Sunday, January 21, 2018

A Taxing Dilemma

The first paycheck of 2018 has been received by most American workers.  And I've seen several posts on Facebook from people lamenting that their take-home pay actually went down by a few dollars, or only went up by a few dollars, then using that "evidence" to criticize the tax cut passed in December.

This is tragic.

It's tragic that people work hard for their money, but don't pay attention to it.  Their paychecks should instead be diverted to someone like The Curmudgeon, who would manage it for them, and put them on a nice little allowance.

To those complainers, let me speak plainly.  And slowly.  Read this over and over and over until you understand it.  I'll even put it in all caps for you:

THE TAX CUT IS NOT YET REFLECTED IN YOUR PAYCHECK.

Take your time.  Keep reading it.  I'll wait.

Okay, now, got it?  See, the IRS hasn't yet had time to update the tax tables for the new brackets, nor to distribute withholding schedules to employers.  So there is no way employers are able to change your pay to reflect the new tax code.  (And no, they wouldn't estimate it - if an employer doesn't accurately withhold, it faces penalties.)

So the effects of the tax cut have not yet been felt by us working stiffs who receive a paycheck.  (Nor have they yet been felt by corporations, yet many of them are already paying bonuses and higher wages to their workers, but that's another post for another day.)

"But wait!" you cry, "My take-home pay amount changed!"

Okay, fine.  Here's what you do:

Look at your most recent pay stub, and compare it to the last one from 2017.  Then figure out why the net amount changed.  (Hint: it'll be due to the amounts that are different between the two pay stubs.)

Maybe you got a small raise, and that's why your check is a little bit more.  Maybe your state taxes changed.  Maybe you changed your withholding by filing a new W-4, and just forgot.  Or maybe your insurance premiums changed.

It's likely insurance, because premiums typically change with every plan year, and most plan years begin January 1.  And insurance premiums almost always go up (especially now, under the not-so-Affordable Care Act).

One thing is for certain: any change in your take-home pay is NOT due to the tax bill, because it isn't yet reflected in your pay stub.  (Go back and read paragraphs five and seven, if it helps.)

Now, once the tax cut is reflected in your take-home pay, to anyone who wants to complain about how small the difference is, let me just say two things: first, check your voter registration.  If you're a registered Democrat, you might want to consider changing your registration.  Because if you want to pay less in taxes, you are by definition a conservative.  Democrats believe in big government, funded by high taxes.  (Usually on everyone but themselves.)  So if you want lower taxes, you're a conservative.

And second, if you search your soul and determine that, no, you're really not a conservative, and you really do believe paying more in taxes is the patriotic thing to do (like your beloved President Obama stated), then by all means, when you file your taxes in 2018, add in the amount you saved from the tax cut and pay the extra tax.  There's no law against it.


Better still, just pay that amount to The Curmudgeon.  I personally guarantee I will deploy those funds more effectively than Congress can.

Saturday, January 20, 2018

A Private Sector Analogy

Imagine a large, multi-national corporation, one that employs 2.8 million workers.  This is a publicly-traded company, with shareholders who provide capital and a board of directors that provides governance and oversight.

Now, let's say the board is divided roughly equally between two factions, each of which wants very different things.  Further, let's assume these factions get so bogged down in in-fighting and political gamesmanship that the politics become the focus, rather than acting in the best interest of the shareholders, which is what corporations are in business to do.

In fact, let's assume that things get so bad, the board can't even approve an operating budget.  Instead, they pass a series of short-term measures permitting management to spend a limited amount of money on only the most basic business functions.

Every time a long-term operating budget is considered, each of the board's factions seeks to attach items to the approval vote that have absolutely nothing to do with funding long-term operations of the business, nor with acting in the best interest of all the firm's shareholders, and the opposing faction will refuse to consider those additional measures.

Thus, the operating budget vote fails every time, not because the requested budget amount is too high, or the allocation of budget resources is inappropriate, but because each side seeks to turn the budgeting process into a political football, knowing that its requests will be so unpalatable to the opposing faction that the budget vote will fail.  Then, each faction can blame the other, seeking to sow discord among the shareholders.

Why?  Simple: as long as the shareholders remain divided, the divided board can continue to serve as directors in perpetuity, and enjoy the benefits that accrue to being a director of the corporation.

None of the shareholders will demand change on the board.  Instead, they just get sucked into the board's political gamesmanship.  And like the sheep they are, they'll continue to support the board members whose spin they buy into, never recognizing the truth that the entire board is corrupt and dysfunctional, and its political warring does nothing to further the corporation, or to serve its shareholders.

What would happen to such a company?  In the private sector, it could never get funding.  Without a budget, analysts wouldn't be able to forecast the company's earnings, thus they'd never recommend its stock as a "buy."  Instead, every analyst in the market would issue a strong "sell" recommendation.  Potential investors wouldn't put in capital.  The company's stock price would plunge.  Ultimately, the business would fail.

Folks, this is exactly what happens with the federal government every time we get one of these shutdowns.  The only difference is that the board is made up of our elected legislators, the CEO is the President, and we the sheeple are the shareholders.

Except we're not shareholders in the traditional sense; we've got a gun to our heads in the form of the tax code.  We don't have the option to not buy stock - our "investment" is our tax dollars.  The capital we provide to fund America, Inc.'s operations is provided involuntarily.

Our vote on the board members, however, IS our right, and that can't be taken from us.  If we can stop blindly bleating long enough to recognize that the problem lies with BOTH factions, and with the process itself, maybe we'll grow the cojones to vote only for board candidates who will fix the process once and for all.

Now, the Curmudgeon always seeks to educate and inform.  So let's look at the current shutdown in light of the long history of government shutdowns (yes, this isn't the first time this has happened), and in light of the current situation.

First, this is the 18th government shutdown since the current method of appropriations approval has been in place, dating back to President Reagan's presidency.  In fact, President Obama "weaponized" the shutdown process, shutting down access to national monuments and national parks when this nonsense happened under his watch.  At least this time, those facilities are remaining open to the public, even if some aspects, such as visitors' centers, are not open.

Second, it is always a political football.  The appropriations measure that would fund ongoing government operations winds up being tied to some unrelated, ancillary measure that one party or the other wants, and the party that wants that ancillary measure uses the government funding vote to further its partisan agenda.

Here are the facts as they relate to the current situation.  First, no one has voted to shut down the government.  That is a false narrative that has been promulgated by the media.  Rather, the Senate failed to vote to fund the government.  That distinction is important to anyone who's paying attention.

Second, while it is true that the government has never shut down when one party had control of the House, the Senate and the White House, this cannot be blamed on the Republican party.  (Note that I am neither Republican nor Democrat; I am a registered Independent.)

The Republican-controlled House of Representatives voted in majority to fund the government, not to allow it to shut down.  Some Republicans voted against the measure, and some Democrats voted for it.  Thus we can't blame the House.

The Republican-controlled Senate failed to vote in majority to fund the government rather than allow it to shut down (more on that later).  So we can blame the Senate, but at this point, we can't blame any one party.

As for the Republican-controlled White House, we can hardly blame the President, as no bill has been presented for him to sign.  The House approved a bill, but the Senate failed to approve it.  The President cannot be held responsible for not signing a bill that was not delivered to his desk.

Now, what of the Senate's failure to approve a spending bill?  Here's the gist of it: neither the Republicans nor the Democrats want the government to shut down.  And neither party wants to see our military personnel not be paid; that would be a sacrilege.

Beyond that, the Dems want a path to citizenship for the DACA "dreamers."  That's fine; the Republicans are willing to concede to that.  But in exchange, they want to stem the future tide of illegal immigration by providing for border security.  No one can argue that illegal immigration is a problem in the U.S.; Bill Clinton and Barack Obama argued in favor of that very point.

However, the Dems were only willing to provide a small fraction of the funding necessary to provide for border security.  So basically, the position of the Senate Democratic leadership, as presented by Chuck Schumer, was, "We want a path to citizenship for the 'dreamers,' but in exchange, we're only willing to provide a small portion of the funding necessary to provide border security to prevent future DACA-type situations."

That's not a compromise, that's a hostage situation.  Knowing that a successful Senate vote on funding the government (which has nothing to do with DACA or border security) requires a number of Democrats to get on board, Schumer et al used the funding process as a negotiating tactic to add in something his party wanted - a DACA resolution - but without being willing to provide the quid pro quo of border security.

And that's why we are where we are today.  If we were to strip out the totally extraneous issue of immigration from the question of ongoing government funding, there would be no shutdown.  If the Dems would accept a compromise along the lines of a DACA resolution in exchange for full border security, there would be no shutdown.

Note that, not only did the House approve ongoing government funding, but a majority of Republican Senators voted to fund the government while a majority of Democrat Senators voted against it, and the Republican President stood ready to sign an ongoing funding bill approved by both houses of Congress.  So how is this Republicans' fault?

Now, having said this, let me say that a government shutdown is in no one's best interest.  Not paying our military personnel is unconscionable.  Moreover, I have family members who are federal employees, and their families are dependent on their ongoing incomes.  They should not be victimized by the political footballization of their livelihoods.  This is simply and plainly wrong.

Let me next say, related to my initial private sector comparison, that this is why we should all favor lower taxes.  What would never be tolerated in the private sector is considered business as usual in the public sector, and this is why the private sector is always more efficient in deploying the dollars entrusted to it than the public sector.  In short, I'd rather keep more of my money and let private businesses solve our problems than entrust it to the government.  (Lest you doubt this, consider the criticisms of the government response to the catastrophic hurricanes this past year, while private businesses stepped in and helped provide relief far more efficiently.)

Thus, we should all be in favor of paying less in taxes for smaller government, and relying more on the more efficient and effective private sector to solve our problems.

Finally, here's the Curmudgeon's message to every member of Congress:  You work for me.  I pay your salary.  Whether you are my Senator or Representative, or are from another district or state, I pay you, through my tax dollars.  Thus, you work for me, and I own you.  And you'd better by God get your sorry arse in line and do the job I pay you to do, or by God I will do whatever I have to do to bring you home, and you can try to get a job in the private sector, like the rest of us stiffs, and we'll replace you with someone who can get the job done.  You are not special.  You are not privileged.  You are my employee, and I expect you to work for me, not for you.  Thank me later.


If we all take that line, this country actually has a chance of succeeding, and competing, on the world stage.  If we don't, I'm afraid we're destined for banana republic status.