Constant Conservative

I was a bit disappointed to read the following:

[T]he perk has also cost states as much as $23 billion in lost revenue by some estimates, and they want it back. Rep. Bill Delahunt (D-Mass.) this morning enlisted Republican South Dakota Gov. Mike Rounds (R) and other state lawmakers to rally support for his proposed Main Street Fairness Act, which would make it easier for states to go after the money [from internet sales].

“We can’t get a hold of it,” Rounds said in an interview this morning. He said that Internet retailers “have a competitive advantage” over in-state businesses, which are required to collect the tax.

[...]

Rounds said in South Dakota, the proposal could net an additional $35 million per year in tax revenue, about 3 percent of the state’s $1.2 billion budget. South Dakota has also worked with about 1,200 out-of-state retailers to voluntarily collect sales tax, Rounds said.

One is hoping that Daugaard would not follow Round’s lead in this regard, were he to become governor of South Dakota.

While one can see any number of arguments for and against the this scheme of taxation, there is no question that the net-based retailers would not be where they are today in terms of sales if they had to follow the same complex and expensive tax-reporting rules as have been implemented for the brick and mortar retailers. Implementing this tax at this time would do little to help the overall economy and much to discourage it.

Word has come from GM that the new Volt will cost $41k before your check from Uncle Sam for being a good citizen drops that price by several thousand. Some people are quite excited about the car. They are welcome to that excitement. Since this is the first year of production, and there are a number of excited people, it is entirely possible that there may be more people who want to own a Volt than there are Volts available for purchase.

In the following article in Wired, we see how GM plans to handle such a problem:

Many will no doubt howl at the price, but GM expects demand to exceed supply in the first year. That raises the specter of price gouging. Although GM cannot require dealers to sell the Volt at the suggested retail price, Ewanick said it will “strongly suggest” they do so. Gouging is something the company is very much determined to prevent.

Ewanick also said there are so many dealerships lining up to sell the car in each market that “we feel they will maintain integrity.”

So, GM will nudge the dealers into not gouging their customers. According to the article, gouging is defined as selling the car for more than suggested retail price. What? I thought that price gouging was charging crazy amounts for plywood after the hurricane (and people needed the plywood). That is, taking advantage of a crisis to bleed people when they must purchase necessary things. Pardon me if I don’t see a Volt as a necessary thing. If a dealer wishes to charge $50k for it, and someone wants to spend that on it, let it happen. If the person can find a dealer to sell it for less, then let that happen, too.

It rubs me wrong that GM believes many dealerships in a given market will “maintain integrity,” that is, keep everyone at the suggested retail price. No, many dealers in one market means competition. That’s what keeps the prices down–until, of course, every dealer but one in a given market is out of Volts. Then, the equation changes.

“But, but, but,” you say “if the price goes too high, then poor people can’t buy it and they’ll be prevented from driving an environmentally friendly vehicle.”

Oh well, I can’t even afford to fly the family somewhere on an eco-friendly jet, but I think we’ll get over it.

I know the man whose name appears above is a pretty good shot with a bow, a rifle or pistol, but he doesn’t do poorly with his pen either:

Anyone with a lick of common sense will tell you that when you are in a hole, you need to quit digging. Continuing to dig will only create a larger problem. Do schools teach this?

Recently, even President Obama’s national debt commission told him that his continuing spending orgy is digging America into a gigantic fiscal hole.

Next year, America’s total debt is expected to exceed $14 trillion. Each American’s share of that debt totals just short of $50,000. If Fedzilla would be honest and put all the figures on the table, we would see that we are in debt more than $100 trillion because of the financial obligations for Social Security, Medicare and Medicaid.

That’s $100 trillion. One hundred percent predictable, 100 percent preventable.

Go read it all.

Andrew adds: “Quit digging”.  I like it.  I think I’ve heard something like this before.  Hmmm…

When is a state budget not properly balanced? When the state borrows someone else’s debt to avoid creating its own:

We did not really balance the state budget. We accepted a one-time federal handout, aka stimulus funds, from President Obama to cover our deficit instead of cutting spending. Worse, the Obama budget “patch over” money is money borrowed from China, Japan or elsewhere that our children and grandchildren will end up having to pay back, with interest.

Using gifted federal money that’s clearly borrowed from others using long-term U. S. Treasury debt is hardly balancing the budget. It’s more akin to taking out a 30-year second mortgage to pay off current credit card debt.

Go and read it all. Sam Kephart lays out a very simple case for restraint. Would that the execution of restraint were as simple.

While many people have not lost their jobs over the last year or so, everyone should be prepared to receive a reduction in pay as of January 1, 2011. The hardworking folks at Americans for Tax Reform have the down low:

Personal income tax rates will rise. The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which two-thirds of small business profits are taxed).  The lowest rate will rise from 10 to 15 percent.  All the rates in between will also rise.  Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates.  The full list of marginal rate hikes is below:

- The 10% bracket rises to an expanded 15%
- The 25% bracket rises to 28%
- The 28% bracket rises to 31%
- The 33% bracket rises to 36%
- The 35% bracket rises to 39.6%

To put it simply, the average taxpayer will see about a 3% increase in base income tax level. This works out to $300 per $10k of income. Not much, you say? Let’s say someone makes $40k per year. That would be a $1200 increase in base taxation.

Higher taxes on marriage and family. The “marriage penalty” (narrower tax brackets for married couples) will return from the first dollar of income.  The child tax credit will be cut in half from $1000 to $500 per child.  The standard deduction will no longer be doubled for married couples relative to the single level.  The dependent care and adoption tax credits will be cut.

If that person listed above who makes $40k also has 3 children, then he will see another $1500 disappear.

The return of the Death Tax. This year, there is no death tax.  For those dying on or after January 1 2011, there is a 55 percent top death tax rate on estates over $1 million.  A person leaving behind two homes and a retirement account could easily pass along a death tax bill to their loved ones.

No way of knowing if our $40k person would lose a parent or other benefactor, but this injustice deserves a treatise or two all by itself. How under God’s great blue heaven can one justify taking money from someone’s estate simply because they have more than someone else? Remember, the very, very wealthy people (who this tax is supposed to “punish”) are not usually affected by it, or not much. They can afford to hire a phalanx of lawyers and accountants to make sure everything is set aside in trusts and otherwise protected from the grim reaper’s sidekick: the taxman. However, our hypothetical hardworking person’s parents are very much in the group of people who are most hurt by this. Someone starts a business, operates it his entire life and grows it into something which is worth a few million dollars–not that much return for 30 to 50 years of labor–only to see it sold and broken up on his death to satisfy the government’s desire for more.

Higher tax rates on savers and investors. The capital gains tax will rise from 15 percent this year to 20 percent in 2011.  The dividends tax will rise from 15 percent this year to 39.6 percent in 2011.  These rates will rise another 3.8 percent in 2013.

Wait, you say, our $40k person doesn’t have any capital gains or dividends to worry about. Maybe, maybe not. But one does not have to be insanely wealthy to have investments. I was discussing this with a friend yesterday whose family member is taking a hit on capital gains this year only because next year it will be much worse–and these investments must fund this person’s retirement.

There is more, getting into the various taxes, fees, and other lovely terms which simply come down to the government taking that which it needs to fuel its own boiler, so go read the entire article. Keep in mind before you do that our $40k friend is already down 6.75% of his income before factoring in anything else. How would our $40k friend feel if his supervisor came to him and said that he’d get 6.75% pay cut and that more cuts would be coming?

That’s exactly how I feel–and you should, too.

Thanks to MHH for the link.

In the midst of the cover article at Business Week comes this bit from someone trying to make it as a businessman in Greece:

Stefanos Manos applauds the recent decisions to cut wages and raise taxes but believes more drastic measures are needed. “The average pay is two and a half times the pay in the private sector,” he says. In his view, more must be done to create a competitive environment. “In Greece, you cannot rent a little truck to move your refrigerator,” Manos says. “Why? To protect the truckers. You have to hire a trucker. You have to get a parking permit. If you sell your house, both parties have to have a lawyer—by law—to participate in the transaction, and they’re guaranteed a percentage of it. If I want to give my house to my son, both he and I have to have lawyers. If Coca-Cola (KO) wants to take out an advertisement during a news program on TV, a percentage of it [20 percent] goes toward a pension fund for journalists. They have so much money in there that journalists don’t even know or care how much money they have!”

Then there are the bribes. “Lawyers know that when a tax collector comes, he will ask for a bribe. Doctors, too. But that tax collector has a job for life. A surgeon at the state hospital expects something on the side,” Manos says. “Otherwise, you can get your operation in six months or more.”

We’ve already seen that average pay and other compensation for federal employees is twice that of the same positions in the private sector. The rest of the things he’s saying also have their parallels within our country.

If we are helping to bail out Greece (and we are) who in this universe is going to bail us out? Greece is not the only place that needs some drastic measures. May we see the writing on the wall before the whole wall comes down on top of us.

There is nothing wrong with maximizing one’s income, is there? Well, there is legal and then there is moral:

Greg Royer ranks among the state’s top-paid employees, with a salary of $304,000. But that’s just part of his income. For nearly seven years, he’s also collected an annual pension of $105,000.

Royer, the vice president for business and finance at Washington State University, tops a long list of college administrative staff members who’ve been able to boost their incomes by up to 60 percent by exploiting a loophole in state retirement laws.

A Seattle Times investigation has found that at least 40 university or community-college employees retired and were rehired within weeks, often returning to the same job without the position ever being advertised. That has allowed them to double dip by collecting both a salary and a pension.

The pattern of quickie retirements has continued despite the Legislature’s efforts to crack down.

A Times analysis of state payroll and retirement records shows that, as of the beginning of this year, about 2,000 people were collecting both wages and a pension from the state. In about two-thirds of those cases, however, retirees had returned to a state job on a part-time or on-call basis.

The context is the state of Washington and a very poor fiscal situation–including within the university system. Many people have been laid off in the last few years because of shrinking education dollars.

Here’s the response of one of the people who benefits:

In an interview, Tapfer, 58, who collects a salary of $70,000 and a pension of $36,000, said he had “no inkling” that he might get rehired at the time he left WSU.

“I’m an ordinary guy who is working for a living. I put in a lot of years, and you’re making out like I’m doing something wrong,” he said. “If you want to criticize the system, fine, but don’t criticize the individual.”

Retired and rehired at 58. Ordinary guy. Don’t criticize the individual. Right. Once again, something being legal does not make it moral.

Are these people taking advantage of a broken system? It would appear so. And to all who would say something along the lines of “they’re just looking out for themselves,” allow me to remind you that they are state employees who are to be serving the educational needs of the state’s residents, not milking the system.

[M]ost state employees can return to work for only up to 40 percent of the hours they worked as full-timers — or lose some of their pension benefits. But thanks to a glaring loophole, many higher-education employees have been able to skirt the rules.

It’s because colleges and universities typically have two parallel retirement systems — the state system and a separate system administered by the institution. Administrative employees can often retire under the state system and return to work under the university plan.

By switching plans, the workers put themselves beyond the reach of state limitations on double dipping. In the eyes of the state, it’s as if the workers returned to a job in the private sector. In reality, the only thing that has changed is some paperwork.

If they were getting payout from a personal IRA or 401k, then that would be one thing. Such money would, after all, be the direct result of their own investments. But that does not seem to be the case:

[A]lmost all employees enrolled in the system stand to gain far more back in pension payouts than they ever contribute through paycheck deductions. Most people will receive back their lifetime contributions and then some within three years of retirement, according to a Times analysis.

In closing, let’s hear a final argument from one of these fine folks:

“I had served 30 years and consequently was entitled to the pension,” he said. “And as far as the college was concerned, they needed a president.”

The man was entitled, so be quiet.

I’ve been glad to follow New Jersey’s new governor as he said good, tax-saving, job-supporting things. Now, I see that I should be digging a bit deeper:

Let’s start with by comparing Christie’s FY 2011 $29.3 billion budget to Corzine’s FY 2010 budget of 29.8 billion. Given today’s economic climate, a 1.5% cut is not one that deserves immense praise. However, for a second I thought, “spending cuts are spending cuts and better that than nothing.”

That’s until I came across the alternative budget prepared by Americans for Prosperity called New Jersey Taxpayers’ Budget FY 2011. The AFP budget adds up to $25.9 billion. That’s $2.4 billion less than what is proposed by Governor Christie. Plus, they did this, without raising taxes. Unlike Christie’s budget.

That’s right, as part of a compromise on the budget, Christie made a deal with Democrats: he will put back millions into his budget (to buy things such as keeping open Hagedorn Psychiatric Hospital in Hunterdon County, funding for cultural sites including the Battleship New Jersey and the Newark Museum, more funding for projects in Urban Enterprise Zones) in exchange for  a series of new tax and fee hikes are being put forward as supplemental bills.

So, has he only been talking a good game? Again, it is hard to know from a single article. Go read the piece and see what you think. I’m reserving judgment until I can do some more research. However, the author of the article is correct. If a governor makes poor decisions in his governance, he should be criticized by conservatives–regardless of his political party.

Via reader Phil M.

I do believe I hear an echo of sorts:

Lawmakers pulled an all-nighter, wrapping up their work at 5:39 a.m. — more than 20 messy, mind-numbing hours after they began Thursday morning.

“It’s a great moment. I’m proud to have been here,” said a teary-eyed Sen. Christopher J. Dodd (D-Conn.), who as chairman of the Senate Banking Committee led the effort in the Senate. “No one will know until this is actually in place how it works. But we believe we’ve done something that has been needed for a long time. It took a crisis to bring us to the point where we could actually get this job done.”

Both the House and Senate must approve the compromise legislation before it can go to Obama for his signature.

Despite myriad changes in recent days, Democrats appear poised to deliver a final bill that largely reflects the administration’s original blueprint unveiled almost precisely a year ago. Although it would not fundamentally alter the shape of Wall Street or break up the nation’s largest firms, the legislation would establish broad new oversight of the financial system.

Working around the clock to get something done before holiday even though they normally only work four days a week. Check. 2,000+ pages of largely impenetrable legalese. Check.  Statement that we’ll need to pass the bill before we can figure out what is in it. Check.

This new way of doing business in the House is very hard on those of us who believe that the government which governs least governs best. May God grant us mercy and may the Senate not get the vapors.

My recent post on Kelo warranted a comment and then an extended response from Mr. Heidelberger of Madville Times which concluded as follows:

Mr. Woodring is right to lament the Kelo decision. I lament it with him. But remember: a rejection of Kelo is a rejection of the capitalist imperative. Some things, like having your home on your terms, are more important than money.

“a rejection of the capitalist imperative.” What is this imperative? Does it mean that all other needs, desires, or rights are subsumed into allowing whoever will make the most of any given resources to do so? Therefore, we would permit the taking under Kelo because the new owners were going to be better capitalists than the old ones? If this is the meaning of the imperative, then I must say that I and (I would believe) nearly all of my fellow capitalists reject such an idea as being incompatible with the private ownership of property.

Kelo was not a question of capitalism run amok so much as it was a question of rights: the city’s perceived rights against the homeowner’s rights. In the penultimate paragraph of his piece, Mr. Heidelberger says the following:

Forcing a property owner to sell that property to another private party who can make more money on that property is akin to forcing construction workers and custodians to move out of town because we want our community to be populated by doctors and lawyers and other wealthy folks who can buy more stuff and generate more sales tax (Vail is like that). Rights should not depend on your economic output. Kelo and the slim liberal majority got that point dead wrong.

I do not know how these “construction workers and custodians” were forced “out of town” but I think it unlikely that they were made to turn over their property to someone else. They may well have been “forced” out of town by the cost of real estate (or more properly by the cost of paying the property taxes on that real estate), but that is another issue entirely, as I note below in the section on taxes. While “rights should not depend on . . . economic output” one does not have the right to affordable housing or a well-paying job.

One does have the right to strive for these things and one has the right to hang on to the things which one has–regardless of anyone else being able to do more with it. Kelo went awry when the court found that the taking was warranted because the city’s desire for more revenue trumped the homeowner’s right to keep their property and live in it. One of these parties had rights, the other one had wants: the court ignored the rights and elevated the wants.

As is noted in the following quote, land use rights (including the right to do nothing with the land) have a long history in the United States:

Under the feudalistic system that governed Europe for most of the second millennium and prevailed in Hawaii until the mid-19th century, land use was a privilege granted only by the king. For most of American history, land owners had a right to use their lands as they saw fit, provided they did not create a nuisance for other people.

We have building codes and more (association covenants, etc) which restrict and constrict property owner’s rights with regard to land and its use. While I find many of the building code specifics to be onerous and even petty, I can see a case for having them. If one doesn’t want to deal with such, then one has the option of moving elsewhere (that is, of avoiding the contract). If one does not wish to come under the rules of some association’s covenant, then one should choose a different neighborhood. However, if Kelo is permitted to stand, we can’t get away from unfair takings without leaving the country.

Let me address the issue of property taxes:

In the colonial age, the property tax was far more fair and progressive than it has become.Back then, most property produced income. Now, as Gordon noted, “property is a terrible measure of a family’s ability to pay taxes. Almost all privately owned property today is income-absorbing.”

In other words, property used to be the best measure of economic activity. But now, most families don’t make money from property — at least not until they sell a house.

[...]

Property taxes flunk every test of fairness. They bear no relation to the taxpayer’s ability to pay. They are arbitrary, varying with the ups and downs of the housing market and the ability and fairness of individual assessors.

Property taxes (whether $1700 for a modest lakefront home or $360 for a small-town dwelling) are a horrible way to reward people for their success, such as it may be. My own home is assessed at a certain value, based on the incomplete status of a massive renovation project. When I get done with the project, I will be assessed at a substantially higher amount. Why? Because the house is now worth more. Of course, the services which the town provides to me are not worth more, but that is immaterial in the calculation. One of the saddest things to me is to hear is that someone’s property was sold for failure to pay property taxes.

I understand the need for taxes–since I am a supporter of limited government rather than no government at all. And, speaking of government, let’s talk about New London for a moment. If you believe as I do that any government entity should exist to protect its citizens and provide a safe context for “life, liberty and the pursuit of happiness,” then the behavior of the city is troubling. The city wanted greater tax revenues (property, income, etc) to the end that it could do more, be more, create jobs, whatever. The problem is that what New London was interested in was perpetuating itself. As a result, the city became an entity in competition with the homeowners.

If we were able to replace property taxation with another form of taxation which was equitable (and perhaps based on consumption) we would no doubt see the number of Kelo-type situations shrink to a very few, or perhaps even go away altogether. However, the possibility of the property tax system being changed is probably smaller than the the chance of the US Supreme Court reversing itself on Kelo–and that seems unlikely in the near future.

It has been five years since the US Supreme Court decided that people’s property rights were not as important as a city’s tax revenues. Ilya Somin has an thoughtful update on what it means and where we are now.

What did I learn from Kelo? That the rights of the individual may be removed quickly and to no good end if the courts decide that rights do not belong to individuals but are rather lent to them until such time as the court decides that the individual simply does not need them.

An adult human has 10+ pints of blood. In general, bigger people have a bit more blood than smaller people, with the blood comprising upwards of 7-8% of one’s body by weight. It is quite common for us to lose a bit of blood without feeling any ill effects. Cuts, hemorrhoids, nurses with needles, etc all permit small losses of the body’s precious fluid without any of us feeling the worse for it. Of course, take enough blood at one time (such as drawing a pint for donation purposes) and the body realizes that things aren’t just right. Take 2 to 3 pints of blood and chances are very high you will pass out. Lose 4 or more and you are well on your way toward dying.

The bottom line is this: we humans depend on our blood for life itself. If we lose too much of it at one time, we lose life. We can, however, lose quite a bit of it over time without our body feeling more than a little weak for a day or two after each donation.

Money is the economic lifeblood of a citizen. The difference, of course, between blood and money is that the amount of money each person needs to sustain a lifestyle may vary widely, so there is not a simple equation which can be used to determine how much a person could lose before becoming financially weak or worse.

The truth is that irresponsible government spending, which can only result in overall tax increases, has the tendency of taking more of the economic lifeblood from a citizen than can be replaced in the normal course of business. In other words, overmuch taxation has the benefit (if one could call it such) of extracting donations from the taxpayer from which the taxpayer is unable to recover and remain financially healthy. One might say that such an approach is remarkably counter-productive since it takes those who are financially healthy and moves them into the ranks of the not-so-healthy, all in the guise of distributing wealth to the less fortunate.

Thankfully, some have recognized this approach for the foolishness it was in the case of the New Jersey millionaire tax and kept that poor proposal from becoming law.

Taxation is necessary, but a proper appreciate for what it means to tax a free people well explicated by the current governor of Indiana, Mitch Daniels:

“The essence of our nation is the protection of individual liberties,” he says in an interview with The Washington Times. “That means, for example, never take a dollar from a free citizen through the coercion of taxation without a very legitimate purpose.

“And then we have a solemn duty to spend that dollar as carefully as possible, because when we took it we diminished that person’s freedom. Otherwise, that citizen could spend that dollar on something he or she chose. This is an obligation of everybody who serves in government.”

I may disagree with you on the definition of “legitimate purpose” but if we all had this understanding of taxation, perhaps our blood would be a bit less likely to boil when we find out what our earnings are being used for.