| Illinoisans Beware: "Progressives" Seek Massive Tax Hike Again; Fight the Hike! Posted: 18 Oct 2013 12:15 PM PDT Illinois " Progressives" (a single word to describe "economically illiterate public union sympathizers") want to pick your pocket once again. The Progressives want to hike the Illinois 2015 top tax rate from 3.75% to a whopping 9%. Moreover the income tax rate will go up on a sliding scale for everyone making over $18,000. Promises, Promises Recall that On the campaign trail in 2010, Gov. Pat Quinn told voters he'd veto any income tax hike that would raise Illinois' rate over 4 percent. That was one of the quickest disclosed tax lies in history. Here are a few snips from my January 13, 2011 post Business Owners Blast IL Tax Hikes;Quinn's Blatant Lies;Neighboring States Gleeful, Mayor Daley Whines;Escape to Wisconsin; Arrogance,Greed,Corruption Tax insanity in Illinois is now official. Governor Pat Quinn signed off on a 67% hike in personal income taxes and a 46% hike in corporate taxes the moment the bill hit his desk.
The personal income tax rate immediately rises to 5 percent, up from 3 percent. The corporate income tax rate rises immediately to 7 percent, up from 4.8 percent. The Chicago Tribune reports Quinn, House Speaker Michael Madigan and Senate President John Cullerton — all Chicago Democrats — muscled the tax hike through in the eleventh hour of the lame-duck legislature. Only Democrats voted for the bills. Not Fixed That tax hike was supposed to permanently fix the Illinois budget. It did nothing of the kind. On June 11, 2011, I noted Illinois Insanity: State Spend $365K Taxpayer Dollars to Teach People How to Fish; Hands Out $4 Million in Free Tuition to AFSCME Public Union Workers On August 31, 2011, I noted Illinois Loses Most Jobs in Nation Following Tax Hikes. Also recall that Instead of acting to help cities, Governor Quinn strengthened prevailing wage laws several times (see my March 27, 2011 article Poisonous Illinois; Caterpillar CEO Threatens to Leave Illinois over Taxes; Illinois Attorney General Wins Dubious Honor "Prevailing Wage Award"). Illinois Overtakes California for Second Highest Unemployment Rate in Nation With the above backdrop, no one should have been surprised by my September 25, 2013 report Unhappy Anniversary: Illinois Overtakes California for Second Highest Unemployment Rate in Nation Temporary Hike? Quinn's tax hike was billed as temporary. Fortunately the legislature actually passed it that way. On January 04, 2013 the Chicago Tribune discussed the setup in Your Quinncome tax hits home Two years ago on their night of infamy, 1/11/11, General Assembly Democrats — and exclusively Democrats — voted to raise the Illinois personal income tax rate by 67 percent.
But when the Democrats boosted the personal income tax rate from 3 to 5 percent — with a companion hike in the corporate income tax — most of us didn't suffer: The state tax hike coincided with a 2-percentage-point decrease in the federal payroll withholding for Social Security. That payroll tax reduction, a last-minute proposal from President Barack Obama's White House, was the final component of a bipartisan Washington deal to keep the Bush-era income tax cuts in place.
Think of it this way: The impact of your Quinncome tax increase — long advocated by Gov. Pat Quinn and made law by his signature two years ago — has finally hit home. Your home. You just took a pay cut.
What's more, the Illinois tax hike hasn't been the saving grace for you, and for your state, that Democrats promised on 1/11/11: State government remains insolvent, unable to pay billions in bills as they come due. And there's no additional money to educate your children or to care for your disabled fellow citizens. Why not?
Because just about every penny of the state's roughly $7 billion in new Quinncome tax revenue goes to paying public pension costs — either making annual contributions to pension funds, or paying off debt from years when Illinois foolishly borrowed money to make its annual pension contributions.
Remember, the Democrats sold the Quinncome tax as temporary: It's in full force for four tax years, 2011 through 2014, then is scheduled to fall to 3.75 percent in 2015 and to 3.25 percent in 2025. Beware the "Progressives" In 2015, the personal income tax rate is supposed to drop to 3.75%. However, the Illinois Policy Institute reports State Rep. Naomi Jakobsson, D-Urbana, introduced legislation for a new progressive tax rate schedule that hit Illinois' middle and working classes hard. Under current Illinois law, the individual income tax rate will be 3.75 percent in 2015. Under Jakobsson's new plan, however, a higher 4 percent rate kicks in for people earning just $18,000. Here is Jakobsson's proposed scheme.  If you think that is absolutely nuts, you are not the only one. The Illinois Policy Institute writes " Jakobsson's progressive tax rates attack the middle class as well. Her 5 percent tax rate applies to people earning just $36,000. When an Illinoisan earns more than $58,000, Jakobsson's tax rates jump to 6 percent, and again to 7 percent on income earned after $95,000 – nearly double the rate Illinoisans will pay in 2015.
It's no surprise that Jakobsson's progressive tax hike proposal targets the middle class – it's how progressive income taxes work. That's where a lot of the money is." Fight the Hike! I made a donation to the Illinois Policy Institute, and if you live in Illinois, please consider doing so was well. Your gift to the " Flat is Fair" campaign will be matched for a one-two punch against the progressive tax hike. Donations through Sunday, October 20 will be matched. Please, Fight the Hike! Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Still More France Economic Idiocies: New Rent Price Controls, Mandatory Rental Insurance, "Unfair Competition" Laws Posted: 18 Oct 2013 09:40 AM PDT The economic stupidities in France keep piling up. Reader "AC" who lives in France writes: Hi Mish,
I saw you covered some of the latest crazy things happened in France recently: actually there is much more. Let me give you a short digest of the craziest things.
Government wants to address the high cost and low availability of apartments to rent, especially in Paris.
After passing a law regulating the rent increase (the increase an owner can ask to a new person renting his apartment with regard to the rent of the former occupant), Cécile Duflot, the Minister of Territorial Equality and Housing, decided to go a big step further: government will fix the price of the lease.
The proposed law (and most likely going to be approved), will impose 2 things:
Mandatory insurance for unpaid rent. The cost will be shared by the owner and the renter
For new rental contracts, the owner will have to stay in a band of +/- 20% of a reference price the government will set based on the average price per square meter in the area where the apartment is located.
No matter what features the apartment has (or lack thereof), or its condition, government will fix the price.
Mandatory insurance seeks to address another chronic problem: owners are extremely concerned about people not paying rent, because the time it takes to get them out of the flat by a court can be very long (up to 2 years), and often in these cases the renters return the flat in poor state. Therefore landlords are extremely selective. Most likely, the mandatory insurance will compound the problem.
The craziest thing is the destruction of real, private, profitable jobs along with the creation of public subsidized, unprofitable jobs, in the middle of growing unemployment and falling GDP.
You have already written about the "Emplois d'Avenir", government subsidies for jobs for not qualified people in the no-profit sector. And that is already crazy enough.
But now, smack in the middle of the rising unemployment, unions have started a campaign to destroy on purpose real, profitable jobs, citing "unfair competition".
The most incredible situation has been the make-up shop Sephora in Champs Elysees.
Champs Elyssees is one of the most crowded and touristic avenues of the world. There are locals and tourists anytime of the day, especially after dinner. Some shops there stay open until late, because of the tourists.
Sephora was one of the shops having an extended opening. It stayed open until midnight every day of the week. 20% of their sales came between 20:00-24:00. The employees get paid more for this working time, and everybody was happy, except of course the unions.
The unions started a legal action to oblige Sephora to close by 21:00 like most other shop, arguing that Sephora had an "unfair advantage". After some back and forth negotiation, Sephora was obliged to close at 21:00 and fire people. The Daily Motion has a video where Sephora employees are in tears for something they never asked.
In the video the union representative says that they will go shop after shop among those having extended hours in Champs Elysees, obliging them to close at 21:00 for "unfair competition".
This is not an isolated situation: The same is happening with a number of "bricolage" stores open on Sunday in the Paris suburb. The problem is getting so hot that the government is thinking passing a law to clarify when businesses can stay open outside normal hours.
Just have a deeper look on the Web, you will find more and more stories like these (for example auto-entrepreneurs).
France will be soon the sick man of Europe.
Best regards,
AC Rise of National Front If Paris rentals were in short supply before , they will be in even shorter supply now. And inane union agreements take away real jobs on top of it. These economic insanities are exactly the kind of thing that will fuel the rise of extreme right candidate Marine Le Pen (See Decisive Victory by Le Pen's Eurosceptic National Front Party in Local Election Stirs Fear in Mainstream French Parties). Please note that I am not a fan of Marine Le Pen's position on every issue even though I agree with her anti-Brussels stance. Pater Tenebrarum gets it correct in Europe's Tottering Banks Political Risks
Said tax cows have lately become rather restless, as inter alia shown by the municipal by-election that was recently won by Marine Le Pen's Front National in France. If you read Mish's assessment which we have linked to, he is quite correct when he states that the whole EU and euro project could easily be derailed by political developments. Populist parties continue to gain support amid euro-land's economic decline, to the point where they represent a real threat to the EU.
We would add that Ms. Le Pen's FN, although it has received a 'face-lift' to rid it of the more obviously objectionable parts of its far-right image, still pursues an economic agenda that closely resembles the autarkic economic program of the German national socialists of yore. The FN is not just another version of UKIP, with its far more libertarian streak. Although we sympathize with Ms. Le Pen's anti-Brussels technocracy stance, her protectionist mercantilistic agenda is just as doomed to failure as Mr. Hollande's milder version thereof (note that the differences between socialist and national socialist economic programs are only of a cosmetic nature; not surprisingly, the FN's gains have largely come at the expense of the socialist party). In spite of the intellectual bankruptcy of France's political mainstream, it is a bit disconcerting that the FN actually leads in national polls at present. France's voters seem eager to "chasser les démons par Belzébuth", i.e., to replace one evil with an even worse evil.
This brings us back to the banks, which have incidentally become quite a popular target of Europe's populist political parties. They are quite correct in objecting to bailouts of course. The point we want to make is merely that any upcoming revelations of additional large losses hidden at European banks have a political dimension that could go well beyond the current 'banking union' related discussions. Poisoned Policies Those looking for poisoned economic policies should look no further than the policies of socialist president Francois Hollande. Here are seven prime examples. - October 10, 2013: Law of Career Security: France's Minister of Digital Economy Orders Telecom Companies "to be Virtuous and Patriotic" and to Use Alcatel-Lucent to Prevent Layoffs
- October 3, 2013: France Vows to "Save the Bookstores", Fixes Price of Books, Bans Free Shipping by Amazon
- May 17, 2013: Hollande Asks ECB to Engage in Japanese Style Currency Debasement
- March 22, 2013: Hollande Announces 20 "Confidence Shock" Measures to Support Home Building
- January 28, 2013: France "Totally Bankrupt" Says Labour Minister; Inappropriate or Inaccurate?
- October 31, 2012: "Google Law" Yet Another Warped Policy by Hollande; Government Motors French Style
- June 8, 2012: Hollande About to Wreck France With Economically Insane Proposal: "Make Layoffs So Expensive For Companies That It's Not Worth It"
My next update on the economically insane policies of France will have this post as the eighth example. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| BART Holds San Francisco Hostage; Best Way to Deal With Public Unions Posted: 18 Oct 2013 12:00 AM PDT The average BART (Bay Area Rapid Transit) worker makes over $76,000 per year, plus huge benefits. Janitors make as much as $82,752. But the unions want more. And they are willing to bankrupt the region to get more. In my opinion, San Francisco is already bankrupt due to pension obligations that cannot possibly be met (but the city may not realize that yet). Oakland is without a doubt bankrupt due to public union pension obligations. Oakland city officials likely realize that (but they just do not want to admit the obvious). In due time, both Bay Area cities will follow Vallejo, Stockton, and San Bernardino into bankruptcy. In the meantime, unions are hell bent on driving cities right over the bankruptcy cliff. With that backdrop, please consider San Francisco Bay Area transit unions threaten midnight strike. San Francisco Bay Area Rapid Transit workers are threatening a midnight strike because contract talks have reached an impasse.
Earlier Thursday, Roxanne Sanchez, president of Service Employees International Union Local 1021, said the transit agency and its two largest unions have "come extremely close" to agreement on economic, health care and pension issues. However, she said the parties remained apart on work rule issues.
She said the workers would walk off the job at midnight unless BART officials agree to submit the remaining issue to arbitration.
Talks began in April, three months before the June 30 contract expirations, but both sides were far apart. The unions initially asked for 23.2 percent in raises over three years. BART countered with a four-year contract with 1% raises contingent on the agency meeting economic goals.
Workers represented by the two unions, including more than 2,300 mechanics, custodians, station agents, train operators and clerical staff, now average about $71,000 in base salary and $11,000 in overtime annually, the transit agency said. BART workers currently pay $92 a month for health care and contribute nothing toward their pensions. BART Workers Plan to Strike Friday SF Gate reports BART Workers Plan to Strike Friday Roxanne Sanchez, president of Service Employees International Union 1021, said Thursday afternoon that they met BART on its health care and pension requests, but the two sides still could not come to an agreement on pay and work conditions.
"We made concessions, but you can only bend so far before you break," Sanchez said. "This is the way they want to solve the conflict, in a fight, a street fight."
BART's General Manager Grace Crunican said there are certain rights that management needed to retain.
"The union decided they would take the money on the table but not the work rules on the table," she said. That's when BART asked unions to take the offer to its membership for a vote. Crunican said the offer remains on the table until Oct. 27 and if approved, the deal would be retroactive to July 1. If a vote is taken after Oct/ 27, the contract offer would no longer be retroactive.
BART's final offer included a 12 percent raise over four years and provisions that would have employees paying a 4 percent pension contribution and a 9.5 percent increase in their health-insurance contribution. BART's Offer Overly Generous Mercury News reports BART workers' paychecks already outpace their peers' BART workers easily earned the most money on average last year among the 25 largest government agencies in the Bay Area, the newspaper's review of public employee payroll data shows. What's more, BART employees also topped the list of the highest-paid transit operators in California.
And the results are not close. Even when eliminating high-paid police officers and executives, the average gross pay for the blue-collar BART union workers who are threatening another shutdown was $76,551 last year.
Overall, BART's average employee -- executives included -- made nearly $30,000 more than employees at Los Angeles' transit line, and nearly $10,000 more than those at San Francisco Muni, the state's second-highest paid transit workers. Blackmail "(BART unions) have a degree of leverage from a strike perspective that many other industries don't, and this is a classic example of them capitalizing on it," said Christopher Thornberg, founding partner of Beacon Economics, a Los Angeles-based economics consulting firm. "If you ask me, it's a tiny bit short of blackmail: 'Give me the money or the commute's going to get it.' " No Shortage of Workers The BART gravy train has no shortage of applicants. Mercury news reports " Since 2007, BART has received nearly 65,000 job applications for about 1,800 line-level union openings." Public Employee Salary Database Mercury news has an interesting interactive map of Public Employee Salaries in the Bay Area that inquiring minds may wish to take a peek at. Message From FDR Inquiring minds are reading snips from a Letter from FDR Regarding Collective Bargaining of Public Unions written August 16, 1937. All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. It has its distinct and insurmountable limitations when applied to public personnel management.
The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations.
Particularly, I want to emphasize my conviction that militant tactics have no place in the functions of any organization of Government employees.
A strike of public employees manifests nothing less than an intent on their part to prevent or obstruct the operations of Government until their demands are satisfied. Such action, looking toward the paralysis of Government by those who have sworn to support it, is unthinkable and intolerable. For more on public union slavery, coercion, bribery, and scapegoating please see ... Best Way to Deal With Public Unions The best way to deal with public unions is to not deal with them at all. Ronald Reagan had the right idea when he fired all of the PATCO workers. Scott Walker had the right idea in Wisconsin when he ended collective bargaining of some public unions. Unfortunately, Walker failed to include police and firefighters. Actual Wisconsin results prove Union-Busting is a "Godsend"; Elimination of Collective Bargaining is the Single Best Thing one Can do for School Kids It's time to implement national right-to-work laws and put an end to public union collective bargaining nationally. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
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