Proposed 2012 Westchester County Budget
November 24, 2011
We must applaud our current Westchester County Executive Astorino for staying true to his campaign promise to halt tax increases at the county level in Westchester.
However, we need to remind CE Astorino that reigning in tax collections can be done in several ways.
The proposed 2012 Westchester County budget as released by CE Astorino hacks away at the branches of excess.
Unfortunately, CE Astorino has not driven down to the roots of inefficiency and waste.
The public sector at the County level can deliver major savings without affecting frontline services.
Real and sustainable savings will not come from slashing safety net services, such as:
• legal services for low-income residents;
• eviction prevention services;
• financial education and budget intervention for low-income families; or
• community health centers.
A quick look at the staffing levels and budget allocations to the Office of County Executive and the Board of Legislators leaves me wondering:
What if these 2 divisions were eliminated completely? Or, had their administrative support functions combined?
Then, a further look at the various administrative functions:
• Human Resources;
• Budget;
• Finance;
• Information Technology;
• Acquisition and Contract;
• Law;
• Planning;
• Tax Commission;
• Board of Elections.
This all makes me stop and think:– If this was my company: Would I try to combine all of these functions under one Chief Operations Officer? And look for synergies and cost savings?
Bill Maher & The New New Rules
November 20, 2011
Bill Maher was interviewed for “All Things Considered” which was broadcast on Sunday, November 20, 2011. Most of the interview centered on his new book, “The New New Rules…..”, and some of his thoughts on current events.
In just 7 minutes, he somehow was able to surface some very disturbing symptoms that seem to be invisible to our elected officials.
Here is an edited excerpt:
“I’m Irish. The Irish people get mad at anything… The country is real screwed up… I think many of us think things are so off track and there are so many greedy selfish people who have hijacked what was good about this country…. Well, you know what’s exceptional about America unfortunately is we are the only advanced nation that doesn’t have Health Care; we are number one in Income Inequality; we are the nation that throws the highest percentage of our own people into prison; we are number one in debt; we are number one in military expenditures; we are number one in meth labs and fat toddlers.
The things we are number one in these days are mostly not good things….”
Here is a link to the entire interview, well worth spending 7 minutes listening to:
http://www.npr.org/player/v2/mediaPlayer.html?action=1&t=1&islist=false&id=142355162&m=142572018
Can we get our friends and neighbors focused on the big picture, and demand that their elected officials stop all of this inane silliness and get focused on real issues that have real potential to destroy our country — permanently?
Americans for Tax Reform
November 5, 2011
I am an American, and I am fully in favor of Tax Reform.
In my view, Tax Reform means removing all of the crazy loopholes that allow certain special interests to avoid paying taxes, or to shelter income under some special rule that allows their income to be taxed at some artificially low rate.
Tax Reform also means capturing federal and state income taxes from the “Shadow Economy.”
Of course, a portion of our shadow economy involves illegal activities such as burglary, robbery and drug dealing, but the lion’s share of our shadow economy is comprised of regular people who don’t seem to want to be obvious criminals.
As our official economy has continued to deteriorate and unemployment hovers in the 9% range, some creative people have found opportunities in the shadow economy.
It is no surprise that in hard economic times, creative people turn to resourceful solutions in order to get by, and Americans are noted for their ingenuity. With high unemployment, informal entrepreneurs — particularly those who don’t pay taxes – have come out of the woodwork.
Unshackled by excessive regulations, license fees, and (yes) various taxes, people work in the shadow, trying to keep their family from becoming a statistic.
Could be a day laborer waiting on a street corner for a construction gig; a single mother running a day care center out of her apartment; an unlicensed street food vendor; a plumber who offers a discount to clients who pay cash; or an auto repair shop that prefers cash over checks or credit cards, and offers an incentive to customers who are willing to pay cash.
Various sources have estimated that the shadow economy makes up a larger portion of the economies of countries like Greece (25 percent) or Mozambique (more than 40 percent) than it does in the U.S. where consensus pegs the shadow economy somewhere between 8 to 10 percent of total GDP — in 2010, an amount equal to around $1.4 trillion That translates to lost federal tax revenue of $280 Billion, assuming a 20% federal tax rate.
Added to this opportunity to increase tax revenues at the individual level, the awful state of our corporate income tax code further exacerbates the problem.
A recently released look at the inefficiency of our corporate tax policy and rules by the nonpartisan research group Citizens for Tax Justice gives us a picture of some simple changes that could be enacted to help create tax equity and to generate significant new revenue at the Federal level. The full report is available at
Click to access CorporateTaxDodgersReport.pdf
Here is a brief excerpt:
“The corporate Alternative Minimum Tax (AMT) was established in 1986 to ensure that profitable corporations pay some substantial amount in income taxes no matter how many tax breaks they enjoy under the regular corporate tax. The corporate AMT (unlike the much-maligned personal AMT) was particularly designed to curb leasing tax shelters that had allowed corporations such as General Electric to avoid most or all of their regular tax liabilities.
But laws enacted in 1993 and 1997 at the behest of corporate lobbyists sharply weakened the corporate AMT, and now hardly any companies pay the tax. In fact, many are getting rebates for past AMT payments. In late 2001, U.S. House of Representatives leaders attempted to repeal the corporate AMT entirely and give companies instant refunds for any AMT they had paid since 1986. Public outcry stopped that outrageous plan, at least so far, but the AMT remains a shell of its former self that will require substantial reform if it is to once again achieve its goal of curbing corporate tax avoidance.”
So, while the organization known as “Citizens for Tax Reform” makes plenty of noise and strongly encourages candidates for public office to sign a Taxpayer Protection Pledge, the real deal here is that they are perpetuating the loopholes which corporations and wealthy individuals are able to use to avoid the tax bracket they ought to be in.
We don’t need to increase tax rates at all. What we need is real Tax Reform that will eliminate these tax avoidance scams once and forever.
Occupy Wall Street
October 27, 2011
Look back on the origin of Investment Banks and you will find people with real money coming together to pool their capital and gamble on commercial opportunities. When the bets were in the black, the partners would share in the gains, and when there were bad investments, the partners would share in the loss.
Fast forward to the time when we began to see a transformation of Investment Banks from private partnerships into publicly held companies.
Most would agree that the beginning of this metamorphosis was the public offering of Merrill Lynch in 1971. That was followed by four other entities which became infamous in the 2008 credit apocalypse: Morgan Stanley (1986), Bear Stearns (1985), Lehman Bros. (1994), and Goldman Sachs (1999) (aka, “the Gang of Five”).
These former partnerships converted to public ownership ostensibly so they could better compete with international banking giants which were encroaching on their core business of underwriting stock offerings and advising firms.
New capital from new shareholders allowed them to increase their involvement in riskier, capital-intensive businesses like proprietary trading.
“In order to have a capital base that would support the funding they needed, they had to be public,” said Roy Smith, a former Goldman Sachs partner and a professor of finance at New York University.
Going public allowed the former Investment Bank Partnerships to become more powerful, with much deeper equity cushions, giving them the gravitas to actively influence significant regulatory change to support their agendas. One clear example of this is the 2004 rule change at the Securities and Exchange Commission which allowed investment banks to increase the amount of debt they could take on their books—a move made at the request of the Gang of Five’s CEOs.
Before Lehman crashed, it had amassed more than $600 Billion in debt. No partnership or private corporation could have achieved that milestone!
The shift to public ownership also replaced the accountability of partnerships—when there are no profits, there are no partner bonuses—with the apparent lemming-like behavior of public boards which some would say are selected for their willingness to rubber stamp recommendations from the COO.
When Lehman failed, $45 Billion in shareholder value disappeared forever. Bear Stearns was rescued from a similar fate when JPMorgan bought it at what some have claimed was a fire-sale price with the help of the Federal Reserve. Morgan Stanley and Goldman managed to remain independent and solvent, apparently because huge subsidies were made available to them.
In the final analysis, shareholders suffered, but employees and executives didn’t. In true Investment Banking partnerships, compensation was contentious: major debates would take place at the end of each year as partners worked to resolve the equitable distribution of bonuses. These debates took place in private, and involved rich people taking money out of one another’s pockets.
Today, it seems to have evolved into a zero-sum game, where the protagonists in the drama have no real skin in the game, yet they are eligible to take Billions from shareholders.
It would seem that the public — as aggrieved owners, taxpayers, and savers — has every right to question the Investment Banks’ methods and practices. If they don’t want the public digging into their businesses, these publicly traded Investment Banks could shrink their balance sheets, replace government-subsidized debt with market-rate debt, stop relying on the Federal Reserve for funding, and get out of index funds that bet against our domestic economy.
Deficit Reduction Discussion
July 10, 2011
The Walrus has tried to stay on the sidelines on this stuff, thinking that reason and common sense would prevail.
Late on Saturday, July 9, House Speaker John Boehner said that he had given up on the potential for a bi-partisan effort to reach a rational $4 Trillion deficit-reduction plan tied to a proposal to increase the federal debt limit.
The major impediment seems to be an unwillingness among Boehner’s fellow Republicans who seem determined to oppose any package containing proposals that could be construed as a tax increase.
I happen to be a member of that small group of people who rely almost entirely on earned income, and fall into the Alternative Minimum Income (“AMT”) calculation for federal income tax purposes.
My sense is that any ‘tax increases’ contemplated in the proposed deficit reduction legislation would actually result in tax relief for me and my family.
I’m thinking that in a reformed income tax strategy, some of the Hedge Fund guys will no longer be able to claim that their income should be taxed as capital gains – at a 15% rate.
Hedge Fund Managers make their money by charging their clients two fees. The first fee is a “management fee”, frequently two percent of the assets under their management. The second fee is a “performance fee”, typically twenty percent of the income from those assets above a threshold level.
This 20 percent share of the investment returns from hedge funds is known as “carried interest” and under current tax law, hedge fund managers are allowed to claim carried interest as a long-term capital gain, currently subject to a maximum tax rate of 15 percent, rather than being taxed as ordinary income, currently subject to a maximum federal tax rate of 35 percent.
My reaction: That’s a racket.
These folks are often betting to crash the U.S. economy and take the rest of us down, and when they win, they pay taxes at 15%, where the rest of us are getting raped and pillaged at 35% or more.
If they only understood what is really going on, the TEA Party folks would have a valid reason to be pissed off…..
walrus51 