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The Internet Tax: What You Need to Know


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State and local governments have been forbidden from taxing Internet access — apparently forever — according to a bill passed in the House on July 15. This measure was a response to updating the Internet Tax Freedom Act of 1996, which had a extension passed in 2007 and was on the verge of expiration.

House Judiciary Chairman Rep. Bob Goodlatte explained that the bill “prevents a surprise tax hike on Americans’ critical services this fall. It also maintains unfettered access to one of the most unique gateways to knowledge and engine of self-improvement in all of human history.

Unfortunately, it is expected to be joined with the Marketplace Fairness Act when it heads to the Senate. That abominable piece of legislation was passed in May 2013; it’s merely a back-door way for states to add additional levies on their citizens under the guise of leveling the playing field, while simultaneously adding undo burden to businesses by expecting compliance with multiple tax jurisdictions. Read more about the Marketplace Fairness Act here.

As for the Internet Tax, it’s a bill to keep track of as it moves through Congress

Major Contract Reform is Needed in the Philadelphia School System

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The Teachers Union in Pennsylvania is putting self-interest ahead of the schools.

A recent article in the WSJ highlights the problems of the Philadelphia school system trying to navigate the process of staff reduction. The unions claim that seniority is the only criteria for cuts, while school administration wants other choices. Pennsylvania is one of a few states that grants teachers a right to strike, so this fight is one which is sure to be long-suffering.

The schools point out to the unions that since “a 2001 state takeover spurred in part by major financial problems and woeful test scores, the system has been governed by the School Reform Commission, a five-member board jointly appointed by the governor and mayor. State law permits the commission to suspend some parts of the school law, including seniority protections for employees”. This is the point of contention with the unions.

While the article is decent, it misses a very important part related to contracts and negotiations. The teacher contracts expired in 2013. Therefore, those teachers who are complaining that there is no right other than seniority — because that right exists in their contract — are operating as if the contract is still valid. It certainly is not. Despite the fact that their contracts expired nearly a year ago, they still claim rights under that contract. This is patently false; when a contract is over, it is over -they have the right to nothing unless it is negotiated in a new contract.

If the school administration is struggling financially, there is nothing to stop them from say, offering teachers 15% – 25% lower pay than what they made in previous contracts in order to get back on their feet, but even more importantly, to get them in line with what similarly qualified individuals are earning in the private sector. There is no inherent right to a higher salary or even the same benefits as they had previously earned. The private sector does not operate this way. The public sector cannot either, if it is to remain solvent.

Teachers don’t automatically deserve work rules, pensions, and pay other than what the private sector pays, especially in a down economy. A teacher strike shouldn’t be over a 10-15% assumed increase based on past contracts and situations. The harsh reality is that the schools simply cannot afford the current teacher pay and pension/benefits packages. And it should not have to pay those salaries and benefits – the realities of life, the job market, and the economy have set compensation levels for similarly qualified individuals at substantially lower than Philly teacher levels. It is only teacher union and political cronyism that has allowed this fiasco to exist.

The Pennsylvania school system would do well to be reminded that, because teacher contracts are expired, they are not bound to continue them on previous, overgenerous terms. Their obligation is to provide their services in return for certain compensation and benefits during that time. But that’s it — they are only covered for the period of the current contract.

This point is important because there really can be no part of a negotiated contract that promises any compensation or benefits for services rendered after the end of the contract period; otherwise, a locality (Philadelphia in this case) runs the risk of continuing runaway financial obligations for which it cannot properly budget and it hamstrings future body politics not even in office yet.

Financial difficulties have already plagued the system once, in 2001. Unfortunately, the wake-up call seems to have been missed. Slapping down a $2 cigarette tax for the schools is not going to save the system. It’s merely a band-aid when a tourniquet is needed.

Overhauling the pay and compensation packages of Philadelphia teachers would be thoroughly beneficial. Even though it may be politically difficult and unpalatable, budget reform and deficit reduction will naturally follow once compensation levels have been stabilized and brought in line with their private counterparts.

Government Still Running a Deficit Despite One Month Surplus

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Even with record federal revenue, the government has a running deficit of $385 billion though the first nine months of fiscal 2014.

According to CNSNews, “The White House Office of Management and Budget has estimated that in the full fiscal 2014, the federal government will collect $3.001721 trillion in taxes and spend $3.650526 trillion, while running a deficit of $648.805 billion.

The OMB has also estimated that, while running that deficit, the federal government will collect a record amount in inflation-adjusted tax revenues.”

All this confirms is that the government is not short on money (record tax revenue receipts) but is short on cutting spending.

As I noted last fall how irregular circumstances contributed to reducing the deficit last year, it is likely that there will be a similar explanation for the tiny surplus as well.

Governor’s Worker Union Ends Support of United Negro College Fund Over Koch Brother’s Gift


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After the United Negro College Fund accepted a $25 million grant from Koch Brothers, Inc and the Charles Koch Foundation, The American Federation of State, County and Municipal Employees (AFSCME) sent a letter to the United Negro College Fund (UNCF) yesterday ending their relationship. This includes a paid internship program.

In the letter, AFSCME President Lee Saunders condemned the action as “not only deeply hostile to the rights and dignity of public employees, but also a profound betrayal of the ideals of the civil rights movement.”

He further accused the Koch Brothers of being “the single most prominent funders of efforts to prevent African Americans from voting”.

Needless to say, these accusations are outrageous. A rational view would show that the Koch Brothers support for organizations that enhance individual responsibility and free-market solutions for education and poverty is far superior to the AFSCME policies of cronyisn and increasing the welfare state.

UNCF President Michael Lomax responded with this statement: “While I am saddened by AFSCME’s decision, it will not distract us from our mission of helping thousands of African American students achieve their dream of a college degree and the economic benefits that come with it,”

The $25 million will create a “Koch Scholars” program. In comparison, a AFSCME spokesman noted that the union donates $50,000 to $60,000 a year for scholarships and “hundreds of thousands” of dollars annually.

The libertarian-leaning Koch Brothers have been routinely vilified on the Left. Senate Majority Leader Harry Reid declared in February that “These two brothers are about as un-American as anyone that I can imagine.”

You can take a look at the Koch Brother’s Foundation charitable information here. They have have pledged or contributed $1.2 billion in donations for medical and cancer research, education and science, arts and culture, and public policy.

As for the ASFCME, a politically-correct hit job “is a terrible thing to waste”

The Halbig Obamacare Case


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The next big case related to Obamacare, Halbig v. Burwell, is sitting in the U.S. Court of Appeals for the D.C. Circuit. The verdict should be announced soon. The crux of the case lies in the wording of the actual bill of Obamacare, which specifically lists state exchanges as a source of subsidies.

There is no mention of federal exchanges in Obamacare. This was created merely by an IRS rule authorizing the subsidies in federal exchanges.

Regardless of the outcome of the case (for a primer, click here), here’s the salient point to take away.

When you look at the plain wording of the actual bill, it really doesn’t make any sense (common sense). Here we have a perfect example of the Democrats trying — and ultimately succeeding — to push something through without looking at it or even carefully thinking through the implications of the words and provisions.

Obamacare was drafted badly, and they couldn’t even get it corrected the proper way because of the crookedness by which it was passed. Now we have a stupid mistake that the judiciary is being asked to fix. And that’s the problem.

What the government is asking the courts to do is to ignore the literal wording of the law. On the other hand, if the literal wording is indeed upheld, the immediate effect of a reversal is going to be extremely terrible.

Think about it. The IRS will have to go after people for refunds of tax credits. That will be a messy and slow and heated endeavor. Many people, especially poor people, are going to argue that they wouldn’t have used Obamacare insurance if it wasn’t for the subsidies. Not sure if that scenario is ultimately good for conservative or libertarians either, because it certainly sets up the sound-byte narratives that conservatives and libertarians want to “take away your health care”, “they hate the poor, etc”. Is it worth it?

My heart of hearts wants literal side to win, but at the same time, I’m not entirely convinced that its the best thing in the long run. Yet, if the government wins, it reinforces the precedent we’ve been seeing that it is okay to ignore the actual wording of the law, much in the same fashion that the wording of the Constitution is being ignored in some instances.

This case perfectly highlights the stupidity and utter disdain for which the Democrats have of procedure and law.

New Lerner Email Hints At Curbing Email Information For Congress


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Roughly a month before the IRS scandal “broke” via a planted question, Lois Lerner wrote the following email.

On April 9, 2013

“I was cautioning folks about email and how we have had several occasions where Congress ask asked for emails and there has been an electronic search for responsive emails — so we need to be cautious about what we say in emails”

About what could Lerner possibly be cautious? To put this into perspective, Lerner crafted her email shortly after (roughly two weeks) the IRS internal auditor present his investigative draft report regarding alleged targeting of certain groups.

Is this Issa’s “smoking gun”? Was Lois trying to warn her staff to pre-emptively curb their discussions or language. This does not bode well.

EEOC Absurdity Strikes Again


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In another laughable, irresponsible, and certainly illegal move (far overreaching any possible regulatory claim), the Equal Employment Opportunity Commission (EEOC) has filed a lawsuit against a private company that fired employees who could not effectively communicate in English. The EEOC lawsuit alleges that this violates Title VII of the Civil Rights Act of 1964, which bans discrimination based on “national origin”.

The EEOC’s logic argues that this includes “the “linguistic characteristics of a national origin group.” The EEOC is in fact saying that a business may not use its own judgment as to whether its employees need to speak English fluently, whether or not there is any evidence of discrimination.

This lawsuit has shades of another ludicrous overreach in June of 2013 by the EEOC that also referenced Title VII “discrimination” in their cases, alleging that,

“BMW manufacturing facility in South Carolina, and the largest small-box discount retailer [Dollar General] in the United States violated Title VII of the Civil Rights Act by implementing and utilizing a criminal background policy that resulted in employees being fired and others being screened out for employment”

These cases appear to have been filed soon after a December 2012 “strategic enforcement plan” was issued by the EEOC “that included targeting background checks as a barrier to employment of minorities”. Within six months, both BMW and Dollar General were sued.

However, the rulings did not go quite the way the EEOC would have liked. Judicial Watch noted that, “U.S. District Court Judge Roger Titus lambasted the administration’s expert data, writing that it was “laughable”; “based on unreliable data”; “rife with analytical error”; containing “a plethora of errors and analytical fallacies” and a “mind-boggling number of errors”; “completely unreliable”; “so full of material flaws that any evidence of disparate impact derived from an analysis of its contents must necessarily be disregarded”; “distorted”; “both over and under inclusive”; “cherry-picked”; “worthless”; and “an egregious example of scientific dishonesty.”

There are simply no facts to support a theory of disparate impact, the judge writes, further stating: “By bringing actions of this nature, the EEOC has placed many employers in the “Hobson’s choice” of ignoring criminal history and credit background, thus exposing themselves to potential liability for criminal and fraudulent acts committed by employees, on the one hand, or incurring the wrath of the EEOC for having utilized information deemed fundamental by most employers.”

Having recovered from the sting, the EEOC is back spending taxpayer funds to target private businesses with frivolous lawsuits. According to their press release regarding Wisconsin Plastics, Incs “the EEOC’s pre-suit administrative investigation revealed that WPI fired the Hmong and Hispanic employees based on 10-minute observations that marked them down for their English skills, even though those skills were not needed to perform their jobs”

Furthermore, according to the EEOC Chicago Regional Attorney John C. Hendrickson, “Our experience at the EEOC has been that so-called ‘English only’ rules and requirements of English fluency are often employed to make what is really discrimination appear acceptable. But superficial appearances are not fooling anyone. When speaking English fluently is not, in fact, required for the safe and effective performance of a job, nor for the successful operation of the employer’s business, requiring employees to be fluent in English usually constitutes employment discrimination on the basis of national origin — and thus violates federal law”

Wisconson plastics, Inc, on the other hand, maintains that the EEOC claims are “false and absolutely without merit”. The EEOC counters that English language requirements are justifiable only when “ absolutely necessary “for an employer to operate safely or efficiently.” but simultaenously admits that “there is no precise test for making this evaluation.”

The Wisconsin Plastic, Inc explains that there “the layoff decisions at issue in the fall of 2012 were made on the basis of the employees’ overall comparative skills, behaviors and job performance over time. Though the decisions were difficult, they were necessary in order to ensure the ongoing stability of Wisconsin Plastics for the benefit of WPI’s customers, its shareholders, the community and the roughly 275 current company and temporary employees.”

So a company operates to benefit its customers, shareholders, the community, and its employees. This sometimes results in a hard decision to discontinue the employment of an employee or employees whose performance does not positively benefit the company to a company-decided level of satisfaction.

The fact that the EEOC can instead arbitrarily decide it knows the intentions of a company better than a company itself, and moreover, sue that company for discrimination when the company decides to terminate an employee that is just not working out, is utterly outrageous.

Let’s hope that the next judge is as wise as the one who presided over the BMW and Dollar General court cases.

A Renewed Appeal For The Keystone Pipeline Project


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What’s going on with oil and energy these days?

Last week, SNL Financial noted that,

“Canada’s crude oil producers are looking to markets other than the U.S. to sell increased output amid delays in pipeline expansions, according to the president of the Canadian Association of Petroleum Producers.

“In terms of growth potential, Keystone is obviously bogged down and everything behind Keystone in the queue is bogged down because the regulatory process won’t engage on those other projects until Keystone clears its hurdles one way or another,” Collyer said. “The primary focus for Canadian producers, Canadian governments and Canadian pipeline companies is to look east and to look west.”

Canada is tired of waiting. What else?

Besides the current frustration with our Canadian friends, there is another overlooked consequence stemming from the delays with the Keystone XL Pipeline project: high gas prices.

Although the pipeline (and ANWR, and other major oil projects) have multi-year lead times, when a project of this magnitude has the green light to move ahead, it has an immediate effect on the markets by changing the traders’ expectations of future supply. Having more oil available in the marketplace contributes to lower prices for consumers. So when Keystone was delayed — multiple times — the markets have reacted accordingly.

In fact, it was noted last week that July 4th marked a record 1290 days of gas prices above $3.00/gallon. Gas prices climbed above $3.00/gallon on Dec. 23, 2010, and that streak has continued since then.

Of course, don’t forget what Secretary Chu said back in 2012 about the price of gas: Chu “admitted to a House committee that the administration is not interested in lowering gas prices.

Chu, along with the Obama administration, regards the spike in gas prices as a feature rather than a bug. High gas prices provide an incentive for alternate energy technology, a priority for the White House, and a decrease in reliance on oil for energy”.

This helped to explain why Keystone was delayed. While the White House continues to “figure out” how to balance two of his major constituencies (labor is pro-pipeline and environmental is anti-pipeline), Americans are feeling the price at the pump. But it doesn’t have to be this way.

According to Gordon Ritchie, vice chairman of RBC Capital Markets, Ritchie noted,

“I’m at a loss to understand why the Americans wouldn’t approve the pipeline going down south because of the difference between the Brent price of oil — world price — and the North American combined price of WTI (West Texas Intermediate). “That $5 a barrel is really a subsidy by Canada to American consumers of gasoline and it works out to about $20 billion a year.”

To add insult to injury, a new report is out that shows the highway trust fund is losing money due to to more fuel efficient cars, which Obama had repeatedly championed. Additionally, the high prices have kept Americans from traveling as much. The highway trust fund will go from a budgeted $50 billion to around $34 billion. The Highway Trust Fund receives roughly 18 cents on every gallon of gasoline sold in this country.

Meanwhile, Canada gets antsy, gas prices are high, the Highway Trust fund is being depleted. Will the Obama Administration finally move forward with Keystone?