Category: Government

Tax Day for procrastinators: big increases due to inflation

by philg

Happy Tax Day if you filed for an extension.

What’s different this year? Inflation means that ordinary schlubs can pay tax rates that were sold as applying only to the elite. The Obamacare “Net Investment Income Tax” of 3.8 percent on top of ordinary income and capital gains taxes, for example, wasn’t supposed to hit Joe Average. But what if Joe Average tried to escape the lockdowns and school closures in California by selling a house and moving to Texas? Adjusted for inflation in the real estate market, his house might not have gone up in value at all. In other words, his purchasing power from selling the house to buy a different house wouldn’t have changed (probably reduced, actually, in terms of how big a house in Austin can be purchased with the proceeds from selling a house in California). But almost surely he will have more than $250,000 in nominal gains. This is all an illusory inflation-driven “gain” and the tax code recognizes that to a small extent by excluding the first $250,000 of house price inflation. But on the rest of it, Joe will have to pay California capital gains tax, Federal capital gains tax, and an additional 3.8 percent for Obamacare. From the IRS:

The Net Investment Income Tax does not apply to any amount of gain that is excluded from gross income for regular income tax purposes. The pre-existing statutory exclusion in section 121 exempts the first $250,000 ($500,000 in the case of a married couple) of gain recognized on the sale of a principal residence from gross income for regular income tax purposes and, thus, from the NIIT.

How about a wage slave? If he/she/ze/they was earning $170,000 in 2019 and got bumped to $210,000 in 2021, his/her/zir/their spending power is actually lower due to raging inflation. Yet now he/she/ze/they is subject to the 0.9 percent Obamacare “Additional Medicare Tax” due to having income over a fixed threshold of $200,000 (soon to be the price of a Diet Coke?).

From Delray Beach, Levy and Associates:

What kind of people are paying the bill for all of the great work done by Congress and Joe Biden? From the haters at Heritage Foundation:

In 2018, due to the cruel policies of the dictator Donald Trump, the rich Americans who earned 21 percent of all income paid only 40 percent of income taxes. Separately, keep in mind that the above chart relates to cash income. A person could be in the “Bottom 50%” with $0 in W-2 income and still have a spending power and lifestyle better than someone earning $50,000 per year (in the “25%-50%” column) due to means-tested public housing, health care, SNAP/EBT, smartphone, and broadband. See “The Work versus Welfare Trade‐​Off: 2013” (CATO) for the states where being on welfare leads to a larger spending power than working at the median wage. Maskachusetts is #3 in Table 4, with welfare being worth 118% of median salary.

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Can our government generate its own inflation spiral?

by philg

Earlier here I wondered Could our epic deficits drive inflation no matter how high the Fed raises rates? (the answer is “yes” according to one of the smartest economists in the world: Economist answers my question about high interest rates and high deficits). Regarding the latest rounds of interest rate hikes, a Democrat-voting university professor friend posted on Facebook:

If you tried to put out a fire with water, and the fire got no smaller even after 3 attempts, you’d hopefully realize this is no normal water and/or this is no normal fire. And if you were able to come to this conclusion, you would not be the Fed.

My response was “I think the government may itself be the inflation spiral. Government is nearly half the economy and everything the government pays money for is indexed to inflation. Medicare, military and similar contracts, Social Security, pensions, employee salaries, etc.”

(This was a few days before “Social Security cost-of-living adjustment will be 8.7% in 2023, highest increase in 40 years” (CNBC, today))

If everything that is part of the local/state/federal government sector is indexed to inflation, doesn’t that mean that inflation goes down only if horrific pain is being inflicted on those dumb enough to be in the private sector? If government workers are getting cost-of-living adjustments (COLA), their spending power by definition cannot change (assuming that the BLS is calculating the CPI correctly). If the CPI says prices went up by 10 percent, the government workers will have 10 percent more in salary to go chasing after a mostly fixed supply of goods. This is the classic wage-price spiral.

Government is not 100 percent of the U.S. economy, so maybe the wage-price spiral can be broken if significant spending power reductions are imposed on non-union non-government workers. But at some level of government control of the economy, the spiral should be unbreakable regardless of interest rates and regardless of how poor the private sector chumps become.

(Why “non-union”? Union workers typically would have an automatic COLA increase and we could also consider union workers part of the government sector because they depend on the government to sustain their union power.)

Loosely related… prices and government worker wages go around in the Bois de Boulogne:

Related:

  • “Inflation Is Unrelenting, Bad News for the Fed and White House” (New York Times, today): “This is a self-inflicted wound that will impact the most vulnerable members of our society the most,[” said Mohamed El-Erian] (I think that El-Erian is saying what I say above, but more succinctly; everyone involved with the government will be 100 percent protected from inflation, which means that the peasants are going to be destroyed to keep those affiliated with the government from feeling any pain)
  • “Retirees Catch a Break With the Social Security COLA” (WSJ): On Thursday, the Social Security Administration said recipients will get an 8.7% increase in their payments next year and, for the second year in a row, that actually exceeds estimates of how much their costs increased. That is according to a 35-year-old initiative to measure the true rate of inflation facing those over 62, via an experimental consumer-price index produced by the Labor Department’s Bureau of Labor Statistics, known as the CPI-E; the E stands for “elderly.” … This year, the COLA was 8.7%, more than the 8% rise in the CPI-E.
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Hurricane lies from state media (NPR)

by philg

“Some don’t evacuate, despite repeated hurricane warnings, because they can’t” (state-sponsored NPR):

Depending on a family’s financial situation, evacuating away from a storm can be costly.

“Many modest- to low-income households simply don’t have the cash or credit,” said Joshua Behr, research professor at Old Dominion University, in a 2018 interview with NPR.

Behr emphasized that the poorest may often wait until the last minute to evacuate, resulting in little to no availability for affordable hotel rooms.

The tragedy of inequality yet again and the obvious remedy is an expansion of the government that funds NPR so that enhanced transferism can be implemented.

As discussed in Practicalities of evacuation from Florida’s west coast, however, all of the quoted material from the NPR article is a lie. The county-run shelters near Fort Myers are (1) free, (2) pet-friendly, (3) equipped with backup generators, (4) stocked with free food and water, and (5) accessible via free transportation (Uber or government-run; summon via taxpayer-funded Obamaphone or wait for the flood and the knock on the door from the public safety crews). A poor person would actually save money by going to the shelter because he/her/zir/their food would be paid for. (The information regarding hotel rooms is also a lie; plenty were available starting at about $60 per night as of the day before the storm made landfall.)

Aside from lack of funds, what other obstacles could a person face in getting to safety?

And while many emergency warnings and notices are now printed in both English and Spanish, there’s still a gap when for those who speak other languages.

More than 400,000 households in Florida speak Haitian as their primary shared language, according to the Census Bureau. Tens of thousands of Floridians speak Portuguese, French, Chinese, Vietnamese, Tagalog, Arabic, German, Russian, Italian or another language as their primary shared language at home.

“While looking at an evacuation map at a county in Florida, I saw they have it in both English and Spanish and thought ‘OK, that’s great.’ But also there are people there who may not speak either language,” said Cuite.

Cuite says alongside the language barrier being an issue for people, there are also different levels of literacy to account for.

“Some people may not be able to read, which makes things like finding their evacuation zone a challenge,” she said.

NPR has previously informed us that low-skill immigrants make a country rich. Today, NPR informs us that a substantial number of migrants can’t speak English or Spanish, are illiterate in all languages, and live in households in which all members are illiterate in all languages. Putting these two together, we can infer that this Army of the Illiterate will boost what we are told is the world’s most advanced economy.

Our neighborhood came through the overnight thunderstorms, which Mindy the Crippler did not appreciate. The phone shrieked a couple of times with a tornado warning and the federal government’s advice to Floridians to take shelter in basements (the nearest of which is in Atlanta?). There was heavy rain at times and some branches had come down from the palm trees. The neighborhood teenagers played football on the green (I also removed my shirt and a nice young lady paid me $100 to put it back on).

There have been no power glitches so far and no wind gusts above about 30 mph.

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Artemis launch subjected to abortion care to “protect NASA employees”

by philg

The Artemis rocket was supposed to be launched right now (3rd attempt), but was once again subjected to abortion care. What’s the principal reason given for the abortion care? “to protect our employees”:

From “NASA to Roll Artemis I Rocket and Spacecraft Back to VAB Tonight” (nasa.gov):

The decision allows time for employees to address the needs of their families

I.e., employees who live and work on Florida’s east coast have to address the needs of their families who live on Florida’s east coast… because a(n admittedly potentially severe) hurricane is forecast to hit Florida’s west coast, more than 100 miles away, roughly 48 hours after the previously scheduled launch.

In case Minitrue deletes the above, a screen shot:

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New York Times inadvertently makes my point about inflation being driven by government spending

by philg

Back in June, I wondered Could our epic deficits drive inflation no matter how high the Fed raises rates? and this question was followed up Economist answers my question about high interest rates and high deficits. Here’s the NYT front page, September 22:

The government has been shoveling out cash to people who don’t do anything to earn it while at the same time trying to stanch the inflation bleeding with high interest rates charged to those who might have a productive purchase for money. Our best and brightest can’t figure out why inflation persists.

Related:

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Our government pays out $250 million to cafeterias without ever doing a drive-by

by philg

Aside from immigration, the big political question in the U.S. is what percentage of GDP should be consumed and directed by government. In the old days, the Federal government was limited to some extent by the Constitution, but today the only limit on the great things that the Federal government can do is our imagination.

What could be bad about having the government take over what had been a private function? “U.S. Attorney Announces Federal Charges Against 47 Defendants in $250 Million Feeding Our Future Fraud Scheme” (justice.gov) is a good example.

The Federal Child Nutrition Program, administered by the U.S. Department of Agriculture (USDA), is a federally-funded program designed to provide free meals to children in need. The USDA’s Food and Nutrition Service administers the program throughout the nation by distributing federal funds to state governments. In Minnesota, the Minnesota Department of Education (MDE) administers and oversees the Federal Child Nutrition Program. Meals funded by the Federal Child Nutrition Program are served by “sites.” Each site participating in the program must be sponsored by an authorized sponsoring organization. Sponsors must submit an application to MDE for each site. Sponsors are also responsible for monitoring each of their sites and preparing reimbursement claims for their sites. The USDA then provides MDE federal reimbursement funds on a per-meal basis. MDE provides those funds to the sponsoring agency who, in turn, pays the reimbursements to the sites under its sponsorship. The sponsoring agency retains 10 to 15 percent of the funds as an administrative fee.

As part of the charged scheme, Feeding Our Future employees recruited individuals and entities to open Federal Child Nutrition Program sites throughout the state of Minnesota. These sites, created and operated by the defendants and others, fraudulently claimed to be serving meals to thousands of children a day within just days or weeks of being formed. The defendants created dozens of shell companies to enroll in the program as Federal Child Nutrition Program sites. The defendants also created shell companies to receive and launder the proceeds of their fraudulent scheme.

To carry out the scheme, the defendants also created and submitted false documentation. They submitted fraudulent meal count sheets purporting to document the number of children and meals served at each site. The defendants submitted false invoices purporting to document the purchase of food to be served to children at the sites. The defendants also submitted fake attendance rosters purporting to list the names and ages of the children receiving meals at the sites each day. These rosters were fabricated and created using fake names. For example, one roster was created using names from a website called “www.listofrandomnames.com.” Because the program only reimbursed for meals served to children, other defendants used an Excel formula to insert a random age between seven and 17 into the age column of the rosters.

In total, Feeding Our Future opened more than 250 sites throughout the state of Minnesota and fraudulently obtained and disbursed more than $240 million in Federal Child Nutrition Program funds.

In other words, the Minnesota and Federal governments spent $250 million that Americans had paid in taxes without ever simply driving to any of the fictitious cafeteria/restaurant sites to see if there anyone was being fed.

Who is indicted?

  • Abdi Nur Salah
  • Abdiaziz Shafii Farah
  • Abdihakim Ali Ahmed
  • Abdikadir Ainanshe Mohamud
  • Abdikerm Abdelahi Eidleh
  • Abdimajid Mohamed Nur
  • Abdinasir Mahamed Abshir
  • Abdirahman Mohamud Ahmed
  • Abdiwahab Ahmed Mohamud
  • Abdiwahab Maalim Aftin
  • Abdul Abubakar Ali
  • Abdulkadir Nur Salah
  • Abdullahe Nur Jesow
  • Ahmed Abdullahi Ghedi
  • Ahmed Mohamed Artan
  • Ahmed Sharif Omar-Hashim
  • Ahmed Yasin Ali
  • Aimee Marie Bock
  • Anab Artan Awad
  • Asad Mohamed Abshir
  • Asha Jama
  • Ayan Jama
  • Bekam Addissu Merdassa
  • Fahad Nur
  • Farhiya Mohamud
  • Fartun Jama
  • Filsan Mumin Hassan
  • Guhaad Hashi Said
  • Hadith Yusuf Ahmed
  • Haji Osman Salad
  • Hamdi Hussein Omar
  • Hanna Marekegn
  • Hayat Mohamed Nur
  • Khadar Jigre Adan
  • Liban Yasin Alishire
  • Mahad Ibrahim
  • Mohamed Jama Ismail
  • Mukhtar Mohamed Shariff
  • Mustafa Jama
  • Qamar Ahmed Hassan
  • Sahra Mohamed Nur
  • Said Shafii Farah
  • Salim Ahmed Said
  • Sharmarke Issa
  • Sharmake Jama
  • Yusuf Bashir Ali
  • Zamzam Jama

The Federales note “An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law,” but we know that this isn’t true with respect to Donald Trump, whose guilt may be established even prior to any indictment.

Why couldn’t Federal or state officials, at some point during the three years in which payments were made, have made an in-person visit to see what was being served for $250 million in tax money? Weren’t they curious to check out the menu and food?

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I need to get COVID-19 within the next three weeks (the government tests arrived today)

by philg

On May 1, 2022 I ordered my “free” (i.e., taxpayer-funded) COVID-19 tests. They arrived in today’s mail. They expire 22 days from now, on September 9, 2022.

For these to be useful, in other words, I need to copy the Pfizer CEO and add COVID-19 to my vaccinated-and-boosted body… within the next three weeks.

Related:

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Sri Lanka and the U.S. now share government-by-emergency-declaration

by philg

“Sri Lanka Imposes State of Emergency After President Flees Country” (WSJ):

The coronavirus pandemic decimated Sri Lanka’s tourism earnings, …

The news is not all bad. Thanks to a robust program of lockdowns and quarantine, “In April 2020, Sri Lanka’s response to the pandemic was ranked as the 9th best in the world” (Wikipedia). (On the COVID-19 death rate leaderboard, Sri Lanka ended up with roughly double the death rate of continental neighbor India.)

What other nation shares Sri Lanka’s form of government-by-emergency?

“Biden says he’s mulling health emergency for abortion access” (AP News, July 10, 2022):

President Joe Biden said Sunday he is considering declaring a public health emergency to free up federal resources to promote abortion access…

That’s just a possibility, though, right? “Biden Administration Extends COVID Public Health Emergency for 90 Days” (US News, April 14, 2022):

America’s public health emergency plan for COVID-19 will continue for at least another 90 days, the Biden administration announced Wednesday.

The emergency plan has been in effect for over two years, during which time it has made it possible for people who may otherwise have lost health coverage to stay enrolled in Medicaid without the usual paperwork checks that would be required, even if their incomes had risen higher than that allowed, The New York Times reported. The program experienced record levels of enrollment during the pandemic.

A virus that attacks obese people continues to be an emergency. Aside from vaccinating 6-month-old babies against a disease that has killed 80-year-olds, how do our best minds of public health respond? Some snapshots taken at the local CVS on July 6 (“must buy 2”):

Related:

  • After 2.5 years of the best lockdowns, mask orders, and forced vaccinations that covidcrats can dream up… “The pandemic remains a global health emergency, the W.H.O. says.” (New York Times, July 12): With known coronavirus cases rising significantly across the globe, continued Omicron evolution and increased pressure on public health systems, the World Health Organization on Tuesday said that the pandemic remains a public health emergency. “The virus is running freely and countries are not effectively managing the disease burden based on their capacity, in terms of both hospitalization for acute cases and the expanding number of people with post-Covid-19 condition — often referred to as long Covid,” he said at a news conference in Geneva. … countries like the United States have been throwing out vaccine doses, while not even two-thirds of the world population is fully vaccinated
  • An obsessive focus on the vaccines that don’t prevent infection has resulted in a failure to apply the vaccines that do prevent infection… “A sharp global drop in childhood vaccinations during the pandemic threatens the lives of millions of children.” (NYT, July 14): Millions of children around the world, most of them in the poorest countries, missed some or all of their childhood vaccinations over the past two years because of a combination of conflicts, climate emergencies, misinformation campaigns, pandemic lockdowns and Covid vaccination efforts that diverted resources, according to a new analysis from Unicef, the United Nations agency that vaccinates half the world’s children, and the World Health Organization. It is the largest backslide in routine immunization in 30 years, the report said. Combined with rapidly rising rates of malnutrition, it has created conditions that could threaten the lives of millions of young children. “This is an emergency for children’s health — we have to think about the immediate stakes, the number of children that are going to die because of this,” said Lily Caprani, head of advocacy for Unicef. “It’s not in a few years’ time; it’s quite soon.”
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Massachusetts contemplates California-style tax rates

by philg

Maskachusetts has been prevented by its constitution from imposing California-style progressive tax rates to fund its Progressive government goals. That could change in November if voters approve an amendment that would enable forcing the rich to pay their fair share.

Currently, Massachusetts is ranked among the top 15 states in percentage of residents’ income taken to fund state and local government (Tax Foundation). TX runs state/local gov. on 8.6% of what its residents earn. FL takes 9.1%. MA takes 11.5%. The champions include NY at 15.9% and CA at 13.5%. Government by Science (philosopher kings) is not cheap, apparently.

The Pioneer Institute provides some analysis:

The amendment to the Massachusetts Constitution would have a particularly significant impact on retirees and small businesses. It would affect a long list of “income” categories, including salary, capital gains (on the sale of investments, homes, businesses and other assets), dividends, IRA and 401K distributions, interest, royalties, and commissions. In any one year, should the totality of these income streams exceed $1 million, the state would increase existing income taxes by 4 percent on the excess.

“Pass-through” companies such as partnerships, limited liability corporations, subchapter S corporations and sole proprietorships are taxed via individual returns. These mostly small businesses, nearly two thirds of which are subchapter S corporations, employed almost half of all private, for-profit employees in Massachusetts in 2019.

Passage of the constitutional amendment would force many pass-through businesses to pay the new 4 percent tax on top of the existing 5 percent income tax. Subchapter S corporations, which currently pay Massachusetts’ unique “stinger tax” of up to 3.9 percent, would face a total state tax burden of up to 12.9 percent, a rate higher than large corporations pay.

In addition, adopting the tax hike amendment would give Massachusetts the nation’s highest short-term capital gains tax (16 percent) and the highest long-term capital gains tax in New England.

… the tax hike amendment falls primarily on households selling a family home or business to finance retirement. Nearly half of all parties affected by the tax earn $1 million or more only once in a decade; over 60 percent do so only twice.

The tax would apply to more residents every year. To adjust for inflation, the tax amendment uses the Chained Consumer Price Index for All Urban Consumers, which has lagged well behind household income and wages in Massachusetts. State legislative salaries, on the other hand, are tied to median household income, which has risen much faster.

I’m not sure that the tax increase would be a bad idea. Due to the state’s 5% income tax and 16% estate tax, a successful person could already save $millions for his/her/zir/their children by moving to the vacation playground of Florida (see analysis below; kids will enjoy roughly 42 percent higher spending power if the parent moves 30 years prior to dying). We can therefore infer that most people who have chosen to stay in Maskachusetts don’t mind paying higher tax rates.

Related:

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Our militarized police

by philg

One of the recurring questions in this blog is why American police officers are armed with guns. See Why aren’t there a lot more police shootings in the U.S.? and Should we have unarmed police? (2014), for example.

“Police Militarization Gave Us Uvalde” (Atlantic) is an interesting article asking related questions. The author has experience both in the military and in the police.

… with the sanction of the courts, departments have reworked their tactics to define American communities as battle spaces, and citizens in them as potential enemies. We have for years told American police officers to regard every civilian encounter as potentially deadly, and that they must always be prepared to win that death match. This is not an exaggeration; there is extensive academic literature on the “danger imperative” as a cornerstone of police training. An entire industry of grifting ex-cops have made themselves rich training police departments in fear and loathing of civilians, quite literally telling officers that they must always have a plan to kill everyone they encounter.

Less than one-quarter of officers ever discharge their weapons a single time in their careers. Ambush killings of police have fallen by 90 percent over the past several decades. Labor statistics suggest that fatality rates for police (for all causes, not just in the line of duty) are far less than those in logging, commercial fishing, and trash collecting. This is not to say that police don’t face real dangers—they do, but the large majority of policing is routine, and the large majority of encounters with civilians are completely innocuous.

The goal of the military is to overwhelm enemies, regardless of whether any particular individual on the other side “deserves” to be overwhelmed. It seems clear that police should not approach fellow citizens, rights-bearers, with the same attitude. Yet a profession’s tools and tactics will not-so-subtly define its attitude and culture. When you repeatedly drill officers that everyone is out to kill them, some will shoot first and ask questions later—and not just the weaker or undertrained officers at the margin, either.

But in our ill-conceived attempt to refashion police into a cadet branch of the military, we have somehow managed to get the worst of both worlds. We have trained a generation of officers that being casually brutal in everyday encounters is acceptable, but these same officers show a disturbing tendency to fall back on jargon about “battlespace management” and “encounter tempo” to explain a slow reaction in the rare circumstance that really does require a rapid, all-out response.

Food for thought and in the spirit of the engraved words below, “Good government demands the intelligent interest of every citizen.”

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