Indiana Primary next Tuesday
Mostly due to my work load I have not been posting on the blog. I hope to change that…
Next Tuesday Hoosiers will vote in the Republican Primary for US Senator. I will be voting for Richard Mourdock. It has been a long while since I have voted for Lugar.
I sincerely hope that Lugar loses next Tuesday. There are several reasons I would never vote for Lugar:
- He has not lived in Indiana in 36 years.
- I believe in term limits and he has been in office far too long.
- He supports Earmarks.
- He supports bailouts.
- He is a big government Republican.
I voted early this afternoon at Precinct 299
I vote up at Agape Church on Lima Road. I voted around 2:30 PM and the polls were empty; as expected. 2:30 PM is normally a time when the polls are empty.
The only person handing out literature was one person handing out literature for Paula Hughes…
In the primary Paula Hughes mobilized a lot of people and had a large number of volunteers…
Mike
Democrats locally using automated robocalls
I did some research on political robocalls today. Indiana has a law that bans automated political robocalls unless there is an introduction by a live operator who gets permission to start the automated message. There is a fine of up to $5000 for violating this rule.
Last year the three Indiana political parties agreed not to use automated political robocalls.
In September of 2011 Indiana’s ban on robocalls was overturned; basically the court said that Federal law trumps state law and so Indiana’s ban was overturned. Indiana’s Attorney General is appealing the ruling.
Yesterday the Tom Henry campaign engaged in a large robocall campaign. The robocalls that I heard were a recorded message from Mayor Henry supporting Karen Goldner and Sandy Kennedy.
When I originally heard the robocall I thought that the robocall was illegal. When I researched the matter today I found out about the Court case in late September of 2011 that overturned the Indiana law.
I dislike robocalls; however, based on today’s research I think they are now legal as long as they are done from out of state…
Mike
Get out and vote today!
I hope everyone who reads this blog and is eligible to vote goes out and votes today! Voting is important and we need Americans to learn more about the myriad of problems that exist in this country and to select the best of the candidates that are available to represent them!
I will be voting this afternoon.
Please let us know what you see when you go to the polls today!
Mike
The American Jobs Act, post 2
As mentioned in a previous post this plan will be paid for by increasing the National debt by 447 billion dollars. It will stimulate the economy in the short run and hurt the economy in the long run; this happens each and every time the government deficit spends.
70 billion of the 447 billion (15.7% of the total) is targeted towards tax cuts for businesses. We will discuss these first. For each I will explain the proposal, discuss which Party tends to support this type of proposal, discuss the supposed cost, and then give you my opinion of it.
The smallest portion of this section of the plan is a provision that allows businesses to immediately expense capital property purchased in 2012. In other words rather than depreciate the property over its useful life companies can write the entire cost off on their next Federal income tax return. The Federal government has passed various provisions allowing accelerated depreciation for well over a decade now. Most states refuse to allow them and these provisions make me and other tax professionals a lot of money because they make the tax code more complicated. The politicians argue that businesses will go out and spend more money if they get an immediate tax benefit. Studies have shown that accelerated depreciation does in some cases cause businesses to speed up purchases; however, this just pushes demand from one period to another. Republicans and Democrats both love accelerated depreciation and have passed similar measures for a long time. The small effect this has on demand is likely far less now than it originally was since accelerated depreciation has been the “norm” for so long. Businesses are used to being able to do this and pretty much expect it at this point. This will cost 5 billion dollars. This is due to the time value of money. I obviously oppose this stupid provision.
The second provision is an employer payroll tax cut. Currently employers have to pay 6.2% of their employees wages (Up to the cap of $106,800 per year) in taxes to the IRS who then sends it to the Social Security Administration. This is a business expense that comes out of the employers funds and the employee gets credit for this as taxes they paid into the Social Security system. This plan would drop the tax down from 6.2% to 3.1% for 2012 only. This provision only applies to the first five million in wages paid by each company. This may be best shown with an example. Let’s say you are a small business and have one employee who makes $100,000 per year and then 10 more who each make $50,000 per year. Normally the employer would pay $37,200 in Social Security taxes on behalf of their employees. With this proposal that would drop by $18,600 to $18,600. So the net savings to the employer is $18,600. Since Social Security will get less money than it is supposed to get the General Fund of the Federal Government will go further in debt and drop an IOU into the Social Security Trust Fund. President Obama is hoping that small businesses will turn around and use this money to hire more workers. Generally speaking this is a provision that I would expect Republicans to support. Generally speaking this is a provision I would expect Democrats to oppose somewhat. I oppose this provision because it is temporary and increases the national debt. I also oppose it because it will be hard to ever end. There is no such things as a temporary tax. There also is no such thing as a temporary tax cut it seems.
The above employer payroll tax cut is combined with another provision. Basically the President wants to encourage companies to net hire more workers in 2012 or pay their existing workers more in 2012 than they did in 2011. Basically for this tax break each business will need to compare the total wages they paid workers in both 2011 and 2012. If wages paid in 2012 is greater than 2011 (Due to new hires or hiring more workers) then the company will be allowed to pay even less in employer payroll taxes. Basically each company will be forgiven the remaining 3.1% Social Security match they normally would pay on their employee wages on those additional wages paid in 2012 up to a maximum of 50 million dollars in wages. The Federal government general fund will drop another IOU into Social Security. This is best shown with an example. Lets say SBS CPA Group paid $200,000 in wages in 2011. Then it pays $250,000 in 2011. It will be allowed to pay $1,550 less in Social Security taxes as the employer match and the Federal Government will drop an IOU into the Social Security Trust fund for that amount. To my knowledge nothing like this has been proposed before. In this example my firm would save $1,550 dollars in 2012. Our profits would increase by this amount. Out income taxes would increase. It is ABSURD to think we would spend this money to hire another worker…
The combined cost of the above two employer payroll tax cuts come at a one year cost of 65 billion dollars. I oppose this provision because temporary stimulus at the cost of increasing the National Debt does not solve our problem. Instead it defers our problem so that it will have to be dealt with in future years. I also oppose it because I can just hear the screaming that will occur if it is EVER allowed to expire. Allowing it to expire will be a HUGE tax increase on small businesses and the Chamber of Commerce will go nuts…
I imagine that the 70 billion dollars that this costs will create some jobs in the short term. I think that some companies will likely go out and buy some capital equipment in 2012 that they normally would have bought in 2013. The money will flow to the equipment manufacturer and help their business which in turn will stimulate the economy in 2012… The employer payroll tax cuts will certainly be appreciated by America’s small and medium sized businesses. It will lower their cost of doing business for 2012. This may save a few from closing who are near the “edge.” Further it will increase corporate profits of these companies somewhat in 2012 and that increase in corporate profits will trigger some short term spending.
I doubt these provisions will really create very many jobs. I agree they will create some jobs in the short run because spending will increase; however, I do not see how it can create very many. I will use my firm as an example. We have three full time employees right now and two part time employees right now. Wed, Thur, and Friday of this week I interviewed seven candidates for a new full time position. We will hire a new full time employee who will start October 3rd. This decision was made a couple of months ago and this decision has NOTHING to do with President Obama’s speech. Since we are adding an employee and since we are likely to give our employees a pay raise starting January 1st 2012 (Which also has NOTHING to do with President Obama’s speech) these employer tax cuts will result in my firm paying less in employer payroll taxes. This means our corporate profits will increase. In turn we will pay more in income taxes. The balance will be distributed to the owners to do with as they see fit. My company is small; however, these payroll tax cuts will likely net result in $4,000 more being pocketed by the owners in 2012 net of income taxes… Knowing the owners of my company the vast majority of this money will be saved and not spent…
This tax cut will NOT cause us to hire another employee.
Mike Sylvester
The mortgage problems are worse than you think
I have a client who talked to me about their mortgage. Last year they fell behind 3 months on their mortgage payments. Obviously the bank holding the mortgage (and in this case it was a LARGE bank) was angry and threatened him with legal actions; as one would expect.
So after missing three mortgage payments he was able to pull together enough money to pay two of those three mortgage payments soon after the 3rd payment was due. So he sent the bank a check.
The big bank holding the mortgage did not cash his check and sent his check back to him. In writing they told him he could only settle the problem by sending a check that would pay all three mortgage payments…
Wow.
Is it any wonder the big banks are losing money hand over fist…
Mike
President Obama and his upcoming jobs plan, part 2
The second component of President Obama’s upcoming “jobs” plan will be to extend Federal unemployment benefits; again.
This issue has been discussed and argued over on this blog repeatedly. Some of the blog posts on this subject have over 100 comments. The readers of the blog are split on this issue.
Generally speaking states offer up to 26 weeks of unemployment benefits. Once these are exhausted then the unemployed can qualify for between 34 weeks and 53 weeks of Federal unemployment benefits. Congress has enacted several emergency measures that grant another 20 weeks to unemployed workers in states with unemployment over 8%. In many cases (states with unemployment rates over 8%) the unemployed can draw unemployment benefits for 99 weeks. In other words in many states the unemployed can draw benefits for almost two years.
The Federal extension expires at the end of this year. President Obama will propose that these extended benefits be extended for another year. This will cost 60 billion dollars.
I oppose this because I do not think paying unemployment benefits for just short of two years is ever reasonable. I would think 79 weeks in states with unemployment over 8% is more than enough.
The pros of this extension include:
- The money goes to people who will turn around and spend it. This stimulates the economy.
The cons of this extension include:
- It will cost 60 billion dollars.
- Study after study has proved that extending unemployment benefits discourages people from going out and getting a job or starting their own business. This is indisputable.
At some point we have to start limiting the “nanny” state. As the readers of this blog know I am in favor of ELIMINATING the entire Federal unemployment system. I personally feel that each state should run their own system.
Mike
Home Loans have insanely low interest rates
I am extremely concerned about the US economy and the world economy. The United Sates, Japan, and Western Europe are built on a mountain of debt. Eventually all of this debt will have to be paid back with interest…
I personally think the best way to prepare for the future is to minimize your personal debt. Once your personal debt is paid off then you will be able to better deal with the future economic hardships that are coming.
My house is likely worth $200,000. We currently owe about $150,000. We are in the process of refinancing the house into a 30 year loan adjustable loan.
I HATE adjustable loans. This loan is a 2.99% loan for five years and then it balloons. It has no prepayment penalties which is critical for us. We will pay that loan off entirely within five years so it never balloons.
I never thought it would be possible to finance my house on a 2.99% loan.
I never would have believed that I would choose to take out an adjustable loan on my house; I always thought they were STUPID.
My wife and I have changed our financial plans and we are going to stop saving money entirely (accept for retirement). I currently think my wife and I will be debt free in almost exactly three years from today. I hope to be debt free the day I turn 47…
I seriously hope EVERYONE who reads this blog decides to minimize and pay off their debt. The idiots in Washington DC (BOTH major Parties) have no idea what they are doing and a large financial crisis is inevitable. You need to protect yourself and your family because the idiots in our Government just keep kicking the can down the road.
Mike
Indiana House Democrats end cowardly trek to Illinois
The Indiana House Democrats have decided to return to Indiana to do the jobs they were elected to do.
I truly hope that the Republicans did not cave in on a bunch of agenda items to get the Democrats to come home and do their jobs.
Does anyone reading this blog plan on voting for any of these cowardly fools who just returned from Illinois? If you do plan on voting for them; please let us know why…
Mike
Indiana Politics
Unfortunately for Hoosiers the State Legislature has been taken hostage by the minority Democrats in the Indiana House. These Democrats have run away because they lost the last election and the majority Republicans are passing legislation they feel is appropriate.
If the Indiana House Democrats were smart they would have stayed in Indiana and made a big deal about voting against these proposals and then they would have made these issues a big deal during the next set of elections…
Alas, they knew they would get outvoted and so ran away like spoiled brats…
I imagine the Democrats will pay for this blunder at the polls in the next couple of elections. I also think there may be some backlash against Democrats that were not involved all across Indiana. For example I think this debacle could effect several local races; three in particular.
I think that Democrats Karen Goldner and John Shoaff may get fewer votes due to this even though they were not involved at all. I am not sure if either one has taken a public stance on this issue. I also think this could effect our upcoming Mayoral race.
Karen Goldner is currently my City Council representative. I voted for Karen last time because the person she was running against had been on City Council way too long. I doubt that I will vote for Karen this year because I expect a conservative will win the Republican primary and I will vote for that conservative. That being said, if Karen supports the Democrats who ran to Illinois then I may well monetarily support her opponent and help them try to defeat her.
I ALWAYS vote for John Shoaff. He is an excellenet member of City Council. I will be asking him his view on the House Democrats. If he supports them running away to Illinois I MAY not vote for him in the upcoming election. John Shoaff is an excellent member of City Council and while there are Republicans I would support over him; they are few and far between.
I will NOT be voting for Mayor Henry in the upcoming election unless his opponent is just “awful” irregardless of his stance on this issue.
Mike
