Head Slapper of the Week

When they say heads will roll, I didn't think most would have this in mind.

To dust we shall return.    3 Head Slaps.

A Policy Interlude

I'm acknowledge that I said I wasn't going to talk politics for the next few months, but that doesn't mean I would discuss policy.  What intrigues me policy-wise recently was the Governor's latest budget proposal the introduces the idea of broadening the sales tax to clothing purchases over $100 and many services.  The idea would be the impose a 5.5% sales tax these goods and services, which would be a lower rate than 6.875% rate.  In fact, I took a look at some of the services and the revenue projections and found the following figures for the next biennium:

SPAM: $870k

Personal instruction (golf lessons, dance lessons, music lessons, etc.): $15 million

Legal Services: $102 million (consumers); $223.9 million (businesses)

Architectural and Engineering services: $243.5 million

You can find the projections here.

Being an individual who's taken extensive study in economics and public policy, I am one who's predisposed to the idea of broader based, lower rate taxation.  I've generally favored sales taxes over income taxes because it provides greater incentives to save and forces folks to make decisions based on economic consequences and not tax consequences if the sales taxes is truly broad enough.  

However, I've decided before I just sent you a myopic opinion I would go a trained expert in such matters.  I asked a professor I took classes from at Carleton College, Professor G., trained at the University of Chicago (where Nobel Laureates abound) about the idea of taxing legal services. Here's the discussion.

‪me: You think sales taxes on legal services is prudent public policy?

‪Professor G.: In a state in which voters have apparently decided that we need medical assistance for the poor that is paid for by a tax on a small minority of us--health care professionals, to be specific (I admit a personal interest in this since my wife pays 2% on her gross per MNCare tax)--I am not sure why other services should not share in the fun of tax form preparation.

In all seriousness, as an economist, I'm generally for broader taxes an lower rates. So, in that vein the expansion to legal services could make sense.

However, from what little I read today whether the present proposal DOES make sense isn't clear. (Broadening tax base doesn't mean targeting a few places--it means broadening.)

Of course, by that logic perhaps we should apply sales tax to educational services as well....

‪me: I certainly agree with that I'm thinking the broader the application, the more likely individuals will make decisions based on the economic consequences, not tax consequences

‪Professor G.: Sounds like you took Econ 111!

‪me: An ode to the St. John President

I would like to know how would we rebut the arguments of regressivity of the sales tax

‪Professor G.: I don't know about rebutting it. It's a pretty fair observation that sales tax is regressive in average and flat on the margin.

‪me: well, addressing the regressivity issue

‪Professor G.: Economists who favor a replacement of income with consumption taxes usually do so by noting savings (and investment) is good.

The distributional impact of the sales tax is usually addressed with the idea of a lump-sum negative tax a la Friedman.

‪me: so some EITC rebate

‪Professor G.: Yes, except without the phase out that effectively lifts the marginal tax rate near 100% for some low income regions (talk about regressive!)

So there you have it, an esoteric discussion on tax policy that I hope is enlightening.

P.S.  Yes, I acknowledge that a certain poll question recorded the most votes.  I will address that issue at a later time. 

A Hmm Moment and Head Slapper

This week at Best Buy I had "Winning Culture" training.  Yes, training to talk about how we create a more productive work environment.  During this training there some interesting moments, but one that stood out to me was a simple one.   One of the concepts brought up is to acknowledge what things we can control and address them and let "gravity" be what it is .  In fact, there was a short dialogue to explain this concept.

Trainer: "Do what you can with the things we can control in a situation, if it's outside of your  control, it is what it is.

For example, can we control gas prices?"

Group:  "No!"

Trainer:  "What can do about them though?"

Member of Group:  "Buy a Prius!!!"

I guess I either have found my place to be or I should just move out from the Groupthink mentality.

For this Week's Head Slapper, I found this "Supernatural" device.

Yikes!   3.5 Head Slaps

Update and an Ode to Rev. Lowery

I've been told that folks do not like reading long posts because I'm particularly boring when I talk about public policy issues and such.  Well, after the last election, I think I'll be taking a break from talking public policy on this blog for a few months.  Celebrate or suffer as you will by that statement.

I am currently in the midst of compiling documentation for filing my taxes.  This is particularly the most bureaucratic activity that I complete all year.  Documents trickle in over the first couple months of the year that I enter into my tax filing program, seeing how much I end up owing our government each year.  A painful experience that uses a whole lot of paper and apparently keeps the postal service busy.

I also had my annual medical checkup and I have to say things have really improved health wise over the past years.  All the critical numbers are moving towards the right direction.  Good cholesterol up, bad stuff down, blood sugar down, blood pressure down and weight way down (about 46 pounds lower than the checkup last year).  It's a work in progress.

I guess I have to say something political in this space regarding the video for this week.  As the President officially enters his second term after showing deft political skill against a weak opponent, I have to say I'm disappointed that the Rev. Joseph Lowery was not brought back to give the Benediction,  for this blog owes a lot to him. 

I have to say I have tried to be mellow.

Quick Follow Up and video

In regards of last week's poll result, I have purchased the Rosetta Stone via Best Buy accommodation and have started down the Mandarin track.  Yes, I follow the the will of the readers and voters.

I guess I should provide a video as well.  So here:

Head Slapper of the Week

All i can say is save us from ourselves.  

Three Head Slaps

Time on the Left Coast

This past weekend I've been in Southern California attending my cousin's wedding with my mother.  I haven't been to this area in January, so i was looking forward to experiencing the relative "climate change" between Minnesota and Southern Cal.  I have say it was quite the difference as these photos show:

Minnesota in January = Frigid

We're not in Minnesota anymore

I eventually got to my destination:

Where the snow go?

I got to my destination in Orange County, but the wedding was in San Diego, over an hour away.  So on Saturday I traveled with my cousins and mom to the wedding.

A view from behind the church

We got there a bit early, a late arriving crowd

Yes, there was a wedding, here's my proof:

After the wedding there was a banquet where we all got cookie cutters.  My mother appreciated them more than I did.

The rest of the week was spent reconnecting with family in the area.  My roots in America started in this area when my father came to CA on the USS Americana in 1946 from China.   I've generally reflected on how the Almighty blessed my father that opportunity to escape the hard life in China to build a successful life in America.  Here's a picture of the his cousins who brought him to this country back in the 1950s:

That man on the right came over on the same boat as my dad

I spend the rest of the weekend in Irvine, CA.  Each morning, I spend some time walking around in the 60 degree weather around a lake behind my cousin's house.

Alas, it's about time to leave SoCal and back to Minnesota.  I'm glad my mother took this trip, not just  for the wedding, but to gain a closer connect to my father's relatives, who she never really knew while my father was alive.    I did tell my relatives I'll be back soon though.

P.S.  Thanks for voting in my poll.  I'll be purchasing my license to Rosetta Stone accordingly.