Category: Government

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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Permanent Temporary Free Internet

by philg

From the New York Times, April 3, 2022, apparently not satisfied with A corrected history of mRNA vaccines, its January 15, 2022 effort to erase Robert Malone:

This post is not about the obviously false claim that someone whose name appears on a foundational paper regarding mRNA vaccines had something to do with the invention of mRNA vaccines. (See also Nature‘s history of mRNA vaccines, which devotes the first three paragraphs to the now-unpersoned Malone and mentions his name 27 times.) It is rather about the possibility that our family could get free Internet rather than handing over $780 per year to AT&T for gigabit fiber! Of course, I clicked on the ad (landing page):

If it’s “free” then I assume it is paid for by taxpayers. What does Comcast say about this taxpayer-funded program?

“a longer-term replacement for the Emergency Broadband Benefit.” So the temporary emergency government program (#BecauseCOVID) has morphed into a permanent entitlement. The FCC explains this:

It’s not the government taking $14 billion every year from one set of residents of the U.S. and using it to pay whatever Comcast and the, ahem, competitors are charging another set of residents. It is instead an “investment in broadband affordability,” implying that broadband prices for Americans who haven’t been organized enough to get into the welfare system might start coming down to European rates.

I will have to revise my standard description of what a low-skill or elderly/infirm immigrant to the U.S. can expect to receive from existing taxpayers. Before it was free housing, free health care (Medicaid), free food (SNAP/EBT), and free smartphone (Obamaphone). The FCC explains eligibility for this new permanent entitlement:

If you’re on SNAP or Medicaid, in other words, you’re seamlessly eligible for free home broadband connection. So now it is free housing, health care, food, smartphone, and broadband.

(Speaking of Medicaid, remember that April is Medicaid Awareness Month!)

Circling back to the Xfinity ad landing page, here’s the final picture of someone in a household that might benefit:

Taken together, these three pictures have me wondering if we should try to go on welfare so that we’d finally be living in a clean clutter-free house!

Related:

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Is a non-indexed-to-inflation capital gains tax Constitutional?

by philg

We’ve had runaway government borrowing and spending, plus money-printing by the Fed, for the past two years. Now we have runaway inflation, which has led to some eye-popping asset prices and a government eager to collect a share of these assets even before they’re sold (“unrealized gains”). See “Biden to Include Minimum Tax on Billionaires in Budget Proposal” (NYT, 3/26/2022):

The tax would require that American households worth more than $100 million pay a rate of at least 20 percent on their income as well as unrealized gains in the value of their liquid assets, such as stocks and bonds, which can accumulate value for years but are taxed only when they are sold.

Legal questions about such a tax also abound, particularly whether a tax on wealth — rather than income — is constitutional. If Congress approves a wealth tax, there has been speculation that wealthy Americans could mount a legal challenge to the effort.

Due to the threshold of $100 million in assets, I’m a huge supporter of this bill! (though I’m concerned that it won’t be long before either the threshold is reduced or $100 million is the price of a Diet Coke). But it makes me wonder about whether the whole framework of capital gains is Constitutional.

Let’s ignore the mechanics of taxing someone on gains that exist only on paper and just focus on traditional capital gains taxes on realized gains (i.e., money received after an asset sale). The government is mostly in charge of what happens to the value of money because the government can decide interest rates, money printing rates, and how much the government will borrow and spend. The Sixteenth Amendment gives the government the power to tax incomes:

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

But it isn’t income when an asset goes up hugely in nominal dollars because dollars have been devalued by the government’s actions. This has been mostly ignored in U.S. history because mostly inflation hasn’t been too extreme (though, of course, for long-held assets, the cumulative effect could still be dramatic). Consider a person who hits 70 and sells some stocks purchased in 1972 to fund retirement. Let’s suppose that these shares were purchased for $10,000 in 1972 and sold for $65,000 today. According to the government’s own CPI calculator, the investor suffered a loss, not a gain, on these shares (no income). Yet, if he/she/ze/they lives in California, more than $20,000 in tax could be owed (20 percent federal long-term capital gains, 3.8 percent Obamacare federal tax, 13.3 percent state tax).

How has the current system persisted for so long without a serious Constitutional challenge?

Related:

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Freedom of speech opposite the banner promising freedom of speech

by philg

A New York Post story:

[Daniela Jampel, who served as an assistant corporation counsel for the City] had publicly challenged the mayor at an unrelated event on LGBTQ issues — as [Mayor Eric] Adams stood in front of a podium banner that read, “Come to the city where you can say whatever you want.’’

“Three weeks ago, you told parents to trust you that you would unmask our toddlers,” Jampel told the mayor.

“You stood right here, and you said that the masks would come off April 4. That has not happened.”

In other words, she said whatever she wanted opposite a banner that said she could say whatever she wanted. Example signs from NBC:

What happened next?

Sources close to the matter said Jampel – a leading local critic of the toddler mask mandate and pandemic school closures – was informed by e-mail shortly after the presser that she was fired.

(Note that Jampel need only move to Florida to live in a society that conforms to her preferences. It is against state law for a public school system to shut down schools, order children to wear masks, etc. She could leave New York City to the folks who like it the way that it is is and come to a place where most people would agree with her regarding the best ways to protect 4-year-olds from a disease that kills 84-year-olds. (see Relocation to Florida for a family with school-age children for how Americans could be a lot happier if people were more mobile))

Related:

Note that if we combine the last two points we find that New York City is spending its taxpayers’ money to recruit additional lower-than-average income residents who will thus be eligible for a full range of means-tested welfare programs after arrival in NYC. And, if a transition is just beginning, for every valuable 2SLBGTQQIA+ community member who is persuaded to move, NY taxpayers will be forking out $100,000 to gender reassignment surgeons and therapists, via Medicaid, that would otherwise have been shouldered by working taxpayers in Florida. Nonetheless, NYC may find itself outbid by Palm Springs, California, which is offering guaranteed cash to members of the 2SLGBTQQIA+ community. See Guaranteed Income Pilot – DAP Health and California city to give universal income to transgender, nonbinary residents regardless of earnings | Fox News:

Transgender residents in Palm Springs, California are eligible to receive a UBI of up to $900 per month solely for identifying as transgender or nonbinary — no strings attached.

The new pilot program will have $200,000 set aside for allocation after a unanimous vote by the Palm Springs City Council last week.

Twenty transgender and nonbinary Palm Springs residents will receive the free money funded by the taxpayers for 18 months, with advocacy-based health center DAP Health and LGBT advocacy group Queer Works managing the program.

Not everyone in the 2SLGBTQQIA+ community is aligned on this one:

Palm Springs Mayor Lisa Middleton, who is transgender, pointed to the transcript from the city council’s March 24 meeting where she “expressed strong reservations in general to guaranteed income programs.”

Former San Diego City Councilman Carl DeMaio, a Republican who served as the first openly gay member of the city council, called the program “outrageous and discriminatory.”

“We’re completely opposed to guaranteed or universal basic income programs, because they ultimately cause inflation and raise the cost of living on everyone — they don’t work,” DeMaio said in a statement.

“But at least some of them have minimum income requirements to qualify, whereas this one is no-strings-attached ‘woke’ virtue signaling to the LGBT community in a way that is not only offensive but discriminatory,” he continued.

I personally disagree with Mx. DeMaio. If there is an income threshold necessary to qualify for free taxpayer cash then you’re pretty much guaranteeing that the recipient will limit his/her/zir/their working efforts so as to stay under this threshold. (See Fast-food economics in Massachusetts: Higher minimum wage leads to a shorter work week, not fewer people on welfare for how low-wage workers are smart enough to avoid working themselves out of means-tested entitlements.) If people are going to be paid for identifying as transgender or non-binary the money shouldn’t be conditional on them also refraining from serious work efforts.

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A $1.4 billion stadium for Afghans, Iraqis, and Somalis to watch American football

by philg

“After decades of decline, Buffalo boasts a ‘Refugee Renaissance.’ Can it last?” (Democrat and Chronicle, January 2022):

After reinventing itself as a haven for refugees, Buffalo seems poised for renewal. But with success comes higher rents.

Across the nation, the results of the 2020 census were the source of hand-wringing and political debate. But in Western New York, they were cause for unbridled celebration.

For the first time in 70 years, the city of Buffalo had grown.

The city’s modest 6% growth was trumpeted by officials as a pivotal triumph for a Rust Belt city that had become synonymous with loss. Hollowed out first by suburban flight and then the loss of manufacturing jobs, the onetime steel and iron powerhouse had hemorrhaged more than 50% of its population in the half-century since 1950. By the turn of the millennium, it also ranked among the most poverty-stricken in the nation.

The city’s turnaround came from a perhaps unlikely source: refugees from some of the most conflict-riven places in the world. After welcoming fewer immigrants than any city its size in the 2000 census, Buffalo has since re-imagined itself as a haven for new Americans from countries such as Myanmar (Burma), Somalia and Iraq.

Over the past two decades, more than a quarter of the refugees who came to the state of New York arrived in Buffalo’s Erie County, even as native Buffalonians continued to flee to greener economic pastures. Since 2002, more than 16,000 refugees have resettled in Buffalo.

Higher rents as the price of prosperity

West Side homes that used to sell for $40,000 might now go for hundreds of thousands, said Beehag at the International Institute, straining the resources of agencies trying to find housing for refugees who may need months to find jobs. To house the around 500 incoming Afghan evacuees, agencies are relying in part on churches and universities for short-term housing.

Poverty rates in Buffalo have barely budged even as other economic indicators trend upward — leaving both refugees and longtime residents alike in danger of displacement, according to a 2019 analysis led by Adelman.

What do impoverished refugees “from countries such as Myanmar (Burma), Somalia and Iraq [and Afghanistan]” need from taxpayers? “Buffalo Bills Strike Deal for Taxpayer-Funded $1.4 Billion Stadium” (New York Times, March 28, 2022):

New York State officials have reached a deal with the Buffalo Bills to use $850 million in public funds to help the team build a $1.4 billion stadium — the largest taxpayer contribution ever for a pro football facility.

Under the deal, the state would finance $600 million of the construction costs, while Erie County, where the stadium will be built adjacent to its current home, would cover $250 million. The remainder would be financed through a $200 million loan from the N.F.L. that was approved on Monday, plus $350 million from the team’s owners.

“Taxpayers To Be Billed a Billion Dollars for Buffalo Bills’ New Stadium” (reason.com):

as Field of Schemes blogger Neil deMause parses in his detailed rundown of the stadium deal, the actual public subsidies probably exceed $1 billion—and that doesn’t account for things like interest payments on the borrowing that the state and county will likely have to do to finance the agreement. The fine print of Monday’s announcement, deMause notes, puts the public on the hook for $6 million annually for the next 30 years to fund upgrades to the stadium and another $6.6 million for the next 15 years to fund “maintenance and repair.” All told, that’s an extra $160 million in taxpayer funds pledged to the project beyond the $850 million price tag.

Related:

  • “Sports, Jobs, & Taxes: Are New Stadiums Worth the Cost?” (classic 1997 paper from Brookings)
  • “Sacking Taxpayers: How NFL Stadium Subsidies Waste Money And Fall Short On Their Promises Of Economic Development” (Heartland 2015): “Taxpayers funded more than half the construction cost of 12 stadiums from 1995-2013,” TPA says. “During that time, national median household income rose 0.3 percent across the United States, adjusted for inflation. In the dozen counties in which an NFL stadium was built using more than 50 percent public funds, however, median household income plummeted 5.7 percent during the same time. Twenty-six counties in America are home to an NFL stadium that received tax dollars between 1995 and 2013. In an astonishing 17 of those 26 counties, the median household income actually decreased in constant dollars after the stadium received public money for construction or renovation. Taxpayer-financed NFL stadiums didn’t just appear to decrease median income, they also apparently contributed to increasing the number of people living in poverty.”
  • “NFL owners approve sale of Bills to Pegulas” (2014): That payment would be for $1.4 billion. (i.e., if we don’t adjust for inflation, the cost to taxpayers, who will get nothing in return, will in the same ballpark (so to speak), as the cost to the owners)
  • “Celebrating Women’s History Month” (BuffaloBills.com), from a team that refuses to hire anyone identifying as a “woman” to be a player
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I picked up our free N95 masks

by philg

These events occurred on February 24, but I didn’t want to post then because it is a trivial story compared to what was happening in Ukraine.

Our local CVS had a sign on the door promising “free” (taxpayer-funded) masks from the central planners:

The clerk tried to give me 10. “Don’t you have a large family?” she asked, hopefully. I asked for 3, explaining that I just wanted to brag to friends about having gotten them, and settled for 5. “We have 35 boxes of these in the back,” she added, and then pointed out that the anti-SARS-CoV-2 masks are “not evaluated for antiviral protection.”

Should I feel bad about writing on a non-Ukrainian topic? Here’s today’s email from McKinsey, the world’s leading business consultancy:

How to fix the broken rung on the career ladder for women in tech

Women are promoted at a slower rate than men across all industries and roles. But in technical roles‚ including in engineering and product management‚ the gender gap is even more pronounced: just 52 women for every 100 men are promoted to manager. Diversity is crucial in technical roles because it helps debias the technologies that are an intrinsic part of modern life. Early‐career promotions are critical to success‚ so this broken rung on the leadership ladder means that companies end up preparing fewer women for senior roles. What can leaders do? Don’t miss our article on repairing what’s broken.

The email includes a photo of a person, gender ID unspecified, doing Ph.D.-level soldering (Ph.D. level because his/her/zir/their other hand is not introducing any solder near the iron’s tip):

Ukrainians are suffering right now, but an American still has mental space, apparently, for all of his/her/zir/their pre-war concerns.

Loosely related… Shutterstock shows us another world in which soldering happens without solder:

Note bare fingers on the hot part of the iron. Could this be an example of what Joe Biden was talking about in the State of the Union speech?

We’re the only nation on Earth that has always turned every crisis we’ve faced into an opportunity, the only nation that can be defined by a single word: possibilities.

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Central Planning Success! (COVID-19 tests are arriving today)

by philg

Today is the day that muscular government action brings relief from COVID-19-related shortages. Our “free” (taxpayer-funded) at-home test kits are arriving. From USPS:

These were ordered on January 19, the first day of official availability. They’ll arrive approximately 5 weeks after the tests became generally available at retail in local pharmacies.

Related:

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Why are people able to charge for fake CDC vaccination cards?

by philg

Dumb question of the day… why are fake CDC vaccination cards a marketable item? “Fake Vaccine Card Sales Have Skyrocketed Since Biden Mandate” (Pew):

The price of fake COVID-19 vaccine cards and the number of vendors selling them have shot up since President Joe Biden announced his vaccine mandate plan last week, according to a global cybersecurity company.

Check Point Software Technologies found that the typical cost of phony vaccine cards bearing the logo of the federal Centers for Disease Control and Prevention was $100 on Sept. 2. The day after Biden’s Sept. 9 announcement, they jumped to $200, according to company spokesperson Ekram Ahmed.

The estimated number of sellers also rose from about 1,200 to more than 10,000 during that period, added Ahmed, whose company has been studying the black market for fake vaccine cards.

The CDC makes a PDF for a blank card available on its web site. The information on the card can be written in by hand. A person who wanted to make his/her/zir/their own card would not even need to buy card stock because he/she/ze/they would generally be able to show a photo of a card rather than the card itself, e.g., to get into a restaurant in Washington, D.C. Clinic site and lot numbers can be copied from a card image found on the Web and/or from a friend’s legit card.

Why are people paying $200 for something that can be easily created at home? What is the skill of the referenced “black market” vaccination card vendors?

(And, given the state of American electronic medical records, how would it be possible to determine that a card was fake if the bearer copied lot numbers and clinic names from a legit card? (my booster shot record just says “CVS” in the right hand column, which could be anywhere in the U.S.) Even if the injection can’t be found in a database, should we infer from that missing record that the card is fake? How do we know that the people at the CVS did all of the upstream tasks correctly?)

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Inflation as experienced by a police officer

by philg

At a COVID-safe Super Bowl party, one of the guests was a police officer who lives in our building. She was chatting with a guy who works for a small video production company. He talked about the challenge of paying rent that had gone up more than 10 percent, health insurance that was going up almost as fast, and similar inflation woes. She expressed amazement that an employer wouldn’t provide health insurance. “The company keeps the headcount below 50 so that the Obamacare rules don’t apply,” said the pinched private sector worker.

The police officer described receiving automatic pay raises in lockstep with official government inflation numbers, which she acknowledged did not keep up with the rising cost of housing here in South Florida. Although only in her 20s, she was already looking forward to retirement. “It’s based on your highest three years of earnings,” she said. “So if you work a lot of overtime near the end of your career you can get a pension that is higher than your full-time salary.”

We asked what the real world speed limit was. “I don’t pull anyone over for speeding,” she replied. “If they’re speeding, that’s a risk that they’re taking for themselves. The State Troopers, however, will even give me tickets.”

Was it worth getting a license plate celebrating law enforcement or applying stickers evidencing a donation to a police-oriented cause? “Those are the people I worry about the most,” she said, “because I know they’ll have a gun in the car.”

What about our minivan, with its “Support Education” specialty tag? (example below)

She said “Any officer who pulls over a minivan needs to reevaluate his or her priorities in life. I won’t pull over a minivan.”

Our Jupiter, Florida police department sends in the SWAT team any time there is a search warrant to be executed. “Jupiter doesn’t have a lot going on,” she responded. “I can do that too if I want. If I pull someone over and there is a warrant outstanding, I can turn it over to SWAT.”

What about enforcement of coronapanic orders? (she worked for a police department down towards Miami, where muscular governmental intervention in the life of a respiratory virus is popular) “I won’t ticket people for not wearing a mask,” she said.

We learned that one shouldn’t be too upset when the police come to investigate a neighbor’s noise complaint. “It won’t hold up in court if there isn’t a calibrated noise measurement and we don’t have any meters,” she said.

(Why was the party “COVID-safe”? Everyone in the room was following the same mask protocols that the spectators in the stadium that we saw on TV were following and we know that California Follows the Science.)

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