Category Archives: Taxes

Poverty, Bonds and Profits

Three items from the news today:

A long time complaint of anti Red Planners has been that it is being foisted on a relatively poor population. If the survey reported by Today’s Trib is accurate then Duluth has seen an increase in people living in poverty from one in five Duluthians in 2006 to one in four in 2010. For those who pay regressive property tax or whose landlords must raise rents to pay them, the Red Plan burden has become more oppressive.

On NPR there was an interview with the Wall Street Journal’s David Wessel about why so few municipalities declare bankruptcy. The lesson Duluth should learn from this is that there is little chance of escaping the Red Plan’s debt burden. If the school district did declare bankruptcy I presume the State would have to pay it off with its “full faith and credit.” Before that happened the School Board could pull out Lake County’s four day school week.

And finally on the brighter side there was a story from the Trib’s bygones section. Forty years ago today it was announced that the DECC had finally turned a profit in 1970 having suffered four year’s of annual losses from its opening in 1966. I recall in the 1970’s that the City’s ski hill, Spirit Mountain, also suffered a number of years of losses before finally turning a profit. Perhaps the municipal Great Lakes Acquarium will also someday turn a profit. (Its current losses have recently been reduced a little) Someday, the Red Plan might actually pay out some dividends if students begin re-enrolling into the Duluth Schools from outside Duluth as they did in the days before the Red Plan. Don’t look for that to happen any time soon.

My first Questionnaire

I’ve got a dozen questionnaires sitting on my desk unopened. Until this election I always filled them out without fail. This time I’ll wait to see if I get past the primary.

I just filled one out however for the local organization that lobbied long and hard to skyrocket our taxes for the Red Plan. It seems they’ve suddenly discovered fiscal restraint.

Here are the questions they gave me and the answers (under 50 words) I returned. Too bad they can’t keep their questions to 50 words.

1. Minnesota faces a large fiscal deficit. Does business pay its fair share of taxes, yes or no? What would you cut or increase to make it fairer?

Tax increases are inevitable but no state spending should be sacred. A six billion shortfall will make LGA hard to justify. I’d give local government greater authority to adjust property taxes and direct them where needed. School building bonds should always be approved by referendum to keep school districts in check.

2. What is the role of government when it comes to regulatory issues? For instance, is it the role of government to tell hospitals what the nurse to patient ratios ought to be or should it be up to the hospitals and their accrediting agencies? Secondly, would you agree that state agencies ought to give permits in a timely manner or should those permits be automatically issued if the state is not timely?

When the state pays the bill it will play a part in such decisions however, in this case I’d incline toward neutrality. There should be a timely permitting process but permits should no more be granted under rigid timelines than murder suspects freed when speedy trials fail to materialize.

3. How can the legislature improve school outcomes without increasing funding?

I’m skeptical of the potential for success of, though not opposed to, merit pay. Paying students would be more effective but is not politically acceptable. I believe that public education has benefited from Governor Rudy Perpich’s Charter Schools which effectively broke up a monopoly.

4. What is the role of government in promoting private sector jobs?

Usually ham handed. Oh, you asked “what” not “how.” I think the prime generators of jobs ““ small businesses ““ should be cut some regulatory slack and offered tax breaks.

The Trib as tax fighter

And then there is this inane editorial.

Yup, the Trib like most of the Red Plan’s early cheerleaders has remained strangely silent over the past half year about the massive tax hog that is the Red Plan. But they sure are encouraging folks to whup it up at the DECC on April 15th with this stirring conclusion:

So go, protest. Scream. Get it out of your system. But don’t just be one of the masses griping into the wind. Be one of the too-few contributors to conversations that lead to actual solutions that result in real change and that end astronomical spending.

My advice to the Trib: “Bag it.”

Ben Franklin on Democracy

“Democracy is two wolves and a lamb voting on what to have for lunch. Liberty is a well-armed lamb contesting the vote.”

If there had been a vote in Duluth in 2006 no one would be contesting it today. The wolves were too clever for their own good.

Doty misses the point

In his recent column Ralph Doty makes some interesting and valuable comments about the Duluth Area’s property taxes. I have good reason for irritation with Doty on an old score but I appreciate anyone who can wade through the murk to point out useful information.

I found this observation particularly interesting.

“City councilor Todd Fedora recently told a radio audience that tax receipts from Duluth’s property tax levy were $13.5 million in 2007. But — here’s the rub – the city’s total health costs for current and retired employees was $17.4 million.

If the city wasn’t’t taking in a lot of money from its sales tax, it would have been bankrupt a long time ago.”

But on one score Doty is completely wrong.

“While the city of Duluth struggles with its deficit and the school district continues to cut important services to students, St. Louis County blithely goes about the business of funding projects and services the city can only dream about – and increasing property taxes every year to pay the bills.

Anger over city property taxes seems to be misplaced: The county’s share of a property tax dollar is 63 cents, while the city gets 22 cents and the school district receives even less at 11 cents.”

While Doty is right to point out the size of property taxes imposed by St. Louis County he too easily dismisses the tax increases of the School Board. Yes, the Schools consume far less property tax but the School District has a bigger budget than the City of Duluth. The schools property taxes are low because the State has made it a point to keep them low because of the relative importance of public education and its determination not to give poor kids and poor communities inferior K-12 schools. The State legislature didn’t anticipate that School Districts like Duluth would use the state’s school tax relief as cover to gouge taxpayers. If every school district in the state did what Duluth was doing the state would intervene in a heartbeat to prevent the state from going into bankruptcy.

When the District’s rates went down it made the schools share of the total property taxes look much more reasonable relative to the City or County. But to reinterate, The school district’s budget is bigger than the cities. Furthermore, the Red Plan will double the School’s property taxes in a few years while the County is increasing its tax rate by 5%. That’s nothing compared to last years school property tax increase of 56%.

Dismissing this monstrous increase by comparing the School District with the City and County is a lousy way to justify the Red Plan.

The Peace Prize

I’m very impressed with the Nobel Committee’s Peace Prize selection.

I heard about Yunus’s small loans several years ago on NPR and they make so much sense. I wish a few Republicans would pay attention to this as it is exactly what the party used to encourage before it got the idea that a free enterprise economy meant steering big government contracts to cronies and campaign contributors, making them rich, and easing their tax burden.

The Republican “invisible hand”

If there is any economic assumption that undergirds today’s Republican Party it is that Adam Smith had it right when he described the “invisible hand” that make markets work most efficiently.

Light-weight Republican hacks like Grover Norquist have been championing a simple-minded and corrupted version of Smith’s philosophy. Unaware or indifferent to Smith’s very real belief that fairness and charity should be introduced into the invisible mechanics of the soulless marketplace Norquist has said that his goal is to make “government so small that you can strangle it in a bathtub.”

Tom Delay Grover Norquist and a whole passle of Republicans are guilty of their own more selfish violations of the invisible hand. Perhaps camophlaged hand is a better discription of things like the K Street Project where Republican lobbyists ply congressmen and their staffs for statutory law which will tilt the invisible hand in their favor or win them government contracts like the many shabby ones granted during the Second Iraq War.

Today’s example of the GOP’s visible hand has to do with President Bush’s billion dollar Reading readiness program which got directed to good ole boys friends of the Republican Party.

Not surprisingly when good-ole-boys get overpriced federal contracts they turn around and contribute a hunk of their “earnings” to the campaigns of the small government folks who got him their big payday. Its just plain old good business.

Or take the secretive, arch-conservative, New York multi-millionaires who have spent millions to organize petition drives in dozens of states to put caps on state taxation fueled not only with their money but with a heavy dose of deceit. Invisible hand indeed!

Republican Fiscal Insanity

Today’s ruling Republicans are way past fiscal insanity. This from Andrew Sullivan’s blog praising another conservative for recognizing this fact:

“US GNP grew 27 percent from 2000 to 2004. The government’s total estimated fiscal exposure (total of public debt plus military and civilian pensions, social security and medicare obligations and other), according to GAO, increased in the same period by 212 percent. The debt to be paid by the next generation went from $20 trillion to $43 trillion.”

It bears repeating that over these four years Republicans have controlled every branch of government in the Nation’s Capitol.

Poison Pills

Why are corporate execs paid so much more compared to “joe six packs” than they were a couple decades ago? This writer suggests it is a reaction to deregulation and an effort by corporate managers to make it difficult to be replaced in a takeover bid.

This was sent to me by Vic who regular readers will recognize as my long time email sparring partner. Its of interest to me because my wife is a corporate exec and because I’m a great believer in the progressive income tax.

I don’t know why the salaries have risen as they have but I believe that people who have benefited most from our nation’s bounty have a greater obligation to support the system that made their success possible. This explains my support for the progressive income tax vs. the Republican’s dearly beloved flat tax (which also apparently came down from Mt. Sinai).

Just where the top tax percentage should fall is always open for negotiation. In the FDR years they approached 90 percent and helped pave the way for the booming market in legalized tax dodges and loopholes. Today its closer to 30  percent and the system is still bedeviled with dodges and loopholes. Now the Republicans are poised to eliminate most of the Estate taxes for the very rich if the Democrats push for an increase in the minimum wage.

Don’t do it Dems. The poor already know you want to do it. Wait to see if you can get control of the House and if you do then revive the Estate tax and the raise the minimum wage!

We’re not all in this (neighborhood) together

I just read this Wash Post story that was reprinted in the DNT yesterday. Its one more bit of evidence of the division of our nation into rich and poor. Now it seems that middle class suburbs – the kind that baby boomers all remember from their youth – are disappearing. Those of us who are being sheltered by Republicans from the dreaded “death tax” are all moving behind gated barriers to exclusive neighborhoods. Those remaining in the middle class have to decide if and when they can jump accross an ever growing abyss to keep up with the quickly retreating Jones and while leaving the title loan and lotto dependent poor behind.