by | ARTICLES, BLOG, BUSINESS, ECONOMY, FREEDOM, OBAMA, POLITICS, TAXES
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
by | ARTICLES, ECONOMY, FREEDOM, GOVERNMENT, POLITICS, TAXES
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.
by | ARTICLES, ECONOMY, GOVERNMENT, POLITICS, TAXES
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.
by | BLOG, BUSINESS, CONSTITUTION, ECONOMY, OBAMA, OBAMACARE, POLITICS, TAXES
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.
by | ARTICLES, BUSINESS, ECONOMY, OBAMA, POLITICS, TAXES
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?
by | ARTICLES, CONSTITUTION, FREEDOM, GOVERNMENT, OBAMA, POLITICS, TAXES
U.S. District Court Judge Reggie Walton called upon the IRS to defend itself in court on July 11th.
According to the Washington Examiner, IRS lawyers will be asked to explain “why the IRS shouldn’t be required to let an outside expert evaluate whether emails on the computer hard drives of former IRS official Lois Lerner and six colleagues really are lost forever.”
The motion filed seeks an outside computer forensics expert to determine the ability to salvage or not the data apparently lost to a crash. At the very least, the IRS was not following proper laws and procedures to protect information.
“If the IRS’s public statements about ‘recycling’ Ms. Lerner’s hard drive are true, that alone establishes spoliation of evidence that violates federal statutes and regulations, the Federal Rules of Civil Procedure, and professional ethics and responsibility.
You can read the motion here:
by | ARTICLES, ECONOMY, OBAMA, TAXES
We first heard that the GDP contraction of 1% was an anomaly. Now, the Commerce Department has revised its report from the Bureau of Economic Analysis, stating the the GDP fell -2.9% in the first quarter.
Here’s the summary:
“Real GDP declined 2.9 percent in the first quarter, after increasing 2.6 percent in the fourth. This downturn in the percent change in real GDP primarily reflected a downturn in exports, a larger decrease in private inventory investment, a deceleration in PCE, and downturns in nonresidential fixed investment and in state and local government spending that were partly offset by an upturn in federal government spending”.
Exports dropped 8.9%
Real final sales of domestic product dropped 1.3%
Real nonresidential fixed investment decreased 1.2%
Nonresidential structures decreased 7.7%
Equipment decreased 2.8%
Real residential fixed investment decreased 4.2%
The one bright spot? Intellectual property products increased 6.3%
You can read the highlights of the report here, along with the May durable-goods report and business investment outlook.
If we see a negative GDP after the second quarter, we’ll be in recession territory again.
by | ARTICLES, GOVERNMENT, HYPOCRISY, OBAMA, POLITICS, TAXES
You can’t have anyone that stupid be in charge at NBC.
Chuck Todd, who is NBC’s “Chief White House Correspondent” and also NBC’s “Political Director”, is out there mischaracterizing the IRS scandal. To blame it on 501c4s is utterly incomprehensible.
Yesterday on MSNBC’s “The Daily Rundown”, Chuck Todd gave this statement:
CHUCK TODD: Time now for my “Takeaway.” The controversy surrounding IRS may be more than a year old but of course we’re still talking about it. On Monday, the IRS Commissioner testified before Congress. A week after the IRS told Senate investigators that two years of e-mails disappeared in a computer crash back in 2011. While this certainly doesn’t make the Obama administration nor the IRS look very good, it’s important to remember what this actual story is about because it’s gotten lost.
The question at hand is whether explicitly political organizations should be filing as tax exempt social welfare groups under the tax code and both political parties are pointing blame. Republicans say that just conservative-sounding groups were targeted by the IRS. That’s why they want to see the e-mails. Democrats have responded by claiming, hey, liberal groups were targeted, too. But here is the story many are missing. Why should primarily political organizations get a taxpayer exemption, basically get a handout from the tax code? Both sides are in an uproar because they couldn’t take advantage of a borderline shady way to raise money for political purposes or launder money for political purposes.
So while the IRS is certainly not a good guy here they have been terrible about being forthcoming. Are there any actual real victims? Folks, this scandal is not black and white since frankly two wrongs don’t make a right. We know what really is working here for Republicans. Beating up the IRS, good for the base. Good politics there makes for great fundraising e-mails. But let’s remember what the controversy itself is about.
The problem is that Chuck Todd is flat-out wrong. 501c4s are not a way to engage in political spending. They are issue advocacy groups, and always have been — for nearly 100 years. Never until this administration has anyone had a problem with 501c4s.
The real crux of the problem is that the IRS attempting to try to turn issue advocacy — which is a first amendment, free speech issue — into political speech, so they can try to curb it. This was clearly evident in the recent uproar with the IRS trying to re-write the rules on 501c4s, which generated tens of thousands of comments in protest.
The short version is that issue advocacy deals with issues (free speech) and is not “political”, whereas advocating for a candidate or a party is “political”. It may not be a perfect divider, but it has worked quite well, and no one has even suggested anything better.
Proving Chuck Todd to be even more clueless is the fact that 501 c4 organizations do not really get any tax benefits from their “tax exemption”. All a 501c4 is, is a group of people pooling their after tax money to pay for a non- deductible expenditure. There are never “profits”, the receipt of funds from its members is not income, and the expenditure of these funds are not “deductions”. Just as there is no tax effect from an individual spending on issue advocacy, there should be no tax effect from individuals pooling their funds for the same spending. The IRS granting of 501c4 status is just recognizing the obvious.
Chuck Todd is either disingenously preying on low-information viewers to not know the differences between 501c4s and other tax-exempt organizations, or else he really is that stupid. Either way, he should submit his resignation today.
by | ARTICLES, FREEDOM, GOVERNMENT, OBAMA, POLITICS, TAXES
During testimony on June 23rd, the IRS Commissioner could not name a law or statue that he has reviewed to make certain no law has been broken. Rep. Trey Gowdy did the superb questioning.
From the Weekly Standard:
“You have already said, multiple times today, that there was no evidence that you found of any criminal wrongdoing,” Gowdy said. “I want you to tell me: What criminal statutes you have evaluated?”
“I have not looked at any,” the IRS commissioner admitted.
“Well then how can you possibly tell our fellow citizens that there is no criminal wrongdoing if you don’t even know what statutes to look at?” Gowdy followed-up.
“Because I’ve seen no evidence that anyone consciously –”
“Well how would you know what elements of the crime existed? You don’t even know what statutes are in play,” Gowdy said, visibly annoyed. “I’m going to ask you again: What statutes have you evaluated?”
“Uh,” the IRS commissioner stumbled, “I think you can rely on common sense–”
“Common sense? Instead of the criminal code, you want to rely on common sense? No, Mr. Koskinen, you can shake your head all you want to, commissioner. You have said today that there’s no evidence of criminal wrongdoing and I’m asking you what criminal statutes you have reviewed to reach that conclusion.”
“I reviewed no criminal statutes,” said the IRS commissioner.
You can watch the testimony here:
by | ARTICLES, CONSTITUTION, FREEDOM, GOVERNMENT, OBAMA, TAXES
Even though the IRS claims it lost all of Lerner’s emails due to a hard drive crash, as least some of those appear at some point to have been archived (the ones from 2009): As reported,
“House congressional investigators have requested emails from 2009 to 2011, when the IRS division led by Lerner began targeting for extra scrutiny Tea Party and other conservative nonprofits applying for tax-exempt status.
The IRS had a contract with email-achiever Sonasoft in effect at least through 2009, according to the website FedSpending.org.
That same year, the company tweeted: “The IRS uses Sonasoft to back up their servers, why wouldn’t you choose them to protect your servers?”
And a document on the company website suggests its system “archives all email content and so reduces the risk of non-compliance with legal, regulatory and other obligations to preserve critical business content.”
However, whether Sonasoft’s government contract extended through 2011 or if the company had the capacity to save every email from such a large agency remains unclear.”
The saga continues.
