Federal taxes are at their lowest point in decades

After filing my taxes for 2010, I noticed that my effective tax rate was just under 10%. This is about as low as it has ever been. Why all of the Tea Party angst? Republicans continue to keep screaming about taxes while they have no concept of economic reality. The reality I'm talking about is the need to raise revenue to pay for their ridiculous war in Iraq and the failings of the Bush administration to keep the economy on course. It's funny how Republicans never mentioned the deficit when Bush was President but they blast Obama daily for inheriting his mess.

There is a great web site that I happened upon the other day called; "VisualizingEconomics.com". In one article, the top marginal tax rates from 1916 to 2010 are charted. Categories of taxation on the chart include income tax, corporate tax and capital gains for the period. Just look at the picture; a picture is worth a thousand words in this case. I'm still not sure that Republicans will get it as they are still tied to Reagan voodoo economics that has caused our massive Federal deficit.

I have a smaller problem with lowering the corporate tax rate from the current 35% to 25% as even Obama has suggested. The key here is to have 100% of U.S. corporations paying taxes, not the current 25%. Corporate lobbyists have done a great job making sure their interests avoid taxes. The middle class has no such luxury in this country.

So why all of the fuss about taxes? It's truly a ruse created by the Republican Party to win votes through radical propaganda. Barack only wants to turn the green line on the chart back to where it was during the Clinton administration. Remember, this is only being considered for those incomes that exceed $250,000 per year (35% to 39%). Please note that this rate was 91% during the Eisenhower administration and at 50% during the Reagan administration.

Republicans continue to say that America has spoken because of the 2010 election. I hate to clue them in but, Barack Obama won in 2008 by over 5 million votes and ran on this very concept. Barack stood in front of the American people and insisted that the top marginal tax rate needed to be where it was during the Clinton administration. Tea Party Republicans are simply wrong.

tomtoak

Tax cuts for the rich killing the middle class

The title of this article says it all, but nobody could say it better than Berkley Bedell. Berkley is a businessman and former politician that dedicated his life to making things better for other people. You have to read his own story (click here).

Yes, America is badly hurt by tax cuts for the rich. There may have been a time to reduce taxes on the wealthy, but that time is not now. The wealthy are continuing to pay a smaller and smaller percentage of tax while the middle class struggles to pay bills on a daily basis. Reaganomics has gone too far. Supply side economic theory has done nothing but make the wealthy wealthier while impoverishing the middle class. Enough is enough!

By the way; my letter to the Providence Journal in support of Governor Chafee's tax plan finally was published. I applaud the Journal for publishing my thoughts, although I must say there is a story within the story that I will not repeat here. I must say that you need a very thick skin to publish these days. Individual opinion seems to mean less in this country. It seems like you have to belong to a "tea party" or something. Offer your opinion and you get swamped by brickbats that do not have a clue about what you are saying. The comments to my opinion piece were largely attacks on my person that had no foundation. The authors of those attacks have probably listened to talk radio for far too long and have no right to question my integrity.

If you have read this blog, you will know that many of Berkley Bedell's comments have been discussed here for some time. Berkley is the age of my mother and he makes me realize that there are still great Americans in this country with the age and wisdom to guide us forward. Thank you Berkley for you service to us all. Please make sure you read Berkley's story (click here).

tomtoak

Privatization and Potholes

How's your car doing? I think one thing that will pick up the economy in the next six months is repairs to automobiles because of the massive number of potholes in this state. How did we get here and why? I'm back to my favorite presidential impostor, Ronald Reagan. Now Reagan really had nothing to do with the way things were run in Rhode Island, but he did set in motion the the privatization notion.

A few decades ago, the State Department of Transportation had strategically located road crews available that would fix potholes within a few days of their appearance. As the privatization craze moved forward, news crews and politicians jumped on any story of impropriety; you know, so and so fixed his own driveway on state time with state equipment; serious problems no doubt. Do you think for a moment that this does not go on with privatized services? You know; private folks fixing something that is not the state's responsibility, but charging the state anyway. Consequently, the State reduced it's contingent of DOT work crews and decided that the private sector would do it better.

Think of the bureaucracy. In days gone by, a pothole would appear and some politician would hear about it and complain to the DOT. There would be a crew out there that day fixing the road. What happens today? Well; we need time to define the problem, then we need to develop specifications for fixing the problem. Now; we need to have another agency of government approve those specifications. Now; we have to go out to bid, giving bidders ample time to prepare their bids. Now; we open the bids and hopefully go with the low bidder. Now; we have to write a contract. The contract has to be reviewed by another government entity, a group called lawyers. Now; changes to the contract have to be approved. But that's not all; today the state doesn't have enough engineers of their own to manage the projects. Now; we have to hire privatized help to watch over the privatized help. The same steps taken earlier to find a contractor need to be repeated. Eventually, contracts are awarded and by this time your car is ready for the dump. Not only that, cost overruns are considered to be a part of the game and tolerated.

Now in days gone by, we had some trained state employees that did a fairly adequate job. At least when they were employed, our potholes didn't grow to the size of a Volkswagen Beetle. This is an important consideration when managing road systems. Fix the problems when they are small. More importantly, the state had ready labor at it's fingertips to perform an untold number of additional tasks that; you guessed it, are now privatized. Snowplowing, street sweeping, road grading, bridge maintenance, brush and tree removal, line painting and the list goes on.

Now the State DOT still has crews that do some of this work, but nothing like it did 20 years ago. Have our roads gotten better? Has the state saved money? Ever notice how long it takes to complete road projects these days when the privatized crews start breaking ground. You have all seen it; projects that should take 3 months take 3 years.

The state is now throwing stimulus money on the years of neglect. The neglect can be tied directly to the reduction in state capabilities, not the weather. If you think that our roads are being maintained for less money today than 20 years ago; all things being equal, I have some land to sell you in Florida.

tomtoak

Privatization Myths - Reagan's Mistake

I want to talk about what I feel is the largest misconception regarding the operation of government. That's right, privatization is in large part a myth. Ronald Reagan's disaster of leadership can be summed up in this one word, privatization. Reagan didn't invent it. It's probably been around for centuries, at least that was one story I read. What Reagan did was to move this issue to the front burner, because he felt that government was the problem. He created a commission to study the ways that government could be downsized by turning over jobs to the private sector.

I started preparing public budgets in the 1980s and I vividly remember the time when privatization was the answer to all of the country's ills. I used to fight for a 4 or 5% increase in my budget each year and I would be livid when I was told, you're only getting 3%. How could I make ends meet? As privatization became the rage, I noticed something quite different; now I was told you have to cut your budget 10%. That would be difficult if it happened one year; funny thing though, it kept on happening, year after year after year.

Why do people believe that private business can do it cheaper? We just went through a period when we saw story after story in the Providence Journal about the cost of the privatized work force. Some 650 employees were hired by the State through the private sector. It turns out that the overhead cost was over 100%. We were told that this was standard practice in the industry. Secretaries that could be at work for the state for half the cost were being paid by private entities, while the connected folks took off with millions. At least this story got reported.

When I retired from the State, my exit interview was focused on the costs of privatization and the sham that it is. I outlined my disgust with a system that would not hire any new employee, yet it would pay the private sector $850 thousand for a j0b that should only cost $200 thousand. Contractors being paid to watch over contractors is the way the Republican leadership sees things. In this case that I'm very familiar with, a contractor was paid $45 thousand to supervise the job site. If the state hired the construction engineers that it should have, that person could watch over a dozen construction projects. Hell, they used to! The entire project was bloated with contractor rip-offs. I had a good feel for this as I had just contracted for the building of my own home. My home was 3000 square feet and the contract was close to $200 thousand. This State contract involved a building that was a lot smaller and cost taxpayers $850 thousand.

Remember the $1million dollar lawyer the Department of Environmental Management hired for the conduct of a single case? Tell me that the Public sector can't do this cheaper and I'll call you a fool.

How about "Blackwater", remember them? They just changed their name because of their incompetence in Iraq. Iraq has to be the first outrageously privatized war in history. What do you think about paying a mercenary $500 thousand each year for a job that was formally done by our own military? This is cheaper than paying a soldier? The head of "Blackwater" could not even tell Congress how much money he made, although he said it was over $1 million per year. This compares to the $160 thousand that General Petraeus was making. What about the no-bid contracts in Iraq? You remember; "Halliburton"!

Privatization merely replaces public transparency with a profit culture that is out of our view. It's out of our view until the private sector starts asking for bailouts! Ronald Reagan got it wrong and is partially responsible for today's financial disaster. Privatization as cost savings for government is in large part a myth. If you don't believe me, just google "privatization myths". Government is not the problem, the Reagan sheep are!

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