Ken's Project Blog

July 12, 2011

Warren Buffett’s Tax Rate

Filed under: In The News,Politics,Taxation,Uncategorized — Ken @ 11:46 am

With all the current talk of getting the “rich to pay their fair share” or about the idea of “shared sacrifice”, you are bound to hear people on TV or in the news refer to a statement made by Warren Buffet in the above video, which is widely mis-quoted. For example, an anonymous poster (under the pseudonym “whatever”) over at the ABC News Political Punch blog posted the following comment:

“When a multi-millionaire pays less taxes than his secretary, something is wrong with the system.”

Presumably this writer is referring to Warren Buffet, one of the richest men in the world, and I’m sure this person believes that’s true – but it’s not, let me explain.

  • Warren Buffet is a billionaire, not a multi-millionaire
  • He pays a lower tax RATE than his secretary, not lower taxes.

Let’s remember, as the head of Berkshire Hathaway he could restructure his compensation so that his tax rate is similar to that of his employees.

Let’s review some simple facts:

  • Buffett makes more than his secretary/employees
  • Buffett & his employees follow the same tax code
  • Buffett pays a lower percentage than his employees
  • Buffett’s compensation must be classified differently than his employees
  • Buffett, as CEO of Berkshire Hathaway could restructure his compensation to be like his employees, then he would have a higher tax rate, more in line with his office mates.
  • Buffett has not (to the best of my knowledge) restructured his pay – yet.

In summary, I think it’s wrong to say (as many do, including Mr. or Ms. Whatever) that Warren Buffet is hoping to pay more taxes, he feels the tax system doesn’t make sense. In fact, he wants a progressive consumption tax, a form of taxation widely-held to favor the wealthy who “consume” a much smaller portion of their income in a given year.

Sources:

YouTube: Warren Buffett’s Tax Rate is Lower than His Secretary’s

ABCNews Political Punch Blog: With Social Security On the Table, Obama Draws Progressives’ Ire

The Economist: All hail the progressive consumption tax!

March 15, 2011

For the Kids

Filed under: Education,In The News,Politics,Taxation,Uncategorized — Ken @ 12:03 pm

For a while I sat and tried to think of how to discuss what I saw in the above video, depicting state workers (presumably teachers), repeatedly asking the children “What does Democracy look like?”, then I came across the following Wall Street Journal Op-ed piece from Gov. Scott Walker of Wisconsin:

Why I’m Fighting in Wisconsin
We can avoid mass teacher layoffs and reward our best performers. But we have to act now.

In 2010, Megan Sampson was named an Outstanding First Year Teacher in Wisconsin. A week later, she got a layoff notice from the Milwaukee Public Schools. Why would one of the best new teachers in the state be one of the first let go? Because her collective-bargaining contract requires staffing decisions to be made based on seniority.

Ms. Sampson got a layoff notice because the union leadership would not accept reasonable changes to their contract. Instead, they hid behind a collective-bargaining agreement that costs the taxpayers $101,091 per year for each teacher, protects a 0% contribution for health-insurance premiums, and forces schools to hire and fire based on seniority and union rules.

My state’s budget-repair bill, which passed the Assembly on Feb. 25 and awaits a vote in the Senate, reforms this union-controlled hiring and firing process by allowing school districts to assign staff based on merit and performance. That keeps great teachers like Ms. Sampson in the classroom.

Most states in the country are facing a major budget deficit. Many are cutting billions of dollars of aid to schools and local governments. These cuts lead to massive layoffs or increases in property taxes—or both.

In Wisconsin, we have a better approach to tackling our $3.6 billion deficit. We are reforming the way government works, as well as balancing our budget. Our reform plan gives state and local governments the tools to balance the budget through reasonable benefit contributions. In total, our budget-repair bill saves local governments almost $1.5 billion, outweighing the reductions in state aid in our budget.

While it might be a bold political move, the changes are modest. We ask government workers to make a 5.8% contribution to their pensions and a 12.6% contribution to their health-insurance premium, both of which are well below what other workers pay for benefits. Our plan calls for Wisconsin state workers to contribute half of what federal employees pay for their health-insurance premiums. (It’s also worth noting that most federal workers don’t have collective bargaining for wages and benefits.)

For example, my brother works as a banquet manager at a hotel and occasionally works as a bartender. My sister-in-law works at a department store. They have two beautiful kids. They are a typical middle-class Wisconsin family. At the start of this debate, David reminded me that he pays nearly $800 per month for his family’s health-insurance premium and a modest 401(k) contribution. He said most workers in Wisconsin would love a deal like the one we are proposing.

The unions say they are ready to accept concessions, yet their actions speak louder than words. Over the past three weeks, local unions across the state have pursued contracts without new pension or health-insurance contributions. Their rhetoric does not match their record on this issue.

Local governments can’t pass budgets on a hope and a prayer. Beyond balancing budgets, our reforms give schools—as well as state and local governments—the tools to reward productive workers and improve their operations. Most crucially, our reforms confront the barriers of collective bargaining that currently block innovation and reform.

When Gov. Mitch Daniels repealed collective bargaining in Indiana six years ago, it helped government become more efficient and responsive. The average pay for Indiana state employees has actually increased, and high-performing employees are rewarded with pay increases or bonuses when they do something exceptional.

Passing our budget-repair bill will help put similar reforms into place in Wisconsin. This will be good for the Badger State’s hard-working taxpayers. It will also be good for state and local government employees who overwhelmingly want to do their jobs well.

In Wisconsin, we can avoid the massive teacher layoffs that schools are facing across America. Our budget-repair bill is a commitment to the future so our children won’t face even more dire consequences than we face today, and teachers like Ms. Sampson are rewarded—not laid off.

Taking on the status quo is no easy task. Each day, there are protesters in and around our state Capitol. They have every right to be heard. But their voices cannot drown out the voices of the countless taxpayers who want us to balance our budgets and, more importantly, to make government work for each of them.

There are those that think that Gov. Walker has “trumped-up” these budget issues to “bust the unions, kill the middle-class and pay off his rich supporters with tax cuts” – well, I’d direct you to the news report last June about Megan Sampson and her layoff, along with 480 other teachers at the end of last school year, and how the teachers now protesting could have spared every one of those teachers, including Megan Sampson, by simply opting for a lower-cost medical plan which would have save the Milwaukee Public Schools $48M, or enough to retain the 480 teachers.

From the report last June:

[Milwaukee School Board President Michael] Bonds said if all teachers switched to the lower-cost plan, about $48 million could be saved, enough to pay for 480 educators.

“I’m not aware of any place in the nation that pays 100% of teachers’ health-care benefits and doesn’t require a contribution from those who choose to take a more expensive plan,” Bonds said.

Pat O’Mahar, the interim executive director for the MTEA, said it was unfortunate the district believed the solution to budget pressures was to lay off hundreds of educators.

Uh, Mr. O’Mahar, the decision was put in the hands of the teachers, and they choose the more expensive health care plans, not the jobs of 480 co-workers… Funny, I don’t remember anyone discussing that “sacrifice” by the teachers during the protests in the state house…

Sources:

YouTube Video: Wisconsin protesters get children to chant

Wall Street Journal: Why I’m Fighting in Wisconsin

Milwaukee Wisconsin Journal Sentinel: Walker brings unwanted attention to local teacher and Seniority system cuts fresh MPS teachers amid budget crunch

March 3, 2011

Michael Moore on Wealthy People’s Money

Filed under: In The News,Politics,Uncategorized — Ken @ 2:00 pm


In the above video, Michael Moore bloviates on the need to take increasing amounts of money from the rich because it’s “ours.”

From the video:

“I think we need to go back to taxing these people at the proper rates. They need to — we need to see these jobs as something we some, that we collectively own as Americans and you can’t just steal our jobs and take them someplace else”

Sounds nice doesn’t it – just increase taxes on the “rich” (ostensibly the proverbial “other guy,” not us) and then we can solve all “our” problems. Let me introduce you to Hauser’s Law, as articulated in a November, 2010 Op-ed piece in the Wall Street Journal:

Over the past six decades, tax revenues as a percentage of GDP have averaged just under 19% regardless of the top marginal personal income tax rate. The top marginal rate has been as high as 92% (1952-53) and as low as 28% (1988-90). This observation was first reported in an op-ed I wrote for this newspaper in March 1993.

For those that are more visual, I provide the following graphic – notice how the fluctuations in the “Top Marginal Rate” have almost no effect on the total revenue collected (as a percentage of GDP) after the mid-1940s:

If you’d like to see the raw data used to create the above chart, here are the data sources:

The best way to grow tax revenues and help pay for all the things Government does is to raise the G.D.P., not simply raise the top marginal tax rate, it would seem.

Note: For an interesting decomposition of the so-called Hauser’s Law, take a look at this write-up “Hauser’s Law is Extremely Misleading” by Mike Kimel at Presimetrics.com.

Sources:

Real Clear Politics: Moore On Wealthy People’s Money: “That’s Not Theirs, That’s A National Resource, It’s Ours”

Wall Street Journal: There’s No Escaping Hauser’s Law

IRS.gov: Top Marginal Rates Historical Table 23

Census.gov: Federal Revenue 1930-2002 from US Statistical Abstract, Historical Statistics and Federal Revenue 2003-07 from US Statistical Abstract, Table 451

Presimetrics.com: Hauser’s Law is Extremely Misleading

February 24, 2011

Federalist No. 5 – The Same Subject Continued: Concerning Dangers from Foreign Force and Influence

Filed under: History,Uncategorized — Ken @ 6:00 am

In 1787 Alexander Hamilton, John Jay, and James Madison set out to inform the public discourse on what was wrong with the then-current form of Government (The Articles of Confederation) and what was needed in our next Government under The United States Constitution that had been drafted and needed to be ratified by the states/colonies. Over the course of the next few weeks I plan to review these important documents – The Federalist Papers, and as I do I will share them here with you, as originally written, without interpretation.

Of course, you may find the topic so engaging that you want to skip ahead of my slow and measured pace – in that case, I’ll direct you to my source for the documents, The Library of Congress website, thomas.loc.gov.

From the Library of Congress web site:

The Federalist Papers were a series of eighty-five essays urging the citizens of New York to ratify the new United States Constitution. Written by Alexander Hamilton, James Madison, and John Jay, the essays originally appeared anonymously in New York newspapers in 1787 and 1788 under the pen name “Publius.” A bound edition of the essays was first published in 1788, but it was not until the 1818 edition published by the printer Jacob Gideon that the authors of each essay were identified by name. The Federalist Papers are considered one of the most important sources for interpreting and understanding the original intent of the Constitution.


Federalist No. 5 – The Same Subject Continued: Concerning Dangers from Foreign Force and Influence

by John Jay

To the People of the State of New York:

QUEEN ANNE, in her letter of the 1st July, 1706, to the Scotch Parliament, makes some observations on the importance of the UNION then forming between England and Scotland, which merit our attention. I shall present the public with one or two extracts from it: “An entire and perfect union will be the solid foundation of lasting peace: It will secure your religion, liberty, and property; remove the animosities amongst yourselves, and the jealousies and differences betwixt our two kingdoms. It must increase your strength, riches, and trade; and by this union the whole island, being joined in affection and free from all apprehensions of different interest, will be ENABLED TO RESIST ALL ITS ENEMIES.” “We most earnestly recommend to you calmness and unanimity in this great and weighty affair, that the union may be brought to a happy conclusion, being the only EFFECTUAL way to secure our present and future happiness, and disappoint the designs of our and your enemies, who will doubtless, on this occasion, USE THEIR UTMOST ENDEAVORS TO PREVENT OR DELAY THIS UNION.”

It was remarked in the preceding paper, that weakness and divisions at home would invite dangers from abroad; and that nothing would tend more to secure us from them than union, strength, and good government within ourselves. This subject is copious and cannot easily be exhausted.

The history of Great Britain is the one with which we are in general the best acquainted, and it gives us many useful lessons. We may profit by their experience without paying the price which it cost them. Although it seems obvious to common sense that the people of such an island should be but one nation, yet we find that they were for ages divided into three, and that those three were almost constantly embroiled in quarrels and wars with one another. Notwithstanding their true interest with respect to the continental nations was really the same, yet by the arts and policy and practices of those nations, their mutual jealousies were perpetually kept inflamed, and for a long series of years they were far more inconvenient and troublesome than they were useful and assisting to each other.

Should the people of America divide themselves into three or four nations, would not the same thing happen? Would not similar jealousies arise, and be in like manner cherished? Instead of their being “joined in affection” and free from all apprehension of different “interests,” envy and jealousy would soon extinguish confidence and affection, and the partial interests of each confederacy, instead of the general interests of all America, would be the only objects of their policy and pursuits. Hence, like most other BORDERING nations, they would always be either involved in disputes and war, or live in the constant apprehension of them.

The most sanguine advocates for three or four confederacies cannot reasonably suppose that they would long remain exactly on an equal footing in point of strength, even if it was possible to form them so at first; but, admitting that to be practicable, yet what human contrivance can secure the continuance of such equality? Independent of those local circumstances which tend to beget and increase power in one part and to impede its progress in another, we must advert to the effects of that superior policy and good management which would probably distinguish the government of one above the rest, and by which their relative equality in strength and consideration would be destroyed. For it cannot be presumed that the same degree of sound policy, prudence, and foresight would uniformly be observed by each of these confederacies for a long succession of years.

Whenever, and from whatever causes, it might happen, and happen it would, that any one of these nations or confederacies should rise on the scale of political importance much above the degree of her neighbors, that moment would those neighbors behold her with envy and with fear. Both those passions would lead them to countenance, if not to promote, whatever might promise to diminish her importance; and would also restrain them from measures calculated to advance or even to secure her prosperity. Much time would not be necessary to enable her to discern these unfriendly dispositions. She would soon begin, not only to lose confidence in her neighbors, but also to feel a disposition equally unfavorable to them. Distrust naturally creates distrust, and by nothing is good-will and kind conduct more speedily changed than by invidious jealousies and uncandid imputations, whether expressed or implied.

The North is generally the region of strength, and many local circumstances render it probable that the most Northern of the proposed confederacies would, at a period not very distant, be unquestionably more formidable than any of the others. No sooner would this become evident than the NORTHERN HIVE would excite the same ideas and sensations in the more southern parts of America which it formerly did in the southern parts of Europe. Nor does it appear to be a rash conjecture that its young swarms might often be tempted to gather honey in the more blooming fields and milder air of their luxurious and more delicate neighbors.

They who well consider the history of similar divisions and confederacies will find abundant reason to apprehend that those in contemplation would in no other sense be neighbors than as they would be borderers; that they would neither love nor trust one another, but on the contrary would be a prey to discord, jealousy, and mutual injuries; in short, that they would place us exactly in the situations in which some nations doubtless wish to see us, viz., FORMIDABLE ONLY TO EACH OTHER.

From these considerations it appears that those gentlemen are greatly mistaken who suppose that alliances offensive and defensive might be formed between these confederacies, and would produce that combination and union of wills of arms and of resources, which would be necessary to put and keep them in a formidable state of defense against foreign enemies.

When did the independent states, into which Britain and Spain were formerly divided, combine in such alliance, or unite their forces against a foreign enemy? The proposed confederacies will be DISTINCT NATIONS. Each of them would have its commerce with foreigners to regulate by distinct treaties; and as their productions and commodities are different and proper for different markets, so would those treaties be essentially different. Different commercial concerns must create different interests, and of course different degrees of political attachment to and connection with different foreign nations. Hence it might and probably would happen that the foreign nation with whom the SOUTHERN confederacy might be at war would be the one with whom the NORTHERN confederacy would be the most desirous of preserving peace and friendship. An alliance so contrary to their immediate interest would not therefore be easy to form, nor, if formed, would it be observed and fulfilled with perfect good faith.

Nay, it is far more probable that in America, as in Europe, neighboring nations, acting under the impulse of opposite interests and unfriendly passions, would frequently be found taking different sides. Considering our distance from Europe, it would be more natural for these confederacies to apprehend danger from one another than from distant nations, and therefore that each of them should be more desirous to guard against the others by the aid of foreign alliances, than to guard against foreign dangers by alliances between themselves. And here let us not forget how much more easy it is to receive foreign fleets into our ports, and foreign armies into our country, than it is to persuade or compel them to depart. How many conquests did the Romans and others make in the characters of allies, and what innovations did they under the same character introduce into the governments of those whom they pretended to protect.

Let candid men judge, then, whether the division of America into any given number of independent sovereignties would tend to secure us against the hostilities and improper interference of foreign nations.

PUBLIUS.


Sources:

Library of Congress: The Articles of Confederation, The United States Constitution, and The Federalist Papers

Wikipedia.com: Alexander Hamilton, John Jay, and James Madison

February 10, 2011

POTUS, Working Hard for You

Filed under: Uncategorized — Ken @ 10:15 am

Apparently President Obama has put on his thinking cap and found some cuts in this year’s proposed budget plan… $775 Million Dollars! Yay! (But we’ll still be spending $1.5TN more than we take in – thanks Kids!)

[President Obama’s budget director Jack] Lew said that the Valentine’s Day budget will proposed cutting in half community service block grants to grassroots groups in poor communities. This cut will save $350 million and this cut will affect the type of community programs Obama worked with as a local organizer, Lew noted in an opinion piece in Sunday’s edition of The New York Times.

Source: New York Times

Having a hard time imagining what $775 Million amounts to in the total budget plan? This might help, one website has created a helpful pie chart graphic to help you out. If that doesn’t help you, maybe this YouTube video from President Obama’s first attempt to trim the budget by $100 million might help:

Just imagine that instead of removing one-quarter of a penny, President Obama plans on taking nearly two whole pennies off the table, and you’ll have a sense of the scope of the cuts President Obama is going to propose next week.

Of course, this is in addition to the federal pay freeze he already proposed, which I covered earlier here
Sources:

The Hill: Budget director previews cuts in Obama’s 2012 plan

New York Times: The Easy Cuts Are Behind Us

Doug Ross: Obama’s “tough budget cuts in pictures” in pictures

YouTube video: Obama Budget Cuts Visualization

Ken’s Project Blog: How To Read A News Story

February 1, 2011

Citizens United

Filed under: Health Care,In The News,Politics,Uncategorized — Ken @ 2:20 am

The left likes to talk about the corrosive effect money from deep-pocketed corporations will have on future elections, as a result of the recent “Citizens United” case. They argue that elections will be bought by corporations, with politicians catering to the wishes of corporations that donated to their campaign.

In his concurrence to the Majority Opinion, Justice Scalia wrote that:

Stevens dissent was “in splendid isolation from the text of the First Amendment. It never shows why “the freedom of speech” that was the right of Englishmen did not include the freedom to speak in association with other individuals, including association in the corporate form.”

Those on the Left may be correct – there are ample examples of deep-pocketed organizations that use their money to curry favor with the Government, take for example the three SEIU locals that got waivers to exempt their members healthcare plans from the very healthcare reform bill they were so supportive of. In total, SEIU contributed $27 million to the election campaign of Barack Obama, and (it could be argued), as a reward for their support, SEIU was able to deny its members the $750,000 annual coverage limit demanded by healthcare reform, and instead offer them only $50,000 in annual coverage.

But is a labor union the same as a corporation? Pretty much. A labor union typically has, as its primary goal the protection and well-being of its members while a corporation typically has, as one of its goals the protection and well-being of the corporation, and by extension, their employees and shareholders. At the heart of a corporation, be it publicly traded or privately held, are people, with the same rights and responsibilities as an individual – no more, and no less.

Sources:

Wikipedia: Citizens United v. Federal Election Committee entry

CNSNews.com: Three SEIU Locals–Including Chicago Chapter–Waived From Obamacare Requirement

RealClearMarkets.com: Why the SEIU Wants Health Reform

January 16, 2011

Interesting Video – MSNBC vs Reality

Filed under: Uncategorized — Ken @ 12:52 pm


So what do you get if take an audio stream from Rachel Maddow’s show where she’s blasting the Right for it’s violent rhetoric and you sync it to a slide show of left-wing violent rhetoric? You get the above video – enjoy.

Source: Scott Starnes’s Blog

January 7, 2011

A Delicate, Depressing Topic

Filed under: Uncategorized — Ken @ 6:16 pm


Yesterday, the New York City Department of Health and Mental Hygine gave a reporting of the births and abortions in NYC for the year 2009, and the news is staggeringly depressing, with a tiny, sliver-thin ray of hope…

First, the good news – abortions are becoming just a bit less common in New York City, with the number of pregnancies that end in abortion down, continuing its ten-year downward trend, with only 39% of all pregnancies resulting in an abortion. That’s slightly less than four out of ten – and that is the staggeringly depressing news.

Examining the numbers that make up that percentage are truly depressing – of the 225,667 pregnancies in the city, 126,774 resulted in a live birth, 11,620 were what is called a “spontaneous termination”, and 87,273 abortions were performed in New York City in 2009. The 39% abortion rate does not include the so-called “spontaneous terminations.”

That’s 239 abortions per day, every day of 2009…

While Pro-Choice advocates like to fill our heads with the need to keep abortion safe and legal for the benefit of victims of rape, incest, or to protect the life of the mother (which are all perfectly valid reasons), I have to believe they would be hard-pressed to argue that those issues recur 239 timkes every day in New York City. That’s an opinion, but in the year 2007 (which is not 2009), the US DOJ reported there were 69,850 rapes reported in the entire country – rape simply isn’t that common. and yes, it probably is under-reported, but every rape doesn’t end in pregnancy either, so those two variables cancel each other out, in my opinion.

Let’s go beneath the surface and take a look at a breakdown by race of the 87,273 abortions in New York City:

  • 40,798 (47%) abortions were to black women, who represent about 24.5% of population in 2000
  • 28,364 (32%) abortions were to hispanic women, who represent about 27% of population in 2000
  • 18,120 (21%) abortions were to women who were neither black nor hispanic, which represents the remaining 51.5% of population in 2000

I wonder how Margaret Sanger, founder of what is now known as Planned Parenthood, the largest reproductive health care concern in the country, would view those numbers…

Sources:
CBS News report “39 Percent Of NYC Pregnancies Result In Abortion”

NYC Health Report 2009 summary

NYC Department of City Planning 2000 Census Summary

Wikipedia article on the Demographics of New York City

January 6, 2011

Teacher Pay: A Smarter Investment for the New Year

Filed under: Uncategorized — Ken @ 12:10 am


Sort of.

In NJ, property taxes directly fund a portion of the local school budgets in NJ, with the rest made up by the state and federal monies available. Some districts get over 40% funding to “compensat­e” them for a tax base otherwise incapable of funding a “proper” education (these are called “Abbott Districts, after a court ruling some years ago). Other districts approach 100% local property taxes, like my district – about 95% self-funde­d.

In my school district in NJ, starting salary for first-year teachers is just under $50K/yr, with teachers with the district for 20 years approachin­g $90K/yr, advanced degrees add a few K more.

As for the paltry pension teachers earn, after 10 yrs on the job, their pension is calculated by dividing their years of service (say, 35) by 55, then multiplyin­g that times their last three year wage average. (This is a state-wide calculatio­n, but each district sets their own payscale.) For example, a teacher with 35 yrs experience and an average $90K/yr salary their last three years of employment would enjoy a pension of (35/55) * 90000 = $57,272/yr with fully paid-for medical coverage for life as well in most cases. While not a kings ransom, it is a guaranteed benefit that far exceeds what many in the private sector are offered by their employers.

At typically 2/3rds of the school budget, when money gets tight, teacher compensati­on will be questioned­…
More on Banks
Read the Article at HuffingtonPost

January 5, 2011

Plenty of time to campaign for 2012

Filed under: Politics,Uncategorized — Ken @ 11:19 am


As reported elsewhere, earlier this week the President commented about the 2012 election cycle:

“My hope is that John Boehner and Mitch McConnell will realize that there will be plenty of time to campaign for 2012 in 2012. And that our job this year is to make sure that we build on recovery,” Obama said.

Source: CNN Political Ticker

But then today I learn that Press Secretary Robert Gibbs is stepping down to begin working on President Obama’s 2012 re-election campaign!

So, I guess the President wanted Speaker Boehner to wait until February to start campaigning for 2012 like he is?

Next Page »

Create a free website or blog at WordPress.com.