Propriety tax

In which we can observe the effects of the “Democratic Socialism” Congressgirl Ocasio-Cortez propounds.  She’s tickled pinko that Amazon decided not to locate their 2nd headquarters in New York.

Robert Mujica, New York State Budget Director, has a different view. Worth reading:
Open Letter From New York State Budget Director Robert Mujica Regarding Amazon

The polls showing seventy percent of New Yorkers supported Amazon provided false comfort that the political process would act responsibly and on behalf of all of their constituents, not just the vocal minority. We underestimated the effect of the opposition’s distortions and overestimated the intelligence and integrity of local elected officials…

Make no mistake, at the end of the day we lost $27 billion, 25,000-40,000 jobs and a blow to our reputation of being ‘open for business.’ The union that opposed the project gained nothing and cost other union members 11,000 good, high-paying jobs. The local politicians that catered to the hyper-political opposition hurt their own government colleagues and the economic interest of every constituent in their district. The true local residents who actually supported the project and its benefits for their community are badly hurt. Nothing was gained and much was lost. This should never happen again.

Read the whole thing. It’s devastating. The only things he missed are a reference to Venezuela, and opportunities to use the words “corrupt” and “venal.”

Meanwhile, New York faces a shortfall of $2.3B in tax revenue and blames Washington. New York property tax rates are Donald Trump’s fault, of course; though I, for one, am tired of subsidizing rich New Yorker’s (those whose property attracts taxes of over $10,000) Federal income tax.

Property taxes are a tax on wealth, which the Left is proposing to expand. So, shouldn’t these Progressive, civically minded, wealthy New Yorkers be glad they’re no longer allowed this huge loophole? I guess not, because they are leaving New York when the true cost of New York government is revealed.

Tell you what, raise the standard deduction again (it was just doubled) by a symbolic one dollar and eliminate the property tax deduction entirely. I own property, and I’m good with that.

Inconsistent consequences

The United States has recently imposed tariffs on Canadian lumber, Korean washing machines and Chinese solar panel components. The President is itching to slap import duties on steel. All those tax increases offset the income-tax cut, while enriching crony capitalists, fomenting a net reduction in American employment, and curtailing consumer choice.

How do these increased taxes balance out with the recent income-tax reduction?

The income tax cut will give 25 million taxpayers in the middle income quintile (or those with incomes from $49,000 to $86,000) an average of $930 of their own money back, BT (Before Tariffs). That’s about $25 billion.

I pick that quintile because I need a number, calculating the net-net of tax increase/decrease is very complicated, and the absolute dollar amount of all income-tax reduction is (naturally) skewed toward the top quintile.

Washing machines
The effect of a $50 increase is more economically significant than for lower or higher quintiles. The lowest quintile can’t afford a washing machine in the first place, and pays no income tax. Using the second lowest quintile could open my argument to charges of cherry picking. For higher quintiles $50-$100 in disposable income is irrelevant. For the discussion, I take the middle quintile as the exemplar of consumer sensitivity to the effect of increased tariffs.

In any case, what’s the amount of the offsetting tax increases? Well, washing machines, on average, will each cost $50 to $90 more. Ten million are bought every year. Consumers will pay at least an additional half billion dollars annually; not counting the as yet unknown additional consumer cost of the threatened steel tariffs.

I’ll call the mid-quintile share of that 50%, or $250 million.

Solar panels
Costs for residential solar panel installation will increase by an average of $650.

In 2017 there were only about 2,500 residential installations, so the residential cost increase would total a bit more than $1,500,000. Peanuts. It won’t make much difference for the mid-quintile.

Note, though, that commercial/utility scale installations would have a much higher value, and do have an effect.

This is because of the inherent contradiction of Fed solar panel policies. The Feds give a 30% tax credit for installing solar, while raising the price through tariffs. Taxpayers in all quintiles are subsidizing all solar projects, so there’s a tax of 6.5% (the tariff’s contribution to increased gross install costs) times the 30% subsidy on taxpayers in all quintiles. Taking $210 million as the revenue of the solar power industry in 2017, that would be about $40 million (6.5% x 30% x $210,000,000). This is a rough approximation, because I don’t know the breakdown of that revenue. What it does show is that the solar industry is not very big, and the clout to have a tariff imposed can’t come from its industrial importance. Must be “climate change” hype.

Of that total, let’s call the mid-quintile cost 15%, or $600 thousand.

New housing
The lumber tariffs added about $1,000 to the cost of a new house, pricing some 300,000 families out of the housing market. An estimated 1,202,100 housing units were started in 2017. That’s over a billion dollars, a disproportionate amount of which falls on the mid-level quintiles.

If one-third of that total falls on the mid-quintile, it’s a third of a billion.

Total cost
Now the total is approaching $600 million. Not much compared to the income tax decrease. But the real burden falls on the consumers who actually pay the extra $50 on their washing machine, the extra $650 on their solar installation, and the extra $1,000 on their house. They didn’t get a tax cut. They had their wealth redistributed to corporatists.

But, it’s more than just the increase in consumer costs: It’s also loss of jobs in retail, because fewer washing machines will be sold; the job reduction in construction of new houses; and the requirement for fewer installers of solar panels.

When steel tariffs are finalized, the job destruction in steel-using industries will be additive to washing machine manufacturing and solar panel installation. It will also affect car makers, pipeline building, skyscraper construction, tractor manufacture, ship building, etc.. Consumers will pay this tax, too.

There’s no doubt tariffs on steel will cost jobs in steel-using industries. It’s happened many times before. If Trump’s tariff accomplishments are anything like George Bush’s, we will see a cost to American consumers of $400,000 per “saved” steel job and the loss of more jobs in steel-using industries than all employment in steel manufacturing: The Perils of Protectionism

All these effects have been known since at least Adam Smith, and are documented by analysis of US tariff experimentation back to at least 1984.

Now, Governor… about "Plan B"?

Michigan Proposal 1-15, the Taxpayer Spoils Division and Extortion Act(s) bipartisan effort to get voters to do the job legislators are paid to do has failed. Ribbentrop and Molotov could not be reached for comment.

The other good news is that a plan to fix Michigan roads without tax increases has been available for a long time – Road Funding: Time for a Change

Figures would have to be adjusted, of course, but the basic principles still apply.

#NO_MIProp1-15

Today is voting day. Stop Proposal 1. If you’re still undecided, read this. And this.

VOTE TODAY!

Update 10:28AM: Do you think this: Detroit Education Overhaul Would Cost Other Schools $50 Per Student, is in any way related to the $300 million allocated annually to the K-12 system by the Redistributive Tax Increase Constitutional Amendment Lansing wants approved today?

It’s not about roads, folks.

The Michigan Convolution

Rep. Ray Franz Presentation on Roads: What You Should Know
Includes a good video encapsulation from District 101 Representative Ray Franz. About 20 min.

Takeaways:
Proposal 1-15 amends the Michigan Constitution.
It is convoluted.
This will be a low turnout vote.
You have to show up to register your opinion.
There will be a Plan B.

NO! Proposal One

RightMI.com is your ‘go to’ site for Proposal 1 information: More Info On Proposal One. Share that link.

For your convenience, I’ve followed some links from that post and you’ll find them below. I recommend checking the full analyses (fifteen minutes or so each), but I’ve included some shorter references (a couple of minutes) for the time challenged. This is a Constitutional Amendment, people: Understanding the detail is important.

First, from The Mackinac Center, Proposal 1 of 2015: An Analysis. The synopsis.

The full analysis, from which I quote:

Road construction in Michigan is primarily paid for with revenues from fuel taxes and vehicle registration fees. Since these taxes are paid by people driving vehicles on public roads, they function as a user fee.

Taxes motorists pay do not meet the strict definition of user fees, however. Vehicle registration taxes for passenger vehicles, for example, are based on their value rather than their estimated wear on the roads. Further, hybrid and electric cars tend to be heavier and thus cause more wear on the roads, but owners of these vehicles buy less fuel and pay less in fuel taxes.

That does not mean drivers of electric/hybrid vehicles get away free. Remember, this isn’t about fixing the roads, it’s about modifying the Constitution to increase taxes. What do you think will happen as we continue to reduce our use of taxable fuel? A tax on miles driven, perhaps? Or, increases in registration fees for electric/hybrids:

Proposal 1 would create higher registration fees for electric vehicles and electric-powered hybrids. Owners of these vehicles would pay an additional $75 on their annual registration fees for vehicles under 8,000 pounds and $200 more for vehicles over 8,000 pounds. This applies to vehicles that are “of a brand or has been modified to be powered solely or predominately by electricity under normal average class operating conditions.”

I also commend to your attention a report by the Citizens Research Council of Michigan: Statewide Ballot Issue: Proposal 15-1. Synopsis here.

Full analysis here:

As part of the final agreement, the Legislature intended to earmark a portion of the new revenues generated in FY2016 and FY2017 from the motor fuel tax increases towards paying down current State Trunkline Fund debt tied to past state road building initiatives. The package is estimated to generate just over $1.2 billion during these first two fiscal years from the motor fuel tax increases. Legislative intent was to allocate $400 million in FY2016 and $800 million in FY2017 of the new tax revenue for distribution through the state’s transportation funding formula, most of which would go to state and local road agencies. The remainder (roughly $860 million in FY2016 and $460 million in FY2017) would go to pay down state road debt.

However, the language included in Public Act 468 of 2014 to effectuate this earmark appears to be flawed. The language specifies that “the first $400,000,000.00 received and collected under this act” in FY2016 and “the first $800,000,000.00 received and collected under this act” in FY2017 would be distributed through the state funding formula. But, revenue “received and collected under this act” includes not only the new revenue from the recent legislative changes, but all existing revenue as well. As such, a literal reading of the language would suggest, for instance, that around $1.7 billion (the $800 million intended earmark plus current baseline fuel tax revenue of around $900 million) would be earmarked for debt reduction in FY2016.a Under that reading, FY2016 funding available for formula distribution would actually go down by around $500 million from current levels.

Demonstrating what happens when you write a bill hurriedly and don’t have time to read it before voting.

For those who prefer video, CRC has a Webinar (a little over an hour) on Prop 1-15. This expands on the history of the Michigan Constitutional limitations which brought the legislature to propose a Constitutional Amendment, and why that just places increased future constraint on the Legislature. They’ll be forced to live with what they created, and they may not find that congenial to addressing future funding issues. For example, they are removing $204 million in funding from state universities – do you think that will stand, or will they come back for more taxes when UofM and MSU complain they’re out of money?

Again, thanks to RightMI.com.

NO! to increased taxes

Put another way that’s a 2 Billion dollar tax increase. The good news is, you can say “No!” on May 5th.

Meanwhile, ads for a “Yes” vote on Proposition 1 are increasing in frequency and hysteria. The public/pirate partnership is telling us we can have either this tax increase or killer roads. This is a false choice. We can have good roads without a 2 billion dollar tax increase. The Michigan House of Representatives even produced such a bill, but it got waylaid in the Michigan Senate.

You can tell something about Proposition 1 from the company it keeps. Unions (here, here) & government are in favor, as are road contractors & Chambers of Commerce (here, here, here). Parties with a vested interest will promote their own welfare by trying to convince you they have your interests at heart. In this case, I don’t think the Venn diagram would show a large overlap.

It is interesting that at the state level, the Chamber of Commerce is officially neutral on the question (though James Holcomb, a senior VP of the Michigan Chamber, favors it). Perhaps this is because of a report they commissioned from the Anderson Economic Group LLC, which says, in part:

[T]he issues [with Prop 1-15] include all of the following:

• an increase in the general sales and use tax rates on retail purchases from 6% to 7%;
• a $1.69 billion increase in spending by state and local governments in Michigan, including: an increase in funding for roads, on the order of $1.2 billion per year; for the K-12 system, on the order of $300 million per year; and for local government revenue sharing, on the order of $100 million per year; plus smaller amounts for other purposes;
• a significant weakening of the extent to which road users “pay for” the roads without reliance on other taxpayers;
• an increase in the tax burden on businesses and their retail customers;
• substitution of a cents-per-dollar wholesale tax on fuel used for road-going vehicles, for the current retail tax that is set at a particular cents-per-gallon rate; resulting in a substantial increase in the effective tax burden per gallon and an increase that grows over time;
• increasing registration taxes and causing them to remain the same in succeeding years as in the year of purchase, regardless of the age or value of the vehicle;
• a partial restoration of the Michigan earned income tax credit (MEITC); and
• removal of universities as a constitutionally-allowed use of school aid funds; an implied change in the definition of higher education; and a new authorization to use school aid funds for public “community” and “technical” colleges, scholarships, and related programs.

Additional issues, some of which were undoubtedly unknown to legislators voting on the bills late in the lame duck session, include:

• widely varying tax burdens on fuel users, as certain users will pay both the new, higher motor fuel tax but will not benefit from the motor fuel sales tax exemption;
• serious compliance burdens and enforcement risks for users of fuel for boating, industrial, and other purposes other than driving vehicles on public roads;
• likely federal income tax increase among approximately 1.2 million Michigan households that itemize deductions for state and local property taxes;
• increases in taxes paid by working-poor and working-class households who do not claim the EITC;
• possible infringement of federal nondiscrimination laws regarding state-supported scholarships, should the state use the newly-created authorization to fund “scholarships”
only to “public” community colleges;3
• problems caused by significant increase in the registration tax on older vehicles, including some drivers paying more for this tax than the value of the vehicle; and
• the consequences of requiring the state to commission an “adequacy of funding” study for the K-12 system, which may encourage future lawsuits.

One takeaway: You have to pass it to find out what’s in it.

If you are still wondering about the wisdom of voting against increasing your taxes when you’re being lied to about the redistribution use of the funds, I offer the following items as worth reading:

Vote yes or you all will D-I-E!!!!!!!!!!!!!!

Remember folks, Prop 1 is a $2,000,000,000 hike with annual tax hike ratchet mechanism on fuel with a whole lotta public sector union payola (everywhere) and fraud embedded into it.

Just Vote Yes, Willya?

So, about three weeks ago, Safe Roads YES! launched their radio and television ad campaign, designed to convince us that jacking up our per-person state tax-and-fee burden by roughly $248.12 – permanently (not including inflation adjustments to the wholesale fuel tax) – is a good idea. To do so, they’re using the standard tactics of bogus statistics and emotional appeals, praying that the typical low-information voter isn’t going to do even the basic homework into the legislative piece of sausage that the GoverNerd and his hodge-podge of allies are doing their damnedest to slide by us roughly six weeks from now.

Taxpayer Cost for Road Fix ‘Compromise’ Went from $0 to $1.9 Billion

According to the House Fiscal Agency, $300 million of the tax increase will go to public schools, $95 million to local government revenue sharing and an additional $130 million in subsidies to local bus agencies. Another $260 million will be used for payments to low-income wage earners, a concession added to get votes from Democratic lawmakers, said Jack McHugh, legislative policy analyst for the Mackinac Center for Public Policy.

However, there’s a catch: The deal also includes an increase in the state sales tax from 6 percent to 7 percent, which must be approved by voters May 5, 2015. If voters say “no” then none of the above will go into effect. Lawmakers will have to start over.

$700 million of it has NOTHING TO DO with roads.

Finally, just how bad are the roads? Apparently, not nearly as bad as MDOT would have you believe, since they base their analysis on self interested subjective criteria and downplay objective metrics. That is, “government entities which stand to directly benefit” from the revenue that would be generated by approval of Proposition 1, find that passing Proposition 1 would be a good idea.

Michigan Roads – How Bad?

Cumulatively, the politically useful PASER pavement rating methodology finds Michigan’s State Trunkline road system to be in far worse condition than the DI / RSL methodology that MDoT actually uses to prioritize road work. A logistic regression – MDoT’s preferred analytical tool – shows that there is a statistically significant variance between the methodologies as they are applied to the State Trunkline system. Either the PASER or the DI / RSL methodology is not properly evaluating Michigan pavement conditions.

Most civil engineers consider RSL to be the ‘gold standard’ of pavement condition evaluation, so PASER ratings, as performed for TAMC, are likely wrong. Should you be inclined to think that the PASER evaluations better represent the condition of Michigan’s roads, ask yourself why MDoT and all the other State DoT’s do not use PASER evaluations to prioritize road work. You would also have to ask yourself why the other instrumented pavement rating methodology, FHWA’s IRI, shows Michigan’s State Trunkline roads to be in even better condition than the DI / RSL methodology…

It only takes a quick look at the charts above to realize that there is something quite wrong with the TAMC PASER road ratings being touted by Proposal 2015-01 supporters. Michigan’s mainstream media are regurgitating these politically useful PASER data as authoritative without any further analysis, so many voters in Michigan are being deceived. Deceit seems to be the modus operandi of Proposal 2015-01 proponents. It is long past time to clear the air by conducting DI / RSL evaluations of non federal aid-eligible roads in Michigan. Then we can discuss a time-limited plan to remediate Michigan’s roads.

Indeed.

Despite talking points, the IRS did NOT target Progressive groups

Our audit did not find evidence that the IRS used the “Progressives” identifier as selection criteria for potential political cases between May 2010 and May 2012…

The inappropriate criteria used to select potential political cases for review did not include the term “Progressives.”

From,
J. Russell George
Treasury Inspector General for Tax Administration
June 26, 2013

Full letter here.

The Democrats’ attempt to make the IRS corruption appear apolitical is worse than the original crime, “We know they did it, but we don’t care.”

Obanana Republic

On November 5th, 2008, I said that the Obama Administration would be the most corrupt in living memory. I was wrong. It’s not merely living memory. And it goes beyond simple corruption.

The American people have been subject to a direct, systematic attack by the federal government, accomplished via the tax laws. Extremely complex laws were combined with bureaucratic ignorance, institutional arrogance, a monopoly on the use of force and a leadership competent solely in permanent campaign mode; in a comprehensive effort to punish dissent, interfere in elections and restrict religious freedom. Information was demanded that could only result in limiting freedom of assembly. Confidential tax information was leaked. Lies were repeatedly told to the legislative branch and to all Americans. When it became apparent that the perfidy would be exposed, and before informing Congress, the IRS staged a passive “Mistakes were made” apology by planting a question at a press conference.

[The IRS] acknowledged it was wrong for the agency to target groups based on political affiliation.

“That was absolutely incorrect, it was insensitive and it was inappropriate. That’s not how we go about selecting cases for further review,” Lerner said at a conference sponsored by the American Bar Association.

“The IRS would like to apologize for that,” she added.

OK, go ahead and apologize, you have our permission. When you do, please reference the First Amendment. And then, name names, fire people and bring charges.

Admit that it was not just groups with the words “Tea Party” in their names. Discuss why, after president “Know Nothing” and his cronies specifically named individual Americans who disagree with the president’s policies, that those named individuals were audited. Expand on your understanding of why it’s wrong for the federal government to demand the content of individual prayers, specifically threatening perjury charges for those so questioned. Tell us why “progressive” groups received preferential treatment in the same time period. I think we need more insight than “inappropriate,” or “poor customer service.”

Tell us if you believe that the root problem is allowing corporations to practice free speech, and whether more regulation is needed. Why is current legal complexity insufficient unto hiding the IRS agenda? Explain why the reasons you gave for the “enhanced scrutiny,” don’t even hold up.

Finally, do you think the IRS transgressions are irrelevant if no one can prove that Obama is directly involved? Do you agree that if the president was involved, it shows that he is the most corrupt, tyrannical leader in American history, and that every branch of the executive division in our government is suspect? If the president wasn’t involved, can any number of straw men, any amount of ad hominem political hackery, any quantity of ignorance pleading – change the fact that it is his Administration?

Before answering, think about what it means if Obama wasn’t involved: The IRS, an agency with the power to destroy every person in America, did all of this on its own initiative.

Explain, please, why your actions did not violate each and every term of the following:

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances.

There is a nascent protest scheduled at IRS locations on Tuesday May, 21st. At noon, I will be at:

EAST LANSING, MI /DET IRS OFFICE
3100 WEST ROAD
EAST LANSING, MI 48823

Let us see what happens.