May 17, 2006

A Sign of Sanity: Hastert Says Across-the-Board Cut Idea is Dead

Filed under: Economy,Taxes & Government — Tom @ 11:40 pm

Background is here.

In a nutshell: The Senate, faced with a hard spending limit of $94 billion for the Iraq War effort and Katrina relief, but with an unexplained desire to lard on $15 billion of additional pork, was thinking about cutting all three items (war, Katrina, and pork) by the same percentage to stay within the spending limit, outrageously shortchanging our troops and Katrina victims.

The Heritage Foundation Blog carries the text of House Speaker Dennis Hastert’s announcement that essentially says “no bleeping way” (I believe the Speaker means $94 bil where $92 is mentioned):

Speaker Hastert: Senate Call for an Across-the-Board Cut to Pay for Bloated Supplemental Won’t Get Heard in the House

(Washington, D.C.) Speaker of the House J. Dennis Hastert (R-IL) today made the following statement regarding Senate attempts to use an across-the-board cut to make room for additional spending it included in its $109 billion emergency supplemental bill. The Senate passed its bill, which is more than $15 billion over the President’s $92 billion budget request, earlier this month.

“Any calls from the Senate for an across-the-board cut to make room for a bloated supplemental will be met by a busy signal in the House. The House will not join a shell-game spending spree with taxpayer dollars. President Bush requested $92 billion for the War on Terror and Hurricane Katrina relief spending. The House has passed a bill that exercised fiscal restraint. The Senate needs to throw overboard, unnecessary add-ons and help us get the needed funds to our troops in the field and our fellow citizens suffering the aftermath of Hurricane Katrina.”

Bam.

Most Ignored Story Nominee: Bush Meets with Chinese Dissidents

Talk about something that should have received more attention (link requires subscription):

The late Pope John Paul II campaigned passionately on behalf of Asia’s “silent witnesses” — the religiously persecuted — and always reserved a special mention for China’s oppressed faithful. For anyone who thinks this battle has passed along with the deceased pontiff, we’d refer you to a meeting in the personal quarters of the White House last week.

On Thursday, President George W. Bush met with three Chinese human rights campaigners. It was the first time a sitting U.S. President has met with Chinese human-rights activitists. Yet remarkably, the meeting wasn’t well-publicized; only one official photo was released. Present were author Yu Jie, a prominent campaigner for freedom of speech; Wang Ji, a pro-democracy writer and Internet blogger; and Liu Baiguang, a legal rights campaigner. All are “house” Christians who have been harassed by the Communist Party; two have been repeatedly jailed. The group talked about religious freedom, with President Bush expressing America’s support for their brave efforts.

China reportedly protested the meeting, but President Bush pressed on. That’s unsurprising, given his record. In private, Mr. Bush has frankly confronted China’s leadership over its repressive policies during his last trip to Beijing, we’re told. The President speaks out publicly, too. But most important, it’s meetings like last week’s White House gathering that show how deeply concerned the President is about religious freedom in China.

It would be even better if Mr. Bush’s administration would confront some of the members of BizzyBlog’s Internet Wall of Shame, and ask them why they are helping the Chinese government to strangle freedom of speech on the Internet, and to hunt down and jail those who dare speak their minds.

Column of the Day: Disinvited EEOC Witness Reveals His Planned Testimony

Filed under: Corporate Outrage,Economy,Taxes & Government — Tom @ 1:22 pm

At OpinionJournal.com Roger Clegg confirms what many of those who have been following the big-company corporate “diversity” movement have long suspected:
- That “diversity” all too often is code for “discrimination.”
- That it is hampering economic performance.

Here is most of his intro, followed by excerpts of what he had planned to say:

Last month, I received an invitation to testify before the Equal Employment Opportunity Commission about affirmative action and diversity in U.S. companies. The testimony was scheduled for today, and I was asked to share my written statement to the commission beforehand, last Thursday, which I did. Late Friday afternoon I received a phone call from the commission, telling me that because of what I had to say, my invitation had been withdrawn by its chairman, Cari M. Dominguez.

….. The problem is that my testimony told the unwelcome truths that (a) American companies, in their “celebration of diversity,” frequently discriminate on the basis of race, ethnicity and sex, (b) this violates the law, and (c) the EEOC is not doing anything about it. I was told that it would lead to a “mutiny” among the career people at the commission if I was given a “platform” to say such things.

(from planned testimony)

The point of my testimony today is that, too often, the corporate celebration of “diversity” becomes the opposite of true “equal employment opportunity.” It becomes, instead, a form of “affirmative action” that is really, to use Nathan Glazer’s phrase, nothing more than affirmative discrimination.

….. The issue, rather, is the narrow but crucial one of whether companies ought to be hiring and promoting with an eye on applicants’ and employees’ race, ethnicity and sex in order to achieve a predetermined and enforced diversity. The issue is whether some applicants or employees are more sought after or get more favorable treatment than others because of skin color, or what country their ancestors came from, or their gender.

It is clear that many companies weigh these factors, unfortunately, and it is clear that they should not. In a 1997 survey, for instance, eight out of 10 business executives said that affirmative-action programs had resulted in them giving jobs and promotions to applicants who were less qualified than others.

….. If the president of a company tells his middle managers that if they fail to meet their “goal” of hiring or promoting a certain percentage of this or that group, they won’t be getting a year-end bonus, that is discrimination.

If a company tells its outside legal counsel that it will be fired unless it fields a suitably “diverse” legal team, that is discrimination.

If the company announces that referrals of women are more welcome than referrals of men, or that applications from “underrepresented minorities” are more welcome than those from other minority and nonminority groups, that is discrimination.

If an internship or a mentoring opportunity is set aside for certain racial groups, that is discrimination.

America is becoming an increasingly multiracial and multiethnic society. That can be a source of great strength, but it can also be a source of division if people know that they aren’t all being held to the same standards. The only way to enforce the antidiscrimination laws in our multiracial, multiethnic society is by playing no favorites.

We cannot say that Latinos are more protected than whites, but less than blacks, and the same as Asians, unless the Latino is Mexican (but not if he is Cuban) and the Asian is Saudi (but not if he is Filipino). The way that Title VII is written plays no favorites, and that is the way it should be enforced.

….. Does that mean that minorities and women no longer suffer any discrimination? Of course not. There is certainly much less of such discrimination now than there was a generation or two ago, but it is not extinct–and it never will be completely unheard of.

But the solution is not to overlay a system of preferences on top of it. The solution, if the personnel manager in the accounting department at company X is a bigot, is not for the shipping department there to give preferences, let alone for company Y to do so. The solution is to enforce the law against such discrimination–and to do so with respect to discrimination against any racial or ethnic group, and against men or women.

….. I will be candid: The commission has been quite passive to date with respect to the company “diversity” policies I have described today, and it is hard for me to believe that it would have been this passive if the shoe had been on the other foot. You need to file some lawsuits that challenge some of the abuses I have described.

New S.O.B. Blogs

Filed under: News from Other Sites — Tom @ 11:30 am

Welcome to The Pullins Report, which tends towards tax issues in Ohio, and Redhawk Review, which is going the more comprehensive route.

More on How the “Evil Rich” Are Carrying Us

Filed under: Economy,Taxes & Government — Tom @ 9:56 am

At the urging of a commenter, I answered an objection he made at this previous post that my review only focused on federal income taxes, and didn’t consider the impact, which he appeared to assume was either regressive or at least “unfair” to low- and middle-income earners, of the other taxes that people must pay.

Fair enough. Here is the substance, with some enhancements, of the comment I left in response last night, which will serve as good marker for future arguments about whether the evil rich are pulling their weight in the tax system.

Keep in mind that at this other comment at the previous post, I noted that in 2003, the most recent year for which comprehensive IRS data is available, the bottom half of all individual income tax filers not only as a group paid no net income tax, but actually, thanks to the Earned Income Credit and other credits, had (again as a group) a negative tax liability.

So, here goes:

State income tax — Most state taxes are “progressive” and allow for very few deductions after federal AGI. The evil rich pay a much higher percentage of their income in most states than than those in the middle class. A particularly egregious example is California, where the top rate is currently 9.3% (10.3% on income over $1 million); that could go to roughly 11%-12% if Meathead Rob Reiner gets his way on his pre-school tax. The state’s tax rate starts at 1% for lower earners.
A convenient table of state taxes showing that the vast majority are “progressive” is here. Of the few states that have “flat” taxes, most have exemption amounts that make them mildly “progressive.”

Local income tax — In Ohio, it’s a straight percentage of income. It’s flat — neither regressive nor “progressive.”

Sales tax — In Ohio, sales tax is charged on everything except groceries and take-out food. That makes it progressive in the sense that those categories constitute a higher pecentage of a less well-off person’s or family’s budget. I can’t speak for other states, but a table of strictly the rates without identifying exempted items is here.

Medicare tax — 2.90% (employer and employee portions combined) of ALL earned income. It sounds like it’s neither regressive or progressive, but the fact is that there should be some sort of correlation between what’s paid in and the benefits received. The fact is that the evil rich are plunking almost 3% of their gross earned income (no deductions) into a system where they will never get anything even resembling proportional benefits in return, while low earners pay in very little and get much more than that back in terms of medical benefits. The least the rest of us could do is say “thank you.”

Social Security — 12.40% (employer and employee portions combined) of all earned income up to about $94,000). This looks regressive, but is actually progressive based on the way benefits are calculated. Assuming no inflation, someone making $25,000 a year during their entire working career will get a benefit of about half that, or $12,500 per year. Again with no inflation, a person making $75,000 a year during their entire career will get a benefit of about 25% of that, or about $19,000. (Earnings above the earnings limit aren’t taxed, but no additional benefits are earned either.) This means, in a point that I similarly made in my maiden post over a year ago, that the person who paid THREE times as much into SocSec is getting a benefit that’s only about 50% higher. On top of that, upper-middle and higher-income taxpayers usually have to pay federal income tax on 50%-85% of their SocSec benefits, while a lower-middle income person doesn’t. You can call Social Security a lot of things, but regressive is NOT one of them.

Real estate tax — This is essentially a “flat asset tax” based on property value. The decision to own a home is voluntary one based hopefully on an evaluation of what a person or family can afford. My take on this is that people tend to live in homes with values proportional to their income, so I would rate this tax as flat (though renters tend to pay proportionally less in property taxes that are inherently included in rents).

Personal property tax (usually on cars) — If there’s a regressive tax, this might be it. While the evil rich tend to drive more expensive cars and pay higher vehicle property taxes, those taxes as a percentage of their income will usually be lower. In the grand scheme of things, these taxes are not a big item.

Taxes on dividends and capital gains — The money used to invest in stocks, bonds, etc. is usually after-tax income that was already taxed when it was earned. A real good argument could be made that dividends and capital gains shouldn’t be taxed at all on that basis. It should also be noted that the tax collections from capital gains have skyrocketed since the rates were lowered in 2003, because the evil rich have been more willing to move their money around to better investments, even if it means having to pay the capital gains tax as a result. This not only raises more revenue, but moves money in the economy into better-quality investments as opposed to keeping it locked into lesser-quality ones.
Also don’t forget that all dividends in 401(k) are tax-deferred, and all cap gains are tax deferred, and those investment plans are more available in proportion to income to the middle class than they are to the upper class because of contribution limits, so-called discrimination testing, and the like.
On balance, I believe the lower taxation of dividends and capital gains outside of retirement plans compared to their tax-deferred nature inside of retirement plans is probably a wash, and that there’s no significant “progressiveness” or regressiveness here. Anyone who is aware of a study on this matter should let me know.

The Death tax — This is an asset-based tax. The only other asset-based taxes in the list above are the real estate and property taxes, which at least have some correlation with the services rendered by the state, county, city, and/or school district involved. There is no such correlation with the death tax — it is simply government-sanctioned theft of wealth that takes place only because a person happened to die, and then only because the person did not employ estate-tax avoidance strategies. Its impact on those who fail to do that is certainly “progressive.”
As discussed over a year ago, I believe that the death tax should be eliminated, because the money involved in building the estate was already taxed at least once, and perhaps as many as four times (income tax, dividends tax, capital gains tax, and/or property taxes on homes and farms); because eliminating it would eliminate the entire tax-avoidance side of the estate planning industry and put those people to work doing more productive things; and because assets wouldn’t remain locked in place as a strategy to avoid the tax, improving capital flows in the economy and the economy’s performance.

So, let’s review:

  • State income taxes — “progressive.”
  • Local income taxes — flat.
  • State sales taxes — flat to mildly “progressive.”
  • Medicare tax — flat, but VERY “progressive” when benefits to be received are compared to money put in are compared.
  • Social Security — flat up to the earnings limit, but VERY “progressive” when benefits received are compared to money put in are compared, and when the federal income taxation of benefits on higher earners is considered.
  • Real estate tax — flat to mildly progressive, if renters are included.
  • Personal property tax — somewhat regressive.
  • Dividends and cap gains — on balance, flat, IF the non-rich person is wise enough to be saving in tax-deferred retirement plans (more info on this from elsewhere would be welcome).
  • Death tax — when it happens, “progressive.”

So, despite concerns expressed by the commenter about items besides federal income taxes, it’s hard not to conclude that the tax system as a whole is still very “progressive.” The evil rich certainly pay a much higher percentage of their incomes in taxes than those in the lower and middle classes. In fact, one of the last things we need to worry about is whether the evil rich are paying their “fair share” — it’s pretty clear they’re doing quite a bit more than that.

My commenter appears to resent the fact that the evil rich may still have more money and wealth left than the rest of us even after paying their exorbitant taxes. Thank goodness for that; if they knew they would end up with the same amount as everyone else, they’d stop working so hard (or smart), and would also stop generating all those taxes that carry us.
___________________

UPDATE: Steve makes some great points in his first comment, and picks up a few taxes I missed, and I think I covered his concerns in the comment that follows.

UPDATE 2, May 20: Here’s an update on the one remaining piece above that was a guesstimate, the cost of government regulation (link requires subscription):

Federal regulations now cost the U.S. economy about $1 trillion in lost output a year, or about $8,000 per household, according to a 2005 study by the Small Business Administration.

That is probably as regressive a “tax” as you’ll ever see. The regulatory burden on a richer person may be higher than it is for a poor person, but it certainly doesn’t increase in proportion to income.

Malkin: “Senate Rejects Enforcement First”

Filed under: Immigration,Taxes & Government — Tom @ 9:44 am

Note: This was orginally posted early this morning but has been carried forward.
_______________________________

Of course, she’s right, and here’s why:

The Senate defeated, 55 to 40, a proposal by Senator Johnny Isakson, Republican of Georgia, that lawmakers demand that border-security measures be in place before beginning a guest-worker program of the kind envisioned by President Bush.

The 55 senators rejected Mr. Isakson’s argument that, if the Congress did not act now, it would have to a decade or so from now, and that “instead of 10 million or 12 million, it will be 24 million” illegal immigrants at issue.

She lists the Republican senators who voted against it (actual roll call is here). I should know better, but two of those names still hurt:

Voinovich (OH),
DeWine (OH)

DBM, IV4P.
_________________________

UPDATE: That 55-40 vote was yesterday. Today the Senate voted 83-16, with no GOP nays, to build 370 miles of fence. Fine, but the prioritization ahead of handling illegals that are already here yet hasn’t been resolved. Nevertheless, it’s a start.

UPDATE 2, May 18: Rush’s take (link provided will work until about 6 PM on May 18)

Folks, I know, it’s getting worse by the day, and it’s inexplicable. It doesn’t make any sense. What are these 18 Republicans doing? What is so difficult to understand about this in terms of the smart, sensible thing to do here? The first thing is the security of the border, and to have 18 Republicans, “Oh, nope, can’t put that in there.” Maybe they didn’t like the fact that we can’t do anything else until the border is secure. Well, what is wrong with that? I am trying to maintain my composure, but no matter where I look and no matter how deep I dig, I can’t come up with a explanation for any of this that makes sense to me.

The 23rd Carnival of Ohio Politics Is Up!

Filed under: News from Other Sites — Tom @ 9:27 am

And it’s here.

Bizzy’s AM Coffee Biz-Econ-Life Links (051706)

Free Links:

  • John Stossel had a great discussion with BizzyBlog’s non-favorite reporter, The Washington Post’s Howard Kurtz, on pervasive newsroom bias in business coverage (transcript is here; HT The Manufacturers’ Blog). Here’s a bit of it:

    KURTZ: You say that the media are clueless, especially on science and economic matters. That sounds like a pretty sweeping indictment to me. Are all journalists clueless or just some journalists clueless?

    STOSSEL: I would say most journalists are clueless when it comes to science, and there this pride in the newsroom of not being able to do your expense account. We hear all these stories about record-high gas prices and this being so evil. I’d say journalists are hostile to capitalism and clueless about science and economics.

    KURTZ: OK. Now, you say that reporters go along with environmental activists and other activists who you more or less describe as scare mongers. How much of this is influenced by your views about government regulations? You’ve been critical of the regulatory bureaucracies. You said that you wouldn’t mind if the Food and Drug Administration just went away. So how much of this has to do with your own philosophy on these things?

    STOSSEL: From my years of consumer reporting I have concluded that almost all government regulation makes life worse, so, yes, I look at life with that spin. I have a point of view.

  • The Communist Party isn’t dead in Russia — in fact, there’s a youth movement (HT “S.O.B.er” Interested-Participant).
  • Memo to shouldn’t-be Ohio Governor Bob Taft — Honda has announced that they will build a 6th North American Plant, but hasn’t decided on the location. Indiana is already on it. Get to work, and maybe you won’t leave in total disgrace. Update: It looks like Ohio is in the running.
  • There would be more if it weren’t for Sarbanes-OxleyTen IPOs were filed with the Securities and Exchange Commission last Friday, the highest number since March 2000.
  • I am REALLY liking this guyThe Skeptical Optimist talks about the right way to leave our kids and grandkids having to pay trillions of dollars in taxes. We should grow our way into it.

Positivity: Brave boy’s life recalled by family and friends

Filed under: Positivity — Tom @ 6:03 am

Yes, this is a positive story, even though the boy died at age 11. Read on:

May 16, 2006

About 500 friends, family members and well-wishers visited Heitger Funeral Service-Massillon Chapel on Monday to offer condolences to Tyler Gardiner.

The 11-year-old Massillon resident died early Friday morning after a 3-1/2 year fight against leukemia

Gardiner’s reaction to the news he had a terminal disease is still being admired by his doctors.

“He was very realistic and made plans,” said Dr. Sarah Friebert, a pediatric oncologist at Akron Children’s Medical Center. “He knew that he was going to die but his goal was to live life to the fullest and hoped for a miracle to prove us wrong. He was a strong-minded kid and was very inspirational.

Photo displays and video from his life were displayed of family and friends, as well as special trips to New York City and Tampa made possible by donations.

Friebert said encouragement and support that Tyler received from area residents were helpful emotionally to him during battle.

“Medicine is only part of the answer,” she said. “Love and concern from others were also helpful to him. He derived energy from his support.”

Sue Kirkpatrick, second vice president of the Fraternal Order of Police Henderson Lodge No. 105 in Massillon, sold her diamond earrings for $260, which started a $3,800 fund-raising drive for his last-wish trip to New York City.

“I would have done it all over again,” she smiled outside the funeral home. “God worked a miracle. He had so much fun.”