Daily Tax Quotes

The difference between death and taxes is death doesn’t get worse every time Congress meets.

— Will Rogers

Jobs, and the jobby jobs that job them

Tony Messenger’s article Jobs is the buzzword of the Missouri Capitol I thought had some great statements that really sum up a lot of my feeling about taxation and job creation.

The question for lawmakers: How to use the government’s power to create those jobs?

It’s a complicated question.

The House, for instance, passed a bill to give tax incentives to Ford to help retain jobs in Missouri, rather than lose them to another state offering more cash.

Then there’s a big push to create the “jobs of tomorrow” by creating special funds — a closing fund, a fund for science and technology businesses, a fund for investing with entrepreneurs.

Those funds need money, and that money, for the most part, comes from either giving companies tax credits or from reduction of income taxes. Both policies reduce the amount of revenue coming into state government.

Such programs, lawmakers and business leaders testified last week, are the core of the “jobs” programs that will pull the state out of its economic doldrums.

Not so fast, offers Sen. Jason Crowell, R-Cape Girardeau, who has become a bit of a tax credit curmudgeon over the past couple of years. Crowell testified last week in favor of bill of his, one of many he has that would try to rein in the state’s various “jobs” programs.

Why? Crowell doesn’t believe all those tax credit programs actually create jobs. He’s convinced they cost jobs.

Where? In schools, for one.

One of Crowell’s underlying points — and it seems to apply to so many of the “jobs” bills that get discussed in the Legislature — is that every such bill creates losers as well as winners.

A tax incentive here equals lost revenue somewhere else. To Crowell, that’s the part of the discussion that has been missing. You can’t just talk about creating jobs without talking about what happens on the other side of the equation.

The money has to come from somewhere.

The Furlough

A friend of mine, I’ll call her Ruth, works for a large corporation in a job she loves and is challenged by. She does performance audits and helps her St. Louis area branches learn efficiency, protocol and then keeps them in check.

The company has had to discontinue 401k matching and often decreased hours for hourly employees in an effort to save jobs. My friend remarked that she was glad they were working hard to keep from laying people off, and that she would be willing to get a little less if it meant her coworkers (or herself) would keep their jobs.

Wouldn’t it be great if your government felt they could do with less if it helped save a job?

Wingspan

Miller-McCune has an article in their new blog “The Idea Lobby” that really startled me.

Basically, their graphing of political leanings in Congress that barely meet in the middle, while blades of concentration, both on the right and left, spread apart from one another.

I think it’s easy to see this impasse playing out, but it is a wonder.

From the article:

The full data suggests that this is not just a polarized moment in politics, but the most polarized the legislature has been in more than a century.

To have or to be?

I recently came across a very intriguing chart. I’m certain you can glean your own interpretation from this simple but powerful look at partisan holdings in the most wealthy and influential corporations:

By David Sparks

Side note: Miller-McCune is a great resource if you’re drilling into the confluence of research and government or the economy.

Letter: Eminent Domain land a liability

I read a great letter today in the Springfield News-leader that expressed really well what I’ve thought about eminent domain acquisitions that are turned over to private contractors (…that it stinks to high heaven).

Zoning to regulate future development while preventing undesirable interim use is a good thing. Annexing 265 acres requiring city services at a time when the city is unable to meet already committed financial obligations is not. Requesting that the county zone those acres compatibly would be better.

Lunching recently at a large hotel, my friends and I were the only diners in the large facility. Inquiring about their dinner menu, we learned dinner is offered only if at least 20 guests are registered, suggesting frequent low occupancy. Will a new tourist hotel near Bass Pro fare better? Would travelers on highway 65 stop less than 50 miles from their destination, except for dinner? Will local shoppers abandon it when the novelty wears off? Might it become a money pit like the ice park? This time, we should be poised for incremental development as funds and demand become assured.

Land obtained through legitimate use of eminent domain is a financial liability, not an asset. Such publicly owned public use facilities, including roads, parks, schools and other public buildings, require maintenance and are tax exempt. The same greed that infected commercial enterprise and brought this country to its financial knees now endeavors to define public good for eminent domain as the tax revenue incidental to private commercial profit. The taking of one man’s property for the private success of another is immoral abuse of the law’s intent.

Doris Witt, Springfield

She makes an excellent point: what can the Government do that private entities can’t (other than seize land and impose taxes…) that gives them an edge in determining what business is worthwhile, or will thrive in any particular area?

To be certain, shuttered buildings, unstable properties etc. are bad for development. But it is not ever the government’s responsibility to replace the economy, but rather to figure out its role in stimulating (or in some cases simply allowing) growth.

Ms. Witt is correct to call this ‘immoral’: it also seems unconstitutional to me, though the courts have disagreed famously in Kelo. Nowhere in the values we teach our children do we give a caveat for taking someone else’s property. There are mechanisms in place protecting neighborhoods from blight with charges and fines for poorly-maintained or dangerous properties. Barring that, and zoning regulations (all clearly defined laws, not judgment calls), how someone manages their property, their personal tastes and choices are their prerogative, having paid for the property.

The only mechanism that is lacking is a way for property owners to repel a government’s aesthetic choice (or, perhaps more likely, a payola choice) to seize their property and be at their mercy as to how well they will reimburse the owner – and to challenge via a rigorous litmus test whether the use of eminent domain is warranted.

Auditor’s race in 2010: bringing sexy back

Well, at least to the Auditor’s race. It promises to be a long and intense race in Missouri, and has thrown the spotlight on the Auditor’s position.

Across the nation, predictions for the most exciting, the most probable and the most scandalous races have begun. The majority of the political forecasts list Missouri’s senate races as “toss-ups”, including The Cook Political Report’s, Congressional Quarterly’s, The Rothenberg Political Report’s, Campaign Diaries’ and the Swing State Project’s.

Ironically, one of the least covered 2010 races is one of the most important to the well-being of the state: the state auditor. Yet, this race is quickly becoming one of the most interesting contests.
And the announced contestants (as of July 10) are: Representative Allen Icet, Thomas Schweich (rhymes with bike) and Susan Montee, the current State Auditor.

The standout, but term limited Chairman of the House Budget Committee for the last five years, Allen Icet, poses a significant threat to anyone running for the auditor position. Icet was the first to announce his candidacy and has done the most on the campaign trail in comparison to his competitors. Earlier this week, he released his impressive list of 84 endorsements, including 80 state representatives and 4 senators.

Thomas Schweich, the former Special Ambassador to Afghanistan for the George W. Bush administration, unofficially announced his bid unconventionally from a Washington University (Saint Louis) locker room. His official announcement was on July 7 in a statewide fly around with nominal support attending. He has been referenced for having Lt. Gov. Peter Kinder, Rep. Roy Blunt, Sen. John Danforth and Sen. Kit Bond’s encouragement to run for the position in an exchange for his absence to run for the open senate seat, the office Schweich had been eying for a long time.

Apart from his entry into the race, Schweich has remained extremely vague in his interviews and continually has not disclosed accountability information, such as whose plane he was flying in and who was traveling with him.

Current State Auditor Susan Montee, the only Democrat so far to file with the state Ethics Commission for the position, was rumored to have considered auditing at the federal level, but has apparently decided to remain in the realm of state politics, at least for the time being. Montee thus far has not posted anything on her website, despite having a bold advertisement on the Missouri Democrat’s homepage.

So far Icet has been the only candidate that seems truly aggressive in running for the state auditor slot. This aggressiveness early on could go a long way in proving to the people his passion for public service and his ability to hold government accountable. While the primary is still a long way off, the other two candidates’ campaign progress has been slow at best, and the public continues to wait for clues into these other distinct identities that would make them capable of holding the state auditor’s position.

To find out more information about what Icet would do as Auditor, click here.

What Cap and Trade means for Missouri – and me.

The Springfield News-Leader posted an op-ed today by Carl Bearden examining the misguided Cap-and-Trade bill awaiting the Senate’s judgment.

I’ve written about this bill earlier, and while it’s a national issue, this op-ed breaks down what Missouri can expect to see if this ersatz environmental bill is passed, projecting that “by 2020 we would have 23,000 to 34,000 fewer jobs; a $900 to $2,800 reduction in annual household disposable income; an annual hit to Missouri economy of between $2.7 billion and $3.7 billion; and much higher energy prices – 21 percent to 67 percent higher for gasoline and 31 percent to 39 percent for electricity.” I don’t know about you, but my utilities are a huge chunk of my paycheck each month and they already increase every year as it is. So essentially, the additional costs to the businesses that employ Missouri workers will result in fewer jobs/reduced wages. Then those workers will turn around and be facing skyrocketing utility and gasoline prices, taking even more out of their paychecks for the same program.

So, try a rough estimate with me. Say my monthly disposable income is, like, $400, so $4800 a year. Heck, we’ll round up to $5000/year. Less the lowest-projected $900 reduction in household disposable income, so my disposable income would be $4100/year. I spend about $200 on my electric bill each month, so the lowest increase rate would cost me $62/month. I spend about the same on gas, so the lowest rate increase would be another $42/month, so that’s $1248/year in gas/electricity rate increases. Altogether, that’s 43% of my disposable income gone in the most conservative of estimates. It may be better or worse for some people, but it’s no small chunk of change and few Missourians are expecting raises in the foreseeable future.

This amounts to a tax increase: money shaved off of personal earnings to pay for a government program – a program that does very little if anything to decrease or deter greenhouse gas emissions, merely shuffles them around to companies that can afford the prices.

On a more lighthearted note:

Cap and Trade hurts.

I like the environment a lot. I’m not utterly opposed to environmental policy that first does no harm, but like this op-ed points out, the so-called Cap and Trade scheme causes a lot of harm. We have a lot of very smart people in this country and I think we can come up with something better than the feel-good symbolism and recklessly regulatory cap and trade idea.

What’s more, people via the market are increasingly demanding that businesses act environmentally friendly and produce environmentally friendly goods. The U.S. Government does not need to tax us into the stone age to force us to be environmentally mindful: we already are. But even if we weren’t trending that way, expending energy is a bi-product of living. For an extremely poignant opinion, see the Ayn Rand Institute.

From the Missouri Political News Service:

Cap-and-Trade Tax Hike Will Slam Missouri

By Carl Bearden and Phil Kerpen

The surprise revenue source to pay for much of the Obama budget is something known deceptively as “climate revenues,” also known as “cap-and-trade.” What cap-and-trade really means is tax-and-spend at an unprecedented level and with sweeping consequences throughout the economy, both nationally and here in Missouri. It’s the worst kind of tax hike – a hidden tax hike, hidden behind a complex regulatory scheme that only adds to the cost.

The size of the tax is a mystery. Companies know they have to pay a tax, but nobody knows what the tax rate is because companies will be forced to bid at auction for the government to allow it to use fossil fuels. The Obama budget initially slated the cap-and-trade tax to generate approximately $646 billion in revenue to the federal government over 8 years. More recently however, the deputy director for the White House National Economic Council, Jason Furman, reported that the tax scheme would actually raise two to three times that much, running upwards of $1.3 to $1.9 trillion. The truth is nobody knows how much this will cost, and that’s part of the problem.

We do know the impact on our economy here in Missouri would be staggering. An analysis conducted by the highly-respected forecasting firm SAIC and commissioned by the American Council on Capital Formation projected the economic impact of last year’s version of cap-and-trade for Missouri. They found that by 2020, with the bill in effect just 8 years, we would have: 23,000 to 34,000 fewer jobs, $900 to $2,800 in lower annual disposable income per household, an annual hit to Missouri economy of between $2.7 billion and $3.7 billion, and much higher energy prices – 21 percent to 67 percent higher for gasoline and 31 percent to 39 percent higher for electricity. The study also found that lower-income families – people who are least able to absorb higher energy costs – will be the hardest hit.

Those numbers are the impact of last year’s Lieberman-Warner version. We don’t have number yet on Obama’s new proposal, but it is more extreme and would be even more expensive.

These astonishing economic costs are not an unfortunate side effect of the bill – they are its intended purpose. President Obama himself explained that passing costs on to consumers is an important part of his plan when he explained to the San Francisco Chronicle last year: “Under my plan of a cap and trade system, electricity rates would necessarily skyrocket… whatever the plants were, whatever the industry was, they would have to retrofit their operations. That will cost money. They will pass that money on to consumers.”

What makes these costs even worse is that they don’t buy us anything of value on the environmental side. Cap-and-trade is already failing to reduce emissions in Europe. And even if emissions targets are met, climate models show that the reductions would have no discernible effect on global average temperature. The National Center for Atmospheric Research found that the Kyoto Protocol would reduce global average temperature 0.07 degrees Celsius in 50 years and 0.15 degrees Celsius in 100 years.

Feel good symbolism is not worth trillions of dollars in higher energy taxes. Climate change can only be effectively addressed with the luxury of wealth that a free-market provides. That’s why it would be such a mistake to impose a cap-and-trade, tax-and-spend scheme that would only undermine our prosperity. This will ultimately be decided in the U.S. Senate, and we can only hope that Sen. Claire McCaskill ultimately decides to vote “no” on cap-and-trade. The health of our state and national economies may depend on it.

A tax by any other name…

Isn’t a dollar in taxes the same regardless of its origin? The answer is no.

According to standard economics, imposing a tax on income, whether a tax on individuals’ labor or on corporations’ earnings, diminishes those activities generating taxable income.

Think of it this way: In a world with no taxation, employers and workers settle on some market clearing wage that is beneficial to each. With an an income tax, a workers’ take home income must go down for the same hours worked. Unless firms raise wages to make up the difference, rational workers supply less after the tax is imposed. The tax reduces the amount of work, which reduces the goods and services available to consume.

Rik Hafer, special to the St. Louis Beacon, make this excellent point. I posted the article earlier, but this stuck out to me in particular as a really great point and one that I think gets glossed over in so many discussions.