Tag Archives: Nevada taxation

Taxscam 101: A Look At Deductions Lost by Individuals and Families (Part 2)

In general, the Republican tax plan makes tax cuts for corporations and businesses permanent while making those for individuals and joint filers temporary.  Further, those closed loopholes are YOURS.  Those special interests are homeowners, students, and employees.  The short version is: The loopholes being closed are those which benefit working Americans and not those which benefit the 1% or corporate America.

Here are a few: (pdf)

Section 1204: Under the provision, the deduction for interest on education loans and the deduction for qualified tuition and related expenses would be repealed. The exclusion for interest on United States savings bonds used to pay qualified higher education expenses, the exclusion for qualified tuition reduction programs, and the exclusion for employer-provided education assistance programs would also be repealed.

One of the ways the tax code can be used to encourage people to do certain things is by giving people a deduction for it — like deductions for the interest paid on student loans.  It really makes no sense to pontificate on the jobs/education mismatch if one isn’t going to help people retrain for new positions.  Nor does it help people wanting to enter STEM jobs to tell them, go ahead but we aren’t going to offer any assistance like a tax deduction for the student loan interest you’re paying.  And you can’t even deduct the interest paid by your US Savings Bonds used to pay educational expenses!

Section 1303: Under the provision, individuals would not be allowed an itemized deduction for State and local income or sales taxes, but would continue to be entitled to a deduction for State and local income or sales taxes paid or accrued in carrying on a trade or business or producing income. Individuals would continue to be allowed to claim an itemized deduction for real property taxes paid up to $10,000.

This provision doesn’t hit Nevada (with no income taxes) all that hard, but it does hurt states that do have an income tax — like the other 43 of them.  Notice the phrase “or producing income?”  if your tax liabilities come from (1) carrying on a trade, or (2) running a business, or (3) producing income — you get to deduct them.   Now, what produces “income” without trade or business activities?  If you guessed “investments” you’d be correct.

Section 1304: Under the provision, the deduction for personal casualty losses would generally be repealed. The provision would be effective for tax years beginning after 2017. The deduction for personal casualty losses associated with special disaster relief legislation would not be affected.

We’ve highlighted this one previously, and no matter how you cut it, unless Congress votes to declare your area a national disaster (like Texas after Hurricane Harvey) your personal casualty losses aren’t deductible.  Thus, if everything you own is pretty much gone after the earthquake, wildland fire, blizzard, or whatever… unless you get the Special Nod from Congress, YOYO.

Section 1307: Under the provision, an individual would not be allowed an itemized deduction for tax preparation expenses. The provision would be effective for tax years beginning after 2017.

Remember the Republicans are touting this bill as a Job Creator — a notion as fictional as the “job creators” who sit around exchanging hybrid and artificial financial products — but consider for a moment the jobs this section eliminates.  About 43% of Americans file their taxes from home (using some tax software or the plastic brains calculator and some pencil sharpening) the rest use a tax preparation service — an industry sector with about 109,000 firms in 2012, and a 2% growth rate to 2015.  Further, “The vast majority of tax preparers are small businesses – 37% are run by a single person, while 53% employ less than ten people.”   And, yet we hear the Republicans claim to be all about “small businesses.”  The big accounting firms are going to do quite well under the GOP plan, those Mom & Pop bookkeeping services or small local accounting firms/franchises are the ones to worry about.

Section 1308: Current law: Under current law, a taxpayer may claim an itemized deduction for out-of-pocket medical expenses of the taxpayer, a spouse, or a dependent. This deduction is allowed only to the extent the expenses exceed ten percent of the taxpayer’s adjusted gross income. Provision: Under the provision, the itemized deduction for medical expenses would be repealed. The provision would be effective for tax years beginning after 2017.

Again, this one! Of all the egregious provisions in the Republican plan this has to be the very worst.

Section 1310: Under current law, a taxpayer may claim a deduction for moving expenses incurred in connection with starting a new job, regardless of whether or not the taxpayer itemizes his deductions. To qualify, the new workplace generally must be at least 50 miles farther from the former residence than the former place of work or, if the taxpayer had no former workplace, at least 50 miles from the former residence.
Provision: Under the provision, the deduction for moving expenses would be repealed. The provision would be effective for tax years beginning after 2017.

And this one again. Notice it’s all on the individual employee — the JCT expects this will put about $10.6 billion in the Treasury from 2018 to 2027. ($1.06 billion each year)  For about a billion bucks a person could buy a couple of Airbus 380s.  Not exactly a major revenue stream for the government in comparison to what employees would face in a major career move or reassignment.

Why are we discussing these items? Because the Republicans want a plan of which 80% of the benefits go to the top 1% of the population.  But, how about those ads on TV about how much money we’ll get back to put in our own pockets?  A bit of unsolicited advice: (1) the numbers are fudgy — too much of it depends on the Growth Fairy waving her magic wand; (2) the numbers are fudgy — the studies from which the numbers are selected aren’t very well tested; and (3) the numbers are fudgy — the numbers actually show us that what the Republicans are proposing is a deficit financed tax cut.  And, here we we’re thinking they were “deficit hawks” and all for “fiscal responsibility” and “lower national indebtedness.”  Maybe not. so. much.

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Filed under Nevada politics, nevada taxation, Politics, tax revenue, Taxation

Real Nevadans Real Numbers Real Income

The big push of the week appears to be that the Republicans have in mind a “middle class tax cut.”  Notice please that we’re not getting all that much in the way of “tax reform” but we are poised to get a deficit financed tax cut.  And, that WE part doesn’t actually include all that many people who file tax returns from Nevada.

Nevada by the Numbers:  2,940,058 Nevadans filed tax returns in 2015 (the last year for which statistics are available from the IRS.) 655,530 were individual tax returns and 440,130 were filed as joint returns.  There were 233,730 filed as Head of Household. 713,530 filers used paid preparers.  The number in that last category ranges from those who have extremely complicated filings to those of us who simply find it convenient to have someone else fill in the forms, or those who take advantage of tax prep companies who offer free filing services to those who don’t actually owe taxes or have small refunds due from the taxes they’ve already paid.

When we look at the adjusted gross incomes reported by Nevadans it may be useful to put the numbers in some context.  For example, the median income in Nevada is $51,847 and the per capita income is $26,541. The median value of a housing unit owned by the occupant is $173,700 and the median selected mortgage cost is $1,442 per month.  The median gross rent is reported as $973.00.  This gives us a preliminary picture of the 1,016,709 households in Nevada, and our population of 2,940,058.

1,350,730 Nevadans filed income tax returns in 2015.   27.21% of the Nevada filers reported adjusted gross income between $25,000 and $50,000.  13.5% of filers reported AGI between $50,000 and $75,000. 8.15% reported AGI between $75,000 and $100,000.  Another 10.22% reported an AGI between $100,000 and $200,000.  From this point on the percentage of filers by category drops, those reporting AGI between $200,000 and $500,000 were 2.48% of the filers; those reporting AGI between $500,000 and $1 million were 0.43%, and those reporting over $1 million AGI made up 0.26%.

The current (2017) tax brackets and explanations can be found compliments of the Tax Foundation in a convenient table form for single and joint filers. To make a long story a bit shorter, a person would have to have an AGI (adjusted gross income) of at least $191,650 if filing a single return to hit the 33% bracket, and $233,350 if filing a joint return.

The numbers indicate that 48.95% of those filing Federal income tax returns from Nevada are reporting below $100,000 in annual adjusted gross income.  Some of the 138,000 Nevada filings between $100,000 and $200,000 AGI may have been included in the bracket in which there is a $18,735.75 liability plus 28% of an excess over $91,900.  Fewer still would be in the 33% bracket with a liability of $46,643.75 plus 33% over $191,650.  Indeed, only 3.17% of Nevada returns reported AGI over $200,000 annually (35% and 39.6% brackets.)

Where’s the middle? Numbers are objective and instructive, but tax policy can get pretty emotional.   By the numbers a person earning about $52,000 per year in this state is in the “middle.”  Pew Research provides one of the more commonly accepted definitions of Middle Class, “2/3rds to 2 times the national median income for household size.”  In current parlance this would be in a range of $46,960 to $140,900.  If we compare this to the Nevadans filing tax returns in 2015 then 21.74% are in the $50,000 to $100,000 AGI range; some others will be in the $100,000 to $200,000 AGI range (10.22%.) Undifferentiated reporting with two sets of categorization make this a difficult call without being able to drill down into that latter classification of filers)  However, what these numbers do tell us is that to be considered a Middle Class Tax Cut the benefits should accrue to those earning between $46,960 (a little below the Nevada median earnings) and $140,900.

So, how does the current edition of the Republican tax plan fit into “the Middle.”

“Despite repeated promises from Republican lawmakers that the plan is designed to provide relief to the middle class, nearly 30 percent of taxpayers with incomes between $50,000 and $150,000 would see a tax increase, according to the study by the Urban-Brookings Tax Policy Center. The majority of households that made between $150,000 and $300,000 would see a tax increase.” [WaPo]

The report from which the Washington Post article is derived is more specific.

“In 2018, the average tax bill for all income groups would decline. Taxpayers in the bottom 95 percent of the income distribution would see average after-tax incomes increase between 0.5 and 1.2 percent. Taxpayers in the top 1 percent (incomes above $730,000), would receive about 50 percent of the total tax benefit; their after-tax income would increase an average of 8.5 percent. Between 2018 and 2027, the average tax cut as a share of after-tax income would fall for all income groups other than the top 1 percent. In 2027, taxpayers between the 80th and 95th percentiles of income (between about $150,000 and $300,000) would experience a slight tax increase on average.”

There’s something about an analysis from the Tax Foundation reporting that 50% of the total tax benefit going to the top 1% that doesn’t sound precisely like a “middle class tax break.”  In short, the analysis makes it seem much more likely that the plan would be far more beneficial for the Nevada income earners who report AGIs over $500,000 per year, a total of 9,290 filers out of 1,350,730 who filed tax returns.  This really isn’t a “middle class tax cut.” At least not in terms of the real Nevadans, who report their real incomes.

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Filed under Economy, income tax, Nevada economy, Nevada politics, nevada taxation, Politics, Taxation

The Big Catch: Pay Us and We’ll Do The Right Thing

Banker Sorry A small group of ultra-wealthy individuals are getting alarmed by the widening income gap in America. [NYT]  Their cries hit some major news outlets and were analyzed in others. [Salon] [NationalMemo] And, as we might expect there’s a catch:  Corporate Welfare.

“There is a way to start. Government can provide tax incentives to business to pay more to employees making $80,000 or less. The program would exist for three to five years and then be evaluated for effectiveness.

The benefits would be huge. People would have more money to spend, and many would no longer need government help. That would mean a reduction in entitlements.” Peter Georgescu, CEO Young & Rubicam

Yes, you and many others read this correctly – CEO’s like Ken Langone (Home Depot founder) and Georgescu and Paul Tudor Jones are worried about the possibilities of either peasants with pitch forks or declining sales.  And, no, there is nothing new here. Nothing that ventures too far from the business model calling for tax breaks, cuts, incentives, etc. for corporations to locate in beautiful downtown West Buffalo Fart. 

If the suggestion weren’t so demonstrably callous it would be ludicrous and risible.  First, there’s nothing preventing companies from doing this without benefit of yet more tax cuts for the already wealthy corporations – or, is there.  Welcome back to the world of Shareholder Value!

Wal-Mart recently announced plans to increase company-wide minimum wage to $9 per hour, and to increase pay to $10 per hour for many employees by February.  And, then it bowed to the First Law of Staffing:

The company has also increased store staffing at peak hours so shoppers move quickly through checkout lines and see stocked shelves, said executives during the company’s quarterly earnings call earlier in August. [MarketWatch]

The old First Law is that you have enough employees if you can satisfy customer demand and maintain acceptable levels of client or customer service.  This should have been good news all around – except it wasn’t.

Those efforts contributed to a 15% drop in second-quarter net income compared with a year earlier, said executives. [MarketWatch]

What did Wall Street do?  The Street didn’t like that drop and punished Wal-Mart accordingly.

walmart stock

That’s right… it didn’t matter to investors if there were happier employees at the giant retailer; it didn’t matter that customers didn’t have to wait in the cashier’s line so long.  It mattered that the second quarter net income report was down on a YOY basis.

This is one of the more egregious contemporary examples of the Shareholder Value Monster trampling on any corporate plans to do what businesses should do best – meet customer demand with an acceptable level of customer/client service.

As long as the Financialists continue to steer the corporate ships details like customer service and employee retention – which used to inform management policy – will take a back seat to the quarterly earnings reports. So, Wal-Mart caved to the financial side and announced to its +/- 4,600 store managers that it would return to “pre-determined” staffing levels (back to the old levels), and cut employee hours to trim expenses.

CEO’s, of such organizations like Wal-Mart, are now trapped in a device of their own creation. If they attempt to offer higher wages (or improve the quality of customer service), both of which have long term benefits;  they are punished by the Shareholder Value oriented short term investors and their stock prices drop. If the stock prices drop so does executive compensation.  Should the stock prices drop too far in the estimation of investors the CEO can be gliding off on his or her Golden Parachute into the corporate sunset.

Thus, it isn’t surprising that the CEOs are anxious to have some taxpayer assistance “doing the right thing” (increasing wages) in the long term because the short-sightedness of the Shareholder Value Theory of Management has translated into a situation in which long term benefits are sacrificed on the altar of short term profitability.

The paycheck pinch: One of the CEO’s angling for government (read: taxpayer) assistance in decreasing the widening income gap is Ken Langone (Home Depot founder). Sales and revenue for Home Depot in 2011 was $68 billion, increasing to $83.1 billion in 2015. 2011 gross income was reported as $21.69 billion, increasing to $27.3 billion in 2015. Its current domestic income tax liability is $3.26 billion, it has a deferred domestic tax liability of $116 million. [Marketwatch]  And, Mr. Langone agrees that corporations should be given tax breaks in order to pay more to the employees of concerns like Home Depot.

There are some 20 Home Depot stores in Nevada, most in the Las Vegas area, some in Reno/Sparks, and a couple in what is understood as rural Nevada, Elko and Pahrump.  There are plenty earning less than $80,000 per year in these operations.  The wages for a sales associate range from $8.67 to $13.95; cashiers earn from $7.93 to $10.83; department supervisors earn between $12.01 to $18.91; and, retail sales associations can make from $8.68 to $17.16.  (See Payscale.com as information updates)

These salaries have tax implications in Nevada as a result of 2015 legislation:

The Modified Business Tax (MBT) is currently imposed on businesses other than financial institutions in the amount of 1.17 percent of wages paid above an exemption level of $85,000 per quarter. Financial institutions pay a higher rate of 2 percent. The MBT rate had been scheduled to decline to 0.63 percent for nonfinancial institutions beginning July 1, 2015. The MBT base has been narrowed significantly since the tax’s introduction in 2003, with exemption level increases in 2011 and 2013.

After significant debate over whether to expand the MBT or adopt a new gross receipts tax, the final plan includes elements of both options. The MBT will increase from 1.17 percent to 1.475 percent for most businesses, effective July 1, 2015. Mining companies will join financial institutions in paying the higher 2 percent tax rate. The MBT base is broadened by reducing the exemption to $50,000 per quarter, increasing the estimated number of MBT taxpayers to 18,607, up from the 13,492 paying the tax at present.[2] An earlier proposal to remove the MBT exemption for employer-provided health care costs was dropped.

After the first year, taxpayers may deduct up to 50 percent of their Commerce Tax payments over the previous four quarters from their MBT liability. Moreover, should total revenue from all business taxes exceed projections by more than four percent, the MBT rate will be adjusted downward, though to a rate no lower than 1.17 percent. [TaxFoundation]

Note the last paragraph, even with a compromise between larger and smaller corporations in Nevada, there’s still a bit of a tax break allowed on the Commerce Tax depending on the “previous four quarters.”  We’re probably not looking at any massive tax breaks in the 2015 legislation, but we need to add these to the $88 million in breaks given to Apple [MJ]  and the state’s generosity to Tesla in the form of $1.25 billion. [RGJ] In the latter deal the understanding was that Tesla would pay an average of $25/hr.

Not to put too fine a point to it, but corporations are quite used to having government entities, be they Apple in Nevada and North Carolina, Tesla in Nevada, or the bargaining in the 2015 Nevada legislature over how to maintain tax revenues, engage in tax-payer subsidies for corporate operations.  Thus, it’s not the least bit surprising the CEOs would ask for tax-payer subsidization for payroll increases.

It would be a reasonable conjecture to conclude that Home Depot and other Big Box firms like Wal-Mart might be willing to adopt staffing policies which increase employee wages and provide for better customer service –IF and ONLY IF there are further tax breaks associated with those policies which will please the short-term oriented Shareholder Value financialists who pull on the purse strings.

Hanging the Wash? Consider what the CEOs are proposing – it’s all good: “The benefits would be huge. People would have more money to spend, and many would no longer need government help. That would mean a reduction in entitlements.”  But wait, there’s some loaded language herein.  Programs like SNAP, and subsidized housing, or similar assistance to low wage earners are NOT entitlements. These are situational support programs for people in need.  Social Security/Medicare, into which people have paid for decades are entitlements – you get what you paid for.

Loaded language aside,  What happens when the corporations raise wages, projected to reduce the number of people receiving social assistance, but the revenues for that social assistance are reduced by the tax breaks given to the corporations in order to support those very same wage increases? The tax payers are on the hook either way – they either pay for the social assistance programs which subsidize low wages,  or they subsidize the tax breaks to corporations to reduce the need for the social programs?  It’s a win-win for the corporations, and a lose-lose for the average American.

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Filed under Economy, Nevada economy, Nevada legislature, Nevada politics, nevada taxation, Politics

The Something For Nothing Crowd in the Nevada Assembly

Nevada Legislature And Nevada’s Assembled Wisdom totters on:

“Remember what happened yesterday. Just after the Senate’s grandiose SB 252 floor vote, the Assembly devolved into pure “TEA” powered madness with constant recesses, shouting matches over those recesses, a floor fight over blatantly unconstitutional bill language, mind-numbing flip-flopping over outrageously discriminatory legislation, and an epic freakout over online sales tax. Are you scared yet? Ralston and others clearly are.” [LTN]

Why are we not surprised?  The bill now goes to the Assembly, in which the ideologically pure (sort of) and constitutionally correct (rarely) will have a whack at the funding for Governor Sandoval’s budget.

“The scariest prospect is that with a third of the session left, the biggest issue before the state has been left in the hands of a body populated by some GOP members who don’t understand policy, who don’t live on the same planet the rest of us do and who are the most embarrassing legislators the state has ever seen.” [Ralston/RGJ]

For those keeping score, Steve Sebelius provided a handy list of the good, the bad, the ugly, and the almost comprehensible measures before said Assembled Wisdom this season. It’s a handy reference.  … Which gets us to the Something For Nothing Crowd.

Consider this release from the Assembly Policy Committee, and its spokesperson Assemblywoman Michele Fiore (R-Bundyville):

“With all due respect, much of the governor’s proposal is based on the mistaken idea that the way to fix public education in Nevada is to pump more taxpayer dollars into the existing failed system rather than dramatically reforming that system and providing far more school choice to Nevada parents, including the financial assistance necessary to exercise that choice for low-to-moderate income families.

“That said, the unemployment rate in Nevada remains, as Bill Anderson of the Department of Employment, Training and Rehabilitation put it last week, ‘stubbornly high’ at 7.1 percent.  As such, the last thing the Legislature should be doing is taking money out of the private sector, where it’s needed to create jobs, and transferring it to the public sector so that government can continue to spend beyond its means.

“Conservatives in the Nevada State Assembly cannot and will not support  SB252 as passed out of the Senate today.”

Let us Parse. First, nothing good ever happens after someone begins with “with all due respect.”  Thence to the heart of the matter – the old privatization refrain, which goes back to the 1874 Kalamazoo Case.

“Kalamazoo Union High School, which many believed to be a necessity for bridging the gap from common school to university, operated with some minor opposition, until 1873. In January of that year, three prominent Kalamazoo property owners filed a suit intended to prevent the school board from funding the high school with tax money. They argued that the 1859 state law had been violated when the high school was established without a vote of the taxpayers. Charles E. Stuart, a former United States Senator from Michigan, along with Theodore P. Sheldon and Henry Brees, initiated the suit. At the time, it was believed to be a “friendly” suit intended to settle the issue legally in favor of the school. However, Stuart’s comments to the Kalamazoo Board of Education years after the suit had been settled, suggest that he and his companions sincerely resented the tax burden that the public high school placed on them. Stuart, like many others of his time, believed that a common school education was sufficient for anyone, and anything beyond that should be paid for privately.” [KPL]

The School Board prevailed in the 1874 litigation, and thus we have public funding for education k-12. [MLive]  The fact that if a school board is charged with administering a k-12 system then it must have the funding to do so raises the second portion of the argument – the part concerning the level of that financial support.

Enter the Something For Nothing Crowd.  What else explains the phrase: “fix public education in Nevada is to pump more taxpayer dollars into the existing failed system rather than dramatically reforming…?” This statement assumes (1) the current level of funding is adequate, or perhaps less is necessary; (2) the schools are failing with the present level of funding and therefore no additional funding is desireable; and, (3) the system needs to be “fixed.”

None of these assumptions can be asserted without challenge.  The first problem is the general issue of the Disappearing Dollars often cited by conservatives. The notion of “pumping in” dollars infers that the dollars are a measure of educational support in themselves.  The concept is a great leap to a highly ideologically framed conclusion.  No. money doesn’t solve educational issues but it does purchase: The services of highly qualified personnel, specialists, aides and assistants, and administrators; school physical facilities, books, libraries, equipment, supplies, etc. 

It’s difficult to avoid the conclusion that the Something For Nothing Crowd is channeling the spirit of Charles E. Stuart from the 19th century – if a family wants a better education for their children they should pay for it themselves.  Witness: “dramatically reforming that system and providing far more school choice to Nevada parents, including the financial assistance necessary to exercise that choice for low-to-moderate income families.”   The translation is fairly simple.  School choice equates to a voucher system for attendance at private schools. and “far more schools” usually equates to the establishment of private charter operations.

We’ve touched on the rationales for this thinking before:

“The K-12 schools are “failing” and therefore we should augment the resources for privatization in the form of charter or private schools.  This contention is most often wrapped in “parental choice” camouflage covering.  That the proposed choice doesn’t exist in many rural communities, or that the proposed choice is extremely limited in urban ones, doesn’t enter into the discussion often enough.  Nor is it observed often enough that school voucher programs are a way to siphon off public funds for public schools and channel the money to private ones. [DB 2012]

In addition to the questionable rational for the conservative philosophy as it pertains to public education, there’s the problem of educational standards. What’s “failing?”

The most common measurement of “educational attainment” and the one most often cited by conservatives is standardized test scores.  Standardized testing has its uses.  However, placing them at the center of the argument is to risk overemphasizing their usefulness:

“We can stipulate that most tests manufactured for use in public schools by major publishing houses are statistically reliable and generally statistically valid. What we cannot say with any statistical certainty is whether or not we are measuring what we value in public education.” [DB 2011]

We appear “not to test well” and there may be some valid reasons for that, such as the generally low salaries for teachers, “Teacher salaries have a huge impact when it comes to attracting good instructors. The innovative, smart, highly skilled people you want teaching your kids aren’t exactly in love with the idea of making $38,000 per year (the average for first-year high school teachers) when they could go somewhere else and earn more while doing less.” [ABC]

Or perhaps we should place greater emphasis on early childhood education: “

The OECD found in a separate study that 15-year-olds who had attended at least a year of preschool performed better on reading tests than kids who had not, even when socioeconomic factors were taken into account.  The U.S. spends more on preschool than other countries but money doesn’t do any good unless kids are enrolled, and the U.S. lags on that measure.” [ABC]

The ASCD offers an enlightening summation:

“For several important reasons, standardized achievement tests should not be used to judge the quality of education. The overarching reason that students’ scores on these tests do not provide an accurate index of educational effectiveness is that any inference about educational quality made on the basis of students’ standardized achievement test performances is apt to be invalid.

Employing standardized achievement tests to ascertain educational quality is like measuring temperature with a tablespoon. Tablespoons have a different measurement mission than indicating how hot or cold something is. Standardized achievement tests have a different measurement mission than indicating how good or bad a school is. Standardized achievement tests should be used to make the comparative interpretations that they were intended to provide. They should not be used to judge educational quality.”

Even if we do apply standardized test score to measure “temperature with a tablespoon” there’s no guarantee that the privatized or charter schools will achieve better results.

Researchers at Stanford University’s Center for Research on Education Outcomes looked at test data from charter schools in 26 states and the District and found that 25 percent of charters outperformed traditional public schools in reading while 29 percent of charters delivered stronger results in math. That marked an improvement over a similar 2009 study by the same research team.

But 56 percent of the charters produced no significant difference in reading and 19 percent had worse results than traditional public schools. In math, 40 percent produced no significant difference and 31 percent were significantly worse than regular public schools. [WaPo]

So, we have the Something For Nothing Crowd in the Nevada Assembly decrying the essence of the Governor’s budget for education with all the old clichés from time gone by, and the tautological statement that if an underfunded school is failing the way to make it better is to further cut its funding.

We can only hope that after the tempers, the tantrums, the protestations, the gnashing of teeth, and the rending of cloth the membership of the Nevada Assembly will manage some form of civility and citizenship, and recognize another time honored statement – You Get What You Pay For.

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Heller Helps Sustain Another GOP Filibuster

Heller 3What if there were a bill in Congress which would do the following?

“Amends the Internal Revenue Code to: (1) grant business taxpayers a tax credit for up to 20% of insourcing expenses incurred for eliminating a business located outside the United States and  relocating it within the United States, and (2) deny a tax deduction for outsourcing expenses incurred in relocating a U.S. business outside the United States. Requires an increase in the taxpayer’s employment of full-time employees in the United States in order to claim the tax credit for insourcing expenses.”

In short — offer corporations tax incentives to bring American jobs back to America, or S. 2569.

But then, there’s the GOP side of the aisle saying things like:

“Some Republicans argue that if Democrats truly wanted to keep companies in the United States, they would work with Republicans to overhaul the tax code and reduce corporate tax rates.“It’s a bill that’s designed for campaign rhetoric and failure — not to create jobs here in the U.S.,” Senate Minority Leader Mitch McConnell (R-Ky.) said Tuesday. “Everyone knows that the Democrats aren’t being serious here.” [The Hill]

First, Senator McConnell’s taunt, that the bill is a purely political exercise without any redeeming merit, is simply a legislative version of the Ad Hominem Attack — name calling without addressing the issue at hand. Secondly, Senator McConnell’s definition of “working with” all too often means give us everything we want and we’ll still keep filibustering a measure.  To wit: The bill to require background checks and close the gun show loophole, in which the total gun safety legislative package was pared down to a single issue to appease the GOP and then the GOP filibustered the bill anyway.  Or the Affordable Care Act, originally a Heritage Foundation proposal, which after numerous amendments to assuage the concerns of Senate Republicans received no support from that quarter.

Third, there’s the matter of “working with Republicans to overhaul the tax code,” which assumes that the Republicans have a plan to overhaul the tax code.  The latest GOP tax proposal comes from the House, and would cut the top tax rate from 39.6% to 25%, impose a surtax on some  incomes above $450,000, but leave capital gains taxes at the low rate, to the benefit of hedge fund and wealth management firms. [WaPo] However, the problem with Representative Camp’s proposal is one shared with other GOP plans (health plans, budgets) — the devils haven’t been specified in the details.

The Joint Committee on Taxation analysis indicates the ‘plan’ doesn’t specify the special interest tax breaks which litter the IRS regulations will get the axe in order to make up for revenue lost in the bracket reductions.   The Camp proposal also comes with its own set of complexities, summarized in the Tax Policy Center’s analysis.  To mention just one, there’s the resurrected specter of the Alternative Minimum Tax implicit in Camp’s legislation — nothing like taking up something complicated in order to make another thing simple?

Then there’s some bad news for states, such as Nevada, which do not have a state income tax:

“Camp would repeal the deductibility of state and local taxes, including both property taxes and income taxes. He’d abolish tax-exempt private activity bonds. And he’d impose a 10 percent surtax on municipal bond interest for high-income households, a step likely to raise the cost of issuing state and local debt.But Camp’s plan also includes some less obvious changes that could increase state income tax revenues, especially for states that piggyback on the federal income tax. By limiting deductions—and thus boosting taxable income—Camp’s plan could also increase state income tax revenue, just as the Tax Reform Act of 1986 did.”  [Tax Policy Center]

No matter, the local and state income taxes, which Nevada doesn’t have, would no longer be deductible, but unless there is a state income tax on which to “piggy back” state income tax revenue doesn’t increase under the provisions of Camp’s bill.  Thus we lose the property tax deductions, and gain very little else.

Then there’s the matter of reducing the corporate tax rate. To what? There’s the statutory rate, which Republicans are fond of citing, and then there’s what taxes cost the corporations — or, the effective tax rate.  The GAO reported the effective tax rate for U.S. corporations at 12.6%.  [CNN]  Of course, the GOP response is “ya’shouldn’t hafta get a lawyer to figure out your taxes,” but that’s precisely what major corporations DO. And, they do it with a raft load of tax attorneys.  It doesn’t seem too far out of line to suggest that if the statutory rate were to be reduced to X%, the rafts of tax attorneys would be hard at work seeing how the liability might be reduced to X-Y%.

And while we’re on the subject of complicated tax codes — it does appear a bit unseemly to have the self same initiators and  protectors of tax break loopholes for corporations advance arguments that the tax code is “broken” because it is so complicated.  This would be a good time to click on over to Jon Stewart’s classic rant on tax avoiding corporations, “The Inversions of the Body Snatchers.”

However, speaking of tax breaks for corporations which bring jobs back to American shores… We aren’t going to see those because the Republicans in the U.S. Senate are successfully filibustering S. 2569, and kept their filibuster going in a vote on July 30, 2014 at 10:50 AM. The cloture motion failed on a 54-42 vote, with Senator Dean Heller (R-NV) voting along with Senate Minority Leader Mitch McConnell (R-KY) to further stall the Bring the Jobs Back Bill.

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Round Up

Wondering about the level of taxation in Nevada?  The Small Business & Entrepreneurship Council says “We’re Number Three!” (Nationally) for being all sweet and cuddly for businesses disinclined to pay taxes. [NNB] But, we are going to collect sales taxes from Amazon.com for Nevada customers. [NNB] And, all this while Governor Sandoval tells us we don’t need any more taxes since the last batch has been extended. [NNB] So, we don’t have enough taxation to make business owners and corporations howl — and we don’t need any more business taxes — but we’ll happily collect more sales taxes (which obviously have a greater impact on those with lower incomes) on online purchases from the Big A…  The Lesson: It’s Only A Tax Increase If A Special Interest Has To Pay It?

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Washoe County, Nevada is still getting some backwash from the Housing Bubble Debacle.  Short-sales are up, wherein mortgage lenders agree to sell a piece of real estate for less than what is owed.  “In Reno, short sales have been accounting for about a third of all sales in the past couple of years, according to the Greater Reno-Tahoe Real Estate Report. Short sales accounted for 116 units sold in March — 31 percent of all home sales in the area. Foreclosures posted 123 unit sales during the same period, which was 34 percent of inventory sold.”  [RGJ]   Meanwhile, back with those Wonderful People Who Brought On The Housing Bubble With Their Insatiable Appetite For MORE Mortgages —

“In case their (derivatives traders/bankers)  lobbying falls short, the industry — largely dealer banks and commodities firms — has been pushing legislation that would pre-empt the rulemaking process and tie the agencies’ hands. So far, no fewer than 10 such derivatives bills have been introduced in the House; two have passed and several more have cleared committee.

Not satisfied with that, influential lawmakers have been not so subtly warning regulators to go easy on derivatives. This is incredibly intimidating: Congress controls the agencies’ budgets, and the increase in workload mandated by Dodd-Frank leaves them woefully short on funds.

And should a derivatives rule unpalatable to the dealers somehow survive this Beltway obstacle course, the agencies face an explicit threat of a lawsuit. This has had a chilling effect. As Bart Chilton, a CFTC commissioner, told me, regulators fear there is “litigation lurking around every corner and down every hallway.”  [Lowenstein, Bloomberg]

Thus we have bankers, who having been bailed out once, have now decided that there is NO reason for any sentient human being to advocate regulation of their shadow system and their “private placement” activities — which got us into this Mess in the first place.  The only good news is that we may have found the bottom of this market. [Bloomberg]

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The bottom of the housing market may be upon us, but the litigation lingers on.   A judge has denied AIG’s motion in the Bank of America settlement. [Reuters] A federal judge denied Bank of New York Mellon’s motion to dismiss a lawsuit by investors over the bank’s role as a trustee more mortgage backed securities  in the mess made by Countrywide.  [Reuters]

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Maybe the Republicans do have a “health care” plan?

Health care would be “addressed” by disabling the implementation of ObamaCare, which Mitt Romney has repeatedly said he’d do on his first day in office. Even if you believe Romney and other Republicans actually have their own agenda of “health reform,” it’s mostly just a matter of replacing today’s health care deduction for employers with a tax credit for individuals, and then passing one bill allowing interstate insurance sales; the “market” (i.e., the rush of insurers to states with little or no regulation) will take care of the rest, and besides, it’s not the federal government’s job to make sure everyone has health insurance, right? [WashMon]

Yes, and with the rush to those states with little or no restraint on health insurance corporations we can reasonably expect that those corporations will not provide insurance to individuals with pre-existing conditions, not include vaccinations under basic policies, not include wellness screening for prostate, breast, or other cancers, and not include tax breaks for small businesses which provide health care plans for their employees.  It’s the Bush System on Steriods.

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Some cheese with that whine?  Presumptive nominee Mitt Romney’s saying Life’s Unfair!

“This America is fundamentally fair,” he said. “We will stop the unfairness of urban children being denied access to the good schools of their choice; we will stop the unfairness of politicians giving taxpayer money to their friends’ businesses; we will stop the unfairness of requiring union workers to contribute to politicians not of their choosing; we will stop the unfairness of government workers getting better pay and benefits than the taxpayers they serve; and we will stop the unfairness of one generation passing larger and larger debts on to the next.”  [TPM]

Translation:  We will provide vouchers for parents to subsidize private schooling for their children.  We will stop assisting manufacturing companies with research and development.  We will attack trade unions.  We will further slash pay for government employees.  We will give tax breaks to the 1% and impose austerity on the remaining 99%.  There’s a good piece about privatizing education here.   H/T to Nevada State Employee Focus, there’s another excellent article on the attacks on public employees here.

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Speaking from friends in interesting places: The Soap Opera that’s become the Nevada Republican Party continues apace, and to read the gruesome details click over to The Nevada Progressive.

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More dispatches from the War On Women in the Sin City Siren.   Meanwhile anti-abortion activists are urging a “personhood bill” for the state of Oklahoma, the New Hampshire Senate has 6 abortion bills on its agenda, and a move to defund Planned Parenthood in Ohio is on temporary hold, but could reappear at any time.   More restrictive bills are in process in Tennessee, Louisiana, and Iowa.

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Political items worth the click and read:  “The Koch Brothers Exposed,” Rolling Stone.   “Mitt Romney’s Attack Dog,” (Larry McCarthy negative ad guru), New Yorker 2/2012. “Don’t Let Business Lobbyists Kill The Post Office,” Rolling Stone.   “Campaign Tips from Cicero,” Foreign Affairs.

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Filed under Economy, financial regulation, Health Care, Heath Insurance, housing, Politics, Sandoval, Taxation, Union busting, unions, Women's Issues, Womens' Rights