OK! So I first thought there would only be 3 parts to this series. However, things keep getting worse on a daily basis. Who knows? There might even be a Part 5 and 6! Let's see how things develop.
In any case, California's deterioration continues. According to a very recent article in the L.A. Times, Bill Watkins, who heads the Center for Economic Research and Forecasting at Califonia Lutheran University, released a recent report. He urges that the State begin emergency discussions with both the Obama administration and the Federal Reserve in the increasingly likely event of a state default. Had he read "Marko's Take" he would have realized that these discussions are already taking place!
Watkins believes that the odds now FAVOR a default. California Treasurer Bill Lockyear sharply took exception with Mr. Watkins' assessment, accusing him of "irresponsible fear-mongering". It makes one wonder whether Mr. Lockyear has spoken to Governor Schwarzenegger who has been saying the same thing!
The crux of the problem is centered in the budget. Republicans are adamant in their refusal to increase taxes, while Democrats are equally determined in THEIR refusal of further budget cuts.
The only reason that California is NOT in default is that some banks still honor the IOUs already issued on 4 separate occasions. If they should refuse to honor those IOUs AND the Obama Administration refuses to provide emergency bailout funds, then the State will have no choice.
As I've mentioned previously in the "California Crisis Deepens" series, the State is SO important, not only to the United States, but the world. I believe the Obama admistration will have NO choice but to provide emergency bailout funds. Therefore, I disagree with Mr. Watkins' conclusions entirely.
California has come up with a rather interesting partial solution to the budget stalemate which will appear on the 2010 ballot: the legalization of growing marijuana! In so doing, the pot industry, the largest agricultural sector in the Golden State, will be subject to taxation at a variety of levels and should be able to raise revenues substantially. Recent polls show this initiative is very likely to pass.
I hope the new initiative has left this troubling piece on a "high" note!
So, why don't you give me your "Take" in the comments section below?
Marko's Take
Showing posts with label politcs. Show all posts
Showing posts with label politcs. Show all posts
Sunday, December 20, 2009
Tuesday, November 24, 2009
Taxes on Taxes
It's property tax time in California. YAY!! I looked at my bill very carefully, since, like a lot of folks, I'm watching my pennies these days. What I noticed was downright shocking. The actual amount owed was 25% greater than the levy that would prevail under Proposition 13, which set a limit of 1% of assessed value. The bill contained 12 additional "assessments", including one for "mosquito abatement'!
The bulk of the remaining assessments went to the public school systems. Interestingly, in 1984, the California Lottery was ALSO established for the express purpose of funding schools.
To be fair, all of these extra charges were voted for by the appropriate electorate in some form of referendum or special election. So I'm not alleging "foul play". I'm as guilty as anyone else. What I AM saying is that this has gotten so out-of-control that voters MUST pay careful attention when they vote on any future referendums. I know it's difficult because these referendums seem to be purposely written vaguely and most people simply lack the time to gain a true understanding. And then, of course, there are the incessant commercials which are also, for the most part, misleading.
But tax quirks don't stop there. One is a concept known as "double taxation", which is defined as two layers of tax. One common example is the policy on corporate dividends to shareholders. Any corporation must pay these from "after-tax" earnings, while the recipient is ALSO being subject to tax on the income received. By comparison, debt interest is paid out of "before-tax" earnings. Countless examples of "double", "triple", or even "mulitiple" taxation exist.
THE major form of "multiple taxation" occurs with the personal income tax system. Some people are taxed federally, by their state and even by their city. Typically, the state and city taxes are deductible against the federal. However, the social security tax is not. And, of course there are a host of smaller assessments, such as State Disability Insurance, that get tacked on as well. Are you starting to think we desperately need tax simplification?
Next we have "surtaxes", which are an extra and ostensibly temporary tax on personal income. President Johnson employed a "surtax" to help fund the Vietnam War and it was later repealed, well before the war ended. More recently, President Clinton passed a "surtax" on higher incomes only to have them rolled back by President Bush.
Currently, Charles Rangel, Chairman of the House Ways and Means Committee, is seeking a 5.4% surtax on certain taxpayers to fund the new proposed Obamacare. Despite the implication that they are "temporary", history has shown that they are very hard to roll back once enacted. While a fool and his money will be soon parted, the exception to that rule is politicians!
Another form of "double taxation" is the "Windfall Profits Tax". It's defined as a higher tax imposed when some entity is deemed to be in receipt of a "windfall", such as the oil companies subsequent to sudden and substantial rises in the price of oil. President Carter enacted one only to have it repealed by President Reagan. Another Federal "Windfall Profits Tax" has been proposed in light of the oil price rise last year and again now as oil prices have rebounded. So far, they have been defeated, but I believe that this potential source of revenue will be too tempting to not ultimately pass.
Yet, in 2008, the state of Alaska DID impose its own "Windfall Profits Tax" on state oil. That tax was approved by none other than Sarah Palin!
I'd like to wish everyone a Happy Thanksgiving, especially to those that are really struggling in this economy. We have major challenges ahead and I'll keep plugging away at raising public awareness as long as it takes. But, no matter what, virtually everyone has something to be grateful for, and I hope that this brief holiday break gives you a chance to reflect on that.
I'll take some time off myself and return to the blog in a few days. As always, I welcome opinions and comments, pro or con . If by some chance you're bored and have liked this essay, there are now a dozen to read in our easy to access archives.
Marko's Take
The bulk of the remaining assessments went to the public school systems. Interestingly, in 1984, the California Lottery was ALSO established for the express purpose of funding schools.
To be fair, all of these extra charges were voted for by the appropriate electorate in some form of referendum or special election. So I'm not alleging "foul play". I'm as guilty as anyone else. What I AM saying is that this has gotten so out-of-control that voters MUST pay careful attention when they vote on any future referendums. I know it's difficult because these referendums seem to be purposely written vaguely and most people simply lack the time to gain a true understanding. And then, of course, there are the incessant commercials which are also, for the most part, misleading.
But tax quirks don't stop there. One is a concept known as "double taxation", which is defined as two layers of tax. One common example is the policy on corporate dividends to shareholders. Any corporation must pay these from "after-tax" earnings, while the recipient is ALSO being subject to tax on the income received. By comparison, debt interest is paid out of "before-tax" earnings. Countless examples of "double", "triple", or even "mulitiple" taxation exist.
THE major form of "multiple taxation" occurs with the personal income tax system. Some people are taxed federally, by their state and even by their city. Typically, the state and city taxes are deductible against the federal. However, the social security tax is not. And, of course there are a host of smaller assessments, such as State Disability Insurance, that get tacked on as well. Are you starting to think we desperately need tax simplification?
Next we have "surtaxes", which are an extra and ostensibly temporary tax on personal income. President Johnson employed a "surtax" to help fund the Vietnam War and it was later repealed, well before the war ended. More recently, President Clinton passed a "surtax" on higher incomes only to have them rolled back by President Bush.
Currently, Charles Rangel, Chairman of the House Ways and Means Committee, is seeking a 5.4% surtax on certain taxpayers to fund the new proposed Obamacare. Despite the implication that they are "temporary", history has shown that they are very hard to roll back once enacted. While a fool and his money will be soon parted, the exception to that rule is politicians!
Another form of "double taxation" is the "Windfall Profits Tax". It's defined as a higher tax imposed when some entity is deemed to be in receipt of a "windfall", such as the oil companies subsequent to sudden and substantial rises in the price of oil. President Carter enacted one only to have it repealed by President Reagan. Another Federal "Windfall Profits Tax" has been proposed in light of the oil price rise last year and again now as oil prices have rebounded. So far, they have been defeated, but I believe that this potential source of revenue will be too tempting to not ultimately pass.
Yet, in 2008, the state of Alaska DID impose its own "Windfall Profits Tax" on state oil. That tax was approved by none other than Sarah Palin!
I'd like to wish everyone a Happy Thanksgiving, especially to those that are really struggling in this economy. We have major challenges ahead and I'll keep plugging away at raising public awareness as long as it takes. But, no matter what, virtually everyone has something to be grateful for, and I hope that this brief holiday break gives you a chance to reflect on that.
I'll take some time off myself and return to the blog in a few days. As always, I welcome opinions and comments, pro or con . If by some chance you're bored and have liked this essay, there are now a dozen to read in our easy to access archives.
Marko's Take
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