But those mooching teachers have it way too good

by folkbum

The bottom line: It’s not exactly easy street for our $250,000-a-year family.

Seriously, that's the conflicting message of the political right these days: It's possible to be near poverty at a quarter mil a year, but that uppity mid-career teacher needs a 12% cut off her $45k salary.

Alternatively, you could put it this way: The political right weeps for a family living beyond its means in Naperville, IL (notably pleading to keep their taxes low, not suggesting they move to Aurora), but insists that we cut Medicare before the debt monster kills us all.

Bet They Are Not in the Minority

By Keith R. Schmitz

Liberals really have nothing against people making a lot of money. What we give a crap about is how it is used. That's why it would be a great if this impulse would start to get infectious.

http://www.youtube.com/watch?v=sqIgb48iq6w

Let's face it. Unlike our junior senator, you get the impression that these people got themselves where they are pretty much on their own, with the exception perhaps of the Disney woman. But if that's her attitude, great!

Nevertheless, these people seem to be smart. Smart enough to know that this country can't keep going the way it is going.

McIlheran Watch: Vacation's over, time to start up the hypocrisy machine again

by folkbum

You know how it is: You come back from vacation, and the grass is up to here, weeds all over the place, papers piled up on the porch because you forgot to put it on hold. Patrick McIlheran, serial calumnist for the Milwaukee Journal Sentinel, finds a similar situation upon his return. See, the Republicans, the party for whom McIlheran usually shills, did something anathema over his vacation--they raised taxes!--and he needs to justify it, which he did both in print and on his blawg. (For a description of why the legislative action is a tax increase, read the news story.)

But it's okay, people, he tells us, that the GOP is cutting the Earned Income Tax Credit, a tax credit designed, as McIlheran freely admits, to encourage poor people to work more by offsetting their payroll or other taxes.

Why is it okay? Because of all the tax cuts in the budget. No, really, he says this. From the Sunday calumny column:

Walker and the Legislature, short of money, decided to cut by 15% one work-inducing incentive and to increase another they reckon will be more effective.

And what was that other tax cut work-inducing incentive? Elimination of taxes on certain capital gains for businesses. I'm actually quite surprised that McIlheran didn't go on about the other business tax breaks the GOP has included in its budget, like the one slipped in Friday night that gives businesses a dollar-for-dollar tax break ... just because. At least with the cut in reinvested capital gains, the GOP is pretending to pick breaks that sound reasonable to your average person. But so many of them are just give-aways to corporate donors.

This is your modern GOP in a nutshell: In a time of deficit, tax breaks for the poor are simply impossible to maintain. But tax breaks for business can continue, and we'll throw in new ones, too.

McIlheran Watch: Is he innumerate, too, or still just being deceptive?

by folkbum

(Unrelated but kind of update: Tom Foley picks liar.)

One of the most dishonest things anti-tax folk deliberately do to fuzzify the debate over tax rates is to conflate marginal tax rates with effective tax rates. For example, when long-time rich-folk defender Patrick McIlheran retweets (or whatever it is that you call the conservative tendency to "heh indeed" someone else's hard work with a slight smug comment) the Wall Street Journal's Stephen Moore's complaints that Democrats in Congress may be thinking about taking 62% of people's income in taxes.

Moore's op-ed is disingenuous in a number of ways besides blurring the lines between effective and marginal rates--which I'll get to in a moment, I promise--such as blending some Democrats' proposed federal income tax changes with actual state and local taxes to inflate his number, and comparing the cumulative effect of all taxes with the income tax rate at some cherry-picked point in the past. And McIlheran adds additional disingenuity too, which I will also get to in a moment. But let's hear from Moore first:

Media reports in recent weeks say that Senate Democrats are considering a 3% surtax on income over $1 million to raise federal revenues. This would come on top of the higher income tax rates that President Obama has already proposed through the cancellation of the Bush era tax-rate reductions.

If the Democrats' millionaire surtax were to happen—and were added to other tax increases already enacted last year and other leading tax hike ideas on the table this year—this could leave the U.S. with a combined federal and state top tax rate on earnings of 62%. That's more than double the highest federal marginal rate of 28% when President Reagan left office in 1989. Welcome back to the 1970s.

Here's the math behind that depressing calculation. Today's top federal income tax rate is 35%. Almost all Democrats in Washington want to repeal the Bush tax cuts on those who make more than $250,000 and phase out certain deductions, so the effective income tax rate would rise to about 41.5%. The 3% millionaire surtax raises that rate to 44.5%.

Moore goes on to add additional numbers, sometimes falsely, to get to 62%. And you'll notice Moore actually uses the words effective income tax rate, which is a bald-faced lie. Let's pretend someone is a millionaire, earning, let's say, $2,000,000 a year. With no deductions except the personal deduction for the millionaire and her husband--no mortgage interest, no charitable donations, no contributions to an IRA or other tax shelter that millionaires tend to access--that couple under Moore's conditions would pay about $765,000 in federal income tax. This makes the effective tax rate, actually, 38.3%, not 41.5%.

This happens because not every dollar you earn is taxed at the same rate. The first $8,500 you earn ($17,000 as a couple) is taxed at just 10%. This is as true for you at whatever crappy low-paying job you tolerate as it is for our millionaire earning $2m. The rate at which additional income is taxed increases at intervals; every dollar from $8,501 to $34,500 is taxed at 15%, from $34,501 to $83,600 is taxed at 25%, and so on. In addition, letting the Bush tax cuts expire on upper-income earners only increases the taxes paid on income above $250,000, and the proposed millionaire surtax (which I bet you a dollar will never pass anyway) will only increase the rate paid on income over $1m.

You may say the difference between 38.3% and 41.5% is small, because either way you're talking about a whole lot of money. Well, yes, when you talk about millionaires, any one percent of their income is in fact going to be $10,000 or more. I would hate to have the kind of life where that were true! The thing is, we're talking about a very small number of earners here, about 1/10 of one percent; Moore and McIlheran want to give the impression, though, that this sort of thing will affect you, too, average taxpayer, and therefore you should be outraged. But less than 3% of all earners (and, I would be bet another dollar, none of either my or McIlheran's audience) make more than $250,000, the ones most affected by the proposed changes. And at those numbers, the difference between marginal and effect rates is huge. Someone earning $300,000 a year pays an effective rate of just 23.4%, even though they're in the 33% bracket. (If the Bush tax cuts expire on them, that $300,000 earner's effective rate would slip upward to barely over 24%.)

And conservatives need to lie to to spread this impression, as noted. Here's another bit of Moore's mess:

Now let's consider how our tax system today compares with the system that was in place in the late 1980s—when the deficit was only about one-quarter as large as a share of GDP as it is now. After the landmark Tax Reform Act of 1986, which closed special-interest loopholes in exchange for top marginal rates of 28%, the highest combined federal-state marginal tax rate was about 33%. Now we may be headed to 62%.

This is the sort of BS anyone with basic numeracy or reading comprehension skills--such as an opinion columnist at Wisconsin's largest daily newspaper--should be able to see through. Moore compares his pile-everything-on imaginary rate to a number that excludes much of what he contorts to include in his figure. His 33% rate doesn't include, as his 62% does, any payroll taxes, for example, making this a massive apples-to-binder clips comparison.

McIlheran himself, not content merely to let Moore's abuse of math slide, offers his own disingenuous comments. He rounds Moore's 62% up to "two-thirds," for example, and again drops his favorite stat: "[T]he top 10% of earners," he says, "pay about 45% of all federal taxes." Which is bad math, again, because McIlheran doesn't give you the context that these same top 10%-ers also earn more than 40% of the income in the US, so that 45% is hardly as shocking as it sounds.

All of this is ginned up to disguise a fact that explains more of the current deficit morass than almost anything else: Federal revenues are lower than they have been since Truman's days. Period. To bemoan the present day--or some imagined future when rates might nudge up slightly--as somehow hellish compared to the good old days of the Reagan years is utter crap. It is a fundamental and deliberate misreading and misrepresentation of the data. No single year of the Obama administration to date has seen more revenue than the lowest year of the Reagan administration.

At the same time as they try to convince us that we can't afford to fulfill the promises of Medicare or Social Security, they also insist that the tax burden is impossibly high already. Neither of those things is remotely true, and it frustrates the hell out of me because a bunch of these liars are, apparently, being paid to peddle those fictions to you.

So when is it a good time?

by folkbum

I've asked this question before, and never gotten a satisfactory answer. But since one of the MacGuyvers insisted over the weekend that a tax increase is "the last thing we need right now" (in the same edition of the paper that showed skyrocketing income among Wisconsin's wealthiest), I figure I should ask again:

When should we raise taxes?

Let's review: Per capita tax collections, here in Wisconsin and across the land, are lower than they've been in generations. But government--even things conservatives want, like roads and wars and abortion auditors--costs money. So we have to have taxes. Even Reagan's tax rates were higher than today's, and Reagan signed eight different tax increases into law.

So, when does it happen? When would it be okay to raise taxes, and on whom, and maybe even how much? I would like to know this. At the very least, promise me that Healy or Wigderson or some other McIvorati will write an op-ed when it's okay to raise taxes again, so we all see the green flag.

Living beyond our means

by folkbum

One of the most common complaints from the right about the current budget morass is that schools (and other units of government) have been "living beyond their means." So let's talk about that.

I attended the Organizing for a Better Way meeting put together last Saturday by the Wisconsin Alliance for Excellent Schools and other groups (earlier mentioned here). Four hundred other people and I listened as speaker after speaker--from teachers to school board members to students from all around the area--described what the impact of a billion-dollar cut in the state education budget might look like.

Not one of them talked about how much schools were living it up before now, and how sad it will be to see the party end. No; every single speaker talked about what had already been lost to cuts to this point, and how additionally devastating a deep cut in the revenue limit, as proposed by Governor Scott Walker, would be.

None of the speakers made this point better than Greenfield Public Schools Superintendent Conrad Farner, who delivered a barn-burner of a speech. It was, indeed, quite a shocker to hear a superintendent, any superintendent, so baldly honest about the budget situation as Farner was Saturday. I could barely keep up taking notes, what with having to stop to applaud every other line with the rest of the audience.

Farner gave the room a history of the last two decades living under the regime of revenue limits set by Madison. For those who don't know how that works: the total amount of money a school district can spend, per student, is capped by state law as a way of protecting local taxpayers from runaway local officials. How much a district's cap is varies around the state; the formula considers everything from how much you spent last year to how much property wealth and state aid your district has. The result of this policy is the remarkable fact that Wisconsin's per-capita state and local tax burden is the lowest it's been in 50 years.

But here's the kicker, as Farner laid it out. Not once in the last two decades has the revenue cap increased at a level equal to the increase in the cost of providing services. Every year for 18 years, Farner said, virtually every school district in the state has had to make decisions about where to cut, and Farner read a stunningly long list of services Greenfield used to provide and now doesn't, from summer school to social workers. He talked about concessions Greenfield teachers have already made in pay, pensions, and insurance. "We can't cut our way to excellence," he said, and yet next year, under Walker's proposed budget, the cuts would be the deepest yet.

Now it is true, as will undoubtedly be pointed out here in the comments section within minutes of this post hitting the presses, that in real dollars the amount of money every school district spends today is higher than it was in 1993 when the caps started. (Complaints about the caps started at about the same time; here, for example, is a press release (pdf) about a 1998 study of revenue limits and their effects on schools.) This is because the rate of increase allowed by state law has been greater than zero (Walker proposes for the first time ever under the revenue cap system a negative number). However, that rate has been slower than the rate of increase in the cost for school districts to offer all the services they want and need to.

This harkens back to a point I have made many times before, and undoubtedly will have to again. Even in times like the present, when inflation is dramatically low, the cost of doing what schools do can still increase. This is because what governments buy--the cost of government services--is very different from what families buy--the costs underlying the rate of inflation. While people and families buy food and clothes and iPads, governments buy roads and tanks and people; governments' cost of living is a different animal than families' cost of living. To try to compare the two, or suggest that governments ought to budget more like families, is a real apples-to-oranges kind of exercise.

But back to the point: Even when the things governments buy, notably people and their health care (the inflation rate of which far outstrips CPI generally), get more expensive, in Wisconsin school districts and other local units of government are prohibited by law from raising revenue to pay for them.

Another way: If you really want to compare governments to families, Wisconsin's revenue limits mean that Dad can't go look for a better-paying job, Mom is not allowed to go back to work after taking some time off to have kids*, and Junior can't pick up a paper route to pay for his own damned comic books.

(* The vagaries of the revenue cap formula include a provision that any decrease in the property tax levy one year penalizes districts in future years because it lowers the revenue cap not temporarily but permanently.)

Or another way, which is how Farner framed it over the weekend: "What business," he asked, "could survive for 18 years with its revenue capped below its cost?" Imagine, as I explained it to someone the other day, that McDonalds wasn't charging enough for its hamburgers to cover the cost of the food, the stores, the employees it had and was prohibited, by law, from raising prices. That would be insane--but that is the situation we're in now.

No, it's worse. The situation we're in now is that McDonalds has closed stores, laid off employees, switched to cheaper ingredients, and is now being told that it has to roll back the prices on its menu anyway and somehow stay afloat.

In the end, I don't think there's a single honest observer who can look at the economizing schools have done in the face of increased costs, increased testing, increased uncertainty about the future and say that schools have been living beyond their means. Their means, indeed, have been capped, making living beyond them impossible. Impossible, like the task Conrad Farner and other school officials have now to find something, anything else to cut.

Keep Debt Alive!

by folkbum

Re: Paul Ryan's Roadmap:

The CBO says your road map would put spending at 22.2 percent of GDP in 2020 and 23.5 percent in 2040. With revenue capped at 19 percent, that means Paul Ryan stands for deficits that would be 3 percent to 4 percent of GDP for at least the next 30 years, which would balloon the debt by trillions, to 100 percent of GDP from 53 percent in 2009. If you're supposedly willing to make "the hard choices," why wouldn't you balance the budget as soon as the economy is back on track? What kind of "fiscal conservative" has a half-century plan to balance the budget?

Indeed, CBO projects the deficit in 2020 to be about the same under current continued policies and under Ryan's policies. Roll back the Bush tax cuts for the top 5%, and Obama's policies lower the deficit faster than Ryan's.

Quote of the Day, Paul Ryan edition

by folkbum

He’s saying: ‘Eat your broccoli. And then maybe you don’t get to eat at all for a few days. You don’t get steak--ever.’ ” - Jeb Bush

They always did say Jeb was the smart one.

Also, a chart:


Click it for an explanation.

McIlheran Watch: Ignorance of the Dumb

by folkbum

I thought perhaps we could just play "simple answers to stupid questions":

My Sunday Journal Sentinel column looks at all the excuses the left is offering to let the term-limited 2001 and 2003 tax cuts expire.

Mainly, I write, it comes down to wanting to increase taxes on some people--the ones they think have too much money. Only, just where in the constitution does it say our leaders have the right to decide who has too much money, much less to, um, remediate that?

Um, Article 1 section 8? "The Congress shall have Power To lay and collect Taxes." Done, right? No, sadly, he doesn't stop there where the simple answer would suffice.

Let's kind of give McIlheran credit, though: Those paragraphs offer the correct implication, that while Democrats will let Republican policy take effect and sunset the Bush tax cuts, they will offer new tax cuts for those earning less than $250,000 a year--those who in his parlance are the ones Democrats think "have too much money." I prefer of course to think of them as "the only people who have seen growth in their income in the last thirty years," but he makes the big bucks down there to the newspaper and I'm just a schlub with access to google, so he gets to define the terms.

McIlheran can't bring himself to say that explicitly, that the only people who will see their effective federal taxes increase are the ultra-wealthy. He can't do it because he needs to play ignorant, and keep his readers ignorant, to make the remainder of his points. First, majorities of Americans are in favor of letting all the tax cuts or the tax cuts for the wealthiest expire on schedule. It's hard to gin up populist anger when the popples are not on your side, unless you play ignorant.

Second, the rest of that blog post is all about "how the repeal of those Bush tax cuts would hit middle-income families." In reality, the Democrats' proposals would have zero hit on middle-income families. Period. There would be no change. So the whole rest of that post is worth exactly nothing. Every word of it is moot, every sentence is a lie.

Is that something McIlheran will ever admit? No. See, the right is counting on you to stay ignorant, because if you knew what you were really getting with a Republican agenda, you'd never agree to it.

(Updated to add the graphic again that originally appeared here in this post.)

(Updated again with mad props to JimSpice, who comments here often, too: "Why on earth would a conservative try to sway the opinion of liberals by sending them to the Heritage Foundation. That's as useless as convincing a conservative by quoting a scientific journal.")

A Taxing Situation

by folkbum

Sorry for the slow blogging this week. This is the last week of the summer program I work with, and it is quite busy and hectic around these parts. (I'm still waiting for that whole "summers off" thing that I was promised when I signed up for my gummint job.)

Anyway, here's three things you need to read, with excerpts. Read them in this order:

• "The rich are getting richer and the poor are getting poorer at a staggering rate. Once upon a time, the United States had the largest and most prosperous middle class in the history of the world, but now that is changing at a blinding pace. [. . .] The bottom 50 percent of income earners in the United States now collectively own less than 1 percent of the nation’s wealth."
• "Call me crazy, but after a decade of living large in ever more sumptuous beach houses and promoting policies that almost wrecked the economy, I think the folks earning a million bucks a year can probably afford to pay an extra 5% in taxes. Seemed to work OK in the 90s, anyway."
• "Letting Bush's tax cuts for the rich expire affects only a tiny number of small businesses; it doesn't affect them very much; and it generates revenues of $678 billion. If the only thing you care about is keeping taxes low for rich people, you won't be convinced. For the rest of us, it's a no-brainer."

Wigderson sets up straw curd man, eats it

by folkbum

James Wigderson's latest "special guest perspective" at the MacGruber World Institute for Advancing Agendas in Spite of Facts touches on a subject near and dear to me (my emphasis):

The increase in the child tax credit is due to expire in 2011 along with the rest of the Bush tax cuts. If the Democrats in Congress and the Obama Administration follow through on their threat to let the Bush tax cuts expire, middle-class taxpayers in Wisconsin and elsewhere could receive a huge tax jolt. [. . .]

Wisconsinites benefit from this tax cut more than residents in other states. Of the tax filers claiming the credit, Wisconsin filers ranked eighth in benefiting from the credit. Wisconsin filers’ average credit ranked fourteenth of all filers. Of the Wisconsinites claiming the credit, the average tax benefit was $1,335 off what they owed.

That’s a lot of cheese curds.

When you invoke the mighty curd, you had better be right in your facts, as I can hear curdspolitation six counties away and doubtless will descend upon those who befoul the curd with a righteous fury.

In Wigderson's case here, the cheese stands alone. At least, the cheese stands outside the realm of reality.

Let's start with the opening presumption. "Democrats in Congress," the son of Wigder writes, "and the Obama administration" have apparently made "threats to let the Bush tax cuts expire," and if that happens, "middle-class taxpayers" would lose their curds. But here's where Wiggy starts to fall off the cheese wheel.

The simple fact is that while "Democrats in Congress and the Obama administration" have indeed stated their intent to let some of the Bush Tax cuts sunset as originally intended (note that he doesn't direct any curdignation at the Republicans who originally scheduled that sunset!), no leading Democrat and no one in the Obama administration has suggested letting the child tax credit expire.

If you don't believe me, just google it. (I assume Wigderson opted not to run a four-second google search because it would have totally ruined his argument, scuttled his column, and cost him that sweet wingnut welfare payday.) You'll see that not only has Obama promised to extend that credit beyond 2011 (with Congress expecting to make it permanent later this summer), he has proposed doubling the credit*. The truth here is precisely the opposite of what Wigderson claims.

This is worth repeating: Wigderson's entire column, from start to finish, top to bottom, is predicated entirely on a complete disconnect from reality.

There are other little bits of disconnection from reality along the way, of course (why stop at just the thesis of your argument when you can muck up even the details?). As an example, there's this: "Democrats unhappy with the Bush tax cuts neglect to mention that only 25% of the benefits went to those making $250,000 per year or more."

Democrats "neglect to mention" this statistic because, you know, it is a stupid and misleading one. Let's assume it's true--that "only" a quarter of all the benefit of the cuts accrues to those making $250,000 or more. It would be good to know how many such filers there are. And in fact, those earning $250,000 or more account for "only" the top 10% of earners in the country. This means that they are receiving a disproportionate share of the benefit of the cuts. Other people note the disparity more clearly:

In 2006, the bottom fifth of income earners got an average tax cut of $20, or 0.3 percent of their income. In 2006, the top fifth of income earners got an average tax cut of $5,800, or 4.1 percent of income. At the very top, the average tax cut was more than 6 percent of income.

[T]he top 0.6 percent of tax filers, those with more than $500,000 in income, received nearly three-quarters of the benefits of the capital gains and dividend tax cuts in 2005.

And indeed, Widgerson's statistic is not true. According to a 2008 report of the Joint Economic Committee, "In 2007, one third of the total benefits of the tax [Bush] cuts went to the top one percent of households." (And the top 1% is those earning $350,000 and up.) Since 2007, the middle-class tax cuts have been constant while breaks on capital gains and estate taxes have continued to grow, pushing the disparity even higher. This year, with the complete absence of any kind of estate tax at all, the skew will be at its peak.

It is always, by definition, easier to argue against a straw man: State something you know is not true (Democrats are going to let the child tax credit expire!) and then amass your evidence and have at it. And here Wigderson does indeed to a nice job of explaining why Obama and the Democrats are smart to not only extend but perhaps increase the child tax credit. But a straw man is a lazy writer's strategy, and one that subjects you to ridicule and derision for not having a basic grasp on the truth. Here Wigderson has gone all-in on an argument full of rotten cheese.

*Corrected. Also, see this report on the benefit of the Bush tax cuts to the wealthiest earners.

Shorter Dan Kenitz

by folkbum

Our conservative reality has lapped your liberal satire.

Sarcasm quotes? Really?

by folkbum

(Note: Mertz responds in comments below and at his blog. It's all good.)

Thomas J. Mertz, the Cheddarsphere's most consistent pro-public school voice, mentions me amid Tom Barrett and others in his latest, which is about taxes:

On and around April 15, “Tax Day,” you always expect to hear destructive messages from the likes of those now in the teabag crowd. Unfortunately, we are now hearing them from “liberals” and Democrats also. What is wrong with these people? [. . .]

Leading “liberal” blogger Jay “Folkbum” Bullock jumped on the “taxes are bad” bandwagon with a post titled “On Tax Day, thank Democrats for your lower tax bills.” In the same vein was an email [note: pdf] from state Democratic Chair Mike “With this [2009-11] budget package, Democrats have strengthened K-12…education” Tate. Like Bullock, Tate boasts that “With Democrats in full control of government, Wisconsin’s tax ranking has improved for the first time in decades.” [. . .]

In a larger sense what is missing is the willingness to make a positive case for government programs and the taxes that pay for them. Barrett, Bullock and Tate all cede the ground to the anti-tax crowd. They begin by assuming taxes are bad and that cutting taxes is good. [. . .] The other mistaken assumption of this formulation is that current revenue policies are superior to any changes other than tax cuts. This is just silly. Tax codes are not divinely inspired, they are the product of years of messy legislative log rolling, horse trading and sausage making. There is plenty of room for improvement, involving increasing some taxes and cutting others.

I have no desire to start or continue or whatever any kind of a spitting contest over whose liberal cred is bigger or the like. But I think Mertz here, both in his reading of a single post and in his use of sarcasm quotes around liberal in his description of me, misses some key points, and gets almost everything about me and what I believe about taxes wrong.

One, I am a partisan. Always have been, always will be, and I have a near seven-year history of blogging to prove it. In almost every circumstance (David Clarke excepted) I am an advocate for Democrats and for Democratic candidates--and for better Democrats, too, as I was the one who asked who was going to challenge Tom Barrett from the left, mostly because of Barrett's attacks on schools. But given a chance to take a shot at Republicans, I will, as I greatly prefer to do that. In the post Mertz linked, my point was not "taxes are bad"; no such clause appears in the post at all. My point, rather, was that Republican politicians are lying about Democrats and that tea-party protesters are living in a fantasy world. The relative value of or need for particular taxes was not the main thrust of the post.

Two, I have, however, often written about taxes without being merely partisan. I was a staunch opponent of gimmicks like TABOR and I have been an advocate for higher taxes or usage fees, particularly in the context of trying to find ways to reduce Wisconsin's severe burden on individual taxpayers.

And three, long before Mertz was blogging and the current "a penny for kids" campaign, I was writing about school finance and property taxes and all of that mess. (For the record, I generally oppose swapping one regressive tax, the sales tax, for another, the property tax.) And trying, at the time, to advocate real reforms in equalization aid and real reductions on the cost side through things like effective health-care reform.

Look, no one likes paying taxes. But as I have written before, taxes are, essentially, the membership fee to the country club we call America and if we want to keep using the pool, we have to keep paying for it somehow. I don't think Mertz and I disagree on this, and I hope this sets the record a little straighter.

On Tax Day, thank Democrats for your lower tax bills

by folkbum

It may not seem like it, given the relative availability of pennies in your pocket to rub together in these recessed economic times, but unless you're one of the very, very wealthy few (and if you are, why the hell are you reading my blog?), your income tax rates are lower this year than in the past.

At the federal level, 98% of working Americans (99% in Wisconsin, pdf) are paying less in income taxes, with none of the other federal taxes increased either. The bulk of that reduction in taxes came from the American Recovery and Reinvestment Act in 2009, a bill no Republicans voted for.

At the state level, state tax rates and spending are lower than they have been in nearly 40 years. This, too, is the result of work by Democrats without support from Republicans.

The challenge, of course, is that this reality is not well publicized and, consequently, not well believed. For example, the new NYT/CBS poll (via) of the "tea party' people gathering, perhaps even as you read this, across the nation to protest their taxation with representation, finds that among the tea-party crowd, 64% think Democrats have raised their taxes. This corresponds well to what conservative apostate David Frum found that tea-drinkers overestimated, by a factor of eight, how high taxes really are.

What to do to overcome this reality is beyond my ken; the best I can offer is this post reminding people of the truth: Republicans talk tough on tax rhetoric, but Democrats deliver. Do not be deceived.

Tax Hell becomes Tax Median

by folkbum

BizTimes (via): "Wisconsin’s state and local tax ranking has dropped to its lowest level since 1961, according to an annual report released today by the Wisconsin Department of Revenue. [. . .] When considering all revenue sources, Wisconsin ranks 24th per $1,000 personal income and 25th per capita."

Darn those Democrats for ruining a perfectly good Republican talking point!

Have I mentioned that I read it for the comments?

by folkbum

This morning McIlheran rehashes one crazy conservative myth that we've already dispensed with here, but it only took one comment for more of the crazy myths to appear: "Today we also learn approximately 50% of the US household will not pay a dime in taxes," writes this poor deluded man. Which, of course, is not true: Everyone who works, buys anything, or lives anywhere pays taxes. They may not pay income taxes, which are progressively structured such that the greatest burden falls on those with the most income to spare.

Here's a previous post of mine on the subject, complete with pretty graph; but even the right-wing Tax Foundation notes (see the chart on page 5) that the lowest quintile of households by income still pays about a fifth of their income in taxes at some level.

Wisconsin Takes a Tumble in Tax Rankings

By Keith R. Schmitz

From today's BizTimes newsletter:

Wisconsin continues to fall from the ranks of the highest-taxed states, according to the latest report from the Wisconsin Taxpayers Alliance.

Over the past 15 years, Wisconsin’s tax ranking among the 50 states fell from third in 1993 to 14th in 2007, according to a new report, "Long-Term Tax and Spending Ranks," that the Alliance released today.

The nonpartisan research organization also said that, with state and local government revenues growing less here than elsewhere, the Badger State’s 50-state spending rank dropped from 13th to 26th.

Reasons given by the Alliance for the drop in both the tax and spending ranks included state income tax cuts in 1999-2001 and limits on school, municipal and county revenues in recent years. The study was based on Census Bureau figures from 1993 to 2007, the most recent year for which data are available.

Wisconsin’s rank dropped in nearly all major revenue categories during the 1993-2007 period. Wisconsin’s individual income tax was among the seven highest from 1993 through 2000. However, income tax changes, including an indexing of tax brackets and the standard deduction and a lowering of tax rates, helped push Wisconsin out of the top 10 after 2004. In 2007, state income taxes were 14th-highest nationally and claimed 3.2 percent of personal income, vs. 3.5 percent in 1993.

Although no major changes were made to the state corporate income tax over the years studied, Wisconsin’s national rank fell from 15th to 25th.

According to WISTAX researchers, the state’s property tax was consistently among the top 10 from 1993 through 1996, claiming between 4.7 percent and 4.9 percent of income. However, a $1 billion buydown of school property taxes in 1996-97 dropped the state’s ranking to 11th (4.2 percent of income). Since then, the state has limited school levy increases through revenue limits, and more recently slowed the growth of municipal and county property taxes with levy limits. As a result, the state property tax ranking has fluctuated between ninth and 11th nationally.

That's a nice level. Any lower and we become Mississippi.

Deep Thought

by folkbum

Reagan-era unemployment numbers mean we should be demanding a return to Reagan-era tax rates.

Compromise Suggestion on Taxes

Keith R. Schmitz

Many GOP critics accuse the Democrats of taking the African-American vote for granted. 

I think the same is true the other way around when it comes to small business. The GOP IS the party of big business, and if they were sincere about small business they would advocate better anti-trust enforcement, serious solutions to healthcare and administration of the Small Business Administration to help small business. 

A good example is the GOP's willingness to let the Big Three automakers go into bankruptcy, delivering collateral hits to their small business suppliers. As a small business, the GOP certainly does not speak for me.

As usual they are holding small business hostage when it comes to our economic turnaround. The point being made is that if taxes are increased on those making over $250,000 year would be a hit to small businesses. 

My good friend on the right Mike Frederick pointed out in the NY Times last week that he would have less money to plow back into the business if his taxes are raised. Though I dispute that only a minority of small business people are any where near $250M per year, point taken.

Actually the solution could be rather simple. Why not design a credit for someone who owns a small business based on their number of employees. As usual, some will find ways to fake their way around it, but audits could extract the fakers.

Soak, Don't Cap

By Keith R. Schmitz

As the phase goes, the rich are different from you and me. That's because in this country there are a class of people who are not rich and often far from it, yet think it is a great idea for a minority to make an ocean liner full of money -- at our expense. They celebrate it and they fervently defend it against any attacks. It puzzles the rest of us.

Of course President Obama's suggestion about a cap on the salaries for people in the companies that we tax payers are bailing out brought out the howling -- and not necessarily from those who would be impacted by the sanction.

But on that point there is one good idea that was in the NY Times.

Reed Hastings the CEO of Netflix suggests that a pay cap is not necessarily a good idea, because if a company sincerely wants to get out of a hole they have to attract talented people.

So he suggests how about a hefty tax increase on those making over $1 million to 50%.

Just about all of us have a talent for something and bust our behinds. Grant you there are those who have remarkable ability for making things or making things work better and no one begrudges their reward. Warren Buffett. And he is now in the process of giving it away.

But for large part the way to make huge riches is through leverage. Once many corporate heads get control of the levers of their business they basically arrange it so large portions of the firm's revenue flow into their pockets. Now, exactly how does leverage benefit us?

I agree with Hastings in countering the argument of why would people work harder if they get taxed more. He suggests that people who enjoy the challenge of what they are doing will keep on doing it.

As the new age phrase goes, do what you love and the money follows.

As for those who are strictly in it for the money, society shouldn't enable that kind of pathology.