19 Dec 2016
Los Angeles’ Pension Problem Is Sinking The City
Indeed Los Angeles, like so many major U.S. cities, is being crippled by its public employee pension debt. According to the most recent actuarial report, the city’s three retirement systems–for public safety workers, water and power workers, and general employees–have a combined $15 billion debt.
In total, LA’s system has 38,113 retirees and beneficiaries receiving average yearly benefits of $48,218, and many of them no longer live in California, reducing these plans’ supposed multiplier benefits.
Unfunded pension liabilities have already caused bankruptcy in Stockton, Vallejo and San Bernardino; and eat up similarly large chunks of the budget in San Jose and San Diego (despite those cities’ previous reform attempts).
So who will be the first to start saying no to these pensions?
15 Dec 2016
Tax Code Complexity Now Costs U.S. Economy up to $1 Trillion Annually
A recent Wallet Hub poll has revealed that 75 percent of Americans believe the federal tax code is too complex. A similar Pew poll registered Americans’ dissatisfaction with the federal tax code at 72 percent, while the last Tax Foundation poll found a staggering 82 percent of the public in favor of a “complete overhaul” of the entire federal tax system. Even the U.S. Treasury Department has admitted that “the complexity of the U.S. tax code makes the tax law too difficult for taxpayers to understand and for the IRS to administer.”
Enough is enough; it’s time for a change.
I don’t think any of this is surprising. It’s time to simplify things. Of course that may mean government employees out of a job.
8 May 2014
Missouri House Overrides Gov. Nixon’s Veto, Enacts Historic Tax Cuts
Today – following the lead of the State Senate – the Missouri House of Representatives under the leadership of Speaker Tim Jones has overridden Democrat Gov. Jay Nixon’s veto of SB 509. For the first time in nearly 100 years, Missouri taxpayers will be given broad-based tax relief.
This vote to override the governor’s veto will provide $620 million in tax relief for hard working Missourians. The legislation includes a reduction of the top income tax rate from 6 percent to 5.5 percent and a 25 percent exemption from income taxes for small businesses.
Nice job, Missouri.
Good to see the system work when even the top dog can have his say overturned.
5 May 2014
White House Wants to Lift Ban on Interstate Tolls – NY Times
A transportation proposal sent to Congress by the Obama administration on Tuesday would remove a prohibition on tolls for existing Interstate highways, clearing the way for states to raise revenue on roads that drivers currently use at no cost.
Some Northeastern states, like Delaware and New Jersey, were allowed to keep tolls on existing highways that became a part of the national system. Other states were allowed to charge tolls on highways that were added to existing Interstates, but that revenue can be used only for repair and maintenance of those roads.
The proposal comes as Congress prepares to rewrite the existing surface transportation bill. A Congressional Budget Office study found that the Highway Trust Fund, which helps pays for Interstate repairs and is financed by a gasoline tax, will run out of money in August.
My questions is why is this Highway Trust Fund running out of money. Is spending ever addressed with these people (except when using it as leverage against political opponents)?
The government wants us to drive less and use less fuel, right? Now the fund that comes from gas taxes is running out of money. People who bought electric cars to save gas money may have to pay for it with tolls. And then, there’s are possible privacy issue with tracking drivers.
7 Jan 2014
Obama pressures Republicans to extend unemployment benefits – Washington Examiner
President Obama on Tuesday called on Republicans to extend unemployment benefits to 1.3 million Americans for three months, looking to build momentum for the federal aid after the measure cleared a major hurdle in the Senate.
“We’ve got to get this across the finish line without obstruction or delay, and we need the House of Representatives to be able to vote for this as well,” Obama said from the East Room of the White House, surrounded by Americans who lost unemployment benefits in late December.
The Obama administration estimates that failing to extend unemployment beyond 26 weeks would cost the economy roughly 240,000 jobs. But some Republicans counter that extending such benefits would keep Americans perpetually unemployed and limit their motivation to return to the workforce.
So here we are again with another government finance crisis. To have crisis after crisis that are only solved with temporary “fixes” is insanity from a problem solving perspective. From a political perspective, it does give the President and Democrats more opportunities to make Republicans look heartless. The latter is obviously the goal here.
There is a problem with the last paragraph quoted above – it’s not true. The logic behind that statement implies that if we put money in the hands of the unemployed, they will spend it and therefore businesses will have income to keep jobs. Here’s the problem. The money that the unemployed receive is recycled money – it comes from taxes paid from people who are working. In other words, we are simply shifting around money at this point from those who are working to those who are not working. So yes, unemployed people can buy more, but people who are employed and pay taxes will buy less. There is no net benefit.
At some point, we need to add in the ability to produce more money – but right now, there are numerous regulations that hinder manufacturing and production. But if we want to shift money around, I suggest shifting money away from the federal government towards the private sector. We are much better at using money than the federal government.
3 Dec 2013
IRS Needs Changes to Avoid Health Law Fraud, Audit Says
The U.S. Internal Revenue Service needs to make changes to prevent fraud and improve security in systems it is building to deliver health insurance subsidies, according to an audit by the tax agency’s inspector general.
The audit found that “critical” pieces in security controls failed during testing and anti-fraud programs are still being developed.
The report is here.
Affordable Care Act: Improvements Are Needed to Strengthen Systems Development Controls for the Premium Tax Credit Project
1 Dec 2013
Puerto Rico, with at least $70 billion in debt, confronts a rising economic misery
The economy here has been in recession for nearly eight years, crimping tax revenue and pushing the jobless rate to nearly 15 percent. Meanwhile, the government is burdened by staggering debt, spawning comparisons to bankrupt Detroit and forcing lawmakers to severely slash pensions, cut government jobs and raise taxes in a furious effort to avert default.
The implications are serious for Americans outside Puerto Rico both because a taxpayer bailout would be expensive and a default would be far more disruptive than Detroit’s record bankruptcy filing in July.
Puerto Rico lost 54,000 residents — 1.5 percent of its population — between 2010 and 2012 alone. Since recession struck in 2006, the population has shrunk by more than 138,000 to 3.7 million, with the vast majority of the outflow headed to the mainland.
The brutal combination of a long recession, a shrinking population and overwhelming debt has left Puerto Rico’s political leaders struggling to manage a conundrum: How do they tame at least $70 billion in debt while marshaling the resources to grow a shrinking economy and battle corrosive social problems, including a homicide rate that is nearly six times the U.S. average?
Here’s some of what they are doing…
- enacted $1.3 billion in taxes including increased corporate taxes, a broadened sales tax and a new gross receipts levy.
- so far 10% of the government workforce has been cut
- underfunded pensions are being shifted to a 401k style of retirement for government workers
- the retirement ages has been raised
- tax incentives and offered electricity credits to entice firms that might be discouraged by Puerto Rico’s electricity costs
Interesting tactic of increasing corporate taxes while at the same time offering tax credits. What they need is moving that is moving through the system. Just cut corporate taxes and get businesses over there and functioning. Only 41% of the working population is working or looking for work. They need to increase the base of people working and paying taxes.