Monthly Archives: January 2013

Shaking My Head At The Data

I was over at Coyote Blog the other day when I saw a discussion surrounding this chart:

Coyote was taking Kevin Drum to task for his analysis of the data described by this chart.  Specifically:

Republicans like to say we have a spending problem, not a taxing problem, but the evidence doesn’t back that up. Total government spending didn’t go up much during the Clinton era, and it’s actually declined during the Obama era. In the last two decades, it’s only gone up significantly during the Bush era, the same era in which taxes were cut dramatically.

What we have isn’t a spending problem. That’s under control. What we have is a problem with Republicans not wanting to pay the bills they themselves were largely responsible for running up.

I looked at the chart and had to go, “Huh, he might have a point.”  Then I read Coyote’s complaint:

This is the total of all government spending at all levels, not just Federal.  In fact, had he shown Federal spending (likely more appropriate given he is trying to draw conclusions about Presidents), the numbers would have continued up over the last few years.

How can Drum really make an argument dealing specifically with federal implications and use data that includes state and local spending?  If he wants to discuss federal expenditures he should use data that describes ONLY federal expenditures.  Not data that gives Obama credit for local fiscal restraint.

North Carolina GOP – Tax Reform

The GOP didn’t do so well at the national level in the 2012 elections.  However, here in North Carolina, the GOP cleaned house.  Not only did North Carolina break for Romney, the only battle ground state to do so, but they elected a republican governor  for the first time in 20 years.  In fact, including this current governor, there have been only 3 republicans in the mansion since 1901, well over 100 years.

Further, the GOP extended their majority in both the state house and senate.  Those majorities are now so wide that the republicans can propose and send to the ballot box amendments to the constitution without a single democrat voting with them.

I don’t think that such dominance is healthy, either way – democrat or republican.  So it isn’t a surprise that one of the first things on the agenda is tax reform:

RALEIGH — Republican lawmakers outlined a proposal Wednesday to revamp the state’s tax system, offering a slew of reforms that would radically shift the tax burden in North Carolina.

The proposal would eliminate personal and corporate income taxes in exchange for higher state sales taxes levied against groceries, medical expenses and other currently tax-free services.

I suspect that this is going to go over like a lead balloon.  So it shouldn’t be a surprise that opposition is already forming:

The N.C. Budget Center, a liberal think tank, conducted a simulation analysis that suggested more than half of taxpayers, particularly the middle and lower class, would see their overall tax burden rise, while the most wealthy would get a significant cut.

Now, I’m not as familiar with the state numbers as I am the familiar national numbers as they pertain to who pays and who doesn’t pay state income tax.  And while I am sympathetic to the argument that an increased sales tax would hit the lower and middle class harder, I am not as sympathetic to an argument that takes a citizen from paying no tax to having some burden to the state.

With that said, I do agree with “Friend of Tarheel” Dave Ribar when he claims:

But critics caution that the proposals represent a fundamental change in who pays the state’s tax burden, and economists said that low-income people would feel the brunt. “For this particular proposal, the responsibility would shift from rich households and prosperous corporations to poor households and smaller businesses,” Dave Ribar, a professor at UNC-Greensboro, concluded in his analysis of the proposal.

North Carolina funds its budget through various taxes working in balance.  While we have high income taxes and corporate taxes, we have a lower sales tax combined with a very inexpensive tax on housing.  Further, our gasoline tax is high compared to our region.

So, while I get the republican’s desire to change the income tax and corporate tax scheme, I’m afraid that they aren’t going to take the whole picture into account and maybe, just maybe, make the whole thing worse.

Here are the details released so far:

It costs roughly $12 billion to eliminate the corporate and personal income taxes and business franchise taxes, as the GOP proposes. The money accounts for more than half the state’s $20 billion annual budget.

Proposed tax hikes

To offset the cuts, Senate Republicans are considering:

• Eliminating all 318 existing tax breaks in the state’s tax code, which account for $9 billion in revenue. The breaks cover everything from motor vehicle taxes to prescription drugs and insulin to sales taxes paid by nonprofits.

• Generating $12.9 billion in new revenue by increasing the 6.75 percent combined sales tax rate levied in most of the state to an 8.05 percent combined state and local tax rate.

The higher rate would apply to all goods and services – including those currently exempt from taxes, such as lottery tickets, haircuts, dentist visits, housekeeping and lawyers’ fees.

One major increase would be the sales tax on groceries. It currently sits at 2 percent but would increase to 8 percent.

Together, the sale tax changes would provide $12.9 billion.

• Levying a 1.05 percent tax on businesses, indexed to either net worth or gross receipts. Republicans are calling this a “license fee” that would produce $4 billion.

• Increasing the tax on all commercial and residential real estate sales, from the current 0.2 percent rate to 1 percent, generating $400 million.

Expect much hand wringing to take place.

Stagnant Middle Class

Perhaps this is simply a myth.

Don Boudreaux and Mark Perry weigh in over at the Wall Street Journal:

A favorite “progressive” trope is that America’s middle class has stagnated economically since the 1970s. One version of this claim, made by Robert Reich, President Clinton’s labor secretary, is typical: “After three decades of flat wages during which almost all the gains of growth have gone to the very top,” he wrote in 2010, “the middle class no longer has the buying power to keep the economy going.”

This trope is spectacularly wrong.

Don and Mark touch on a point that I often make:

…this wage figure ignores the rise over the past few decades in the portion of worker pay taken as (nontaxable) fringe benefits. This is no small matter—health benefits, pensions, paid leave and the rest now amount to an average of almost 31% of total compensation for all civilian workers according to the BLS.

That’s not an insignificant amount.  I often hear that compensation for health care shouldn’t count, after all, why should the worker have to accept ever increasing costs of fixing a broken leg?  A response to which I ask, “Would you be willing to give up that health insurance?”

Always the answer is no.

However, they point out a concept that I often miss:

One underappreciated result of the dramatic fall in the cost (and rise in the quality) of modern “basics” is that, while income inequality might be rising when measured in dollars, it is falling when reckoned in what’s most important—our ability to consume.

I absolutely think it’s critical to include in these conversations what we are able to consume today as opposed to 30 years ago.


Despite assertions by progressives who complain about stagnant wages, inequality and the (always) disappearing middle class, middle-class Americans have more buying power than ever before. They live longer lives and have much greater access to the services and consumer products bought by billionaires.

Lefty Has A Friend

More on California taxes.

I posted on Monday that Phil Mickelson has had enough of the confiscatory powers of the state:

 And now California is about to.  When you tax the living snot out of people they are going to react.  They’ll either move or quit.

And that results in $0.00 tax revenue.

It’s really not rocket surgery.

Perhaps the only thing more frustrating than a government that confiscates so much wealth is the fact that it is so predictable:

…but when pressed during his interview Tuesday, here’s how Woods responded:

“I moved out of here back in ’96 for that reason. I enjoy Florida but it was also…I understand what he was I think trying to say. I think he’ll probably explain it better in a little bit more detail.”

When California takes 13.3% and Florida takes zilch the calculus is pretty simple.

2012 Election in North Carolina

Some interesting stats from the 2012 Presidential election:

A new analysis of voter turnout data for the November 2012 election proves North Carolina has earned its reputation as a swing state.

Democrat Barack Obama and Republican Mitt Romney evenly split the 10 counties with the highest turnout. Beaufort, Davie, Greene, Moore and Person voted for Romney, while Chatham, Granville, Hertford, Wake and Warren voted for Obama.

Living in Raleigh I’m disappointed that Wake county broke for Obama.  However, I continue to take immense pleasure that we were the one battle ground state that Romney carried.

More tidbits:

  • Overall, turnout in 2012 was 68.3 percent – down slightly from 69.6 percent in 2008.
  • Republican women picked up a percentage point, from 72.3 percent in 2008 to 73.4 percent in 2012.
  • GOP men made an even bigger gain, from 70.7 to 72.2 percent.
  • The number of registered Democrats who voted in 2012 actually dropped by nearly 53,000, even though the party added about 8,800 registered voters since 2008.
  • Turnout among black voters dropped slightly, from 71.9 to 70.3 percent, that’s in line with the drop in overall turnout.
  • Turnout for voters 18-25 dropped by more than 5 percent from 2008
  • [Hispanic] turnout was 4.9 percent lower than in 2008.
  • Senior citizens … picked up 4.2 percent at the polls, with a 2012 turnout of 76.6 percent – the highest of any demographic group.

With a commanding majority in the state political picture, it’ll be interesting to see how the republicans govern and lead the state for the next two years.

The Decline of the Union Worker

If the decline of the union means that American companies begin hiring more people, I’m all for the decline of the American union:

Last July was a good month for factory workers in Anderson, Ind., where a Honda parts supplier announced plans to build a new plant and create up to 325 jobs. But it was a grim month in the Cleveland suburbs, where an industrial plastics firm told the state of Ohio it was closing a plant and laying off 150 people.

Nearly all of the Ohio workers belonged to a labor union. Workers at the Indiana plant don’t. Their fates fit a post-recession pattern: American factories are hiring again, but they’re not hiring union members.

But nationally, is there a trend that would suggest that union shops are doing better than or worse than non-union shops?

U.S. manufacturers have added a half-million new workers since the end of 2009, making the sector one of the few bright spots in an otherwise weak recovery. And yet there were 4 percent fewer union factory workers in 2012 than there were in 2010, according to federal survey data. On balance, all of the job gains in manufacturing have been non-union.

This isn’t rocket surgery.  It’s been a fact for a long time now that unions are nothing more than modern day racketeer outfits.  While they may provide better compensation for their members, they restrict the number of jobs that otherwise might have been available.  Further, and perhaps more insidious, is the fact that the monies generated from their members goes straight into the hands of politicians.

Good riddance.

Laffer Curve: PGA Style

Imagine a curve.  On the left hand side the value is zero.  Then, as you move from left to right, the slope goes up peaking somewhere then slides down back to zero.  That’s the Laffer Curve.

If you tax income at 0%, you realize $0.00 of tax revenue.  If you tax income at 100% you will also realize $0.00 of tax revenue; no one works for free.  In between is the sweet spot.

And it appears that, for Lefty, a 63% take is just too much:

LA QUINTA, Calf. — Phil Mickelson started his 2013 PGA Tour season at the Humana Challenge in partnership with the Clinton Foundation with a tie for 37th place. But after a final-round 66, Mickelson did more than hint that the 2014 season may see some big changes for the World Golf Hall of Famer.

“Well, it’s been an interesting offseason. And I’m going to have to make some drastic changes,” Mickelson said at the Palmer Course at PGA West in La Quinta. “I’m not going to jump the gun and do it right away, but I will be making some drastic changes.”

And what changes might he be making?

PHIL MICKELSON: Well, it’s been an interesting offseason. And I’m going to have to make some drastic changes. I’m not going to jump the gun and do it right away, but I will be making some drastic changes.

Q. Meaning leaving from California?

PHIL MICKELSON: I’m not sure.

Q. Moving to Canada?

PHIL MICKELSON: I’m not sure what exactly, you know, I’m going to do yet. I’ll probably talk about it more in depth next week. I’m not going to jump the gun, but there are going to be some. There are going to be some drastic changes for me because I happen to be in that zone that has been targeted both federally and by the state and, you know, it doesn’t work for me right now. So I’m going to have to make some changes.

And why does he think he needs to make these changes?

PHIL MICKELSON: Yeah. I’ll probably go into it more next year or next week. But if you add up, if you add up all the federal and you look at the disability and the unemployment and the Social Security and the state, my tax rate’s 62, 63 percent. So I’ve got to make some decisions on what I’m going to do.

France learned it.  And now California is about to.  When you tax the living snot out of people they are going to react.  They’ll either move or quit.

And that results in $0.00 tax revenue.

The State of States

If only federal republicans could govern in the way and manner of state republicans:

Thanks to a Republican governor committed to developing its natural resources, not punishing entrepreneurs who do, Texas legislators are facing an $8.8 billion surplus over the next two years. To the east, Republican governors Bill Haslam of Tennessee and Rick Scott of Florida have also turned recession deficits into budget surpluses. Moving north, Michigan’s Gov. Rick Snyder, Iowa’s Gov. Terry Brandstad, and Indiana’s out-going-Gov. Mitch Daniels, also can now all boast surpluses in the hundreds of millions of dollars. All of these governors managed to turn their state’s fiscal situation around through spending cuts, not tax hikes. Now their budgets are in the black and their economies are growing.

I think it’s important to focus on the second to last sentence in that quote:

All of these governors managed to turn their state’s fiscal situation around through spending cuts, not tax hikes.

And lest we think that this is just a series of circumstances related to an overall nation economic rebound:

Things do not look as good in Democrat-controlled states. Illinois, who massively raised taxes on the rich, still has a $5.9 billion stack of unpaid bills. California, who also raised taxes on the rich, was supposed to post a small surplus this year. But tax collections are coming in at 10.8 percent below budget projections. As a result, the state is now projected to be $1.9 billion in the red by the end of this fiscal year.

Now, if that same fiscal responsibility could translate to the national level.

United States Wire Tapping

I have a strong distrust of government over reach.  I think that we often times allow out government to go far too far in what we think are noble intentions.  But I have to admit that I am at a loss in this area.

Consider, an American citizen talking to another American citizen.  Clearly the government would be required to obtain a warrant.  However, what legal requirements would be needed in order for the government to listen to the communications of a foreign operative and ANOTHER foreign operative outside the US borders?

Probably none.

But now consider this.  A foreign terror suspect, on foreign soil.  Can we listen to his communications?  And what if those communications are between him and an American citizen?

This is what we’re talking about:

The FISA Amendments Act, (.pdf) which was expiring Friday at midnight, allows the government to electronically eavesdrop on Americans’ phone calls and e-mails without a probable-cause warrant so long as one of the parties to the communication is believed outside the United States. The communications may be intercepted “to acquire foreign intelligence information.”

I happen to agree with Obama’s administration on this one.  If we’re targeting a foreign suspect and happen to listen to American citizens, I don’t think that we have a legal requirement to obtain a warrant.  However, if we just listen to American citizens in the hopes of catching them talking to terrorists…..different story.

Abuse of the System

I’m late on this one; been sitting in my stack for awhile now.

I’m not so naive as to think that any program is going to be 100% free of abuse; there will always be those that game the system.  So I’m not really moved by this:

The food-stamp program prohibits the purchase of booze, tobacco and lottery tickets with an EBT card. But with the cash-assistance program, users can blow money on strippers or a six-pack and to tap welfare dollars from liquor stores, casinos and adult-oriented establishments.

The Post found dozens of pubs, nightclubs and tobacco shops where welfare dough was dispensed — and presumably spent.

The Boiler Room, a gay dive bar in the East Village, had $120 and $60 transactions a minute apart on Jan. 17, 2011. The bar is around the corner from a Bank of America that takes EBT cards.

West Village tobacco shop Shisha International had EBT transactions ranging from $40 to $180 in 2011. The store is near at least two EBT-friendly ATMs.

That’s precious little data to suggest that there is a problem.  But what DOES drive me crazy is this:

State Sen. Tom Libous (R-Binghamton) passed a bill in his chamber in June that would outlaw welfare withdrawals at gambling dens, strip clubs and other venues of vice, but the measure is gathering dust in the Democratic-controlled Assembly.

Libous is looking for a new Assembly sponsor to carry the bill in that house in the upcoming legislative session, after past sponsor George Latimer (D-Rye) was elected to the state Senate.

With only one of the city’s Assembly members, Nicole Malliotakis (R-B’klyn./SI), as a co-sponsor, the bill faces an uphill battle.

The Assembly typically doesn’t support welfare reform, because its more liberal members think the measures “hurt the poor,” Libous said. If the bill remains stalled, the state stands to lose $120 million in federal welfare funding.

The Middle Class Tax Relief and Job Creation Act, signed by President Obama last February, requires states to prohibit sinful welfare spending by 2014. If they don’t, they’ll forfeit federal cash.

“The people who are stealing from the program are the ones I want to go after,” Libous said. “Not someone who lost his job or a single mom who has to feed her kids. That’s what this program is supposed to be for.”

This isn’t, or doesn’t seem to be, an ideological attack on the program at all.  Rather, it seems to be a attempt to tighten regulations to make sure that the money is being used for food.  For the required basics.