Monday, December 10, 2012

The Fiscal Cliff

As we approach the deadline the fiscal cliff looms before us. Once far off in the distance it is now upon us.

With the IMF stating we need to do something or else….

The President seems unwilling to negotiate on any terms but his own and will not budge on the tax increase for the wealthy.

While Bohener seems to be moving toward some sort of solution that will most likely be too little too late. It is not clear as to whether or not other Republicans will follow his lead.

So will we all freefall into economic disparity? Hitting rock bottom never to get up again?

The effects of “going over” are not immediate as the spending and tax structure that is affected can always be attended to in a session of Congress. The long term effect current growth and will most likely head us into another recession which would most likely be felt worldwide.

The very long term effects might be positive as it reduces a very large deficit. Whether that reduction is worth the pain most economists seem to say no and this is the worst time to make such an experiment.

So I think that a last minute deal will be made that satisfies neither party. Democrats and Republicans and will point fingers at each other for lack of leadership and once again letting down the American People.

And unfortunately I believe both parties will be correct.

Friday, December 7, 2012

Prop 39 Money to go to schools

I read that Proposition 39 money will be earmarked for schools. I think this is a good example of the waste of government here in California and how the citizens rarely benefit from slick looking political campaigns. 

This is a good example of what is wrong with California and US politics.

Prop 39 is a measure that closed a loophole in taxes for Multistate Corporations that do business in California. The idea is that many Multistate Corporations avoid taxes in California because of a rule created in the 2009 budget.

This rule essentially let Multistate Corporations choose between two tax structures. Obviously this is set up so they can choose the most advantageous of the two.

The first structure is the single sales formula. This is based on sales and the Multi State Corporation pays taxes based on sales in California

The second structure is the rule of three it allows a formula of tax structure based on proportion of sales, California Payroll and California property holdings. This is known as the factor of three.
This was a result of California ratifying the MTC or Multistate Tax Compact
This reduced the tax for Multistate Corporations tax burden in California. California then challenged the validity of the rule in a lawsuit against Gillette. California had an unfavorable decision.
California then proceeded to form a new law which would not allow this formula of the rule of three. On June 27th Governor Brown signed ab1015 into law effectively going against the 2009 budget decision and to trump the unfavorable ruling.

During this time the State of California surmises that this might be in violation of its own rules for a tax hike which requires a popular vote and the campaign for Proposition 39 begins before the ink is even wet on ab 1015

Proposition 39 was touted as a loophole that needed to be closed and those monies would go toward clean energy.

We also passed proposition 30 a tax and sales tax increase for schools. It is intended to revitalize the loss of funds to California schools.

Now the tax from prop 39 is being ear marked to go primarily to schools as a no brainer

Good times for the CTA and other unions here in California. How and if we will benefit as citizens of California will remain to be seen

California residents will now pay more for goods and more in income tax across the board. Where this new money will be spent will be lost in a quagmire of board meetings, prevailing wage jobs, and the good old boy network and political gooblygook language that none will understand.

 I question how much money was wasted on the 2009 ratification of MTC and its subsequent laws suits and ultimately the campaign for 39. I do know however who pays for it.