My future-stalking-object Jill Stewart has surfaced, with the center of her brain that produces smart vitriol fully intact!!
Check out her take on the budget crisis:
Elizabeth Hill, the state legislative analyst, who strives not to side with Democrats or Republicans, pointedly explained that corporations comprise only a small part of the roughly $70 billion tax revenue–roughly $6 billion.
That was a shock to some Assembly members. Hill noted, again rather pointedly, that the top 5 percent of Californians pay 42 percent of the income taxes and that just 10 percent pay 80 percent of income taxes. Furthermore, large numbers of millionaires and those making $100,000 or more have vanished. Some went broke, but others left for states that dont make them carry as big of a load, like tax-free (and booming) Nevada.
The packed audience at the special hearing appeared stunned. The message was clear: There arent enough corporations and rich around to pour huge new tax dollars into state coffers and save us.
So what was the first act announced by the obviously bewildered Jenny Oropeza, a Long Beach Democrat who clearly is in over her head as chairwoman of the Assembly Budget Committee? I thought that perhaps Oropeza should announce the creation of a job-stimulus subcommittee or a budget-cutbacks task force.
Instead, she formed the Working Group on Revenue–a crew of Democrats now meeting in secret to figure out ways to tax corporations, the rich, the middle class, Internet sales, retail sales, wine sales, small-service businesses and anything else the group can think of.
Im a Democrat who has had a snootful of stupidity from Democrats in recent years. Thinking that maybe I was being too judgmental, I called some leading Democratic thinkers to get their read on the message coming out of the Legislature.
Al Checchi, who ran against Davis five years ago and has been watching the debacle, told me, They have thrown the money away, completely distorted the expenditures on public-sector things like huge employee pensions they cannot afford, and they will run deficits of $10 billion or more next year as well. They should stop worrying about finding new taxes that are barely going to address this and deal with the true cause: their incredible overspending.
Not likely, considering a key member of the Working Group on Revenue is one of the most anti-middle-class, capitalist-loathing big spenders in higher public office in California, Jackie Goldberg of Los Angeles, who one legislative aide told me has already taken control of the working group even though she is not its chairperson. Goldberg is, officially, the Stupidest Well-Spoken Person I Know. She hatched policies that left a wake of misery in her Hollywood City Council district. My nickname for her–the Dominatrix of the Los Angeles City Council–should travel well now that she is pushing people around in Sacramento. This feminist used to corner the men in Los Angeles City Hall and cry like a baby to get her way.
Aaah. A drop of intelligent bitters in my afternoon soda water. Refreshing
now go read the whole thing!
I wondered why Layne was moving to Nevada!! Blogging must pay better than I thought…
I got the band reference in the title. That was one messed up group!
Jill sounds like a Democrat about to become a supply-side conservative. I made that trip ten years ago and she should know, if she already doesn’t, she’s about to loose a whole bunch of friends and make a whole bunch of new ones.
I wonder why Al Checchi didn’t run against Gray Davis in the Democratic primary? California is in for a rough time, no doubt about it. What with not saving the revenue from the internet bubble, and signing the long-term energy contracts, it adds up to the mother of all budget deficits.
Anyone read any good ideas on closing the gap?
The Truth about Taxes
Let’s put tax cuts in terms everyone can understand. Suppose that every day, ten men go out for dinner. 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 $7; The eighth $12; The ninth $18. The tenth man-the richest-would pay $59.
That’s what they decided to do. The ten men ate dinner in the restaurant
every day and seemed quite happy with the arrangement-until one day, the owner threw them a curve.
“Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily meal by $20. “So now dinner for the ten only cost $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 eat for free. But what about the other six-the paying customers?=A0 How could they divvy up the $20 windfall so that everyone would get his “fair share?”
The six men 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 end up being *paid* to eat their meal. So the restaurant owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay. And so the fifth man paid nothing, the sixth pitched in $2, the seventh paid $5, the eighth paid $9, the ninth paid $12, leaving the tenth man with a bill of $52 instead of his earlier $59. Each of the six was better off than before. And the first four continued to eat for free. But once outside the restaurant, the men began to compare their savings. “I only got a dollar out of the $20,” declared the sixth man. He pointed to the tenth. “But he got $7!”
“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar, too. It’s unfair that he got seven times more than me!”
“That’s true!” shouted the seventh man.”Why should he get $7 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. The system exploits the poor!”
The nine men surrounded the tenth and beat him up.
The next night he didn’t show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they discovered something important. They were $52 short!
And that, boys and girls, journalists and college instructors, is how
the tax system works. The people who pay the highest taxes get the most benefit
from a tax reduction.
Tax them too much, attack them for being wealthy, and they just may not
show up at the table anymore.
Unfortunately, some people cannot grasp this straight-forward logic
Thanks to TC for making it all clear.
He left out one part though.
Does he maybe assume everybody at the table gets equal portions?
Not addressing that is a convenient twist on reality, isn’t it?
The Real Truth about Taxes
by Anonymous
Let’s put taxes in terms everyone can understand, but with enough detail to show why they work that way.
Suppose that every day, ten men go out for dinner at their favorite restaurant “The Economy”. The bill for all ten meals comes to $100. If their meals reflected their wealth, the orders would look something like this:
-The first 2 men rarely show up. Their wives would kill them if they spent the rent money eating out every day. (20% of income earners made under $10,000 in 1999)
-The 3rd and 4th men buy soup and salad, so they can take the salad and some bread home to their families. (The next 20% of income earners made $10,000 to $19,000)
-The fifth man ate his soup AND his salad (His 10% of income earners made $20k to $25k)
-The sixth man had a hamburger and a soda (His group made $20k to $35k)
-The seventh man had ribs and an iced tea (His group made $35k to $50k)
-The eighth man had soup, steak and a beer. He passed on dessert, so his daughter could go to college. (His group made $50k to $75k)
-The ninth man had a salad, steak, some wine and a fruit tart for dessert (His group made $75k to $200k)
-The tenth man ordered a seared ahi appetizer, a caesar salad, a juicy cut of filet mignon with hearts of palm au gratin, the house’s best wine and some crème brulee for dessert. (He is representative of the top 2% of income earners, who made anywhere from $200k to $100 Million).
Now they decided to pay their bill like we pay our taxes so:
The first two men-the poorest-would pay nothing
The third and fourth men would pay $1 each
The fifth and sixth men would pay $2 each
The seventh $10
The eighth $12
The ninth $29
The tenth man (the richest) would pay $43 (Not bad for that meal!)
One day, the owner threw them a curve.
In order to keep his customers paying money into “The Economy”, he said, “I’m going to reduce the cost of your daily meal by $20.”
So now dinner for the ten only cost $80.
How could they divvy up the $20 windfall so that everyone would get his
“fair share?”
(The data above is based on real data. The endings below are hypothetical.)
(At least I warned you!) 🙂
———————————————————————————————————
The optimist’s ending:
The 10th man, who cared about his friends, realized they had few luxuries and decided he could at least split the difference equally.
The 20 dollars divided by the 6 paying customers came to $3.33 each.
The first six men would be paid to eat. That wouldn’t be right, so the money is pooled so that all six could attend and eat a better meal. Remember, the first 2 couldn’t even come to the meal before.
The seventh man paid $6.67.
The eighth man paid $8.67.
The ninth man paid $14.67.
The tenth man paid $25.67.
In the short run, “The Economy” lost some money, but since the men had more expendable income, they were able to buy better meals, more appetizers and desserts. And so “The Economy” actually did better. The tenth man, who happened to hold 50% of the stocks in “The Economy” (as well as a few other restaurants) profited doubly from the shared savings (as the wealthy often do).
——————————————————————————–
Trickle-down ending:
Because the 10th man ate the bulk of the food and paid the bulk of the bill up until now, the owner awarded the 10th man a much larger savings than the others. The 10th man, only able to consume so much on any given evening, didn’t reciprocate by ordering much more at future dinners. Instead, he opted for an after-dinner cigar. The other nine men, respecting that the 10th probably worked hard to get where he is (unless, of course, it was inherited), walked away muttering…”I would have used that money to buy a better dinner.” It occurred to the owner of “The Economy” that he had empowered a small percentage of his customers to fill his cash registers. His smaller consumers bought less because they had little spending power. Rather than empowering 8 consumers to spend, he had concentrated his efforts on one.
——————————————————————————–
The pessimist’s ending:
It didn’t matter how the men split the savings. The foolish owner had not taken the cost of running “The Economy” into account. He could barely afford to pay for the infrastructure of “The Economy”, such as rent, cash registers, kitchen supplies and food. In order to pay for “The Economy’s” infrastructure, he could no longer afford his head chef. It was the head chef that trained the other chefs. In other words, education went to pot. Sure, the burgers were still OK, but the filet mignon was never quite right, and the crème brulee was always runny. The tenth man began frequenting other restaurants like “IRA’s Diner” and “Bond’s Place”. “The Economy” lost over 30% of that $80 and went into a downward spiral until it was forced to closed.
———————————————————————————
All tax and income data (with the exception of the endings) is taken from the following source:
http://www.irs.gov/pub/irs-soi/99in11si.xls
Feel free to verify it.
All endings are hypothetical and reflect my views… Don’t look surprised. Economics is theory, which accounts for our 2-party system.
Take all internet information (including the story above) with a grain of salt until you have thoroughly researched it.
I truly dislike internet disinformation (dis-information-net). Please feel free to share this story with anybody that might have received the message that disregards who ate what at that restaurant.
The first analogy is BS. Taxes pay for government services. Most of these are consumed relatively evenly, while the social services are consumed mostly by the poor and less as you travel up the income scale. The fact that someone can afford to buy additional services after paying taxes means nothing.
In order for the analogy to work, we have to assume that supporting yourself (eating) with your own money should be attributed as a benefit provided by government. There are people who believe this, they are called communists. They believe everything you have or consume is owned by government since it provided the society in which you earned your income.
I am sure most people who read this recognized the nonsequiter of equating taxes with benefits received from separate payments, but it doesn’t go to let such stupidities pass unchallenged.
An Internet Chestnut on Taxes
Paul Oei passed this on to me, and I thought it a useful way to add to the thinking about taxes and tax cuts. It’s a variation on an Internet chestnut that’s been making the
Hey Armed Liberal! Thanks for all the gushing comments about my brains, my looks and my take on politics over the last couple of years. I feel like I owe you something … but not what you may be thinking. I’ll have to limit my offer to this: what’s your pet peeve about Sacramento/the legislature/California that I should put on my list of future columns? I’ll be happy to take a crack at it. — Jill