Considering state and federal income taxes, as well as Social Security and Medicare taxes, we had an effective tax rate of 16.5%. Mitt Romney, on the other hand, had an effective tax rate of 13.9% on over $20 million of income in 2010, as has been widely reported. The news reports I have seen do not include information on whether Social Security or Medicare taxes are included in that total; however, since Social Security taxes are capped  on the first $100,000 or so of income and Medicare taxes are 1.45% of your income, including those taxes in his amount would still put it below our effective rate. His “estimated” tax rate of 15.4% in 2011 is also below our rate. If you include the employer portions of Social Security and Medicare taxes in both our income and tax burden, as many economists are wont to do, then the total tax burden on us is a hair under 20%, which is a bit more lopsided. Again, due to caps, Romney’s total tax burden with this calculation would increase no more than three percentage points, and I’m not even sure that carried interest income is subject to Medicare taxes.

A couple of observations on this. First, either a 16.5% or 20% effective tax rate does not seem “onerous” or “job-killing” or any other descriptors that some people use for income taxes. Sure, I’m not including the sales tax rate, gas taxes, or any other excise or property taxes, but all the same, the end result not that we’re working so the government can take half of our income. Second, our income tax burden was reduced by some middle-class tax perks, such as the deduction of student loan interest payments and tuition. Perks that I don’t happen to agree with, but they are the law and so it is what it is.

Third, it is wrong to pay a higher tax rate on money you get from going into work five days a week than money you get in a big pile that’s sitting around. If you are a cop, teacher, office worker, even a doctor or lawyer, you pay a higher tax rate than if you draw an income on a huge pile of money, as Mitt Romney does. This is not right.

I’m actually no more in favor of the Buffet Rule than I am other tax code complications: it makes taxes harder, not easier, to calculate. As I’ve said before, I prefer a drastically simplified, progressive income tax, without most deductions, loopholes, Alternative Minimum Taxes, and the like. Even so, something definitely needs to be fixed in our tax code. I’d like it if Romney boosted his contribution to something over ours.

• Current Mood: Foggy
• Currently Listening To: "I Saw Her Standing There", The Beatles

First, I’m going to ignore the anti gay marriage amendment, about which much has already been said. I’ll also ignore some of the more fantastic amendments, such as replacing all state taxes with a sales tax on every good and service in the state. That, however, still leaves plenty to talk about. And why not start with the amendment requiring a three-fifths majority to raise taxes? Because you know who else requires a supermajority to raise taxes? That’s right, California. Even people from California will admit that the state is hardly a paragon of good governance, what with its constant budget crises caused by that very rule. I’d also throw into that same pot bills that limit spending to some arbitrary amount. Colorado went down that road until they suspended it because of the trouble it caused. The last thing this state needs, considering all of the special sessions and shutdowns in recent years, is an amendment that makes it even harder to balance the budget.

Photo ID is the next big one. Because Dayton vetoed the statute that the Republicans passed, they are trying to evade him and put it directly to the voters. Such an amendment has broad support in the public, meaning that it if were on the ballot, there’s a good chance it would pass. It’s still unclear which voting problems it would solve, aside from the problem that people who don’t have current IDs, like the elderly, poor, and students, can vote. It wouldn’t solve the non-existent problems of non-citizens voting, or dead people voting, or even people voting twice. If such an amendment had a requirement for a comprehensive, year-round government effort to get to every person in the state and ensure they had a free ID, then perhaps it wouldn’t be a problem. But of course it doesn’t.

Nullification? It looks like a number of state legislatures need to go back to high school civics class and re-learn what that Civil War was fought over.

Of course, we can’t forget “Right to Work”. Unions have been losing power for decades and union membership is at a level not seen since the Great Depression. Thus, I really don’t see much point to this one; the actual economic record when it comes to whether these laws attract business development is decidedly muddy. As with most of his statements, I tend to agree with Martin Luther King Jr. on this one.

Taking a look at all these amendments, it would appear that the goal is to turn Minnesota into a cross between California and Mississippi. I’ll pass, and I believe that most of the people in Minnesota would agree. There are a lot of thing that make this a great state: the community, the belief that government should work well and not in a dysfunctional manner, and that everybody deserves a chance. These amendments would do a lot to remove what makes Minnesota great.

• Current Mood: Monday
• Currently Listening To: "I Want To Know What Love Is", Foreigner

I took the test, and received a score of 33, which puts me squarely in the category of “A first-generation upper-middle-class person with middle class parents.” My parents were certainly middle class; I would generally not consider myself upper middle class from a wealth perspective. Perhaps from an educational standpoint maybe, although there were no questions on who paid for that college and post-graduate education, just one of a whole host of questions that were omitted for him to prove a point.

My low score is supposed to be indicative of how out of touch I am with the “common man”, though, and with this, I do have to disagree. First, the questions are quite arbitrary, and even counter to what he is trying to prove: is buying Budweiser, now owned by InBev, more “American” than buying a beer that is brewed within 30 miles of my house and employs workers only in America? Why would I go to Applebee’s when I live in an area that has much better restaurants available for the same price? Sure, I understand that in many places, basic cable, chain stores, and terrible beer are all that is available. However, should I choose to live in a place that allows me a wider array of choices, have I somehow lost touch with the zeitgeist?

Second, as pointed out in one of the links, there is little correlation between scoring highly and having empathy for, well, for whomever Murray thinks needs the help, so the rural, conservative, Evangelical Christian viewpoint that is so rarely heard these days. David Brooks, he of the salad bar at Applebee’s, has no idea what life is like for the hourly worker. Nor would Murray, frankly: the world is quite full of highly-educated pundits who continually lecture us on what the “less educated” and “lower classes” want, without ever actually deigning to find those things out for themselves. Look no further than Murray’s belief that poorer people choose to work less and so are at fault for their poverty (and yes, we’ve heard this before).

Murray, like a lot of people on one side of the aisle these days, think that problems such as unemployment, low wages, and foreclosures are due to personal moral failings. They refuse to see any of the large-scale structural changes both in the economy and in the policies of our own government that have led to these issues. After all, it is far easier to blame the individual than to seriously take a look at our society and ask if there are things we could change through policies to make things easier for those who are less well off. Especially if it means people like Murray would have to both 1) pay more taxes, and 2) have some real empathy for people instead of the fake stuff.

I certainly have few illusions that my beliefs make up anything near a majority of the country. I know they don’t. All the same, though, I don’t think I need to regularly eat at Chili’s to participate in a discussion about why a huge chunk of people are falling behind in this country. In fact, I want such a discussion, unlike those like Murray who simply blame the victims.

• Current Mood: Sore

One thing that the top 1% say, of any measure, is that those people in the Occupy Wall Street protests should probably be spending their time in better ways. In the NYT article, Anthony Bonomo, in that top 1%, says, “If those people could camp out in that park all day, why aren’t they out looking for a job?” It’s a common refrain, and not just from the top of the heap. Many people have said that who are nowhere near that 1%, who look upon the protests as the self-indulgence of a spoiled minority who are too lazy or too entitled to actually work.

Why don’t those damn hippies get a job? Well, the vast majority of them have a job, actually. But what about those slackers who don’t? This picture is all you need to know to reply to that:

There are currently four unemployed persons for every job opening. It is numerically impossible for every unemployed person to get a job. “Get A Job, Hippie!” may have made sense in 2000 when there was a bit over one unemployed person per job opening; today it is little more than a cruel insult. And this only counts the unemployed, not the underemployed or people who have dropped out of the workforce entirely. I’m sure if you counted the people who are part-time and looking for full-time work, or the people who have just plain given up, the numbers would be even worse.

It’s intellectually lazy to dismiss protesters as lazy no-goodniks who just need to take a shower, put on a suit, and start being productive members of society. The top 1% of income earners may work hard, and they may feel that they are being unfairly targeted in today’s economic climate. But the unemployed are even more unfairly targeted, and unlike the top 1%, they don’t have the income to help make them feel better.

• Current Mood: Pain
• Currently Reading: "Requiem For A Dream", Hubert Selby Jr.

Capitalism, like a gun or a hammer or a nail, is a tool. It’s a system. It has zero inherent morality. Morality only comes into play when humans decide to use those tools. A hammer that is used to build a house through Habitat for Humanity would be a moral use of that hammer, most people would say. A hammer used to break your neighbor’s window is immoral, unless you are breaking the window to get him out of a burning house, in which case it is moral again. A gun used to commit a crime is used immorally, a gun used to protect yourself from an attacker is seem by most people as a moral use of a weapon. In all of these examples, the objects are just tools, free from goodness or badness until they are used in some manner by people capable of being good and bad.

The free market is the same way. It’s a tool. When it is used by businesses to make both the business and the customer better off, most people would agree that it is a moral transaction. When a private equity firm swoops in, liquidates a business, lays off all the employees, and enriches nobody but the initial investors, people may debate the morality of such a thing. It’s not an attack against the amoral system, it’s an attack against how the system is being used. Saying critics are “attacking capitalism” in this case is as absurd as saying people are “attacking cars” when they fault criminals for drunk driving.

As I’ve said many times before, I happen to think that the free market is a mighty useful system for a lot of things. I won’t, however, ascribe morality to it a priori. It’s not inherently moral; it’s not inherently immoral. What matters is what people do within and throughout the system. We can all agree to use a system while still debating the morality of using that system in certain ways. It’s perfectly acceptable to try to ban things largely considered “wrong” even if they are allowed within the rules of the free market. Defining “right” and “wrong” and getting that balance right is difficult, of course, but it’s a good and healthy debate. I welcome an honest debate about the merits of private equity firms, of CDOs, and of payday lenders, to name a few (and there are good arguments on both sides of the debate for those three examples). I shun, though, any attempt by people to close off the debate by claiming it’s an attack against the free market. And that is exactly what Romney is doing.

• Current Mood: Sore
• Currently Listening To: "Long, Long, Long", The Beatles
• Currently Reading: "The Compass of Pleasure", David J. Linden

Here’s the deal: CitiMortgage has a new program to help people pay off their mortgages more quickly. Instead of making 12 monthly payments a year, this program allows people to make 26 half-payments a year to match most people’s biweekly paycheck schedule. The result, one extra mortgage payment per year, will reduce the time it takes to pay off the mortgage, along with the total interest charged. Good deal, right? Except for the strings.

See, CitiMortgage charges $375 to set it up, then $1.50 per payment for “processing”. And what does it do with your money? It holds onto that half-payment for a couple weeks, then bundles it with the other half-payment to remit the payment in full. Yes, it floats your money for half the year. So CitiMortgage is making money on you in several ways from this scheme. No wonder people are not amused.

Is this something that should be regulated? I think two points are relevant here. First, as the article points out, it is impossible to set up such a scheme using Citi’s available bill paying tools, despite the fact that such a payment plan is not necessarily harder for banks to deal with. On the other hand, there are other ways to get the same effect, such as increasing each mortgage payment by 1/12th, and setting that up as an auto-payment. I’m not sure if Citi would allow this setup.

The second point is the feasibility of consumer choice. If you don’t like a McRib sandwich, you have little problem finding someplace else to eat. However, when it comes to mortgages, you can’t really up and take your mortgage elsewhere if you don’t like the fees. Most people, when they shop for a mortgage, are only concerned about the upfront fees and the interest rate. They don’t care much about extra fees down the line. Perhaps one of the efforts of the CFPB that has already started, that of revamping the mortgage disclosure forms, will help. But even with more disclosure, it is unlikely that people would prioritize future fees when choosing a mortgage company. Plus, those fees could change in the future. Thus, the lack of the ability for a consumer to decide they don’t like the fees and take their business elsewhere is severely hindered.

Clearly, the CFPB is going to have a lot of details to work through with regards to regulating financial products. It won’t be easy. Frankly, I’m not sure what the correct course of action would be for this CitiMortgage product. Generally, I think most people would agree that making people pay for using their own money in the manner they want is not acceptable, aside from nominal fees. Nobody likes ballooning ATM fees, or monthly fees to use a debit card, and so forth. Maybe the solution would be to prevent Citi from doing this. Or maybe the solution would be to make Citi tell its customers there are free ways to achieve the same end, and let people choose the expensive option if they really want to.

I think we are going to be hearing a lot more stories about similar products. To the extent they get publicity, I think it’s going to be good for the debate.

• Current Mood: Calm
• Currently Listening To: "We Gotta Get Out Of This Place", The Animals

Remember the part in “I’m Just A Bill” where a piece of legislation is passed by both the House and Senate and signed by the President to become law? Of course you do! Remember the part where the Senate minority has pro forma sessions to prevent the President from appointing a person to carry out that law? Probably not, because abuse of the filibuster is a relatively recent phenomenon, popularized by Republicans. The law that created the CFPB was passed by Congress and signed by the President. It is the law. Republicans have been playing fast and loose with Senate rules to prevent that law from being enacted. To complain about Obama’s actions today rings quite hollow, especially since the filibuster is mentioned just as many times in the Constitution as recess appointments: zero.

Have Democrats used the filibuster in the past to prevent people from being appointed to positions? Yes, they have. But that certainly doesn’t make it right. The filibuster needs to go, and frankly, we need to stop requiring Congress to confirm any sub-cabinet level positions. Yes, I know that without a filibuster, a Republican president and Congressional majority could do whatever they wanted. However, the filibuster has been used far more often to block progressive legislation that conservative legislation. It needs to go.

I feel so bad for Mitch McConnell that his Senate minority is no longer able to call the shots with regards to Richard Cordray. But in the end, that’s what being in the minority means: you hem and haw. You don’t block the enactment of a bill properly passed into law.

• Current Mood: Satiated
• Currently Listening To: "Something", The Beatles

Paul Krugman has a very good article on government debt. Government debt is not like owing a mortgage to the bank. For most government debt, the debtor and the borrower are one and the same. As a taxpayer, I am “responsible” for a portion of the U.S. debt. But I also own a portion of that debt in my retirement account. Much of that debt is similarly owned by fellow citizens. In addition, as the blog post points out, we own a lot of foreign government debt too, and overall, we haven’t had a huge net increase in foreigners owning U.S. debt. People may complain about how China and Japan “own” the U.S. now, but that’s not really true. We own ourselves.

Miniscule bond yields mean that nobody is clamoring for us to pay the bill soon. The best analog to the U.S. debt problem is not a family that is six months late on their mortgage payment. Instead, it’s probably the credit card that thinks so highly of us that they are going to extend our 0% teaser rate a bit longer. That makes a big difference as to what course of action to take.

• Current Mood: Exhausted
• Currently Listening To: "Take Me to the River", Talking Heads

The issue at hand is, as Kevin Drum reports, one of the most underreported stories of the year. Catholic bishops in Illinois, as in many other states, are leaving the charity business because they would be forced to follow non-discrimination laws aimed at the GLBT community. If that was the sum total of the issue, frankly it wouldn’t be a problem: if an entity doesn’t want to follow the requirements of a government contract, then they have every right to stop seeking out contracts. But sadly, it doesn’t stop there. Instead, the church is claiming that they are being subjected to religious discrimination. As a result, they are asking for the right to continue discriminating while receiving government funding.

I’m blown away by the audacity of this stance. Would the church be willing to refuse to service non-whites, or maybe mixed-race couples, or people with disabilities? Highly doubtful, and even if they did, very few people would defend such an action. Yet it’s acceptable to not only refuse services to gay people, but to demand that the government let them continue to discriminate against them indefinitely. To not allow it is to lead the churches to be the victims of “intolerance”. Yes, they say that without a hint of irony.

If you think that there is something wrong with gays getting married or being parents or being treated like everybody else, then that’s your right. But don’t demand that the rest of the world indulge your beliefs, or worse yet, give you taxpayer money for treating others like second-class citizens. Especially when the future is not the discriminatory past you have been living in.

• Currently Listening To: "Daughter", Pearl Jam
• Currently Reading: "Flatland: A Romance of Many Dimensions", Edwin Abbott Abbott
• Just Watched: Crazy Stupid Love

There is no reason a Republican should hate a health care exchange. It’s the free market, or as free as you can practically get when it comes to health care. The existing health care market is not working. I fully believe in the free market when it works, but when it doesn’t, it’s time for the government to step in. Health care exchanges are probably the lightest touch the government can give when it comes to market interference. It’s as innocuous as a food court where customers can look at all the options and decide where they want to eat. That’s why health care exchanges were part of Mitt Romney’s health care plan in Massachusetts, and why Newt Gingrich essentially supported exchanges in 1994. Letting multiple insurance companies freely and transparently compete for premiums, instead of putting everybody into a single-payer insurance system, has been a bedrock principle of conservative health care reforms forever. At least when they were putting forward serious plans.

I can see why middlemen like insurance sales people would be against exchanges: it is taking away from their cut. I don’t agree, but I can sympathize. I can’t sympathize, though, with Republicans who oppose it simply to give Obama a defeat. Especially when they waste $1 million to do so. There really is no excuse for this.

• Current Mood: Engaged
• Currently Listening To: "Little Miss Strange", Jimi Hendrix