Archive for the ‘Federal Budgeting’ Category

Cost of Government Day

Monday, August 15th, 2011

Americans for Tax Reform released their study on “Cost of Government Day.” This study looks at for an average individual in each state, how long you are working for the Government rather than yourself. On average, you’re working for the government until August 12th. That’s actually down two days from last year.

Unfortunately, not all states are created equal. Here are the bottom ten:

40. Massachusetts (August 15th)
40. Pennsylvania (August 15th)
42. Illinois (August 17th)
43. California (August 18th)
43. Minnesota (August 18th)
43. Washington (August 18th)
43. Wisconsin (August 18th)
District of Columbia (August 18th)
47. Maryland (August 20th)
48. New York (August 30th)
49. New Jersey (September 6th)
50. Connecticut (September 10th)

However, there are some states which don’t tax you as much:

1. Mississippi (July 19th)
2. Tennessee (July 20th)
3. South Carolina (July 23rd)
4. Louisiana (July 26th)
4. New Mexico (July 26th)
4. South Dakota (July 26th)
4. West Virginia (July 26th)
8. Alabama (July 29th)
8. Arizona (July 29th)
8. Kentucky (July 29th)
8. Nevada (July 29th)
8. Oklahoma (July 29th)

The end of the Executive Summary notes something that needs to be taken to heart by Congresscritters and state legislators:

Barriers to an earlier COGD remain. As of this writing, a deal to raise the debt limit in exchange for significant spending reform has not been reached. As the country exhausts its nearly $15 trillion in borrowing authority, the evolving debt debate represents an unprecedented opportunity to shift the paradigm of government spending. If it fails to do so, the forecast for future Cost of Government Days looks bleak.

The full report is well worth your reading.

Perhaps $1 Million a Rider

Monday, August 15th, 2011

How many individuals want to ride high-speed rail through California’s Central Valley? That’s not an academic question, as that will be the first leg of the line built by the California High-Speed Authority. The line will run from Shafter (population 17,000) to Madera (population 61,000): just north of Bakersfield to just south of Merced.

The first major city north of Bakersfield is Visalia, with a population just above 124,000. The line will then pass through Fresno (510,000) before reaching Madera. Just how many of those people need to get from one end of the Central Valley to the other?

Let’s be real: This is a colossal waste of money. And it’s now over budget by somewhere between $2.6 billion to $6.8 billion.

Yes, I realize the goal of the line is to connect the Bay Area with the Los Angeles Basin. While the news article I linked to notes a cost of $43 billion, the true cost will undoubtedly be higher. I’m guessing that the eventual cost per rider will be about $1 million. It currently costs around $100 each way to fly that route. Given where our government is today, wouldn’t a better use of the $43 billion (or $143 billion) be paying down all of our government’s debt and not building a white elephant?

I also realize that California voters approved this measure. This is one time the legislature should step up, and let the voters know that a mistake was made. Return the federal funds to Washington, and stop the project. White elephants like this is why the government is in the mess it’s in.

“Shhh: The Middle Class Tax Hikes Are Coming”

Thursday, February 4th, 2010

Most of us are in the middle class: That’s a fact. If taxes are going to go up, taxes on the middle class are going to go up. It’s an inconvenient truth that the current Administration would prefer not to acknowledge.

So Reuters publishes a story earlier this week that states that the middle class will see large tax hikes under President Obama’s budget. (You can find the text of the Reuters story here, via the PowerLine Blog.)

The targeted tax provisions were enacted under the Bush administration’s Economic Growth and Tax Relief Reconciliation Act of 2001. Among other things, the law lowered individual tax rates, slashed taxes on capital gains and dividends, and steadily scaled back the estate tax to zero in 2010.

If the provisions are allowed to expire on December 31, the top-tier personal income tax rate will rise to 39.6 percent from 35 percent. But lower-income families will pay more as well: the 25 percent tax bracket will revert back to 28 percent; the 28 percent bracket will increase to 31 percent; and the 33 percent bracket will increase to 36 percent. The special 10 percent bracket is eliminated.

Middle-class families also will find fewer tax breaks available to them in 2010 if other popular tax provisions are allowed to expire. Among them:

* Taxpayers who itemize will lose the option to deduct state sales-tax payments instead of state and local income taxes;

* The $250 teacher tax credit for classroom supplies;

* The tax deduction for up to $4,000 of college tuition and expenses;

* Individuals who don’t itemize will no longer be able to increase their standard deduction by up to $1,000 for property taxes paid;

* The first $2,400 of unemployment benefits are taxable, in 2009 that amount was tax-free.

As I’ve said before, when a tax cut is eliminated you have an increase in taxes. I’m not going to play semantics. Bluntly, that’s a tax hike. I doubt that middle-America cares what it’s called; there’s less in their pockets.

Arthur Laffer, the renowned economist and inventor of the Laffer Curve (which showed that decreasing tax rates leads to an increase in tax collections), doesn’t like where this Administration is taking the economy. In an interview with Human Affairs, Dr. Laffer made some pointed remarks:

“Obama is a fine, very impressive person. He really is. Unfortunately, everything that he is doing in economics is exactly wrong. He is a crappy president,” Laffer said.

“Whenever a country is in the throes of spending too much and raising taxes, it’s a fiscal catastrophe in the making and this is what is happening now,” he said.

What will the impact of all this be? Dr. Laffer believes the economy might improve remarkably this year; however, such improvement would be a mirage. Companies may move income into 2010 from 2011 because of the likelihood of higher taxes next year. Dr. Laffer believes that 2011 will be a disastrous year for the economy.

In any case, higher taxes are coming. All those of you who think that only the guys behind the trees will be taxed, well, you’ve got about a 0% chance of being right.