Taxing the Rich - The Math Doesn't Work

This is a great piece that effectively and unemotionally explains the problem facing us as a nation with our excessive spending.  We hear all too often that all we need to do is tax the rich and get them to pay their fair share.  While that might sound like a great idea, the facts don't support this claim.  If people would just check the facts and challenge politicians to be honest, we could have an open honest discussion.  The political bickering is not helping us solve the problem.

Even if you tax everyone making $200,000 or more 100%, you won't collect enough to pay down this year's deficit, much less make any progress on reducing the $15 trillion we already spent that we didn't have.  Government has grown beyond our ability to pay for it and it is time the government, do what every business has had to do in tough times - downsize.


We need to quit demonizing the rich and get back to encouraging people to be innovative, take risks and excel.  We have rewarded complacency and what started as a safety net has turned into a way of life.  The intent of government assistance was exactly that assistance, not a sustained stream of income and benefits for life.

You can't make an informed decision in November if you don't educate yourself.  Take some time and watch this video!!

Numbers that should scare us all

We all know about the fiscal crisis that is affecting Europe.  Way too much governmental spending and excessive budget deficits have caused a crisis in the region.  Citizens in these countries are resisting austerity measures as they have become addicted to having government provide their every need.  It is clear something must be done in Europe to avoid a financial crisis that could pull the whole world back into recession.

What isn't covered is the media is the fact that the US has the highest Government Debt per capita.  Worse than Greece, Spain, Ireland and Portugal.  All of the countries we hear about nightly.  But why is it we hear nothing about US debt levels?

Given that the per capita income in the U.S. was just over $27,000, this debt load represents almost two years of income!!  No matter how you look at this, the current levels are unacceptable.  But, due to our reckless spending the last three years and failure to even pass a budget, the numbers are even worse now and if they keep up will be catastrophic by 2016.  And these estimates don't take into account the enormous impact that Obama Care will have on the debt and deficit.

The table below shows the debt per citizen and per taxpayer from 2000, 2004, 2008 and 2012.  It then projects values for 2016 based on the percentage increase we saw between 2008 and 2012.  I highly doubt that the increase between 2012 and 2016 will be less than 50%, more likely it will be significantly higher given the record deficits the past three years.

And what did we, the taxpayers get for a 50% increase in debt per taxpayer between 2008 and 2012?  Nothing, except a weak economy, high unemployment, lower 401(k) balances and many of us are making less now than we did 4 years ago.

It is time for our politicians to stop talking and starting solutioning!  We the taxpayers can not afford more debt.  Families and States are forced to balance their budgets, it is time the Federal Government do the same.  We hear lots of strong talk about no Corporate Bailouts, but we should have equally strong talk about no Government bailouts.  We need Congress to set a plan for reducing this deficit, living within their means and fixing this fiscal crisis.  We need to downsize government just like businesses have to downsize during difficult times. 

The government has grown beyond our ability to pay for it and no amount of tax increases on the "Rich", those making $250,000 or more, is going to fix this mess.  I have posted data before that shows that even if we tax 100% of the income that is earned by these "Rich" taxpayers it only covers the current years deficit and does nothing to lower the total debt.  So we need to stop this non-sense about taxing the rich and focus our efforts on reducing expenses substantially!!

Politicians can talk all they want, but the facts are clear.  It is up to us to tell these politicians what we expect and if they do not perform, we need to vote them out and we need to replace them with people who are willing to make the tough decisions and put the taxpayer before their desire to be re-elected.

Make your voice heard this November.

Thank You Letter from a Taxpayer

This is the "thank you letter" many of you may have heard read on the radio, thought it was worth sharing if you haven't already heard this...


To all leftists, occupiers, union thugs and malcontents,

Thank you! What an election!

We couldn't have done it without you. Without your tantrums, outbursts and boorish behavior we might have stayed home for this election. Without your filthy, pot smoking hemp -headed minions occupying, dirtying and damaging our Capitol we might have been complacent. Without your obnoxious protests, boycotts and other actions from your union playbook, we might have sat this one out.

But you couldn't hold back. You couldn't restrain yourselves and behave like adults. You couldn't accept the 2010 election results. We sat and watched as you erupted in a juvenile hissy fit that embarrassed Wisconsin. The spectacle you created is what motivated us. And thanks to your pathetic behavior, we won. We turned out. Big time! And now we are organized and energized. Committed. "All in". And we aren't going away. We now have our own organizations (no dues required), an army of volunteers and the means to communicate. And countless new sources of funding, including a donor base from all 50 states. And we have "iverifythe recall" to ferret out your infiltrators in our future local elections.

So thank you little boy Tate, Graeme Zielinski, Fred "Loonie" Levenhagen, Ismael Ozanne, Maryanne Sumi, Noble Ray, Charles Tubbs, Joanne Kloppenberg, Segway Boy, John Chisolm, public employee union members, UW TA's, WEAC, SEIU, MTI, AFSCME Council 24 in Union Grove and WI prison guards,. Thanks for the death threats, the intimidation, the bullying, belligerence, thuggery and goonish behavior. The lack of ethics and the failure to enforce rules and laws. Thank you for putting your selfish, greedy motives on display for all taxpayers to see.

Your antics might have made you feel good but they didn't make you look good. They sickened the rest of us.

Thank you Shirley Abrahamson and Ann Walsh Bradley. Your petty politics woke us up. Thanks you Miles Kristan for dumping the beer on Robin Vos's head. Thank you University doctors for writing the phony excuses; Madison teachers for calling in sick or dragging your students to the protests without permission. Thank you Katherine Windels for making death threats against the Governor. The noontime capitol singers who taunted Sheboygan high school students. Thank you WEA Trust for raping Wisconsin taxpayers. Thank you Gwen Moore for your embarrassing minstrel show. And thanks all of you for harassing the Walker family at their private home.

You have all been exposed. Your tactics have been rejected. Your bad behavior has been forever captured on You Tube.

Thank you Peter Barca and fellow Assembly members for donning your foolish orange T-shirts and screaming "shame" at legislators just doing their jobs.

Thank you Mark Miller and all 14 senators for fleeing the state and making fools of yourselves in the process. Your combination of childishness and ignorance fits in very well in Illinois. I’m sure you felt right at home. Thanks for showing us what democracy doesn't look like.

And Mayor Barrett. How grateful we are that you chose one low road after another in your issue-less campaign against the Governor. This was your strike three. You are out. Take a seat on the bench and stay there. I have a hunch this was your final at-bat.

All of you helped turn Wisconsin permanently red. Your Governor, Scott Walker, will not just complete his first term, he is all but assured as many future terms as he seeks. He will be your governor for a long, long time. Get used to it. And his national "rock star" status just might lead him to be your President some day.

Just think, it couldn't have happened without you! So to all of you blue fisters, thank you from the bottom of my happy, red heart.

Sincerely,

A Wisconsin Taxpayer

The NO-Bama Budget

Interesting that President Obama is criticizing Paul Ryan's budget as radical, yet the Paul Ryan budget was approved by Congress by a vote of 228-191, while the budget submitted by Barack Obama did not receive any votes.  That's right the vote in Congress for the Obama budget was 0-414.  Which one is radical?

I guess the Ryan plan would be considered radical if balancing the budget and only spending within your means is radical.  Or perhaps the President believes that lying to the American people about the sustainability of Medicare and Social Security as they currently exist, will somehow endear him to voters.  Only an idiot or someone looking to deceive the public, would honestly tell people we can continue these programs as they are currently designed.

So instead of offering constructive alternatives all this President does is whine and complain about ideas presented by others.

We have a serious financial situation in this country and the solution from this President is to spend more.  This President believes we simply need to tax the rich more.  As I have pointed out in previous posts, even if you tax the 1% at 100%, there is not enough revenue to close the gap created by this President.

Since Obama’s inauguration, the federal debt has increased by $4.2 trillion. That is more than ALL the debt racked up from the birth of our country through President George H.W. Bush, according to CNS News. That is the real difference in the Ryan plan vs. the Obama plan.  Obama plans to keep spending and increasing this enormous debt load on the country.  A burden our children and grandchildren can not afford.

Everyone would agree that Greece is all but bankrupt with debt per citizen of over $50,792, but what many don't know is the this number is just as bad for the US at $49,842.  If you look at the chart below you can see that the trend is not encouraging.

Unless we start dealing with the real problem - SPENDING - this will only continue to get worse.  The choice is really clear.  Do you want more Government spending and more taxes or lower taxes and smaller government? 

We need to learn to spend within our means as a country.  The only message these politicians understand is the message we send through the voting booth.  So make your voice heard in November!!

Germantown School District less than honest with taxpayers

The Germantown School District recently sent a survey out to residents to presumably assist them in planning for the future.  At the beginning of the survey they indicate that in the past two years the district has reduced the budget by more than $2.2 million and eliminated 13 staff position which equated to 8 FTE.  For next year the district is forecasting a budget shortfall of $2.3 million.  They then go on to tell us, in this impartial survey, that:

·        Fringe benefits are some of the very lowest in our region, 42 of 45 area districts

·        Starting salary ranks 37 of 45 area districts

·        Average salary ranks 37 of 45 area districts

·        Administrative cost per student is the bottom 8% of all school districts in Wisconsin, ranking 396 of 431 districts.

All numbers reflect 2010-11 data as this year’s information is not yet available.

We are then asked to respond to a number of leading questions that I am sure they will try to use to show taxpayers support more spending.

While those statements, from the survey, sound impressive, it is tough to evaluate without some context.  So, being the inquisitive type, I went to the Germantown School District web site and the Department of Public Instruction to uncover some facts.  Here are some of my findings:

Budget reduced by $2.2 million over past two years

While a budget is nice and important for managing expenses, I find it most helpful to see what they actually spent.  And no, surprise expenses in the year ended 2010 were 4.0% higher than 2009 and expenses in the year ended 2011 were up another 3.4% over 2010.  So, instead of the more than $2.2 million they claimed to have reduced from the budget, in the last two years, they actually spent $3.5 million more!!  How’s that for truth in advertising.

Starting Salary ranks 37 of 45 area districts.

Notice they didn’t say salary, they said starting salary.  So they bring in new teachers at rates significantly lower than other districts, ranking them 266 out of 424, with a low salary of $31,913, but you have to also consider that they also get avg. fringe benefits of $15,505.  What the district failed to point out is that they have one of the highest top salaries in the state.  Germantown ranks 44 out of 424, with a high salary of $78,104.  This is significantly above the median high salary of $62,740.

Average Salary ranks 37 of 25 area districts

While this may be true, what they fail to tell you is that the average salary is $56,017, significantly above the average for the state which is $50,627 and well above the per capita income of $34,698 earned by residents in Germantown according to the 2010 census.

Administrative cost per student is the bottom 8% of all school districts in Wisconsin

While admirable, let’s look at the facts, not the hype.  According to the Administrative salary report from the Department of Public Instruction, the total salary and benefits for the 15 administrators in Germantown totaled $1.6 million   This is an average of over $106,000 in salary and benefits for this group.

 

The one thing I have learned in my 52 years is numbers don’t lie, but liars use numbers.  There is any number of ways to use the same information to try to make your point.  I just wish these governmental entities would respect the intelligence of the electorate and be more straight forward and honest in their disclosures to taxpayers.

I want to make it clear that I am not anti-teacher.  I am frustrated that the teacher’s union does not recognize that most taxpayers have suffered the past few years and most of us have less income than we did 3 years ago, many more of us are out of work, our retirement nest egg is significantly smaller than it was three years ago and our home is now worth less than it was three years ago.

It is now time for the school districts to examine the cost of education and to find creative and innovative ways to deliver a better product.  Buying overpriced insurance from a union owned company can not be tolerated.  The school districts owe it to the taxpayers to find ways to cut costs.  There are ways to reduce expenses and not impact the quality of education.  If any school district doesn’t think they can find any cost savings, I would be happy to sit with them and go through their books to find opportunities for them.

TAX SYSTEM EXPLAINED IN BEER

I couldn't resist sharing this.  Hope you enjoy.

Finally, a way to understand class warfare in real world terms.


Suppose that every day, ten men go out for beer and the bill for all ten comes to $100.  If they paid their bill the way we pay our taxes, it would go something like this...

     The first four men (the poorest) would pay nothing
     The fifth would pay $1
     The sixth would pay $3
     The seventh would pay $7
     The eighth would pay $12
     The ninth would pay $18
     The tenth man (the richest) would pay $59

So, that's what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve ball.  "Since you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by $20".  Drinks for the ten men would now cost just $80.


The group still wanted to pay their bill the way we pay our taxes.  So the first four men were unaffected.  They would still drink for free, but what about the other six men ?  How could they divide the $20 windfall so that everyone would get his fair share?

They realized that $20 divided by six is $3.33.  But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer.

So, the bar owner suggested that it would be fair to reduce each man's bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using.  He proceeded to work out the amounts he suggested that each should now pay.

And so, the fifth man,
     The first four men still paid nothing.
     The fifth man, now paid nothing (100% savings).
     The sixth now paid $2 instead of $3 (33% savings).
     The seventh now paid $5 instead of $7 (28% savings).
     The eighth now paid $9 instead of $12 (25% savings).
     The ninth now paid $14 instead of $18 (22% savings).
     The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before.  And the first four continued to drink for free.  But, once outside the bar, the men began to compare their savings.

"I only got a dollar out of the $20 savings," declared the sixth man.  He pointed to the tenth man, "but he got $10!"

"Yeah, that's right," exclaimed the fifth man.  "I only saved a dollar too.  It's unfair that he got ten times more benefit than me!"

"That's true!" shouted the seventh man.  "Why should he get $10 back, when I got only $2?  The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison, "we didn't get anything at all.  This new tax system exploits the poor!"

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for drinks so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and government ministers, is how our tax system works.  The people who already pay the highest taxes will naturally get the most benefit from a tax reduction.  Tax them too much, attack them for being wealthy, and they just may not show up anymore.  In fact, they might start drinking overseas, where the atmosphere is somewhat friendlier.



David R. Kamerschen, Ph.D.
Professor of Economics

Government vs. Soup Kitchen

At Thanksgiving, the poor pay for dumb regulation.


Just another example of excessive government and lack of common sense on the part of public officials. 


By WILLIAM MCGURN

This Thursday, in a parish hall not far from the New Jersey town green where George Washington once made his winter headquarters, as many as 300 people will gather for their Thanksgiving meal. Some will be homeless, some will be mentally ill, some will be old, and some will be folks and families who have just hit a hard patch. For all of them, Morristown's Community Soup Kitchen and Outreach Center is one of the few blessings they can count on.

In many ways, this soup kitchen illustrates Tocqueville's point about the American genius for voluntary association. Having started out in a local Episcopal church, it has grown into a network that links restaurants, corporate sponsors and community groups with volunteers from nearly three dozen church congregations, including this reporter's. The result is a hot meal to anyone who comes to the door each noon, no questions asked.

This the men and women of the Community Soup Kitchen have provided for 26 years, not once missing a day. Now comes a challenge greater than any snowstorm or power outage. Earlier this year, the Morristown Division of Health ruled that henceforth the soup kitchen would be considered a "retail" food establishment under New Jersey law.

From that single word far-reaching consequences have flowed. In a column for a local blog, Ray Friant, a volunteer from the Morristown United Methodist Church, called the rule "crazy." Over Sunday breakfast at a local diner, Mr. Friant, his wife, Emmy Lu, and another church couple who also volunteer at the kitchen, Barbara and Jim Morris, spell out what they mean by crazy.

Most obvious is the higher cost: at least $150,000 more a year. To meet this increase, the kitchen is asking each participating church to up its own contribution. Some congregations don't have the money. For those that do, it will mean less for some other need.

Much of this cost results from a new prohibition on people donating food they've prepared at home. For those on the giving end, often this was the only way they could participate, so eliminating their contributions means eliminating volunteers. For those on the receiving end, it means no more homemade meat loaf, lasagna, cakes and so forth.

All, of course, in the name of food safety. Still, one suspects that when a co-worker brings a tin of Christmas cookies to a friend inside Morristown's Division of Health, those cookies are not forbidden because they do not come wrapped from a supermarket or approved restaurant. Yet this is precisely the restriction these officials have imposed on men, women and children whose only hope for a home-baked cookie might be at the soup kitchen.

Finally, there's the utter soullessness of the thing. For example, many of the women would bring their own aprons from home. No more. Now it's all latex gloves, throw-away aprons, and a ban on food servers even entering the kitchen. In short, more institutional cafeteria than Grandma's house.

Teresa Connolly, the soup kitchen's director, did not return phone calls. No doubt her top priority is keeping the kitchen going, and many appear to have concluded that the best option is getting along with the government. The senior pastor of the Friants' church, Neill Tolboom, notes that the soup kitchen appreciates that the town continues to let it do its work right near the main square, and he says his hope is that by adapting to the new government rules the result will be healthier meals for those whom the kitchen feeds.

Mr. Friant and his fellow volunteers say no one opposes reasonable measures to improve cleanliness. The question is whether this is a solution in search of a problem. In the 26 years this kitchen has been open, there seems to be no case of food poisoning. Maybe Morristown officials would do better to seek out those who actually eat there, and put to them this question: Do you feel safer and better off now that we've protected you from home-baked apple pie?

So what's the solution? It may be as simple as getting the Division of Health to reconsider. Unfortunately, Darlene O'Connell, the town's health officer, refused to comment, directing a reporter to her superior, Thomas Alexander, who did not return several calls. If, on the other hand, it turns out the push is from the state, surely Gov. Chris Christie and state lawmakers would be happy to work out a resolution that advances health while preserving the more personal elements that make this kitchen such a gift to those in need.

On a 1995 trip to New Delhi, Hillary Clinton visited an orphanage run by Mother Teresa's nuns. She came away impressed by the great love and care she found there. With no small irony, she noted it was a place that "would not have passed inspection in the U.S."

At least not in Morristown.

Write to MainStreet@wsj.com

Published in Wall Street Journal 11-22-2011