Posts Tagged ‘Taxes’

Big News About the News Guy

Friday, June 12th, 2009

Hold onto your hats, folks: We have some rrrrrealllly big announcements to make about the future of News Guy.

To begin with, there will be no postings next week.

Yup, the News Guy is taking another week off. Yeah, yeah, it’s not that long after his previous week off. But William Ernest Henley to the contrary notwithstanding (in the very famous if rather bad poem, “Invictus”), no one can really claim to be “the master of my fate..the captain of my soul” (or is it the other way around?)

Just a fancy way of saying that sometimes you have to accommodate yourself to the schedules of others. Hence, next week is the week off. The next post will appear June 22, one day after the Summer Solstice.

But that’s not all. Here’s another rrrreallly big change:

Upon return, there will (usually) be but three postings a week. Expect new posts only every Monday, Wednesday, and Friday.

It isn’t that five a week is too much, though it is. But mostly, it’s too much to maintain quality. As said at the very outset of this site, some stories take more than one day to report. Committing to the daily offering threatens the onset of superficiality, precisely the scourge of Vermont journalism News Guy was created to combat.

(Do we hear some wise guy, someone with the instincts of a reporter, asking whether another factor is that it was OK to sit in front a computer all day back in December when News Guy was born , whereas now a guy might want to spend some time in his garden, in the woods, in a kayak communing with the neighborhood loon (see above), in a trout stream? OK, guilty).

The new schedule does not mean only two substantive posts and one Friday mop-up/inside info piece each week. Substance will continue to outnumber inside baseball by at least a four-to-one ratio.

Furthermore, now and then, there will be a Tuesday or Thursday offering. If an important event or development occurs on a Monday or Wednesday, the News Guy will cover it. And having been brought up in the world of daily newspapers, he is constitutionally incapable of keeping a good story to himself for 24 hours.

Readers who are registered on the site, or following via Face Book and/or Twitter (finally, a use for these thingies) will be alerted when an extra post is planned.

But, in the immortal words of The Cat in the Hat, “that is not all, no that is not all.”

There’s another rrrrreally big change in store.

And it is…….

We can’t tell you.

Not quite yet.

It involves other folks, other enterprises. The details have not yet been completely arranged. As soon as they are, you will know.

All right, enough for the future. Let’s delve into the past. There have been an unusually large number of comments and emails lately, and some of them deserve answers and/or comments.

First of all, the winner of the gold star for identifying the source of the politics/poker connection (in the June 10 post, Political Palaver) is reader Tom Stevens, who said, “I’m going with musicala obscura: Fiorello.”

The song Politics and Poker is indeed from the 1959 Broadway musical, Fiorello, which, as Stevens seems to be suggesting, has pretty much faded from memory. But it was a good show, one of only seven Broadway musicals to win the Pulitzer Prize for drama.

Reader GFB3 correctly scolds the News Guy for not mentioning the title of the school spending study by Susan Pace Hamill mentioned in the June 8 post, (He’s Leaving Home Continued). That title is  ”The Vast Injustice Perpetuated by State and Local Tax Policy.”

From that same post (and indeed from that same report,), reader Peter Joes asks, “can you explain how the highest income taxpayers in Florida pay more in taxes than in VT when there is no (Florida) income tax?

Good question. Possible, partial answers: Florida’s statewide sales tax, like Vermont’s, is six percent. But it goes as high as eight percent in some areas, probably the wealthier ones. Also, until 2007 (and the figures cited were from 2006) Florida had an intangible personal property tax on stocks, bonds, etc. Rich folks have a lot of them

Thanks to reader Doug Hoffer who turned out to be not only a better statistician but a better editor than the News Guy.

Who was trying to make the point that the average bloke (or blokette) could earn more money in Vermont than in most Southeastern states. That’s true, but comparing per capita income was not the best evidence to support the contention, because, as Hoffer said, “it ignores the (income) distribution” As he said, comparing median household income, family income, or hourly wage would have been better.

Then he asks, ” You said, “A case can be made, both economically and morally, for greater inequality. I can’t imagine how.”

So we’ll try to explain.

First of all, a case can be made for anything – tyranny, racism, and (as we have recently seen) torture. The question is, can a good case be made for any of it?

For those last three, no. Greater income inequality is a bit more complicated. Obviously we all accept some inequality. The company president earns more than the janitor, the foreman more than the laborer, the maitre d’ more than the busboy. A market economy has to provide incentives.

Over the last few decades, the “more’ that these bosses earn vis a vis their underlings has grown substantially. Too much, in the  view of some. But not everyone agrees. They claim the economy grows faster if entrepreneurs can earn more and keep more of what they earn.

As it happens, the economy has grown faster when incomes got more, rather than less, equitable – from the 40s through the 60s, and again in the 90s, when income inequality grew, but more slowly than it did in the 1980s.

But there’s also a moral argument for greater inequality, the argument that there is a connection between power, wealth, and virtue, that those who have more deserve more, and those who have less…don’t.

It’s a tough political argument because many more voters have less than more. Hence the diversionary tactic, claiming that the real purpose of inequality is economic growth. The point of that earlier post was to urge the anti-equality forces to stop pretending that, for instance,  Vermont’s tax rate was hurting the economy (it is not), and to come out of the closet, as it were, and make an honest case for more economic inequality.

Hmmm. Come out of the closet. Could supporting greater inequality be the policy position that dare not speak its name?

Friday on Monday

Monday, April 13th, 2009

There having been no post Friday, and there being several loose ends to tie, let’s tie them.

A couple of corrections. Whoever read the April 6 Post (A Few Final (One Hopes) Musings on This Marriage Business) before 10:30 AM or so saw a reference to the Founding Fathers creating our system of government tin the late 1770s.

Yeah, that’s when the Revolution started, so technical accuracy may be claimable. But the Constitution was written in the late 1780s; there’s accuracy that need not be claimed, being unassailable.

Until corrected (when both errors were noted that morning) the same post made the National Organization for Marriage ten years older than it is. It was founded in 2007, not 1997.

(We will return to the subject of this organization shortly)

The next day’s post (We Can Afford It) prompted a helpful but challenging comment from policy analyst Doug Hoffer,. The challenge was to the conclusion that whether a $75,000-a-year household pays more in state and local taxes in Vermont than it would in most other states “probably depends on how big it is, where it lives, and other variables.”

“There’s no need to guess,” he said, pointing to a Joint Fiscal Office Study showing that at both $40,000 and $80,743, Vermonters pay less than households in eight selected states, more than their counterparts in only three.

True, and interesting. But that JFO study dealt with only twelve states. The other eleven were chosen because they were deemed comparable, not out of a hat, but there are still 38 other states not included in the analysis.

Also, as Hoffer acknowledged, the study doesn’t deal with property taxes, Vermont’s or anywhere else’s. Considering the “income sensitivity” provision (apparently unique to Vermont) of the statewide school income tax, putting the   property tax comparisons into the analysis would in all likelihood still leave the typical lower or middle-income Vermonter paying less than folks in other states.

(To see the whole comment, just scroll all the way down to the end of the last post on this page [A Day to Remember] and click “older entries.” It’s the very next post. Click on “1 comment” at the bottom of it).

But isn’t it time Vermonters (and everyone else) stopped comparing tax liabilities? It’s simplistic if not dishonest. We plan to return to this subject in greater detail in a later post, but just for starters: in most of the states in which a person is likely to pay less in taxes than he/she pays here, he/she is also likely to earn less income. Paying a smaller percentage of a smaller total can easily leave him/her with….less money to spend

Back for a moment to the April 6 post, which inspired a comment from a reader who identified him/her self only as “Bokweb,” but who may be a lawyer, or who at least seems familiar with the law.  The post, he said, got the law wrong.(To read the whole comment, follow the same procedure explained above).

Specifically, Bokweb says it was an error to conclude that the Mormon Church probably “endanger(ed) its tax exempt status” when it set up a political organization to lobby against gay marriage in Hawaii in 1995.

That organization, like its successor, the above-mentioned NOM, was “established as a 501(c)(4) ‘community welfare’ organization under the Internal Revenue Code. A 501(c)(4) can make legislative lobbying its principal activity,” Bokweb wrote, and  ”a church, as a 501(c)(3) organization, may also engage in a certain amount of legislative lobbying – including paying a 501(c)(4) like NOM to lobby on its behalf – with the limits defined as an ‘insubstantial’ percentage of annual expenses.”

At this point, I’m not going to do the reporting required to confirm Bokweb’s interpretation. He seems to know what he’s talking about. Whether what actually happened in 1995 (or in 2007 when NOM was created) met the test of an “insubstantial” percentage of expenses is another question.

Then there remains the broader political question of how deeply should religious organizations insert themselves into the political debate even if they scrupulously obey the law.

That’s easy: as deeply as they choose. If enough people find a church’s political activity distasteful, they will react against it. The church’s political activity will then become politically counter productive.

When will voters react negatively to a church’s political activity? We may be about to find out. NOM has produced an anti-gay marriage commercial, so far only on the Internet via You-tube. It shows people claiming to be “a California doctor,” and “a Massachusetts parent” worrying that gay marriage will “change the way I live.”

But everyone in the commercial was an actor. Somebody got a tape of an audition and posted that tape on You-tube, though it has apparently been expunged from the system. (Here’s the link by which it was available the other day, but the ad seems to be gone).

In response, an organization called Californians Against Hate has prepared ads with the tag line, “The Mormons are Coming,” a la the Longfellow poem about Paul Revere, on the assumption that there will be a backlash against the church’s political actions.

Fred Karger of the California group said both sides were preparing to fight it out in all the Northeastern states, including Vermont, where the fight seemed to be over and done with last week when the Legislature overrode Gov. Jim Douglas’s veto of the bill legalizing same-sex marriage.

Maybe. And maybe not.

School Daze

Tuesday, December 16th, 2008

Most adroitly, Gov. Jim Douglas turned the screws on Vermont’s school boards—and on the voters who accept or reject school budgets—the other day.

“I think Vermonters have to ask themselves if it’s fair to have eight percent reductions in some critical state services when the caseload is increasing, while at the same time we’re going to have a 4.6 percent increase on average in local school spending at a time when we’re going to have 1,400 fewer kids to educate next year,” Douglas said. “We need to have an honest discussion about our priorities.”

An honest discussion he will lead? Perish the thought. “I don’t want to be that direct,” he said.

Or responsible, as it is sometimes known. But responsible and adroit are often not the same thing.

A really responsible governor who wanted his state’s schools to spend less would say something like, “and here’s what I propose to cut,” or perhaps “here is the process I am putting in place to decide what to cut,” or at least, “here is the commission I’m going to appoint to advise us on what to cut.”

But a politician who acts responsibly risks…well, being held responsible. Any specific plan to cut school spending would be opposed by one faction or another: Teachers, administrators, school board members, parents, ideologues of the left or right. Or maybe all of the above.

Governors don’t like to get those folks mad at them. Far better to say, “the schools ought to spend less,” and leave it to others to figure out how.

From a politicians’ perspective, this has two advantages: (1) If anything is done, the politician is less likely to get blamed than whoever actually came up with the unpopular (to some factions) specific proposal; (2) If nothing is done, the politician can claim he or she tried to get something done, but was thwarted by “special interests.”

But Douglas should not be condemned. First of all, most ofthe other 49 governors would do the same. Besides, Douglas is taking the lead in proposing those other budget cuts he talked about. On Monday, the governor and key legislators announced agreement on almost $20 million in cuts in mental health services, environmental programs, and college scholarships, not to mention shutting down rest areas on the Interstate highways. All of that will be unpopular.

But not comparable to the political peril of messing with the public schools. And anyway, the Democrats who dominate the legislature share whatever blame the Republican governor gets for these cuts in the state budget. They cover each other’s backside.

Or course, the other reason Douglas should not be condemned is that he might be right, On the face of it, he has a strong case. Thanks to the recession, the state has to cut programs that help an increasing number of low-income people while the schools teach fewer children every year. Why should the public schools keep spending more to teach fewer while other government agencies have to spend less to serve more?

John Nelson of the State School Boards Association says the comparison is invalid.

“It doesn’t quite work that way.” Nelson said. “You can lose ten or 11 kids, maybe spread out over five grades. Does that mean you’re going to be able to cut a teacher?”

Besides, Nelson said, schools and school financing run under “an entirely different process” than the ones that prevail in state government.

“By that I mean that the process of developing and approving school budgets happens locally on the part of people who are going to pay the bill.”

Well, yes and no. In many ways local control of public schools has been attenuated. State (and, increasingly, federal) requirements help determine what is taught, and effectively, if not officially, how it is taught. Teacher salaries are negotiated with a union organized on a statewide level.

Furthermore, the statewide property tax and its income sensitivity provision, which holds down most people’s property tax, mean that local taxpayers may not save all that much from a cut in the local school budget.

“Our tax burden is more driven by the statewide tax rate, so only a small portion is based on our local spending,” said Tax Commissioner Tom Pelham. “There’s no incentive to control cost.”

Nelson, not surprisingly, does not agree.

“I can’t see any evidence that people vote yes (on the school budget) even though they think it’s too much money because , ‘I have incomesensitivity so what do I care?’ I never heard anybody say that , or heard that board members argue that to their voters.”

Who’s right? Who knows? It’s all conjecture, and will remain so unless some economics graduate student tries to collect and analyze real data.

What is not conjecture is that most Vermonters think their schools are worth it. Last year only 12 of the 263 school districts voted down their budgets at town meeting, according to figures provided by Darren Allen of the teachers union. Sometimes voters forced school boards to cut programs. Sometimes they forced them to put back programs the board had proposed cutting.

It isn’t that Vermont schools aren’t expensive. By any objective standard, they are. Thanks simply to the lay of the land, they will probably continue to be expensive if they are going to continue to be good, which, by those same objective standards (test scores, for what they are worth, which is something) they also are.

That doesn’t mean there is no way to save money on the schools. But as John Nelson said, “ it’s not as though people aren’t looking for it.” Even a re-elected and politically adroit Jim Douglas could have trouble convincing Vermonters to slash their school budgets. Perhaps that explains why he doesn’t want to be “that direct.”—Jon Margolis