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Corporations have convinced the public that government and government spending are bad for the economy.

Question, was President Eisenhower's building the interstate highway system good or bad for the economy, the public and in the end for corporations?

Discuss.

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There is a myth that businesses and people are leaving California in droves because of taxes.  A recent example is George Will, in California as Liberalism's Laboratory, writing as part of an anti-tax column,

For four consecutive years, more Americans have moved out of California than have moved in. California's business costs are more than 20 percent higher than the average state's.
Notice the obfuscation.  Will cites "costs" and the thrust of his column implies that he means taxes are forcing this exodus.  But the costs that cause businesses to leave California are the high real estate prices, not taxes.  This higher cost of owning and renting in California is, of course, because more people want to live here than other places

A December LA Times story, More are moving out of California than in, made clear the reasons for the exodus,

The outflow -- last seen during the economic and social struggles of the 1990s -- started when it became too expensive for most people to buy homes in the state, and has kept going throughout the bust with the loss of so many jobs.

[. . .] "This was the epicenter of the housing meltdown," said John Husing of Economics & Politics Inc., a regional economic research firm. "People started leaving California because of housing prices -- particularly younger couples that just couldn't afford to buy a house."
The Public Policy Institute of California studied California job losses in 2007 and released, Are California's Companies Shifting Their Employment to Other States?,

... Given that this shift was sharpest during the economic boom of the late 1990s, it cannot be attributed to business climate problems unless one is willing to argue that the business climate was worse during that period, which strikes us as implausible.
One thing to understand is that taxes are not a cost, because taxes are calculated after the end of the year, all costs are subtracted before calculating the profit, and only profits are taxed.  Salaries and other business expenses are deducted before profits are calculated. Companies that are not making money are not taxed at all. 

Actually there is a tax problem affecting businesses here.  The effect of Prop 13 on commercial real estate gives a tremendous disadvantage to new businesses - the very entities that provide most new jobs.  Commercial property held for a long time has a much lower tax rate, providing advantages over innovative new companies.

Another tax problem (data from California Budget Project) is that the poorest fifth of California's households earn and average of $11,100 a year and pay 11.7% of their income in taxes, while the wealthiest 1 percent bring in an average of $1.6 million and pay only 7.1% of their income in taxes. 

Looking past the surface hysterics there is something disturbing about the implications of this conservative-corporate threat to move companies rather than pay taxes.  What does the threat say about their perception of the relationship between the people and the corporations?  After all, who is supposed to be in charge here?

Corporations are creations of our government and We, the People created them to benefit US.  (Why else would we have created them -- to harm us?)  Our laws enable their existence in the first place, our courts enforce the contracts and settle disputes, our police and firefighters protect them, they deliver their goods on our roads, and we educate and train their employees.

We created these entities, and gave them rules.  And now they are telling us that if we ask them to share the gains with us, they will throw a tantrum, pack up and leave?  It sounds like it is time for We, the People to put our foot down and explain the rules: We tell you what to do, not the other way around.     



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Not.

The Forbes list of states that tax their citizens the most is out!  And California ranks ... well, California isn't even on the list.

Forbes: Where Americans Are Taxed Most:
10. Pennsylvania (not California)
9. Wyoming (not California)
8. Washington (not California)
7. Massachusetts (not California)
6. New York (not California)
5. New Jersey (not California)
4. Minnesota (not California)
3. Connecticut (not California)
2. Hawaii (not California)

Drum roll ....

... keep scrolling ...

--- And the winner is ...

1. Vermont (NOT CALIFORNIA!)

So yesterday I'm driving and KGO radio has a show about the "tax revolt" that is "taking place all over California," with people rising up and having "tea parties" to protest the "incredibly high taxes" in California.  Here is KGO's program listing:
 

2 PM - Growing Anti-Tax Revolt in California? And What About Prop 13?

Taking inspiration from a landmark 1970s tax revolt, a determined group of activists say the moment is right for another voter uprising in California, where recession-battered residents have been hit with the highest income and sales tax rates in the nation. And like Proposition 13, the 1978 ballot measure that transformed the state's political landscape and ignited tax-reform movements nationwide, they see the next backlash coming not from either major political party, but from the people. How real is the latest anti-tax sentiment and has Prop 13 run it's course?
Guest: John Coupal, president Howard Jarvis Taxpayers Association

Mr. Coupal was on the show to say that California is the highest-taxing state, and state taxes should be lower, and the government wastes all the money it takes in, and can't be trusted, and is too big.  He talked about how other states get by with lower taxes while providing better services than California. He said, for example, that there is no income tax at all in Texas -- without mentioning that Texas taxes oil taken out of the ground while California doesn't.  He said that California spends more on schools than any other state, and called for "school choice" -- which is getting rid of public schools and only having education for those who can afford it.

He said a lot of things that turn out not to be factual if you look into them.  But you can't bother be factual and argue for lower taxes and spending.  As Dave Dayen points out at Calitics,

"Right now we're at the bottom of per capita spending in almost every major category - 44th in health care, 47th in per-pupil education spending, dead last in highway spending and 46th in capital investment among all states."   
But here's the thing.  HE was on the radio, telling Californians that we are the highest-taxing and spending more on schools, etc. than any other state.  And the other side was not on the radio telling Californians the truth.  So he wins. 

Californians don't really have much choice except to believe the anti-tax, anti-government, pro-corporate arguments because they are not hearing anything else

This was just one radio show of the hundreds of radio shows every month that repeat this message.  And the newspapers repeat it.  And the TV shows repeat it.  And there are even public speakers, funded to go from civic group to civic group around the state to repeat this message!

Why is it that he was on the radio and the other side was not?  Because there are so few "other side" organizations for radio stations to call on, funded, with people trained and ready to talk on the radio and TV, write columns, speak to public groups, and generally make the case that government serves a purpose, roads and schools and public safety and are beneficial and that democracy is better than rule by corporations.  Corporations are enabled by our laws to amass incredible sums of money with little oversight, and are using some of that money to influence the state's policies, always to further reduce oversight and amass ever greater power.  That money leaks out of the corporations and into the political system, while pro-democracy organizations have few sources of funding.  

The result is that the Howard Jarvis Taxpayers Association is very well funded and is widely quoted in the media. Organization that makes the case for government and democracy are not.  And democracy in California is the loser.  So if we think we're going to be able to persuade Californians to overturn the 2/3 vote requirement for a budget or to increase taxes, we're going to have to come out swinging... At the moment, we don't even have a batter at the plate.


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The key to California's successful business environment are education and infrastructure.  It is not an accident that our semiconductor and computer and Internet industries, and biotechnology and pharmaceutical and genetic engineering and our other world-class competitive industries developed in California instead of in "low tax" states like Mississippi and Alabama.  These industries thrived here because of our well-educated people and our modern, well-maintained infrastructure. 

There has been a dramatic wealth-building return on our investment in education and infrastructure.  Investors could count on California as a good place to start and grow a business, and it has paid off.

But how much would it cost if businesses had to pay fair market value for use of the infrastructure that We, the People built?  What would it cost if companies had to pay the full education cost every time they hire someone who was educated at a California public school or state college or university? 



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What Are Tax Brackets?

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In 2009 California is going to have to confront and settle a number of budget issues that we have been putting off for decades. We have been putting off so many necessary decisions -- deferring maintenance of our infrastructure, pushing pain into the future by borrowing, setting aside the needs of our people by cutting school, police, fire and other budgets, and practicing almost every form of avoidance of reality that we could find. 

Well, the karma is coming back on us, all the chickens have come home to roost, we are getting what we gave and we are going to pay for our sins.  (Please leave more cliches in the comments.)

The number one budget issues that has to be confronted is taxation.

So, let's talk taxes, beginning with the basics.  I have found that many people don't really understand how taxes work so I want to write a bit about that here.  One reason for the lack of understanding of taxes is that there has been quite a bit of deliberate misinformation.  By confusing people, the very wealthy and corporate interests have been able to trick people into letting them avoid paying their fair share.  Instead we either take on ourselves the bulk of the burden of paying for democracy, or just borrow and put that burden on our children.

One thing that I have found many people do not quite understand is the concept of tax brackets.

Tax brackets

A "progressive" tax is one where the tax rate increases as income increases.  A progressive tax structure consists of brackets.  You pay a certain tax rate on income up to the next bracket.  After that bracket is reached, a higher tax rate applies to income that is earned that is above that amount.  Let's say that you pay 5% on income below $10,000 and 7% on income above $10,000.  So if you make exactly $10,000 of income the tax is $500.  At $10,100 the tax is still that $500 on the amount below $10,000 and $7 on the additional $100, for a total of $507.  The key point is that only the amount in the new bracket is taxed at the higher rate.

Many people believe that once you reach a higher bracket you pay the higher tax rate on all the income that falls below that bracket amount as well.  I have actually talked to people who think they need to "get their income into a lower bracket" to avoid paying a higher tax rate, because they think that a higher tax rate would apply to all of the income they earned.

Using the example of the earlier paragraph, many people believe that you would pay $707, not $507, on income of $10,100, assuming that the entire $10,100 is taxed at a 7% rate because the total income is above $10,000.  This incorrect belief is one result of anti-tax arguments.  It is also the basis of many tax-avoidance schemes.  

So, to repeat:  If you enter a higher tax bracket, you only pay the higher tax rate on the amount of income you earn that is in the new tax bracket, not on all of your income.

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California's unemployment rate has soared to 8.2% -- third highest in the United States!  We need to stimulate California's economy.  We need a massive jobs and infrastructure investment program, rebuilding our roads and bridges and schools and making our buildings energy-efficient, and hiring more teachers and police and firefighters.  We can do this, while balancing the budget at the same time.

How can we do this?  We can raise taxes on big corporations and the wealthy and use the money to stimulate the economy and balance the budget and get things moving again.

Our economic system is not perfect, so over time income tends to concentrate at the top, which makes it harder for most people to get by.  People spend less and things slow down.  We are seeing this today -- wealth has massively concentrated at the top, and the consumer is "tapped out."  No one is buying cars and Christmas sales will be much lower. 

Taxes on the wealthy and corporations fix this by recirculating money that has bunched up at the top.  Taxes provide the resources that We, the People can then use to stimulate the economy and get it moving again.

The corporations will try to say that this tax increase will slow the economy.  But this isn't what has happened when this has been done in the past.  Actually history shows that taxing the wealthiest and corporations helps our economy.  This is not surprising when you realize that more people with more jobs and money to spend is a good thing in a consumer-driven economy. 

There is a problem, though.  In California we have a rule that we cannot pass any tax with less than a two-thirds vote.  A little over half the people voted to impose this two-thirds requirement -- and now 100% of us are hobbled for doing what we need to do to fix the economy.  Instead of stimulating the economy we have to lay off teachers and firefighters and road workers, further worsening the recession, because cutting budgets is the only option available.  Even if 55% or 60% of us would rather hire people and stimulate the economy, we still can't.

So we need to change this rule.  We need to be able to pass taxes on the corporations and the rich, and get the economy moving again. 

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One problem that many people attending this convention are forced to deal with is the sheer distance between events. First, getting from the airport into town is a very expensive cab ride with few other choices.

I was immediately struck that there is no light rail system out to the airport! I don't understand how a major airport near a major city could have been planned and built without incorporating light rail from the start. Of course, this was all done in the unfortunate oil/car-dominated era that we are all working to end...

In town convention events are vast distances apart. Even inside the security perimeter itself things are far apart. It is a long walk in the sun to get from the Pepsi Center to the Tivoli, where the Starz Green Room is. It is a very long walk from the Big Tent to the Starz Green Room. Etc.

Getting my official convention credentials this morning meant taking a cab for miles, to a hotel in another part of town. (Long lines, waiting, waiting...) And then there were no cabs available to take me back. Miles and miles... There was a free city "16th street mall" shuttle that helped part of the way.

So this is a problem with this convention. Having things far apart might be OK if there was some way to get from one place to another. You can't have a car here but everything seems to require that you do.

And of course in the larger picture this is the problem with the way America has built up its housing/mall/freeway infrastructure. You have to have a car, period, or you cannot participate in the modern America except in a few larger cities that have well-thought-out transportation. This requirement that you have a car imposes a certain cost on people. But there are plenty of people who can't meet those costs and are forced to drop out of participation. So look what happened in New Orleans when Katrina hit. Many people simply could not evacuate because they did not have their own cars, and there was no real transportation available otherwise.

America has created distances between people, classes, and even physical distance requirements that work against us in the long run. This kind of approach, where you can't participate if you can't afford your own car is anti-democracy. In the case of this convention, it was just dumb.


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One more attempt to get a state budget in place collapsed -- blocked by the Republicans because it included tax increases. Republicans insist that the budget be balanced with billions and billions of dollars in cuts in our schools and fire protection and the other things most of us want our state to do.

I would bet that most of California's public doesn't know what is going on with our budget. They only know that there isn't one, and that this is causing problems. It makes people angry, and causes them to lose faith in government.

People know that government employees are being forced to take pay cuts, and many are being laid off. But they really do not know why.

Yesterday's budget vote was 45-30. The public doesn't understand that this means that there were forty-five votes FOR the budget and only thirty votes against, and this is why it failed. They don't understand that because it does not make sense. But because of a trick that the Republicans were able to play on the public the rules are that it takes a two-thirds vote to pass a budget. So an overwhelming vote of 45-30 FOR the budget means that the budget does NOT pass!

Every Republican in the state has taken a vow not to raise taxes on wealthy corporations or massively wealthy individuals. They won't vote to require people who buy yachts or private jets to pay the same sales taxes that the rest of us pay when we buy cars. They refuse to ask oil companies to pay fees when they take our oil out of the ground and sell it to us. (Maybe they understand that such a vote will dry up their campaign funding...)

News stories about the latest budget collapse:

San Jose News:

Although the $105.2 billion budget blueprint garnered a majority vote, 45-30, it fell short of the two-thirds supermajority that California's constitution requires to pass a budget.

. . . The vote "shows clearly that we're not going to vote for taxes," said Assembly Republican leader Mike Villines, R-Fresno.


Wall Street Journal:
"We're fundamentally saying 'no tax increases,'" said Mike Villines, the Assembly Republican leader.

They will require workers to take pay cuts and layoffs. They will cut our school budgets. They will cut transportation, the DMV, road repair, law enforcement, prisons, fire protection. But they will not ask wealthy corporations or extremely wealthy individuals to pitch in.

And here is why: by and large California's public doesn't know this. They are not being informed that this is entirely because a small minority of Republicans refuse to represent the public's interests, choosing to represent the wealthy corporations and wealthiest few people.

In fact, the public likely believes that it is the Democrats who are keeping the budget from being passed. If you Google the word Democrat with the word obstruction and you get about 600,000 results. This is a national result, but it reflects the same strategy in use in California. Republicans spent years accusing Democrats of being "obstructionist" when they were not, as a strategy to pressure them to pass Republican-/corporate-oriented bills. Now, after blocking almost everything that the nation's Congress is doing, the Republicans are campaigning saying that the Democrats in Congress aren't passing anything! Meanwhile a new Drum Major Institute polls shows that 72% of middle-class Americans can't name a single bill passed by Congress in the last two years that benefited them or their families! (Minimum wage increase, stimulus package, college more affordable, SCHIP...)

Less than two in five (38%) middle-class respondents to the Drum Major Institute's new poll say they live comfortably. One-third (34%) say they meet their basic expenses each month with just a little left over for extras, while one-quarter (26%) of middle-class adults would say they just meet their basic expenses (17%) or have trouble meeting their basic expenses each month (9%). And, economy and jobs tops their concerns. They are pessimistic about the direction of the economy. They think it's more likely that Brangelina will celebrate their 25th anniversary than gas prices returning to $3 a gallon.

But they do not understand WHY. They don't make the connection between the corporate-controlled Republican party and what is happening to the country.

How do Republicans get away with this? How are they able to get the public to think so many things that are not true? The Republicans have a vast "noise machine" that tells the public things that are not true. (Remember how they were able to convince so many people that Iraq had attacked us on 9/11?) It costs a lot of money to have a noise machine like this, but they get the money from the very corporations and wealthy individuals whose interests they are representing. So it works for them.

Plain and simple, they are bale to reach the public and tell them stuff, and get the public to believe it. The use of overwhelming repetition is the tactic. I use the word “stuff” here with meaning: it’s just stuff they want the public to believe, with no grounding in reality. They do it, and here we are. Nationally the debt is approaching TEN TRILLION DOLLARS and they are still able to get the public to think taxes are bad. In California they are able to force layoffs and school cuts while refusing to make the ultra-rich pay even the same taxes the rest of us pay.

Please leave comments with suggestions on how to fight this.


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The California Chamber of Commerce has released its annual list of what it calls "job-killer bills."

Why is it that the Chamber's job-killer bills hit-list seems to only target Democrats? Not a single targeted bill belongs to a Republican. "Bad bills", like those designed to protect public health, climate concerns or consumer rights legislation, are all authored by Democrats. The chamber has always been a lobbying organization, but it has gotten so bad that the Chamber seems to have devolved into little more than just one more fear-mongering Republican Party front group.

The "job killers" on this list are any laws that protect consumers, reduce energy use, require worker protections or anything else that might hinder a very few corporate executives from reeling in another several-hundred-million dollars a year. The jobs that are "killed" are those of lobbyists for the energy industry.

The first group on the "job killer" list is bills that ask for any kind of energy or water conservation or environmental standards for new housing construction. For example, AB 1085. The bill describes itself as undating,

"building design and construction standards and energy conservation standards for new residential and nonresidential buildings to reduce wasteful, uneconomic, inefficient, or unnecessary consumption of energy."
But the Chamber's job-killer list says this
Substantially increases the cost of housing and development in California by implementing significant energy efficiency measures
Now, think about this -- if it costs less to heat and cool your house, this saves you money. If you want to add energy-saving technology like solar electric or water-heating on your house this creates good jobs. Maybe Exxon won't benefit as much from this as the new, upcoming solar industry, but heck, the solar companies aren't coughing up the big bucks and providing the good jobs to the Chamber of Commerce's lobbyists!

The next group of "job killers" is "workplace mandates" like paid sick leave for employees, disability pay for on-the-job injuries or providing California’s citizens with health insurance.

Ah yes, the money businesses pay out to provide sick leave and disability pay for those pesky employees "kills jobs." They could hire so many more people if they didn't have to actually pay them and keep them from getting injured! This is one of the oldest arguments in the books. Slaves are always cheaper. But why do we have an economy if not to provide US with good jobs and other benefits? Do we have an economy so a very few corporate CEOs get all the money and benefits, or do we have an economy so the people can also get good pay and benefits and safe working conditions? The evidence (this, for example) is clear that good wages and benefits do not hurt jobs or the economy.

Then there are “economic development barriers” like asking online retailers to collect the same sales taxes that you local business owner collects, asking the wealthy to help pay for our schools, raising fire standards in high-risk fire areas and protecting our environment. I guess the online retailers must be paying the Chamber more this year than the retailers who have to actually rent storefronts and pay wages in your town. I can't think of any other reason why SOME retailers should collect sales taxes and others should be exempt. Doesn't this change the playing field waaayyy in favor of online retailers and harm the prospects of businesses that actually set up in our local communities? God forbid we ask them to help pay for our schools and police and fire protection!

This "job killer: list is nothing more than the use of fear to scare us into allowing a few rich corporations to have their way. By saying that protecting workers or the environment might "cost jobs" they are trying to make us afraid to ask these big corporations to live up to their responsibilities to our communities. How long will we let these lobbyists make us afraid?


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As the post-mortems continue to characterize the year just past and prognosticators speculate on what will be the year to come, it is clear that California is in for a bumpy ride over the next several months, if not years. With a projected $14 Billion short-fall (with many estimating the number may reach much higher), there is no question that the times call for some courageous leadership. But in today's political world, where cynics and superficial pundits abound, it is difficult for real leadership to emerge and be given the space to articulate and implement that necessary vision, courage and know-how to make the necessary changes we desperately seek and need.

Commentators proclaim that little was accomplished in the year past---no major health care reform, no real water policy emerged to deal with our state's chronic but moving toward acute problem, little real movement to develop a massive but necessary investment in transportation infrastructure, including our roads, bridges, ports or public transit, sewer systems, schools, etc. The bottom line is: we haven't seriously or effectively addressed these needs. Our massive prison system is crumbling under its own weight, while federal judges determine whether we are complying with basic legal and human rights while we warehouse more and more people and spend greater and more scarce resources in doing so.

There are many who study our state's political institutions and systems and declare the state ungovernable, observing that we are too dependent on special interests who fund campaigns; suffer from public initiatives generated from out-of-state business or ideological interests who are using our state as a guinea-pig; a tax system that is arcane and heavily-weighted in one direction or another. Also factored in is simply the massiveness of our state, with one out of every eight Americans living within our borders. So where is the leadership to deal with all this?


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