Tag Archives: taxes

On Politics and Inequality

What a fantastic little piece from The League of Ordinary Gentlemen.

As long as he was just a billionaire, Michael Bloomberg couldn’t stop synagogues from delivering bagels to homeless shelters. As mayor, he can. A billionaire can urge you to quit smoking, but a politician can ban it. And a billionaire can buy goods in the market, but a politician can confiscate them in broad daylight, with the full blessing of the law.

Politicians who complain about economic inequality tend to achieve two things: First, they extend political inequality. And second, they make it harder for market forces to raise the living standards of the least well-off. (Why is eflornithine expensive? It might be a difficult chemical synthesis, but it’s probably patent law or regulatory compliance. If so, then the government is a real-world Dives, and it deserves a lot more odium than the fictional one.)

Politicians do these things not because good remedies don’t exist, but because politicians don’t like good remedies. The political elite isn’t stupid. They want what everyone else wants — power. Unlike most of us, they already have a power base to build on. That’s also why they need to be stopped. Concentrations of power are dangerous, particularly when they can’t be punished by customers walking away.

When asked how much the rich should pay in taxes, we are primed to think of figures like Dives, and the answer is always more. Why? Because Dives is an asshole. Really. Our answer — “more” — arrives no matter how much the rich already pay, and whether or not they actually are assholes. I’m fairly sure that the answer will always be more; this alone should raise suspicion.

This very nicely points out fundamental flaws in Leftist/Collectivist thinking, as well as highlights the commonly polled response “higher taxes are great, as long as they are only higher for people richer than me”.*

I would suggest the reason eflornithine has a high price is supply and demand, not the cost of regulation.  The cost of regulation affects supply – if the cost is higher than the expected price, the drug is not produced, or it is only produced in quantities where a very high price offsets the costs; thus is only one part of the price equation.  It’s semantics and nitpicky, but I can get that way.

(Via @radleybalko on Twitter)

* “A CBS News/New York Times Poll conducted in 1985 found 69 percent felt that “people who have more money than you” were paying too little in taxes – while they themselves were paying their fair share (51 percent) or even too much (45 percent).”

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Economics of Gas Taxes

Peter Franchot, the MD State Comptroller, has floated the idea of a gas tax holiday over one of the upcoming summer long weekends.

While gas prices have dropped about 10 cents per gallon over the last week, the Maryland average is still about $3.85 a gallon — about a dollar more than the same time last year.

A high-ranking state official who has vowed to fight soaring gas prices is floating the idea of a gas tax holiday, according to 11 News reporter David Collins.

Comptroller Peter Franchot plans to pitch a three-day gas tax holiday to the Maryland General Assembly, Collins reported Thursday.

“We think it would put Maryland on the map, and it would more than pay for itself through increased economic activity,” Franchot said. “Most of all, just give Maryland citizens a break.”

The current state gas tax is 23.4 cents per gallon. At one station Collins visited Thursday, a 15-gallon purchase would cost $56.25. With the gas tax lifted, the bill would have been reduced by $3.50.

I heard Franchot on the radio yesterday, explaining that certainly we can’t do it permanently, because of the revenue loss, but over a weekend the loss of $6 Million in revenue would be offset by increased economic activity, and would be a net gain for state tax revenue, as well as good for residents of the state.

How is it possible he understands eliminating the tax for a short period of time would have a net positive benefit, but doesn’t understand that it would have a positive benefit if it were eliminated permanently?


The next time someone suggests we need to raise taxes (again) in Baltimore City…

Show them this.

Alone amidst a wash of concrete and bricks, paving and sidewalk, the tiny unidentified greenery struggles to spread its sprouts into a seemingly intractable blanket of shade.

But do not mourn this poor forlorn seedling, for the city’s Board of Estimates just approved $8,800 for its care and maintenance. Along with 15 months of watering and pruning, the contract will also provide company for the lone greenery in the four-story concrete parking garage, with plans to add several additional planters to the darkened caverns that temporarily house the cars of motorists visiting the city’s Mount Vernon neighborhood.

The money is part of $27,000 in landscaping contracts approved for four city-owned parking garages Wednesday. The contracts provide for 15 months’ worth of work by Grass Roots Landscaping, a Baltimore-based business that will now be responsible for nurturing the lone plant in Franklin Garage, along with other potted shrubbery withering on sidewalks or wilting in the exhaust-filled concrete facilities at three other parking garages.

The expenditure for the solo shrub, that comes amidst intractable budget shortfalls and higher taxes, was justified as key to presenting an aesthetically pleasing atmosphere inside the otherwise mundane parking garage, an important selling point for attracting out-of-town motorists.

Yup.  $8,800 for a plant in a parking garage.   The Lovely Mrs. Stagg, who, of above average intelligence, reminded me that it’s probably that expensive because plants can’t live in a dark parking garage.

Our property taxes are twice the surrounding counties.  The city implemented an additional sales tax on bottled beverages (that retailers are not allowed to call a sales tax, or even disclose to their customers) because if we didn’t, we’d have to ground the police helicopter.

Yet we’re spending money on this.  Awesome.


The additional costs of Federal Income Taxes

Mark Perry adds them up at American Enterprise.

Americans spent almost 4 billion hours filling out tax forms last year, according to the National Taxpayers Union, and that number’s likely to be even higher this year. At the current average hourly wage of $18.90, the amount of time spent by Americans on tax preparation is worth about $75 billion, equivalent to the entire annual Gross State Product of New Mexico. Add another $30 billion that the IRS estimates taxpayers spend out-of-pocket on tax preparation (tax software, tax preparers, accountants, etc.), and the total annual cost of tax compliance equals the state of Iowa’s entire annual output.

The compliance burden of income tax preparation for Americans has risen significantly over time as a direct result of the increasing complexity of the U.S. tax code. For example, just the instructions for the 2009 Form 1040 total a record-high 175 pages, more than double the 84 pages of instruction in 1995, and more than 10 times greater than the 17 pages in 1965 (source).

My total cost is ~$80 for Turbo Tax and 5 hours of my time to prepare taxes, and a couple of hours a month keeping the required records, conservatively 20 hours.  That’s more than a half a week of productivity, which for me is about $50 an hour (my wife’s is higher).  The cost to me on top of the $50K+ I pay in Federal and State income taxes is more than $1300.  Can you imagine the cost of an audit, where you must prove your own innocence?

I wonder if anyone in Congress considers this cost to the country as they continue to add complexity to the tax code on top of raising tax rates.  Somehow I doubt it.


Happy Tax Freedom Day!

Today, the 99th day of the year, is the day that the average American has worked enough to pay all of his taxes.

Not everyone is celebrating today.  I have not calculated it to the day (maybe I will and update the post), but I know my tax freedom day is no earlier than July.

Yes.  More.  Than.  Half.

You’re welcome, I guess.


Legislative Logic

In Mass, the legislature wants to increase the tax on people who own and license a dog by $3. Alone, this is certainly not the most outrageous thing you’ll see today, but the explanation of why they need the tax revenue is pure awesome.

But state Sen. Pat Jehlen (D-Somerville) argued the fee is necessary to fund a state spay-and-neutering plan meant to snip the state’s out-of-control problem with strays.

“The number of abandoned animals has gone through the roof over the past few years,” Jehlen said. “Shelters are euthanizing animals because they have too many.”

So, they are increasing the tax on people who register, spay and neuter their dogs to pay for spaying and neutering of dogs.

Really? So what do you think will happen? I know what I would do (in fact, it is what I’ve done). My dog would not be registered.


Two Wolves and a Sheep Vote on Dinner

According to CBS, 74% of people support higher taxes on those making $250k a year or more.

Almost three-quarters of Americans think it is a good idea to raise taxes on people making more than $250,000 per year, according to the latest CBS News/New York Times poll.

In fact, two-thirds of Americans think the tax code should be changed so that middle-class Americans pay less than they do now, while “upper income” people pay more.

That’s a shocker, people think their taxes should be reduced, while those who are “more fortunate” should pay more.  Interesting, it doesn’t appear there was any question phrased in a way that everyone’s taxes should be reduced and we should stop taking money by force and giving it to other people, although there were some questions on approval of the President’s budget.  The poll was split almost in thirds thinking spending was going to help, spending was going to hurt, and having no idea.

In other news, the wolves ate the sheep for dinner.

Link via Coyote Blog


TurboTax Rules

Seriously.

$70 plus $20 to efile my state return, versus $700+ to have my accountant do them, and it didn’t take me any longer, because the packet I had to fill out for my accountant was pretty much the same as the questions TurboTax used.

I used the Home and Business version (got it at BJs on sale), I really couldn’t be happier.  Given the small odds of an audit, and that we tend to have solid documentation, there’s no way we’ll use an accountant again unless they are providing some serious tax planning value over what the software provides, and ours wasn’t, at all.


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