January 29, 2010

Spreading Your Wealth Around

Justin Katz

Marc already offered the only commentary necessary on the idea of taxing workers during a recession to pay the unemployed, but there's a tangential point to be teased from this:

Under one scenario, the maximum amount of the new tax on a worker could be about $58 a year.

Doesn't look like much, does it? We all chip in and help those who are down on their luck, just now. How could one object?

Well, $58 per year is a small amount. But so is an increase in the municipal water bill. So is another $100 or so for a local pay-as-you-throw garbage program. So is the incremental increase in taxes to pay teachers' step increases. So is the annual increase in RIte Care. So is the per capita cost of the stimulus program. This list could go on and on.

Before you know it, that little bit of money to help out struggling families is creating disincentive to spend cash and thereby finance businesses. It's raising the cost of hiring new employees. In short, it's generating more struggling families.

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Don't tax the workers. Don't tax big business. Don't tax the small businessman. Abolish the estate tax. Do away with corperate taxes.

You guys are killing me.

Posted by: michael at January 29, 2010 9:14 PM

And there is the hidden tax of inflation which, I believe, is much higher than the official statistics show. I suspect .gov manipulation of the numbers. Milk is up $.50/gallon in the last two months, bagels up 16% by a dime each, even a bag of white beans is up to $1.50 from $1.29.

As to Michael's inane comment, history has shown consistently that lowering tax rates increases government revenues. So if you want more money to flow to your beloved government, lower the taxes. If you are using the tax system to express envy against your fellow citizens or Marxist class resentment, your stated position is logical for that purpose, although it is self-destructive in reality.

Posted by: BobN at January 29, 2010 10:05 PM


Don't worry, I'm surprised you are not here!

The RNC is having their national winter conference at the Hilton Hawaiian Village in Waikiki Beach this week with temperatures daily 82 daytime and 65 nighttime. Room service breakfast for two can range up to $125 delivered (I will not try to calculate lunch or dinner but that is what 1 RI director reported being charged during a previous conference stay) and minimum rooms with no view start at $180 a night outside of the about $800 RT coach airfare to get here and $100 a day rental car fee which cost around $25 to self park a night at the hotel.

But take heart, Hawaii has one of the lowest hotel, food and rental taxes in the nation about $5 a day lower than RI according to industry watch dogs!

Thank you GOP for added stimulus funding to Hawaii even though our sales tax is 4.5% compared to RI at 7%!!

What you say RI is about 9 degrees! You should have attended the National RNC Winter Conference and Blogged from here for the week because after all the GOP gives Obama a very hard time about visiting his birth city, mother's, grandmother's and grandfather's grave site and family during Christmas every year to pay respects.

Keep warm because the GOP well connected are in Waikiki Beach, Hawaii partying right now!

Posted by: Ken at January 30, 2010 2:34 AM

BobN... I'm not sure that lowering taxes will increase revenue. Maybe that would be true if the taxes themselves made up a bigger portion of everyone's expenses. I don't know about you, but I'm a 'regular working guy' with a decent job and TurboTax is telling me I pay under 20% (including social security, the property tax, medicare, etc.). That's actually not -so bad- for a functioning society where nobody starves to death, nobody dies from a broken arm, I'm protected from foreign invasion, and I can call the police when someone tries to rob me.

I'll be totally honest, if I got to just not pay my taxes at all, maybe by some magic spell, my life wouldn't be all that different. It would be -nice-... I guess I'd have an extra grand or so a month, it wouldn't make me rich or anything.

The problem I have with our taxes is that we're not competing with our neighbors. Not competing in a 'mobile' world like ours means that we're just going to lose people who know they can do better elsewhere. Business will leave the state. People will be jobless (and that would be devastating to me).

If taxes were -way- up there, like 40%, 60%, then lowering them would definitely encourage a lot of growth, but at today's levels, a 50% reduction to 20% of my budget isn't really that impressive.

Don't read into this that I'm not into cutting taxes. I am. We all pay enough taxes. High taxes are the main reason we have much higher unemployment than our neighbors (alongside excessive regulation, general unhelpfulness from government bureaucrats, and a broken public education system). Government should endeavor to be as small and unobtrusive as possible, that's the idea behind this whole country, after all.

But please understand, it's going to be a -long time- before Rhode Island is a low-tax environment. Even if we were to totally clean up our act today, we're 1.5 entire budgets behind on our existing fiscal obligations (read: existing pension obligations). If the state was a person, he would be wondering how to retire on no savings and a nearly maxed-out credit card, you can't just snap your fingers and make that problem go away.

Also, Getting a generation of kids through education that helps them achieve middle-class status takes over 15 years.

We have a lot of work ahead of us.

Posted by: mangeek at January 30, 2010 3:49 AM


Context matters. In the context of Rhode Island, my statement is very far from "don't tax anybody ever." Taxation is among our problems, and now those who benefit from those high taxes (or think they do) are behaving as if it's unreasonable ever to say "enough."

Posted by: Justin Katz at January 30, 2010 6:20 AM

The idea that every American would pay two months worth of his income to the government would have been unimaginable to the Founders.

The fact that lower tax rates increase government revenues by stimulating greater economic activity has been empirically proven many times over. Just because you wouldn't be motivated doesn't mean that some entrepreneur hoping to grow rich from his new business idea wouldn't be.

If my business ever takes off as I hope it to, I'll be out of RI pronto unless there are some drastic changes made.

Posted by: BobN at January 30, 2010 8:42 AM

I am a firm believer of lowering taxes from their historic highs. It just seems that the current taxpayer revolt movement, (Teaparty, 9-12 Project, RISC and others) run the risk of alienating their growing numbers by losing sight of reality. I strongly and vocally supported the Teaparty until the other night when the speakers, Laffey and Felkner, both vociferous opponents of fire departments were the main attraction. I simply will not stand behind people or their representive movements whose agenda directly affects public safety.

Mangeek, pension reform is underway, and will continue, albiet slowly, until it is more in line with current economic conditions. Understand the reticence from those who benefit from the current plans though, change is difficult and costly, though ineviatable. People will try to hang on to what they have earned, private sector included, until the end. Reality is a bitter pill, one swallowed only when forced upon us. Trust in elected officials, incidentally those in control of our economic future, is nonexistant. Making public employees and unions and their pensions the focus of the state's budget crisis is misleading. It is a piece of a far larger puzzle that will never be fully understood.

Posted by: michael at January 30, 2010 9:26 AM

Michael, how do you reach the conclusion that the budget and tax cuts advocated (separately) by OSPRI and Laffey would directly affect public safety?

The knee-jerk response by local governments that they have to cut back police and fire services, or school sports and music, is a worn-out scare tactic. They constantly raise that alarm because it is easier for them than taking the difficult actions to cut the cost base by getting out of activities that were never legitimate functions of government, and by rooting out corruption.

How many $millions of taxpayer dollars did Mayor Moreau steer to his friend for "emergency" boarding up of foreclosed houses? Why would the city get involved in paying for such work in the first place? And that is just one small example.

Posted by: BobN at January 30, 2010 10:34 AM

Steve Laffey promotes privatizing ambulance services. Bill Felkner quoted the infamous and oft quoted RIPEC study while a guest on Mewsmakers undermining minimum staffing requirements. Both in my opinion would definately adversely affect public safety.

My belief is yours when it comes to government. The umbrella is too big. Education, public safety, national security, and public works are priority, the rest gravy, with some exceptions that I haven't thought about.

Posted by: michael at January 30, 2010 10:46 AM

I don't see how privatizing ambulance services would impact public safety in any way. In a competitive environment they would be forced to offer the best service at the lowest price.

I know that in my town the volunteer rescue service is a profit center for the town, but that is probably not true for career EMT operations.

"Minimum staffing requirements" is a union term of art, not a fire department standard.

As to education, I actually favor privatizing all schools and forcing them to compete for fixed scholarship money given to each student.

Posted by: BobN at January 30, 2010 12:02 PM

--"pension reform is underway, and will continue, albiet slowly, until it is more in line with current economic conditions. Understand the reticence from those who benefit from the current plans"

Aye, there's the rub.

What has been true with private sector unions for decades is now starting to emerge with public sector unions.

That is that in essence, though it takes years if not decades to unfold, unions are giant Ponzi Schemes in which union bosses always benefit, and the early "rank and file" benefit, and the later "rank and file" get the shaft.

The early UAW and Steelworkers made out like bandits. But unions never know when to stop demanding more -- if for no other reason than the union boss-politicians have to keep bringing home the contract bacon and some in the rank and file swallow the Marxist Kool-Aid they've been fed about sticking it to greedy management -- and eventually the host starts to die.

Often it does die, taking the whole employer and all of the rank and file with it, though the "leaders" of the national union remain at union HQ in Washington, D.C., continuing to feed off of the remaining hosts.

And even when the host doesn't die (or in the years beforehand) it starts to shrink as it becomes increasingly uncompetitive. So then the less senior rank and file (e.g., new hires) start paying the price. Reduced benefits, different pay scales, and the first to be laid-off as the employer shrinks.

Yet (at least before they are laid-off or terminated) they still get to pay the exact same dues to support the union bosses, and the more senior rank and file, in the lifestyle to which they've become accustomed.

As Rhode Island continues to lose (and shrink) because it is uncompetitive with its competition (better-run states with lower taxes, right-to-work etc.), this downward side of the slope dynamic is starting to impact the public sector unions that up until now have managed to keep up the first phase of "more more more" and its going to be ugly for the less-senior "rank and file" that'll pay the price for the largesse enjoyed by their more senior peers and the union leadership.

Posted by: Ragin' Rhode Islander at January 30, 2010 12:19 PM

Bob, privatizing ambulances is doable, privatizing emergency medical services is not. We have police and fire as first responders, National Guard when things get very ugly. Police and fire departments are para-military orginizations, with rank structure, chain of command and oaths of office. Emergency medical providers fall under fire department rules and regulations. An incident command system is in place for all mass casualty (three or more victims) cases. EMS is a direct link to that system. There is an Incident Commander who supervises different parts of the organization. EMS Sector is a vital part of the structure.

Fire department based EMS hire people who have gone through a vigorous examination process, drug tests, background tests, psycological tests and physical agility tests. We are sworn members in a proffession where public safety is first priority. Union membership is secondary. (have fun with that one Mike and George)

Mass casualty and major incidents aside, the public is better served by people who take their employment seriously, not just a job with an ambulance company. There are many ambulance company employees who do just as good a job as fire department personnel, and some much better, but there is more dedication as part of the paramilitary organization.

There is no state mandate for minimum manning for fire departments. My union (Local 799, Providence Firefighters) fights every mayor's staff negotiation time to keep manning at what we consider safe levels. Right now that is 92 firefighters per shift. Governor Carcieri seeks to take minimum manning language out of contract negotiations and arbitration, leaving manning up to mayors or managers.

Steve Laffey is a good polititian and a better money manager. What looks good to him on paper equals disaster in the street.

Ragingrhodeislander, your commentary is frighteningly accurate. One of our main objectives as a union is, as we say, never sacrifice your young, which puts us in a difficult position; hold the line so everybody is equal, renegotiate a contract where everybody loses, either benefits, salary or safety, or. sacrifice the young.

We have chosen to give concessions to the city and try to keep our manpower. The city wants both. Our leaders, at least on a local level are trying to do the right thing.

Thanks for reading if you got this far, I need a nap, this is one of the longest things I've written in months.

Posted by: michael at January 30, 2010 3:07 PM

--"Ragingrhodeislander, your commentary is frighteningly accurate."

I make no bones about not being a union-friendly guy.

That said, my comments were based upon taking a long-term perspective of the union dynamic, not from an anti-union bias per se. Like companies, unions tend to have a lifecycle (at least within a particular company).

I say all that simply to point out that while we may disagree on many things, I do recognize and appreciate your ability to acknowledge reality and, when appropriate, acknowledge when the other side makes a valid point (just as you do with regularity).

Quite refreshing, and it gives you credibility. Unlike, say, Pat Crowley who merely regurgitates his spin -- typically demonstrably false spin at that -- and so who (I suspect even over at RI Future where they're predisposed to be on his side) continues to erode his credibility.

Posted by: Ragin' Rhode Islander at January 30, 2010 3:22 PM

Since we're on the subject:

"Turning union cash to ash"


Posted by: Ragin' Rhode Islander at January 30, 2010 3:45 PM


Why is that people who want affordable public safety are always described by your ilk as being "opponents" of fire departments?

We'd all love more police, fire and rescue personel. Hell, we'd like to have one of each for every man, woman and child in the state. But here is the news flash: WE CAN NOT AFFORD IT!

And the main reason we can not afford it is due to the union enabled pay & benefits that have been extorted from the taxpayers from spoiled, non-self-reliant union hacks who think they have "earned" the right to collect guaranteed pensions that grow by 3% per year for more years than they worked, to go along with their free or near-free healthcare for life.

They didn't earn it ...they extorted it with the assistance of a compliant & obediant General Assembly that was being lobbied by the likes of your union president who, rather than working the job he was paid to do by the taxpayers, was instead hanging around the statehouse heroically "attending to union business" while the rest of us were busy at work.

Lastly, since you and your fellow union members sat silent while your union president took 3+ years out of work (while being paid), thus creating a man shortage in the department, you and your fellow hacks have no credibilty when it comes to talking about public safety as it relates to minimum manning.

If minimum manning was so damn important, you should have been jumping up and down when your union president was incurring his inexcusable absence.

Posted by: Over-taxed at January 30, 2010 4:03 PM

George, do you actually read anything I write or just see my name and rehash you're tired old opinions?

Posted by: michael at January 30, 2010 5:17 PM

Michael, thanks for the thoughtful post. I'm a volunteer firefighter - I hope you won't hate for not being in the union.

I have to believe that the vast majority of career firefighters see it as a calling and a profession, and knowing first-hand how tough and dangerous working in a structure fire can be, I admire them enormously for it.

But you know as well as I that there are some guys who "work the system" to get as much money as possible for as little work as possible. The true stories of guys who take phony disability pensions, call in sick to trade "recall" overtime, and pull other scams based on contract rules have really hurt the reputation of firefighters in this state. Unfortunately, people who don't know enough of the facts read the headlines and tar everyone with the same broad brush. It may not seem fair, but unless the public can see the facts, what do you expect?

I'd like to see less tolerance in the force for those who view the union as their employer and the taxpayers as their enemy.

And what I'd really like to see is cutting off the able-bodied idlers, baby-mamas and illegal aliens from welfare, and de-fund the parasitical "social service" organizations that are paid our tax dollars to enable them. That action will save many times more than hard-lining .gov employees ever could.

Posted by: BobN at January 30, 2010 7:46 PM

Volunteer firefighters make up something like 90% of the firefighting force in this country. Their roots run deep. Anybody who doesn't respect a volunteer firefighter doesn't respect any firefighters.

I can only speak from experience when it comes to the scammers. They exist, and in my union those practices are simply not tolerated. George Overtaxed will tell you about our union presidents alleged scheme to bilk the Providence taxpayers for overtime but it is simply not true. Numerous posts and commentaries have been posted here offering the reason for his absence from Special Hazards during his scheduled tours.

Weeding out the deadbeats from society will not be possible until the programs that exist to enable them are taken away. That is why I supported the Tea Party movement, but it looks like they have travelled a different path. All I can do is try to elect people who appear to have what's best for their constituants at heart and hope for the best.

Posted by: michael at January 31, 2010 9:40 AM

Michael, I urge you to give the Tea Party another look. Check out their discussion site at riteaparty.ning.com .

The only thing carved in stone so far is the Tea Party's mission statement. As a grassroots citizens' movement, the Tea Party is searching for the best solutions to our state's problems. There are no doctrinaire positions opposing firefighters, or teachers or cops for that matter.

Since positions on specific issues are still being formulated and debated, you can help guide the Tea Party by joining up and educating your fellow members. Lots of us need it. Or you can not be involved, abdicate your opportunity to shape the debate, and be like the average do-nothing, whining voter. It's your choice.

Posted by: BobN at January 31, 2010 10:53 AM

Ha! I like your style. Maybe I'll give it another go. I took a lot of heat for supporting the tea party


when I first heard of the movement, but it was, and is my opinion that we (public/private, union/non-union) are all in this together, our differences can, if not be completely erased at least respectfully debated and maybe the us vs. them divide be eased and real reform begin.

The debate does get tiresome but now and then a good kick in the seat is necessary to get back at it.

Posted by: michael at January 31, 2010 11:23 AM

Michael, I just read your link. It looked like Cody Reed and the Asian drug spammers were your only antagonists. Reed seems like a typical Marxist union stooge. Probably drinks at Local 121 with Pat Crowley.

I wouldn't worry about him.

And as I said above, public safety employees are not the problem. Sure, there are abusive terms baked into some contracts but they aren't the problem and they aren't the solution. The big problems are found where the government is spending huge dollars doing things that are not legitimate functions of government.

Posted by: BobN at February 1, 2010 9:12 AM
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