June 19, 2011

AP’s Error-Riddled Report on Taxing Internet Sales Taxes Patience (See Updates: AP Partially Corrects)

Update, June 20, 12:30 p.m.: Revised to reflect another AP math error not caught the first time around.

Update 2, June 20, 3:20 p.m.: The AP has issued a correction indicating that lost sales taxes are $23 billion and teachers’ salaries which could be paid are 460,000. The contradiction explained below about California’s claim that it is failing to collect only $200 million (less than 1% of the total, in a state with 12% of the nation’s population) is unexplained. The post’s text has been revised to reflect AP’s correction. AP has NOT corrected its original story here or here.

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What is it with Associated Press reporters and basic math?

Earlier this evening, I noted how the wire service’s Scott Bauer failed to correctly state the nature of the pension costs many of Wisconsin’s unionized workers will have to pay; he said they would have to pay “5.8% of their pension costs,” when it’s really “5.8% of the gross pay into the state’s retirement fund.

Yesterday, the AP’s Chris Tomlinson, in reporting on states’ desperate attempt to force online vendors to collect sales tax on their behalf, contributed a couple more math and conceptual errors of his own:

State governments across the country are laying off teachers, closing public libraries and parks, and reducing health care services, but there is one place they could get $23 billion if they could only agree how to do it: Internet retailers such as Amazon.com.

That’s enough to pay for the salaries of more than 46,000 teachers, according to the U.S. Bureau of Labor Statistics. In California, the amount of uncollected taxes from Amazon sales alone is roughly the same amount cut from child welfare services in the current state budget.

But collecting those taxes from major online retailers is difficult.

… California estimates it loses at least $200 million a year in uncollected tax from online sales, $83 million from Amazon.com alone. A bill that has passed the state Legislature would force Seattle-based Amazon and others to collect that tax from California residents.

Busts, busts, everywhere:

  • AP has acknowledged in Update 2 that 460,000 teachers could have their salaries paid with the $23 billion which allegedly can be raised through taxation of Internet sales (thanks to a commenter for catching this. Zheesh).
  • The Bureau of Labor Statistics actually says that “Median annual wages of kindergarten, elementary, middle, and secondary school teachers ranged from $47,100 to $51,180 in May 2008.” That’s the median, it’s not the average, and it’s three years old. This source indicates that the current average is $50,304. Chris Tomlinson’s salary estimate of $50,000 is essentially correct, but only through luck.
  • Far more important, the $23 billion would pay for 460,000 teachers’ wages and not a dime of their benefits. Factor benefits at a conservative 50% of earnings into the equation (in Wisconsin, it was found to be much higher than that), and the real potential is about 307,000 fully-funded teachers.
  • The 307,000 teachers in the previous point would represent less than 9% of the roughly 3.5 million kindergarten, elementary, middle, and secondary school teachers in the U.S.
  • The $23 billion in potential online revenues doesn’t square with another statistic Tomlinson cited. He noted that California says its estimated annual revenue pickup would be about 200 million, or less than 1% of $23 billion. But the Golden State has 12% of the nation’s people. That does not project. AP’s correction (see Update 2 above) indicates that $23 billion is the correct annual figure. It’s not my job to do all the research to fix all of his math problems and contradictions. It’s his job to get it right. He clearly didn’t.

Tomlinson also failed to address the excruciating burden Internet sales collection and remission would impose on start-up and early-stage online businesses who, unlike Amazon and others, don’t have the infrastructure to be able to handle determining which of the “over 8,000 taxing jurisdictions in the United States” gets the money collected. There is talk of having “a national standard using the Streamlined Sales and Use Tax Agreement,” but as long as rates between jurisdictions differ, it’s difficult to see how such an agreement would be of much help. It’s not unreasonable to believe that you can kiss a few tenths of a percent of annual GDP growth good-bye if a national Internet sales tax regime ever becomes a reality.

Cross-posted at NewsBusters.org.

AP’s Bauer, Obsessed With ‘Polarizing’ Law, Actually Understates the Pension Hit Wis. Public Employees Are Taking

Gosh, I would have thought that someone in Wisconsin’s or America’s labor movement would have caught Scott Bauer’s clear June 15 understatement of the net pay hit many unionized public sector workers in the Badger State will be taking as a result of 2011 Wisconsin Act 10, commonly known as the “Budget Repair Bill,” once the law’s provisions become effective on July 1. That error is in the following sentence from Bauer’s report (“New lawsuit filed against Wisconsin union law”):

The law also requires workers to pay 12 percent of their health insurance costs and 5.8 percent of their pension costs, which amount to an 8 percent pay cut on average.

The AP reporter apparently spent time which should have gone towards getting the facts right to ensuring, as he did in a June 14 story (covered at NewsBusters; at BizzyBlog), that the law was described as “polarizing” as often as possible. Bauer’s frequent use of the P-word also seemingly distracted union supporters who read or heard portions of Bauer’s report from noticing the error I will explain shortly.

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Did AARP ‘Pivot’ on Social Security to Stop Membership Bleeding?

Filed under: Economy,Soc. Sec. & Retirement,Taxes & Government — Tom @ 9:08 am

aarp-logo1Here are key paragraphs from Laura Meckler’s Wall Street Journal’s report on AARP’s “pivot” (read: apparent change of heart) on Social Security reform:

AARP, the powerful lobbying group for older Americans, is dropping its longstanding opposition to cutting Social Security benefits, a move that could rock Washington’s debate over how to revamp the nation’s entitlement programs.

The decision, which AARP hasn’t discussed publicly, came after a wrenching debate inside the organization. In 2005, the last time Social Security was debated, AARP led the effort to kill President George W. Bush’s plan for partial privatization. AARP now has concluded that change is inevitable, and it wants to be at the table to try to minimize the pain.

“The ship was sailing. I wanted to be at the wheel when that happens,” said John Rother, AARP’s long-time policy chief and a prime mover behind its change of heart.

The shift, which has been vetted by AARP’s board and is now the group’s stance, could have a dramatic effect on the debate surrounding the future of the federal safety net, from pensions to health care, given the group’s immense clout.

“If they come around and say they’re ready to do something, it will be like the Arctic icecap cracking,” said former Sen. Alan Simpson, co-chairman of a White House commission on the deficit. He has frequently assailed the group as a barrier to progress.

At the same time, AARP runs the risk of alienating both its liberal allies, who have vowed to fight any benefit cuts, and its 37 million members, many of whom are deeply opposed to such a move.

I’m not in a forgiving mood. What AARP did to derail rational discussion of Social Security reform in 2005 was reprehensible and, as the organization is now effectively admitting, wrong. Finally coming around after letting the demographic time bomb’s fuse nearly run out during the intervening six years is hardly impressive. I also suspect that whatever AARP believes is “reform” has nothing to do with giving Americans some degree of control over how their money is invested, and has nothing to do with giving them assets they can pass on to their heirs if they don’t survive to retirement. And of course, AARP supported the passage of Obamacare in a case of what was correctly seen as a case of brazen self-interest.

Meckler’s reference to “many” AARP members who would oppose any reform is apt. How “many”? I suspect AARP has polled this internally, and has found that fierce opponents of Social Security reform are in a distinct minority.

Which gets to the membership question I brought up in the post’s title.

Meckler’s reference to “37 million members” caught my eye. That seemed lower than the numbers I’ve seen concerning AARP membership rolls — and it is:

  • At Wikipedia’s AARP entry — “AARP claims over 40 million members, making it one of the largest membership organizations in the United States.”
  • The link to “Government Watch” at this AARP “Advocacy” page says “AARP’s 40 million members hold their elected officials accountable for their votes on issues of great importance to older Americans.”
  • New York Times; October 3, 2009 (“A Heated Debate Is Dividing Generations in AARP”) — “Its 40 million members are split about evenly between those who have access to Medicare, the federal government’s health program for the elderly, and those who are too young to be eligible for such benefits.”
  • A current Google News search on [AARP "40 million members] (typed exactly as indicated between quotes) returns four items from the past 30 days, including items predating AARP’s “pivot” from US News and New Hampshire Public Radio.
  • A Google News Archive search on the same string but also sorting by date and omitting any items containing the word “nearly” returns 98 items.

But now, Laura Meckler’s reported number is at least 7-1/2% (3 million divided by 40 million) lower than what has been claimed by AARP itself and generally used in media coverage.

In August 2009 (“Seniors Voting with their Feet”), Ed Morrissey at Hot Air noted a CBS News story reported that “Over 60,000 members have left the AARP, angered by the group’s support for Barack Obama’s health-care reform efforts and silence on cuts to Medicare that will pay for them.” Perhaps that number was a very small indicator of a much larger trend.

It may be that AARP’s move was primarily motivated by a need to stop the bleeding caused by millions of members and potential members voting with their closed wallets.

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UPDATE: Thanks to Hot Air Headlines for the link. Keep in mind, based on demographics, as awesomely demonstrated at this graphic at Calculated Risk, AARP’s membership should be increasing, not decreasing.

Positivity: Vatican announces first winners of Ratzinger Prize

Filed under: Positivity — Tom @ 7:00 am

From Vatican City:

Jun 14, 2011 / 11:19 am

The first three winners of the inaugural Ratzinger Prize for Theology were announced June 14.

The prize was established last year to promote theological study on the writings of Pope Benedict XVI and has been referred to as “the Nobel Prize for Theology.”

“We chose to reward two scholars already well established, and one who is relatively young but very promising,” Cardinal Camillo Ruini remarked at a Vatican press conference.

The two scholars chosen for the prize are Professor Manlio Simonetti, an 85-year-old expert on the Church Fathers who used to teach at Rome’s La Sapienza University, and Professor Olegario González de Cardedal, a 77-year-old specialist in dogmatic theology at the Pontifical University of Salamanca, Spain.

The youngest of the three winners is Professor Maximilian Heim, a 50 year old Cistercian who teaches dogmatic and fundamental theology at the University of Heiligenkreuz in Austria. He has a particular focus on the theology of Joseph Ratzinger, who is the current Pope.

The Ratzinger Prize is the initiative of the Joseph Ratzinger-Benedict XVI Vatican Foundation. It’s funded by the royalties accrued from Pope Benedict’s writings.

“Modernity has brought with it a dramatic divorce between secular knowledge and religious knowledge,” explained the Italian academic Professor Giuseppe Dalla Torre, who is also one of the prize judges.

“This division has gone through society from the top of the social pyramid,” he said, pointing to universities as the starting point because they are the place where “people, environments and … cultural paradigms and ways of life are forged.”

Dalla Torre said that since universities sit at the top of the social pyramid, it’s necessary to respond by directly and seriously engaging the intellectual elite.

The president of the foundation, Monsignor Giuseppe Scotti, said he wanted to thank the Pope for having “risked an adventure of this kind” in the hope it can “invest in the future of man.”

Go here for the rest of the story.