Posts Tagged ‘Government’

Why Some Businesses Supports Indirect Taxes

Friday, April 16th, 2010

The day after we filed to pay our income tax (direct taxes) and in reflection of the “across the board” tax increases (indirect taxes) that were pushed and past this last legislative session, it is good to reflect on why some business groups might have pushed for these widespread tax increases.

After I wrote yesterday’s post, I read a selection from From Out of Step: The Autobiography of an Individualist, by Frank Chodorov; The Devin-Adair Company, New York, 1962, pp. 216-239 entitled Taxation is Robbery.  It is definitely worth reading, and I thought I would draw your attention to this piece in particular:

Tacit support for indirect taxation arises from another byproduct. Where a considerable outlay in taxes is a prerequisite for engaging in a business, large accumulations of capital have a distinct competitive advantage, and these capitalists could hardly be expected to advocate a lowering of the taxes. Any farmer can make whiskey, and many of them do; but the necessary investment in revenue stamps and various license fees makes the opening of a distillery and the organizing of distributive agencies a business only for large capital. Taxation has forced the individually-owned and congenial grog-shop to give way to the palatial bar under mortgage to the brewery or distillery. Likewise, the manufacture of cigarettes is concentrated in the hands of a few giant corporations by the help of our tax system; nearly three-quarters of the retail price of a package of cigarettes represents an outlay in taxes. It would be strange indeed if these interests were to voice opposition to such indirect taxes (which they never do) and the uninformed, inarticulate and unorganized consumer is forced to pay the higher price resulting from limited competition.

I know I’m on a big versus small kick that might seem to be getting old to some, but I think this theme deserves a lot more attention than the traditional partisan rhetoric. It is the shifting economic paradigm of our times.

The Big Against the Small Continued

Thursday, April 15th, 2010

I’ve noted time and time again that a change has occurred in America that is quite unsettling.  The dynamic shift that concerns me is the alignment of big business and big government interests against those of small businesses and individuals. Now, maybe this has always existed, but I don’t think so – at least not to the level that is currently evident.

It used to be that government interests (tax collection and regulation) were contrary to the majority of business and individual interests, but this has now changed.  What has emerged is a return to days of old (i.e. landed aristocracy and ruling monarchs indenturing the masses and suppressing entrepreneurship).  Consider that “too big to fail” businesses are now encouraging increased taxation and regulation that will:

  1. stifle competition from upstarts with regulatory barriers to entry
  2. burden potential challengers with profit draining regulation
  3. create new revenue streams by artificially increasing costs of individuals (think cap and trade)

The latest evidence of this trend is the new compliance focus of the IRS:

A new study by the Transactional Records Access Clearinghouse (TRAC) shows that despite a growing federal deficit, IRS audit efforts aimed at the nation’s largest corporations have precipitously declined in the last few years and now are at an all time low.

According to Dean Zerbe, alliantgroup National Managing Director and former Tax Counsel on the Senate Finance Committee, “As if April 15th isn’t frightening enough for small business owners, now comes news that the IRS has increased audit hours for small and medium businesses by 30% over the last five years, while at the same time decreasing the number of hours spent auditing large corporations by 33%.”

Keep in mind, that taxpayer bailouts went to the largest of corporations.  Those same corporations are now reaping the rewards of free money:

For 2009, the Fortune 500 lifted earnings 335%, to $391 billion, a $301 billion jump that’s the second largest in the list’s 56-year history, approaching the increase in the robust recovery of 2003. 

Yet, this taxpayer investment into corporate profits has nothing to do with creating jobs for Mr. and Mrs. Taxpaying America.  In fact, the opposite has held true:

The number of Americans filing for unemployment insurance for the first time jumped for the second week in a row, according to government data released Thursday.

There were 484,000 initial jobless claims filed in the week ended April 10, up 24,000 from an unrevised 460,000 the previous week, according to the Labor Department’s weekly report. 

 And, it’s not just jobs that continue to disappear. Those losing their homes also continues to increase:

In the first three months of 2010 foreclosure filings rose 7%, to more than 930,000, compared with the previous quarter, according to the online foreclosure marketing firm RealtyTrac. That is a 16% jump over the first three months of 2009.

Foreclosures started off the first quarter with modest gains but spiked in March to a record 367,000 filings. Plus, nearly 258,000 of those filings were for bank repossessions, the highest quarterly total RealtyTrac has ever reported.


This is not good for America.

Another Thought on the Size of Government

Monday, April 12th, 2010

More often than not, the discussion of bigger versus smaller government comes down to arguments around:

  1. paying more or less in taxes
  2. individual rights versus the greater good

I’m just as guilty as everyone else for minimizing the discussion to these points.  However, something I read this weekend reminded me that what often gets lost in the discussion is that the argument for smaller government is really about individual responsibility.  I have touched on it before – especially as it relates to parenting and education. But, it’s worth revisiting again.

I believe that the vast majority of people in this world are good.  I believe that given the opportunity to do what’s right and just,  most people will do the right thing. If they see somebody in need, they will lend a helping hand, not because they are required to by law, but because it’s the right thing to do.

Of course, this isn’t just something I believe, it is something I see re-affirmed everyday. I see it every week when adult volunteers step up to coach community children in various sports or help out in classrooms. I see it when I look at the good works done by various religious and social organizations. I see it when people write checks to support the needs of the homeless, the hungry or special needs children along with many other very worthwhile causes.

Unfortunately, one of the problems with continually growing the size of government is that it erodes this sense of individual responsibility to provide solutions to the challenges facing our communities.  If we continually increase taxes to take care of everything, it is not long before we as individuals no longer feel personal responsibility to be part of the solution.  Instead, we begin to feel that we’ve paid our taxes to support [fill-in the blank], so our part is done.

However, the reality of the situation is that in a great many cases, the government solution to solving the same problem is inefficient and overly bureaucratic.  Primarily, this occurs because whenever government is involved in providing a solution the one thing that is guaranteed to follow is regulation upon regulation mandating “how to do it right.” Those mandates lead to investment in compliance as opposed to solving the problem at hand. Interestingly enough, when it comes to compliance, most people will seek to do the minimum required.  Yet, ask those same people to volunteer to solve a problem, and they will work on it until it is done.

So, back to what triggered this post. Former Congresswoman Heather Wilson posted a recent speech on her Facebook wall that she gave at the Air Force Academy, which included the following statement:

In my experience in the Congress, it seemed to me there were two kinds of people in public life: those who want to be somebody and those who want to do something. 

I’d argue that this doesn’t just apply to those in Congress. It extends to everyone. Being somebody is easy, and in the grand scheme of things, meaningless.  Andy Warhol noted, “In the future everybody will be world-famous for 15 minutes.” Now, there is some fame (i.e. being somebody) that lasts more than fifteen minutes, but despite the duration, if it is not coupled with doing something, it is equally meaningless.

Getting elected to public office, transforms you overnight from “nobody” to “somebody.” The same is true for a professional athlete or movie star.  But, “being somebody” is fleeting. Once you’re gone, your fame is irrelevant. Sure, there are those whose legacy continues beyond their life, but it is not because they were somebody as much as they did something – made a contribution to society that impacted people’s lives.

Larger and larger government removes the motivation to truly do something and make a contribution. It shifts the drive to do something from the people to the government.  It attempts to rob us all of the pleasure and satisfaction of individually making a lasting contribution. In history, every “great” society that has gone down this path has ultimately collapsed to a shell of it’s former self. It’s time for the pendulum in this country to shift back to acknowledging the value of the individual before it’s too late.

[youtube=http://www.youtube.com/watch?v=b1cE-qpKCiI]

Compliance Trumps Jobs as Governmental Priority

Monday, February 22nd, 2010

There is well reasoned analysis out there that the high unemployment numbers we are currently experiencing might be with us for some time:

The unemployment rate hit 10 percent in October, and there are good reasons to believe that by 2011, 2012, even 2014, it will have declined only a little. Late last year, the average duration of unemployment surpassed six months, the first time that has happened since 1948, when the Bureau of Labor Statistics began tracking that number. As of this writing, for every open job in the U.S., six people are actively looking for work.

All of these figures understate the magnitude of the jobs crisis. The broadest measure of unemployment and underemployment (which includes people who want to work but have stopped actively searching for a job, along with those who want full-time jobs but can find only part-time work) reached 17.4 percent in October, which appears to be the highest figure since the 1930s. And for large swaths of society—young adults, men, minorities—that figure was much higher (among teenagers, for instance, even the narrowest measure of unemployment stood at roughly 27 percent). One recent survey showed that 44 percent of families had experienced a job loss, a reduction in hours, or a pay cut in the past year.

So, it is kind of interesting that federal and some state governments are more interested in “catching” businesses in a worker misclassification game to fill government coffers than making sure that people can work and feed their families.

President Barack Obama‘s proposed 2011 budget suggests tough times ahead for employers who rely heavily on independent contractors in order to keep down labor costs.

If the budget is approved, the Internal Revenue Service will add 100 new enforcement personnel as part of a $25 million plan to crack down the misclassification of workers as independent contractors.

When you consider that 50 percent of jobs created during the economic recovery are contingent labor, you quickly see that a Catch-22 situation is unfolding.

Of course, many of the businesses that are able to survive the recession are also smart enough to quickly assess the forthcoming penalties and make employment decisions based on those pending government regulations.  Those decisions will be in the best interest of the business and its current employees, but will do nothing to put out of work Americans back to work:

And our associates voted to schedule 50-hour workweeks rather than hire new associates — even if it means working five 10-hour days or maybe even working on Saturdays when needed. We’re just not going to hire right now because we don’t know what’s coming next. We hope something will be made clearer in the next 90 days as our country focuses on what is necessary to create jobs in America. Then we can re-evaluate our decision.

Put yourselves in the shoes of the tens of millions of Americans struggling to keep their families fed and housed.  Now, think what this crackdown will mean to them.  Instead of earning a living, they will be forced to remain on the public dole or worse, so that tax collectors can go after those that are trying their hardest to survive.

Elect Officials Fail New Mexico

Friday, February 19th, 2010

When the Legislature meets during the 30 day session, the constitutional mandate is clear:

B. Every regular session of the legislature convening during an even-numbered year shall consider only the following:

  (1) budgets, appropriations and revenue bills;

  (2) bills drawn pursuant to special messages of the governor; and

  (3) bills of the last previous regular session vetoed by the governor.

Denish-Come-Lately

Monday, February 15th, 2010

Denish-Come-Lately

Noun

Singular
Denish-comelately
Plural
Denish-come-latelies

Denish-comelately (plural Denish-come-latelies)

  1. (idiomatic) A newcomer; a novice; an upstart

 Example in Common Usage:

Considering her complicit silence for seven plus years as Lt. Governor and many more years before that as the Chairman of the Democratic Party, many might consider Diane Denish’s election year decision to become an open government advocate something of a Denish-come-lately phenomenon.

It’s been more than half a decade, all of which Lt. Governor Diane Denish has occupied the number two seat in one of the most corrupt and backroom dealing administrations this state has ever seen, since I’ve lamented the fact that how the administration spends taxpayer dollars is done in secrecy.

Now that election season is in full swing, Governor Richardson’s number two is trying to reposition herself as a “Champion of Sunshine.”  Well, she may be able to fool some folks, but come November the voters are not likely to forget that when it came to letting the sun shine in this scandal plagued administration, Lt. Governor Diane Denish her time hiding in the clouds.

Even as recently as a few months ago, when this administration refused to identify those the 59 administration faithful who were supposedly being cut (probably to hide the fact that some were being moved to other positions), the sound of Lt. Governor Denish’s silence was deafening.

Sorry, but being a Denish-Come-Lately to the sunshine brigade is just not going to cut it in November.

It Only Took Three Days

Friday, January 22nd, 2010

So, who wants to raise our taxes? If you’re a legislator in Santa Fe eager to raise taxes on small businesses in New Mexico, raise your hand.  No, better yet, just scribble your name on top of the proposed new tax bill.

Oh, sure I understand how some readers might think that this is a tax on the rich, but that’s because they don’t understand how most small businesses are set up.  They are usually limited liability companies or sub chapter S corporations.  That means that the profit from their company ends up on their personal income tax filings.

Now with banks being tight on lending (despite bailouts from taxpayers), most profitable small businesses are keeping those retained earnings in their company to keep their doors open and hold onto their key employees. But, that last lifeline is about to be raided by legislators and the administration in Santa Fe because it’s easier to force more layoffs in the private sector than to cut unnecessary spending in public sector.

After all, who is going to notice if one more small business is forced to close their doors? Well, the answer is I will, and I sure hope you feel the same.  If you find your legislator’s signature on this additional tax on small business, I hope you’ll give them a call and ask them to get their priorities straight. If you don’t know what your legislator’s signature looks like, no problem, you can download this PDF of the entire bill along with the document they signed to kick off the session.

What’s Important to Voters

Thursday, January 21st, 2010

On the national level, elected Democrats just received a wake-up call that their agenda is not our agenda. And, by our, I mean the majority of voting Americans whose number one concern is housing and feeding their families:

Shorn by Massachusetts voters of their pivotal 60th Senate vote and much of their political momentum, the White House and congressional leaders are considering a more modest version of Obama’s top legislative priority. It could focus on curbing insurance company practices like denying coverage to sick people and on helping low-earning people and small businesses afford coverage, officials said.
Also fueling the Democratic search for a fresh health care strategy is a conviction by many in the party that it’s time for an election-year focus on jobs and the economy, which polls show are easily the public’s top concerns.
Of course, they’re kind of missing the mark. Jobs and the economy are NOT an election-year focus.  They are an EVERY year focus.  Think about it. If we have a strong economy and jobs, the vast majority of Americans can take care of meeting their own healthcare needs.  I know.  What a concept!
I’ll also let you in on a little secret. The more government taxes and regulates, the less likely we’re going to see jobs and a strong economy. The bigger government gets, the smaller the private sector gets. 
Don’t believe me? Well, look for a state with a really big government footprint. A state like, hmm, well, a state like New Mexico. We’ve got lots of big government and very little industry.  The result? We’ve got a very poor populations per capita.  Are we seeing how this works?
Our state legislators would be wise to consider this as they wrangle with how to save all of those “very important” government programs. If we want to see jobs and growth, we need to shrink the size of government.  Of course, the easiest way to do that is stop feeding the beast.  In other words, make do with the revenue we have as opposed to taking away more jobs by increasing taxes even more.

Never Quite Short Enough

Wednesday, January 20th, 2010

Despite the fact that this year’s State of the State address by Governor Richardson was billed to be his shortest to date. It still seemed a bit long to me. Then again, I always have a hard time continuing with the speech after the Governor begins spewing nonsense:

New Mexico has always been fiscally responsible.

Unlike Washington, New Mexico cannot run a deficit, nor overspend.

We must have a balanced budget.

And we have balanced the budget every single year.

If New Mexico can’t overspend, you have to wonder how we got ourselves into this pickle.  Oh wait, no wondering needed.  I know exactly how we ended up here.  We took one time funds and created recurring expense obligations – one after another after another.  There are the obvious examples like the Rail Runner and the Spaceport, and there are many more not so obvious examples, like continually throw money at education without expecting a single result.

There’s been a lot of talk about increasing taxes this session, but the shot heard round the world should serve as a warning to those that prefer tax raising over spending cuts.

[youtube=http://www.youtube.com/watch?v=7nEoW-P81-0]

Imagine That

Monday, January 18th, 2010

I’ve noted before that there are places that government spending can be cut to provide taxpayers better return on their investment.  Now, the Committee on Government Efficiency has come to the same conclusion:

The Committee on Government Efficiency delivered its report to Gov. Bill Richardson and legislators with recommendations to merge some departments, eliminate certain boards and commissions, saving $129 million overall.

Now, let’s see if the Governor and legislators are more committed to finally reigning in spending or continuing to throw our hard earned money away.