Once upon a time, the property tax made some sense as a way to raise governmental revenue. Most property was agricultural, and generated wealth, in terms of animals, crops and cash. But that was long ago. Now, agricultural land is a tiny fraction of our economy, and wealth is more properly measured in cash income. The ability to pay taxes depends upon one’s income, not upon one’s holdings. That is why income tax is paid on stocks when sold, not on their value when held, for example.
It is important to distinguish between the need to raise governmental income, and the means to that end. In this, the property tax no longer makes much sense, and continues to produce many pernicious and unintended consequences.
The elderly, on fixed incomes, see their assessments and taxes rise, based upon the value of neighboring homes, which are sold. Their ability to pay typically does not increase, as they get no income from their home, and their demand upon services does not increase either. Why then, accept continued property tax increases, which force people with fixed incomes to sell their homes?
Farmers see their property taxes increase, not because of anything they do, but because assessments often are based upon the possibility of a more valuable use, eg, converting the farm into a subdivision.
Landlords experience the perverse result of increased property taxes, if they invest in property improvements.
These are extreme examples, perhaps, but everyone has felt the pinch of rising property taxes as unfair, as they are asked to pay more on an assessment of expected value, rather than upon real income.
The property tax is an unfair means to raise governmental income: abolish the property tax, and base state and local revenues upon the income tax, which most fairly tracks the ability to pay.
Sunday, March 16, 2008
Saturday, March 15, 2008
Disinfectants and Public Health
Disinfectants: Marketing disinfectant products by raising public fear of bacteria runs counter to improved public health. We have evolved in a bacterial environment, and our immune systems depend upon bacterial infections to stay strong. Promoting a goal of 100% bacteria-free environments encourages disinfectant use. However, constant use will lead to resistant bacteria, and potentially great health hazards. Items such as antibacterial soaps in public wash rooms need to be banned, and people need to be told the truth about overuse of disinfectants.
Agricultural Reform
Monoculture: Intensive monoculture, or the use of only one crop variety, has become the main form of large-scale agriculture. While productivity can be high, the costs can be high, too. First, is increased soil erosion. Second, is pesticide dependency, as the pests favoring a single crop can establish themselves year-round. Third, is increased need for fertilizers. Fourth, is the loss of genetic diversity in using only one or a few different varieties of the crop. All of these costs compromise the long-term sustainability of farming.
It is important to reverse our dependency upon monoculture crops. Subsidies have to be eliminated for this kind of farming. Pesticide enforcement needs to be strengthened. Most important, genetic diversity needs to be promoted, or even required.
Factory Farming: Factory farming is heading for a dead end. Raising chickens and hogs, and fish and dairy farming under crowded conditions, increasingly rely upon constant low level doses of antibiotics. Unfortunately, such antibiotic use virtually guarantees development of resistant microbes, and increased cases of widespread disease. Rain runoff contaminated with low level antibiotics help to spread resistant organisms downstream. Farming methods which require constant antibiotic dosing need to be banned.
It is important to reverse our dependency upon monoculture crops. Subsidies have to be eliminated for this kind of farming. Pesticide enforcement needs to be strengthened. Most important, genetic diversity needs to be promoted, or even required.
Factory Farming: Factory farming is heading for a dead end. Raising chickens and hogs, and fish and dairy farming under crowded conditions, increasingly rely upon constant low level doses of antibiotics. Unfortunately, such antibiotic use virtually guarantees development of resistant microbes, and increased cases of widespread disease. Rain runoff contaminated with low level antibiotics help to spread resistant organisms downstream. Farming methods which require constant antibiotic dosing need to be banned.
Educational Reform
The country’s future depends upon properly educating its children, and we are not doing a very good job. While there have been many calls to improve our educational system, we have not yet succeeded. Here are a few modest proposals for such an improvement.
College has become too expensive for many otherwise qualified people. Our goal of equal opportunity is slipping away. Yet, a college education is more of a job requirement than ever. Every qualified student should be able to attend college.
The government should pay for college for anyone with good grades. In return, each student would commit to one year of public service for each year of college paid for. The overall program could be titled, “American Service Corps,” or ASC.
Early childhood is a time for children to learn by playing, but we subject them to discipline and passivity at ever earlier ages. We need pre-school and early school environments which allow children to follow their interests through play, well before imposing a rigid behavioral code on them. We need fun and opportunities for learning in the classroom, not more rigidity.
Elementary and High School structures tend to be lectures, but lectures are not efficient modes of learning. We think faster than we hear, meaning boredom and loss of attention are inevitable in lectures. Similarly, we learn more by doing than by sitting passively. We need to let go of the lecture as our prime teaching mechanism. Our school structures need to be more open to experimentation, and to more effective means of learning. The nation needs to begin wide-scale experimentation in alternatives to the current system.
College has become too expensive for many otherwise qualified people. Our goal of equal opportunity is slipping away. Yet, a college education is more of a job requirement than ever. Every qualified student should be able to attend college.
The government should pay for college for anyone with good grades. In return, each student would commit to one year of public service for each year of college paid for. The overall program could be titled, “American Service Corps,” or ASC.
Early childhood is a time for children to learn by playing, but we subject them to discipline and passivity at ever earlier ages. We need pre-school and early school environments which allow children to follow their interests through play, well before imposing a rigid behavioral code on them. We need fun and opportunities for learning in the classroom, not more rigidity.
Elementary and High School structures tend to be lectures, but lectures are not efficient modes of learning. We think faster than we hear, meaning boredom and loss of attention are inevitable in lectures. Similarly, we learn more by doing than by sitting passively. We need to let go of the lecture as our prime teaching mechanism. Our school structures need to be more open to experimentation, and to more effective means of learning. The nation needs to begin wide-scale experimentation in alternatives to the current system.
Corporate Accountability (2) Who Benefits from Bankruptcy?
Corporations essentially are creations of the state, by charter. It is an odd approach when the law currently provides for a corporation to be shielded from its creditors, in a bankruptcy. This places the interests of current executives and directors over those of their creditors, which is precisely what should not be allowed if they have failed in their fiduciary duties to the business. Those who go into bankruptcy should not be allowed to continue managing or profiting from the situation.
As such, corporate charters should be subject to revocation, in extreme cases, such as bankruptcy or gross violations of the law. Rather than close a business, however, states should be able to “condemn” such businesses, assume ownership, and auction them off to new owners and management. This would protect workers from the follies of executives, and provide income for the state.
As such, corporate charters should be subject to revocation, in extreme cases, such as bankruptcy or gross violations of the law. Rather than close a business, however, states should be able to “condemn” such businesses, assume ownership, and auction them off to new owners and management. This would protect workers from the follies of executives, and provide income for the state.
Corporate Accountability (1) Limited Liability
An interesting thing about the corporate shield of limited liability: it could be viewed as one of the first “family friendly” policies. Prior to the invention of the corporation, investors had unlimited liability. That is, all their wealth, including their homes and personal assets, were liable to seizure to pay their debts. Many women and children found themselves in the poorhouse as a result of such bankruptcies.
The invention of the corporation limited investor liability to the monies invested, shielding families from such catastrophic losses. In this sense, not a bad idea. However, since its start, corporations have lobbied continually to extend the concept of limited liability far beyond this modest beginning.
Today, corporate boards and officers claim free speech protections for their advertising, file slander suits for “product disparagement,” seek to minimize their personal responsibility for environmental and social damage caused by their operations, and otherwise hide behind the corporate shield. We have come a long way from limited financial liability, to minimal personal responsibility.
Restoring the original concept of limited financial liability would mean that if the corporation were judged guilty of violations of the law, then the directors and officers would be subject as individuals to appropriate civil or criminal punishment. This would provide an immediate and lasting incentive for compliance with worker safety, environmental, anti-discrimination and many other laws and regulations intended for society’s benefit.
The invention of the corporation limited investor liability to the monies invested, shielding families from such catastrophic losses. In this sense, not a bad idea. However, since its start, corporations have lobbied continually to extend the concept of limited liability far beyond this modest beginning.
Today, corporate boards and officers claim free speech protections for their advertising, file slander suits for “product disparagement,” seek to minimize their personal responsibility for environmental and social damage caused by their operations, and otherwise hide behind the corporate shield. We have come a long way from limited financial liability, to minimal personal responsibility.
Restoring the original concept of limited financial liability would mean that if the corporation were judged guilty of violations of the law, then the directors and officers would be subject as individuals to appropriate civil or criminal punishment. This would provide an immediate and lasting incentive for compliance with worker safety, environmental, anti-discrimination and many other laws and regulations intended for society’s benefit.
Restoring Fairness and Progressivity to the Income Tax
Progressivity: Once upon a time, Americans accepted a progressive income tax, in part because of an understanding that the wealthy benefited from our democratic institutions and capitalist system. The wealthy therefore owed a fair share of their income to the people as a whole, and they could pay proportionately more because they simply could afford it, without compromising their quality of life. In recent years, this principle has been under attack, and it is time to reaffirm the responsibility of the wealthy to contribute to society as a whole.
Fairness and the Alternative Minimum Tax: The core of our income tax system is an overall belief that on the whole, it is fair. Unfortunately, decades of huge numbers of special interest provisions and tax breaks, and recent tax cuts for the wealthy have undermined this belief. It is not enough to fight each provision one at a time. The way to restore fairness is to cut through the complexity of the tax code, and focus on key principles.
One option is to ensure that the principle of the Alternative Minimum Tax is a reality. For example, the following table shows how we could maintain a progressive and fair tax system, through the Alternative Minimum Tax.
Adjusted Gross Income (AGI) Minimum Tax (% x AGI)
Under $100,000 None
$100-200,000 15%
$200-300,000 20%
$300-400,000 25%
$400-500,000 30%
Over $500,000 35%
Basing the AMT only on the Adjusted Gross Income means that tax shelters, tax breaks, and tax credits, no matter how inventive, could not reduce taxes below this minimum level. This would be fair to all.
A comparable table needs to be developed for corporate taxation. For example:
Corporate AGI Minimum Tax (% x AGI)
Under $5 million None
$5-25 million 15%
$25-100 million 20%
$100-500 million 25%
$500 million - $2.5 billion 30%
Over $2.5 billion 35%
*Note that corporate AGI needs to be defined as net of reasonable business expenses, before shelters, breaks, and other creative accounting methods are applied.
This simplified application of the Alternative Minimum Tax would go a long way toward restoring fairness to the income tax.
Fairness and the Alternative Minimum Tax: The core of our income tax system is an overall belief that on the whole, it is fair. Unfortunately, decades of huge numbers of special interest provisions and tax breaks, and recent tax cuts for the wealthy have undermined this belief. It is not enough to fight each provision one at a time. The way to restore fairness is to cut through the complexity of the tax code, and focus on key principles.
One option is to ensure that the principle of the Alternative Minimum Tax is a reality. For example, the following table shows how we could maintain a progressive and fair tax system, through the Alternative Minimum Tax.
Adjusted Gross Income (AGI) Minimum Tax (% x AGI)
Under $100,000 None
$100-200,000 15%
$200-300,000 20%
$300-400,000 25%
$400-500,000 30%
Over $500,000 35%
Basing the AMT only on the Adjusted Gross Income means that tax shelters, tax breaks, and tax credits, no matter how inventive, could not reduce taxes below this minimum level. This would be fair to all.
A comparable table needs to be developed for corporate taxation. For example:
Corporate AGI Minimum Tax (% x AGI)
Under $5 million None
$5-25 million 15%
$25-100 million 20%
$100-500 million 25%
$500 million - $2.5 billion 30%
Over $2.5 billion 35%
*Note that corporate AGI needs to be defined as net of reasonable business expenses, before shelters, breaks, and other creative accounting methods are applied.
This simplified application of the Alternative Minimum Tax would go a long way toward restoring fairness to the income tax.
Cutting the Military Budget: A Posture for Peace
The U.S. spends vastly more on its military than the rest of the world, combined. We have the most advanced and best trained militaryforces. Anyone who claims that we are weak, is living in another world. However, it must be remembered that overspending on the military was a major factor in the economic collapse of the Soviet Union. The U.S. needs to learn from that example.
Serious questions must be asked about our military posture and strategy. What is the purpose of each of the hundreds of bases we have around the world? A global map of our bases vs those of any other country suggests that we want power and influence everywhere, but this is not the same as “providing for the common defense.”
Many have warned against trying to be the policeman of the world, but this is a mild analogy. A policeman is a neutral person, charged with enforcing the law. Our military is hardly neutral in its actions.
Do we need tens of thousands of soldiers in Europe, for example? What are they defending the U.S. against there? Why do we need bases in Latin America? Asia? Is any country there a threat to the U.S.? This is not a call for isolationism, as we can legitimately cooperate with other countries for common interests. However, our vast military commitments can safely be scaled back.
If we cannot justify our military presence in the eyes of host and neighboring countries, then perhaps it is time to reduce our commitments. Many bases in other countries should be closed, and our soldiers brought home. This would substantially reduce our military budget, and the risk to our soldiers. It also would send a message to the world that we are more interested in peace than in war.
Serious questions must be asked about our military posture and strategy. What is the purpose of each of the hundreds of bases we have around the world? A global map of our bases vs those of any other country suggests that we want power and influence everywhere, but this is not the same as “providing for the common defense.”
Many have warned against trying to be the policeman of the world, but this is a mild analogy. A policeman is a neutral person, charged with enforcing the law. Our military is hardly neutral in its actions.
Do we need tens of thousands of soldiers in Europe, for example? What are they defending the U.S. against there? Why do we need bases in Latin America? Asia? Is any country there a threat to the U.S.? This is not a call for isolationism, as we can legitimately cooperate with other countries for common interests. However, our vast military commitments can safely be scaled back.
If we cannot justify our military presence in the eyes of host and neighboring countries, then perhaps it is time to reduce our commitments. Many bases in other countries should be closed, and our soldiers brought home. This would substantially reduce our military budget, and the risk to our soldiers. It also would send a message to the world that we are more interested in peace than in war.
High Quality Health Care for All
Most of the discussion of controlling health care, Medicare, and Medicaid costs focuses on reducing benefits, or artificially capping payments. Neither of these approaches addresses the need for quality health care for all Americans.
One problem with the current health care system is that medical professionals generally are paid for “piece work,” for example, by the operation. This encourages both long hours and higher volume activity, neither of which improves the quality of service. We need a new paradigm.
Medical professionals should be salaried, with comfortable pay rates. Their work loads and hours should be cut as well. A new group of medical professionals should be recruited and trained, to make up for the reduced work loads. The government should pay for their medical education, under contracts which require one year of public service work, for each year of training.
By substantially increasing the number of medical professionals, we could reach the goal of high quality health care for every American.
One problem with the current health care system is that medical professionals generally are paid for “piece work,” for example, by the operation. This encourages both long hours and higher volume activity, neither of which improves the quality of service. We need a new paradigm.
Medical professionals should be salaried, with comfortable pay rates. Their work loads and hours should be cut as well. A new group of medical professionals should be recruited and trained, to make up for the reduced work loads. The government should pay for their medical education, under contracts which require one year of public service work, for each year of training.
By substantially increasing the number of medical professionals, we could reach the goal of high quality health care for every American.
Energy Independence and Putting People to Work
Space heating accounts for about one-third of U.S. energy use. A combination of better insulation and solar heating could save more than half of this energy. At the same time, the construction trades are hurting from the housing crisis, and the economy needs a stimulus.
We should train tens of thousands of new and current workers, to install better insulation and solar heating for most of the nation’s existing housing. This new public works program could start us down a 20 year path to energy independence, be a productive stimulus to the economy, and save enormous amounts of money and resources for the long-term. The major beneficiaries would be the lower and middle classes, both renters and home-owners. However, everyone would benefit from greater energy independence.
We should train tens of thousands of new and current workers, to install better insulation and solar heating for most of the nation’s existing housing. This new public works program could start us down a 20 year path to energy independence, be a productive stimulus to the economy, and save enormous amounts of money and resources for the long-term. The major beneficiaries would be the lower and middle classes, both renters and home-owners. However, everyone would benefit from greater energy independence.
Iraq is not a war
The war in Iraq is over. It was over with the declaration, “Mission Accomplished.” And, what was that mission? Neutralize the Iraqi military, remove Mr. Hussein, and eliminate weapons of mass destruction. All three were accomplished in a matter of weeks, even if it took a bit longer to verify that there were no weapons of mass destruction in Iraq.
If the war ended years ago, why is the U.S. military still there? It can’t be to remove autocrats and create democracy in the Middle East, or we also would have invaded several other countries, including those of some “allies.” It can’t be to create democracy, as the U.S. rejected the results of a free election in Gaza, because we did not like the outcome. It is a cynical contradiction to support democracy in Iraq, autocracy among our allies, and simultaneously reject the exercise of democracy elsewhere.
One suspects the goal is to control Iraqi oil, especially since the U.S. has pressed to open ownership of the oil fields to foreign investors. And, most likely, the goal is to establish a base for long-term U.S. influence in the area. Why else construct such a large embassy, or several giant military air bases?
Are these legitimate aims? If Iraq no longer presents an imminent threat to the U.S., what is the basis under international law for our continued occupation of Iraq? What can justify the deaths of hundreds of thousands of Iraqi citizens, or the creation of one or two million Iraqi refugees? What can justify the waste of 4,000 U.S. lives, tens of thousands of U.S. wounded, and a trillion dollars?
Whatever one thinks of the answers to these questions, it is long since time for us to change the rhetoric on Iraq. The war is long over. Iraq is no threat. It is time to speak of ending the occupation.
If the war ended years ago, why is the U.S. military still there? It can’t be to remove autocrats and create democracy in the Middle East, or we also would have invaded several other countries, including those of some “allies.” It can’t be to create democracy, as the U.S. rejected the results of a free election in Gaza, because we did not like the outcome. It is a cynical contradiction to support democracy in Iraq, autocracy among our allies, and simultaneously reject the exercise of democracy elsewhere.
One suspects the goal is to control Iraqi oil, especially since the U.S. has pressed to open ownership of the oil fields to foreign investors. And, most likely, the goal is to establish a base for long-term U.S. influence in the area. Why else construct such a large embassy, or several giant military air bases?
Are these legitimate aims? If Iraq no longer presents an imminent threat to the U.S., what is the basis under international law for our continued occupation of Iraq? What can justify the deaths of hundreds of thousands of Iraqi citizens, or the creation of one or two million Iraqi refugees? What can justify the waste of 4,000 U.S. lives, tens of thousands of U.S. wounded, and a trillion dollars?
Whatever one thinks of the answers to these questions, it is long since time for us to change the rhetoric on Iraq. The war is long over. Iraq is no threat. It is time to speak of ending the occupation.
Fixing the Housing/Credit Crisis
The financial markets have been in turmoil over the unexpectedly high risks of complex bundles of mortgages. The Federal Reserve has lowered interest rates, and intervened to back the industry with guarantees and cash to help promote new loans. Many plans have been presented to resolve this crisis, but one aspect has not received enough attention. Here are some ideas to stabilize the credit markets, keep people in their homes, ease the pain to the lending institutions, and protect people and lenders from such future problems.
The Adjustable Rate Mortgage was invented by the financial industry as a way to extend housing credit to more people. The obvious goal was to make more money by making more loans, even if many of these loans were to speculators and to people who were stretching their budgets to the limit. For many years housing prices went up, and, most people did well, based upon two assumptions: (1) their incomes would increase enough to cover possible increases in their interest rates; and/or (2) they could sell their homes at a profit, if they could not make their increased payments.
We now have seen what happens when both assumptions turn out to be false. Many people are missing their mortgage payments, homes are going into foreclosure, and the lenders are posting multi-billion dollar losses.
Since the lenders encouraged many people to take ARM’s, they should absorb the pain rather than the homeowners or the government. On the other hand, lenders should be helped and not allowed to fail. The basic problem is the ARM, itself. Here is what we could do right now to stabilize the market and help people stay in their homes.
1. Limit any ARM interest rate adjustments to ¼ % per year, with a maximum interest rate no higher than conventional 30 year rates, when the adjustment reaches that level.
2. Once the ARM reaches the 30 year rate, provide no-cost conversions to a conventional loan, for the remaining life of the loan.
3. Roll back all ARM adjustments for the past year, which is when those adjustments began to outstrip people’s ability to pay their mortgages.
4. Either prohibit new ARM’s completely, or require borrowers to qualify at the highest interest rate specified in the loan.
5. Limit the highest interest rate specified in new ARM’s to current 30 year rates, plus no more than 2%.
These measures would lower the number of foreclosures substantially, enabling the market to better price loan instruments. Mortgage lenders would be able to lower their “risk premiums,” freeing up cash for the credit market. ARM’s would unwind over a long period, reducing the costs to lenders. Borrowers would have an easier time obtaining credit, and staying in their homes. All involved would benefit.
Something to think about.
The Adjustable Rate Mortgage was invented by the financial industry as a way to extend housing credit to more people. The obvious goal was to make more money by making more loans, even if many of these loans were to speculators and to people who were stretching their budgets to the limit. For many years housing prices went up, and, most people did well, based upon two assumptions: (1) their incomes would increase enough to cover possible increases in their interest rates; and/or (2) they could sell their homes at a profit, if they could not make their increased payments.
We now have seen what happens when both assumptions turn out to be false. Many people are missing their mortgage payments, homes are going into foreclosure, and the lenders are posting multi-billion dollar losses.
Since the lenders encouraged many people to take ARM’s, they should absorb the pain rather than the homeowners or the government. On the other hand, lenders should be helped and not allowed to fail. The basic problem is the ARM, itself. Here is what we could do right now to stabilize the market and help people stay in their homes.
1. Limit any ARM interest rate adjustments to ¼ % per year, with a maximum interest rate no higher than conventional 30 year rates, when the adjustment reaches that level.
2. Once the ARM reaches the 30 year rate, provide no-cost conversions to a conventional loan, for the remaining life of the loan.
3. Roll back all ARM adjustments for the past year, which is when those adjustments began to outstrip people’s ability to pay their mortgages.
4. Either prohibit new ARM’s completely, or require borrowers to qualify at the highest interest rate specified in the loan.
5. Limit the highest interest rate specified in new ARM’s to current 30 year rates, plus no more than 2%.
These measures would lower the number of foreclosures substantially, enabling the market to better price loan instruments. Mortgage lenders would be able to lower their “risk premiums,” freeing up cash for the credit market. ARM’s would unwind over a long period, reducing the costs to lenders. Borrowers would have an easier time obtaining credit, and staying in their homes. All involved would benefit.
Something to think about.
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