organize, they gain the ability to strike. Even if the strike is illegal or unofficial, it may happen in the form of workers suddenly all taking a "sick day" at the same time. (Teachers: What kind of example is that to set for your students, to fake a note from the doctor to get out of class?)

Now, let's stack the deck. We give the union the power to tell employer that they have no ability to deal with anyone not in the union. This means that anyone going to work joins the union automatically, whether they wanted to or not. This also means that the employer can't replace people who are employed but don't want to work, with people who are unemployed that do want to work. Sucks if you're unemployed but want to work, right? Also sucks if you're employed but you don't necessarily agree with the people running the union.

In these circumstances, the union has the power to destroy the employer. If the employer can't make people work, and can't replace them with people who want to work, the union can run them to the ground by forcing them into self-destructive contracts. It has happened before, with Eastern Airlines. It's happened with the factories in Detroit.

I'm not saying that the teachers in Wisconsin want to destroy the public education system there, I'm sure that they don't. I'm not saying that they want to destroy the state government which is their employer. But here is my question: Should any organization, union or otherwise, have the power to bring an elected State government to its knees? Is there any person that can be trusted with that kind of power? Even good people, wise people, educated people with the best of intentions can end up abusing power. Everyone is flawed. How do you keep that kind of power in check?

Friday, February 18, 2011

Is collective bargaining such a bargain?

So again, I'm looking at the Wisconsin mess. As one blogger I follow has noted, "Cairo and Athens come to Madison."

The argument I hear from one of the protest participants is that collective bargaining is an important right.

Now, I have never worked in a "collective bargaining" job. I did once work in a grocery store which gave employees an option of joining the union, but I was a minor at the time, and therefore not eligible for union benefits. (Now, the union wanted to sign me up and take a cut of my paycheck anyway, without telling me I wouldn't get any benefits, but thankfully I declined.)

But let's say you've been in the world of collective bargaining, and it looks like that is going to be taken away. Your union managers tell you that you absolutely need collective bargaining, that it's vital to your well-being. You can expect this. It's not your job on the line, it's theirs. Just as I can expect the car salesman to tell me that a lease on a new luxury vehicle is vital to my well-being. For some people, it may be, but in my situation, I think I can do without. Everyone has to make their own decision, in the end.

Two questions come to mind. First, what am I getting for my money? Second, what is my situation really if I decide to do without?

Sure, you can talk about the history of collective bargaining and unions, who much good or harm they may have done for American business and American workers, but in a way, that's all history. What matters here and now is the situation here and now, and that's what I want to look at.

So, what are you getting for your union dues? I'm having trouble finding a single source of information on that. Maybe someone in the union or in Wisconsin could do better, but for now, I'll just have to go with what information I've got.

It looks like you're eligible for a nifty credit union, for one, but then, credit unions are easy to come by these days. Plus, there's no reason that the credit union can't exist apart from the labor union. Ditto for the financial advice services. So, let's just leave that aside.

It looks like the Wisconsin education union spends a lot of money on lobbyists and politicians, more than twice as much as anyone else in the state. You know what I found out recently, though? You don't have to be a full-time lobbyist to lobby your politician. My Beautiful Wife registered as a lobbyist at the state legislature at the beginning of last year. I've written my politicians as a private citizen many times. If you want to donate to a politician's campaign, you can do that without having to go through the union. I'm just sayin'. Plus, it looks to me like the union has just plain made some poor lobbying decisions lately, which may be why they're on the political chopping block. They threw all their support behind one party, and the other party won. Seriously, if you're going to stick your neck out for your union, you better make sure they're doing a good job for you first.

You're paying for someone else to make your case. But if I'm paying for someone to speak for me, I want them to use language I'm comfortable using myself. I'm not comfortable with some of the signs I'm seeing here. It doesn't fit with the "love your enemy, pray for those who persecute you" ethic that I've been taught.

Checking the union's web site, they also spend money on social networking and events, multimedia, and publications. Now again, I work in an environment with no collective bargaining, and I do plenty of social networking and events with my coworkers, and we have plenty of multimedia and publications. So, the union can lose its collective bargaining position and still do all of this.

Let's move on to the "what if I have to do without collective bargaining" question. Now, as I said, I've been outside of the collective bargaining world for my whole career. My situation may seem strange to you, but please trust that I know what I'm talking about.

I am awesome at my job. I work hard, overtime even. My boss knows how awesome I am, how hard I work. He makes sure his bosses know how awesome I am and how hard I work, because it makes him look good. He does his best to make sure I get as good a raise as I can every time employee evaluations come around. Also, he's helping with my career planning. Sure, I've had bosses who weren't so great, but I worked hard, prayed, and landed in a better situation.

That's life in the non-collective world. It's not so scary as you think. Why don't you join me in the non-collective?

On Sesame Street

One of the big items on the discussion table for Federal budget cuts is NPR. Those in favor of NPR are talking about it as "de-funding Sesame Street".

Well, let's look at Sesame Street a moment. I think that if there's a single NPR production that could survive without tax money to help, it would be the show with the Big Bird. Sesame Street is a huge international franchise, and the money made on Elmo toys alone must be worth a sizable fortune.

Here's my devil's advocate question: Do they really need the money they get from our taxes? Or can they get along without it?

We get upset when Wall Street gets tax money, especially when it goes to people who can clearly do without. Why don't we hold Sesame Street up to the same standard? Is it because it's "for the children"? Or is it the cute and cuddly monsters?

I'm not saying that Sesame Street isn't a good cause. They do their job very well, educating and entertaining. But does every good cause need to be directly supported by taxpayer money? That's all I'm saying.

Thursday, February 17, 2011

The economy needs miracles

Two things I ran across yesterday are spinning in my head.

First, I ran across this link. Duquesne University Economics Professor Antony Davies compares the national debt to a household income.

Here's a video from that page:

Watch that. Listen twice to what he says at the end. If you take all of the debt, all of the unfunded promises that have been made in Social Security, Medicare, and so on... If you take all of that, and add it up, it outstrips the economic output of the entire planet.

That's right. Our government has promised to pay more money than exists, more money than can possibly exist. In the world.

Let that sink in.

When I learn this, I think: Ouch. We are screwed.

Now, on to the next thing. An old college "sister" of my wife is in Wisconsin taking part in the protests at the state capital. She posted that the state budget shouldn't be balanced on the backs of state workers. I asked whose back it should be balanced on. She replied, it shouldn't be balanced on anyone's back.

Now, back to the first post. We're in a hole, deep. And digging deeper.

Here are my thoughts, as they flow one to another:
  • There is no way out of this economic mess without miracles. Big miracles. God-sized miracles. We are in a debt that we can't possibly pay.
  • Christ came to this world to pay our debt of sin that we couldn't possibly pay. He paid for it with His life given on the cross. Hold that thought.
  • Miracles require sacrifice. Christ didn't feed the multitudes without someone giving Him a few loaves and fishes. He didn't make wine without water. And again, He didn't pay off our debt of sin without giving His life.
  • Christ made clear that the only sacrifice that is worth His blessing is personal, and with nothing at all held back. If we hold anything back, anything at all, we're like the young man in Matthew 19:16-22, who couldn't bring himself to give all to follow Christ.
  • My job and the talents I exercise at my job are blessings from God. Yes, I work for a bank, but it's only by the grace of God that this bank has resources to pay me. I have a right to expect that my employer will live up to the promises that they have made to me. However, I have no rights before God. He has already given the life of His Son for me. What more would I demand? What more could I possibly ask?
  • I ask, undeserving, that He hold to his promise to care for me and my family, whatever may happen to the bank, or to the state, or to the nation. My sacrifice is that I trust in Him, and use His gifts carefully.
Kyrie eleison!

Monday, January 17, 2011

More Obamacare analysis

My letter to the editor sparked some interesting debate and comments. Mostly encouragements, good to hear.

There were a few folks who didn't necessarily disagree, but who think that we'll never get people to be personally responsible for themselves on a large enough scale to ever solve the problem.What can I say? If you start with a low expectation of people, they'll satisfy that expectation. It's like the epidemic of low expectations in majority-black schools these days: If you tell students that they can't learn, then they won't try, and if they don't try, they won't learn. Likewise, if you create policy based on the expectation that people won't try to plan for their own future, you'll make it harder on people who actually do plan for their own futures.

On the other hand, if we expect that there will be people who are responsible, and that there will be people who are charitable to those in need, then we might actually get people who are responsible, and people who are charitable to those in need.

There was one poster who actually thought that this healthcare bill would actually reduce the cost of healthcare. I pointed out that the new bill had put the brakes on several hospitals being built. He said that building new hospitals would increase the cost of healthcare!

Let's just nip that in the bud, shall we?

Image from Wikimedia
See this chart? Basic microeconomics. Invest to increase the available supply of medical services, and you move your Supply curve from S1 to S2. The result of that is that your Price moves down from P1 to P2, while the quantity of health care actually received moves up from Q1 to Q2. Yes, there is an investment cost, but with the increase in patients served, the total revenue will go up. The new bill, though, does nothing to increase supply. If anything, it makes it harder for suppliers to reach the market by adding new layers of paperwork and bureaucracy.

It gets even worse. Here's a comprehensive list of tax hikes embedded in Obamacare, thanks to the Americans for Tax Reform. I won't go through all of them, but there's a few that jump out at me as being especially wrong. If your goal is making it easier for Americans to afford healthcare, these taxes are exactly the wrong thing to do.

Medicine Cabinet Tax - Last year, I got a Health Reimbursement Account from my employer. Pre-tax dollars go in, and as long as it is used on healthcare, it never gets taxed. This last year, I was able to use it for non-prescription medicine. Now, I can't. How does taxing my Tylenol make my health care more affordable? Or, let's say you've got a mild heart condition that you treat with Aspirin in order to keep from developing a seriously expensive heart condition. Wouldn't keeping your medicine tax-free be a help?

Tax on Medical Device Manufacturers - As of January 2013, there will be a new excise tax on medical device manufacturers. If you're trying to make healthcare cheaper, why are you taxing medical devices? This tax will also be a job-killer for these companies.

Excise tax on Charitable Hospitals - Hello, Washington? You're taxing CHARITY? How much more wrong can you get? Okay, so you're running a hospital like Children's Healthcare of Atlanta, or Scottish Rite, or St. Jude's, a hospital that saves lives, offers exemplary service, and charges patients far less than the actual cost of their service, thanks to the generous, tax-exempt contributions of donors. Tax-exempt because the hospital has satisfied the IRS that it should be a 501c3. But wait! Now the hospital is going to be taxed because they are a charitable hospital!

There is only one explanation I can think of for this. The power to tax is the power to destroy. Charitable hospitals must be punished, because they demonstrate that people can be generous without government involvement. Punish the charitable hospitals out of business, and people will have to turn to the government for their health care! It's despicable.

Codification of the "economic substance doctrine" - This one's so scary, I just had to get confirmations from multiple reliable sources. What's this scary doctrine, you ask? According to Americans for Tax Reform, "This provision allows the IRS to disallow completely-legal tax deductions and other legal tax-minimizing plans just because the IRS deems that the action lacks “substance” and is merely intended to reduce taxes owed."

That's right. You've done something completely legal that just happens to lower your taxes. Maybe it's a donation to a 501c3, a church, a soup kitchen, or a local theater company. Maybe it's saving for retirement, or your child's education. Whatever you've done, it's completely 100% legal. But if the IRS auditor reviewing your case decides that your only motivation was to reduce your tax hit, they can not only take away your tax deduction, they can also penalize you.

It doesn't stop there. Companies are now responsible for red-flagging themselves to the IRS under this new code. The company I work for does a lot of donation to charity. Why? It's simply the Right Thing to Do. It's investing in people and neighborhoods. Believe it or not, there are still companies out there that try to do the right thing. Under this law, one of the rules is that an economic transaction must be of a substantial economic benefit to the company. One could easily claim that the company I work for doesn't get any economic benefit for giving donations to soup kitchens and other local causes. Now they're going to punish us for our charity? How wrong is that?

We may not be up to the point where the government can persecute you for thought-crime, but it looks like we're at the point where they can tax you for your perceived motivations. If an IRS auditor says you did something just for the tax benefit, how do you defend against that?

I hope that my many friends in local theatre will read this and take note. How many of you work for non-profit companies that are dependent on corporate and individual philanthropy? Your benefactors are soon going to be punished for their generosity. If that doesn't scare you, I don't know what will.

I know what you're going to say. "But Danny, that new law is just to go after tax evaders!" In the eyes of some IRS agents, anyone who puts forward any effort to hold on to their own money is a tax evader. I've read far too many stories of innocent, law-abiding citizens suffering at the hands of abusive IRS auditors out to improve their own job performance ratings. The Founders knew: Give any human being an unchecked government power, and that power will be abused.

Thursday, January 6, 2011

Thanks to Obama? No thanks.

I have submitted this as a Letter to the Editor at the Citizen.

This is in reply to the Jan. 4th letter to the editor, "Thanks to 'our wonderful' Obama". A reader thanked the President for an increased Medicare check she recently received.

Here's the thing: The money didn't come from Obama. As my parents taught me, money doesn't grow on trees. All money in the government treasury comes from taxing, and borrowing against future taxes.

Ms. Zeldin: Decades ago, before I was old enough to work, politicians told you a lie. They said that if you would just pay your Medicare taxes into the system, they'd pay you back when you got older. You were told that if you would just accept the additional taxation, you wouldn't have to pay for your own medical care in retirement. It was a scam, a Ponzi scheme. They took the money and ran. Now you're being paid back, not with your own tax money, but with mine.

Now, that's bad enough. I understand, my own mother-in-law is facing expenses that she can't cover in her own retirement. I am willing to make personal sacrifices and pay for her retirement, and my own, if that means that my daughter (now 4 months old) won't have to pay for mine.

But it's bad enough that I have to pay for the failed promises that were made when you were paying into "the system". Now, Obama is promising you more on top of what you were already promised. There is no way your additional benefits now could have been paid for by what you contributed in the past.

You're thanking the thief who has taken from my wallet and put some of the money into your own. Pardon me if I don't share your appreciation.

Danny Dolan

Peachtree City, GA