California passes the tipping point

Betsy Newmark had this interesting roundup on California's self-imposed financial crisis:

Shannon Love writes at Chicago Boyz that California has reached the point of no
return:

"Instead of state employees working for the people, the people now work for the state employees. As far as the state government is concerned, people in the private sector work merely so that they can be taxed for the benefit of the tax consumers. They’ve entered a condition not unlike like that of pre-industrial serfs.

Of course no one is being whipped, but in effect an ordinary citizen of California cannot get their desires for reduced state spending implemented due to the disproportionate power of the State’s employees and allied interest. It appears now that the government unions will not accept any solution to California’s budget crisis except increased taxes in a declining economy. Ordinary citizens have no choice but to either emigrate or just lie there and take it. "

If you're an ordinary California taxpayer, you might want to think about that emigration possibility. This is the San Diego Union Tribune editorial that prompted her conclusion that they'd passed the tipping point.

"Controller John Chiang, a Democrat who aspires to be governor, is refusing to enforce Schwarzenegger's order that state workers take two unpaid furlough days a month beginning Feb. 1 to ensure the government has enough money to continue to perform its basic functions.

Why? Chiang says it is illegal. To the contrary, established case law gives government bodies considerable leeway during emergencies. The unions challenging the furlough plan are going to need to establish that such an emergency doesn't exist. Good luck with that.

But questions about Chiang's intercession go far beyond the flimsiness of his assertion that the furlough plan is illegal. Even if it were, when did voters pass a constitutional amendment giving the controller power to veto the governor's decisions?

The answer, of course, is that they never did and never would. Voters know there can be only one governor at a time.

Considered in this context, Chiang's actions border on a bureaucratic coup d'état. It looks even more like a coup when you consider that Chiang is about to unilaterally implement his own plan to deal with the cash-flow crunch. When it was announced last week, most of the attention focused on his intention to withhold $1.9 billion in state tax refunds. More attention should have focused on Chiang's move to withhold $188 million in assistance to more than 1 million aged, blind and disabled Californians – money they rely on for food, rent and utility bills.

They are not going to be inconvenienced by Chiang's decision. Their lives will be grossly disrupted. But the controller doesn't care. He's taken care of his top priority: protecting public employees. He knows the unions always will remember this massive favor. "

Adds Betsy: "As more and more taxpayers with opportunities elsewhere move out, how will the state survive with the only ones left being just those "tax consumers?" " I think this relates also to government job growth in the face of private job shedding, which is a nationwide phenomenon, but which is grossly exaggerated in California. California is a case-in-point of what happens when you have a near democrat-hegemony. It already happens in big urban cities (Detroit, anyone?).

Harry Reid: Tax System Is Voluntary

I can't believe that this is real, but it sure looks to be (via moonbattery):

$1.5 Billion in MI Reform Choices

The Center for Michigan has compiled a list of more than $1.5 billion in hard choices for budget cuts and reforms to the way Michigan's public sector does the public's business. (HT: Cameron Brown)

I'm curious if any of these even have a chance with the dems controlling the State House and the Legislature. Could more tax increases be on the way?

Well this is interesting

Chronicle: University-Provided Laptops Are Taxable to Faculty. (via taxprof)

I previously blogged that the IRS increasingly is requiring faculty to report the value of university-provided cell phones as income under § 280F. This week's Chronicle of Higher Education reports that the IRS is similarly targeting faculty who receive a university-provided laptop: Professors May Have to Pay Taxes on College Laptops, by David Shieh:...

I'm not sure if Oakland U. has done anything in this regard. Then again, maybe they have such a policy somewhere in the 3-million page 'policy' book that seems to grow by the day. I haven't heard of anyone getting a university-provided phone either. At least not on the faculty side.

Isn't this just a bigger version of Michigan's problems?

Government for the benefit of more government (HT:betsyspage) Some snipets:

Democratic leaders of the California Senate and Assembly agreed in closed-door negotiations with Schwarzenegger to cuts in virtually every social services, health and welfare program in the state. This was the governor's price for going along with proposed increases in sales, gas and income taxes... ...But the cooperation ended when Schwarzenegger took his everyone-must-share-the-pain thesis to its logical conclusion. To ease the state's cash crunch, he announced plans to have state employees take off two unpaid furlough days a month beginning Feb. 1... ...Medical checkups for poor kids can be halved. Help for the developmentally disabled can be reduced. Job training for inner-city youths can be suspended. But when it comes to cutting pay or benefits for a highly compensated state work force, Democratic officeholders not only draw the line; they express horror at the very thought... ...This survival-of-the-fittest scrum has made more obvious than ever that Democrats in the state legislature aren't just allies of public employee unions. Instead, these lawmakers are best described as wholly owned union subsidiaries – people who see state government as a jobs program, not a means to provide services to the downtrodden or anyone else. (emphasis mine).

If we're not careful and get a grip on things here in Michigan, we will be where California is right now.

I doubt this very much

Geithner Blames Turbo Tax For His Tax Troubles (from taxprof).

Let’s hope the economy is easier to figure out than TurboTax. That’s the software that Treasury Secretary nominee Timothy Geithner used when he failed to pay about $34,000 in taxes, he admitted this morning in a confirmation hearing that was delayed because of his tax flubs. “I used TurboTax to prepare my returns,” Geithner told the Senate Finance Committee, looking just a little embarrassed, and prompting laughs in the hearing room. He wouldn’t blame the software for his errors, but he didn’t say it helped him spot them, either.

Taxprof adds:

Of course, as any tax professional know, TurboTax (and any of the other leading software programs) easily calculate self-employment tax (as well as the disallowance of a dependent care deduction for the cost of your kids' overnight camps). The errors here were entirely Geithner's, not TurboTax's.

Yeah, I'm crying foul on this one also. I've been using TurboTax since 1998 and it does everything. Including self-employment tax.

Fighting illegally inflated property assessments

Especially for those of you living in Michigan! I was listening to Frank Beckmann this morning on WJR 760AM and Frank had a guest on who just launched a new website to help people figure out the true value of their home and how to make sure that the city assessor is not over-assessing your property. Apparently, many assessors stopped assessing in September 2008. And you know what happened since then, don't you? (besides the fact that it got a bit chilly) Home values plummeted (a short story on why is here if interested). This may not be reflected (may not? Come on, who am I kidding? Will not!) in the assessment statement that we will be getting shortly. The statement is supposed to reflect your home value as of December 31, 2008!!!

In any case, check out the website and make sure the government is not taxing your property beyond the law! Here it is: http://overtaxedproperty.com/

Bring change yourselves, America

A promising title for an article I read on the Freep this morning by Mitch Albom. That's nothing new for Mitch. His articles many times sound promising (you know - fair, objective, no bull, no bias, etc.). Same is true with his radio talk show ("The Mitch Albom" show) that I listen to now and again if I happen to be driving between 5-7pm (it's on WJR-760AM). But his articles, as well as his many observations on his talk show veer left. And I mean VERY quickly. I always get a reminder in my head when I react to most of what Mitch sais. Remember the old SNL (back when it was good), where Dan Akroyd and Jane Curtin play adversaries in a show called "Point/Counterpoint" and argue about various topics? The classic line from Akroyd's mouth was "Jane you ignorant slut!" See here.

In any case, when I listen to Mitch on the radio, I often get a reaction that can be best exemplified by the statement "Mitch you ignorant liberal!" Mitch begins by asking "what are we so happy about?" Now I know he must be talking about his buddies at the freep, because I know he is not talking about me. Or many people that I know. Must be nice to be in an echo chamber of liberal ideology (also know as 'the cacoon'). Mitch continues:

"Our schools are in disarray. Our stock market is sick. Our environment is
taking a pounding. We face threats from Russia and a big shadow from China."

Yes, our schools are in disarray. Our government-run schools anyway (private schools and the homeschool movement are performing just fine, btw, as I wrote about just last week). Of course, the solution is to open schools up for competition, which liberals vehemently oppose. Instead, they want to throw more money at the problem, which has helped DPS tremendously (well, didn't it?). The incoming administration will not be friendly to giving control of children's education back to the parents where it should always belong. So there's that. Nothing to be happy about there!

The stock market is sick. Yes it is! Why? The housing market. The bubble that burst. How did that happen? I recently wrote a pretty extensive piece about this also. In short, the housing bubble was created by the subprime mortgage mess, which in turn was created by democrat attempts at social engineering in the banking system. Such is the case with so many failures in our past, and more yet to come. And the new administration wants to do more of this! So no happiness there either.

Our environment is taking a pounding? Really? Is this that silly global warming/CO2 thingy again? As global temperatures have decreased in the last year? The same global temperatures that haven't risen a single anything since 1998? That environment? A pounding? From what? No matter the platitudes in the face of science, the new administration was cap-and-trade installed, which is basically saying "more taxes" without using those exact words. Impact on the environment? Negligible to zero. The impact on the economy? Priceless (I mean, really - they can't come up with a number big enough yet). No happiness there.

We face threats from Russia and a big shadow from China. Yeah, but I think indirectly from Russia as they tend to give support to terrorists. It is the terrorists that pose a big continuing threat these days. Remember them, Mitch? 9/11? Thousands dead on our soil? And why a big shadow from China? Well, since we make it almost impossible for companies to do business for a profit here in the U.S. (highest corporate tax rate in the world, union domination in many sectors, etc.). The new administrations solution? Card check. Union thugs with lead pipes. More union control. Higher cost of doing business in the U.S. The China shadow grows.

"Why does it feel that inaugurating Barack Obama as our 44th president has already become a mini-Olympics of self-congratulation, parties everywhere, singing and dancing everywhere, exultations of near biblical frenzy?"

Uh, because it has. Like, since Nov. 5th? Unending gushing over Obama by the MSM to such a degree that every citizen slips in it when a tv is turned on within earshot?

"Any sane mind knows the economy moves with little regard for who sits in the White House. And Middle East wars proceed no matter who serves as America's commander in chief."

I guess we have a lot of people not 'sane' by Mitch's definition here. Where was any of this when the MSM blamed Bush for everything possible? Too many hurricanes? Bush! Too few? Bush! The housing bubble that's been growing for decades? Bush! In good economic times? Don't mention Bush (find something else to talk about and blame Bush!). Mitch's statement here is basically correct. Clinton got credit in the 90's for the economic boom, but had nothing to do with the underlying cause of that boom - computers and the internet (note that no one blamed him for the dot-com crash when that occurred at the end of his second term). The one thing that presidents can do to alter the economy is to alter taxes. Reagan came into office and slashed taxes dramatically. The economy rebounded dramatically. FDR raised taxes to launch a bunch of social programs in the 1930's and the depression continued for 8 years (until WWII). Taxes is pretty much the only thing the prez can do, for good or ill.

And the Middle East will continue to fight regardless. It's not a problem of territory. It's that one side doesn't believe the other should even exist! How do you solve that? What's a compromise? Eliminate only half the Jewish population by public execution? Not happening.

"If the Republican can see the celebration of Democrats and say, "OK, it's not my party, but it's my country, and it's good to give someone new a chance" -- then we'll have done something."

Excuse me, but where was this when Bush was first inaugurated in 2001? Where were the MSM calls to 'give him a chance?' What happened to dissent being the highest form of patriotism? The tune sure has changed quickly, eh? (is this the whole 'change' thing that Obama talks about?)

"If the rich say, "I've had it good for a long time, and if the country needs
money so that we all have opportunity, OK" -- then we'll have done something."

Silly me. I always thought that the rich already pay the lions share to the federal loot. You can find plenty of info on who pays what via Google, but here's just a snipet: "From 1986 to 2004, the share paid by the richest half increased from 93.5% to 96.7%, and the share paid by the richest 1% increased from 25.75% to 36.89%. At the same time, the amount paid by the poorer half decreased from 6.5% in 1986 to 3.3% in 2004. While the poor's contribution was cut in half, the richest Americans saw their contribution increase by nearly 50%. When you get past the propaganda, for the last two decades the rich have been paying more and more while the poor have been paying less and less." That's a heck of a "progressive" scale already, eh comrade?

"If the poor minority says, "You know, I've always blamed this country for
picking on me, but it's time to drop that complaint and take responsibility for
what I do" -- then we'll have done something."

Not. Going. To. Happen.

"In the coming hours, we will gush over Obama to incredible levels. Nobody does celebration the way America does celebration, and, let's be honest: we seem to be extremely proud of ourselves for having elected him... ...he will not always say what is popular."

In the coming hours? Sorry, Mitch, but the gushing has been at obscene levels since BHO came onto the scene. Nobody does celebrations the way America does, or the way Barack is doing it? (read here, here and here) And he will not always say what is popular? Tax the rich? Give tax cuts to those that don't pay them? Tax evil corporations? Evil oil? Card check? Shall I go on? The guy's rhetoric is purely populist, and at worst obfuscates his true intentions, and the real results that might come to pass. I don't think many will be happy about those.

WSJ: The Best Economic Stimulus: A Corporate Tax Rate of Zero

via taxprof: "Wall Street Journal op-ed: Leave the New Deal in the History Books; Cut Corporate Taxes to Zero and Create Real Jobs, by Mark Levey: By 1939 Roosevelt's own Treasury secretary, Henry Morgenthau, had realized that the New Deal economic policies had failed. "We have tried spending money," Morgenthau wrote in his diary. "We are spending more than we have ever spent before and it does not work. . . . After eight years of this Administration we have just as much unemployment as when we started. . . . And an enormous debt to boot!" "

Ouch. Seems related to a post I had written yesterday. More:

"In addition to New Deal spending programs, a series of new taxes were introduced that crushed the innovation, risk taking, and growth plans of entrepreneurs, corporations and investors. From 1930 to 1940, the top marginal income-tax rate rose to 79% from 25% while the corporate income-tax rate doubled to 24% from 12%. In addition, Roosevelt tacked on an excess profits tax and undistributed profits tax. He imposed an excise tax on dividends. Even the new Social Security payroll tax added 2%. As a result, the New Deal forced the allocation of money away from the private sector. ..."

"The quickest way to strengthen the credit system and begin the end of this crisis is to get money into the economy for true job creation, and not into government work programs. The way to do this is to slash taxes. The U.S. corporate tax rate, currently the highest in the world, should be cut to 0% (corporate income would still be taxed, of course, when distributed to shareholders as dividends). The capital-gains tax should be cut further."

I couldn't agree more. Although I don't think the incoming administration will allow themselves to hear this argument (cover ears with hands. Say "lah, lah, lah" really loud. Rinse. Repeat).

Filing taxes electronically

Via the taxprof: "This year, the IRS and its partners are offering a new option, Free File Fillable Tax Forms, which opens up Free File to virtually everyone, even those whose incomes exceed $56,000. Free File Fillable Tax Forms allows taxpayers to fill out and file their tax forms electronically, just as they would on paper. This option does not include an “interview” process like the other Free File offerings, but it does allow taxpayers to enter their tax data, perform basic math calculations, sign electronically, print their returns for recordkeeping and e-file their returns. This “self-service” option may be right for those who are comfortable with the tax law, know what forms they want to use or don’t need assistance to complete their returns. Both the fillable-forms option and the previously available “full service” Free File offerings are available only through the IRS.gov web site."

I don't know why more people don't go this route, but I've been happy filing electronically (using TurboTax) since 1998. Love it!

Obama: Geithner situation an 'embarrassment'

Well. yeah. Brietbart reports (via the AP) that "President-elect Barack Obama called disclosures about Treasury choice Timothy Geithner's tax problems an embarrassment Wednesday but said Geithner's "innocent mistake" shouldn't keep him from confirmation as the new administration's top official in urgent efforts to revive the economy. " (emphasis mine)

'Innocent mistake?' If you read just a bit further: "The revelations that Geithner had failed to pay $34,000 in taxes several years ago derailed Senate Democrats' plans to speed him to confirmation by Inauguration Day, but senators in both parties said the information was unlikely to torpedo his chances in the end. "

$34,000 and it's an 'innocent mistake?' Uh - haven't many people gone to jail over such 'innocent mistakes?' And this is the guy who is supposed to oversee the IRS? Would this guy have ever been seen again had he been a Republican, versus the Chosen one of THE One? And why is the mainstream media giving him a pass on this?

UPDATE#1: And so the other shoe drops: Michelle Malkin reports that Geithner was reimbursed for those taxes that he never paid! Read the whole report. Doesn't sound like such an 'innocent mistake' anymore, does it?

UPDATE#2: Betsey Newmark follows up on Michelle's post - "he will have to answer the story in both National Review by Byron York and in the Wall Street Journal that the IMF actually gave American employees a tax allowance to cover what they were supposed to have paid. And Geithner received those reimbursements and signed a form acknowledging receipt of that allowance and promising to pay his taxes."

My reaction to update#2: I had no idea! NO IDEA! Geithner was an IMF agent! Wow, like dangling from wires like Tom Cruise. And succeeding in missions designated 'impossible.' Maybe we do need the IMF to tackle the economy, as it looks like mission impossible right now...

UPDATE#3: A good roundup on the topic from taxprof.

Americans Failing Taxes 101

Via TaxProf: "The H&R Block Tax Institute released a survey of over 1,000 adults showing that most Americans cannot answer basic tax questions. Among the findings:

84% do not know they can file an amended return to correct errors in a prior year's return
78% do not know what tax bracket they are in
76% do not list "knowledge of current tax laws" as important in picking a tax professional
70% do not know of recent tax legislative changes that may affect their returns
60% do not know the difference between a tax credit and a tax deduction"

No surprises here.

A tax increase on the way in Michigan (again?!?)

Possible if you read this. I sure hope not. We've been hemorrhaging Michiganders for a few years now. At least 20% of my graduating class in high school is out of state now (that I know of). Higher taxes will not help the exodus.