Does Taxing the Rich Help Me?

The United States has a progressive income tax system, the more you make the higher percentage of income tax you pay. Some in Congress, and the President, are advocating that certain tax cuts on those making over $250,000 expire (the tax rate would go from 33% to 36% for money earned from $250k to $373K and from 35% to 39.6%). I’m not quite sure how this benefits me, a furloughed Civil Engineer. If anything I only see negatives from this for me.

It doesn’t balance the federal budget, it only “helps”. If anything it prolongs me getting a job by pulling money out of the economy. I work in an industry that is largely discretionary in nature. Governments have the discretion to improve and maintain the government owned infrastructure. Land owners, and their investor partners, have the discretion on whether to improve the land they own (with the governments permission). While the government spending has increased it has not increased adequately to compensate for the decreases in the private sector. Who funds the private sector developments? Last time I checked it’s not the person behind the counter serving me fries. It tends to be people who have a large amount of discretionary income, the very people the taxes will affect.

Now a large part of the problem is that people have lost faith and aren’t using their discretionary spending on land development. I can’t really blame them. If they had some of their money invested in land development during this current bust they probably lost some money. Locally there has been two or three investment funds go bust. There’s also a lot of housing and commercial stock on the market which needs to be filled up with families or employees. Taxing the rich only delays this.

Now what could the government do that would really help get investors back into the game? How about getting out of the way? The first step could be requiring federal and local agencies to deal with permit requests within 10 working days. Any time period beyond that time the governmental agency would pick up the tab for the costs involved in the delay (interest, inflation, etc.). This would remove a large portion of the risk in land development and provide an incentive to investors to reenter the market. Best of all it wouldn’t increase the national debt.

Why do I have to Pick the State?

Sometimes it’s the little things. If you have a website and are collecting user information why not fill out the state for me? Trust me I’m not from Alabama and I doubt I will ever live there. Sure I could be travelling out of town, but for the majority of the time I’ll be surfing at home.

If you don't want to put the effort into figuring out what State I'm from, how about filling in the state the majority of your customers come from. For instance if you are a small engineering firm in San Luis Obispo how about putting the default state as California. I'll know that you pay attention to details and desire to make working with you easier.

Now if you don't have a website or collect information from people I apologize if you now notice when the state isn't your own when you're filling out forms.

Dear Sustainability Movement,

Please cease and desist all claims of saving the planet in promotional, educational and propaganda materials. I’ve done a simple calculation that indicates to me that the movement is not sustaining the planet, but is delaying the destruction of the planet. My main concern with claims of providing sustainability is the complete lack of attention the movement puts on population growth.

For instance I’ve taken a look at the energy consumption for the State of California between 1970 and 2000. The population figures for the state of California are below from the US Census.

1970 California Population: 19,953,134

2000 California Population: 33,871,648

Below is the Energy Consumption for the state of California and per person:

1970: 41,844,077 Energy Units : 2.09 Energy Units/person

2000: 61,337,853 Energy Units : 1.81 Energy Units/person

As indicated in the above numbers California became approximately 14% more energy efficient, or more sustainable, between 1970 and 2000. Unfortunately due to population increases California utilized 146% more energy in the year 2000 compared to 1970. I’m not quite sure how this energy use could be considered sustainable.

The same pattern is detectable in other areas focused in on by the sustainability movement such as land use, water use and daylighting. Without a focus on population growth the sustainability movement is destined to fail. There is no feasible way the concepts and ideas can be considered sustainable without controlling population growth. The UN calculates the World’s population went from 3,685,777,000 to 6,115,367,000 from 1970 to 2000. Additionally projections of the World’s population is to increase by an additional 1.2 billion people by 2030. Without a major shift to population growth sustainability will never be achieved.

Here are some ideas to include sustainability in the movement to become realistically sustainable:

• A requirement for residential buildings have Covenants, Conditions & Restrictions to limit the number of children people can have. China’s current children policy of "One is best, two at most, but never a third" appears to be affecting change there in population growth.
• Much in the same way as the LEED process encourages the use of electrical vehicles the same could be done with limiting children. Businesses occupying LEED rated buildings could require policies that discourage employees having children. Such as not providing benefits for the third child and more.
• Encourage businesses to focus on dividends instead of growth.
• Remove tax credits children and replace it with an increased tax rate for families with three or more children.

While I can understand why the movement is not going in this direction, for fear of upsetting people, I fully expect without changes like this the movement is destined to fail and never reach the goal of sustainability.

Sincerely,

Christopher Fugitt, PE, LEED AP

The Government’s Mortgage Mess?

Today I deposited my first unemployment check. I’ve also listened, read and watched the President demand that banks, who paid back the TARP money with interest, refund the government for the TARP money the government won’t get back from other failed companies who did not make it. That doesn’t sound quite fair considering the government has a big hand in causing people to loose their home. Much has been made about banks providing loans to people who couldn’t afford it, but what hasn’t been covered is the way unemployment is paid out which impacts the middle class causing them to lose their homes.

In the State of California unemployment is paid at 50% of your salary up to $46,696.04/yr. After this point for each dollar you earned before loosing your job you don’t get any benefits. Because of this, at least in my case, means I’m getting around 30 cents on the dollar. Considering when banks  give out home loans they want to keep housing costs maximized at 30% of income, it doesn’t take a genius to figure out the math doesn’t work and people are loosing homes.

Now it’s nice and easy to blame banks for the mortgage mess, but I think it’s time the politicians acknowledge that it’s not all the bank’s fault for houses falling in default. Now I’m not calling for the government to raise the amount I get for unemployment, I’m just wishing that they’d stop blaming the banks.

Now what’s really bizarre is that if I do loose my house the purchasers will get a $6,500 (or $8,000 for new home buyers) tax credit. Remember that a tax credit is subtracted directly from the tax paid, so it’s essentially a government check to the purchasers of homes. If I did the math correctly that means that the purchasers of my home would get an additional $1,725 (or $3,225) over than the amount it would have taken for me to get paid at a 50% rate (for the 13 weeks unemployment benefits last). At a 50% rate I have a better chance of keeping my home without further assistance. At half that I don’t really have a chance, if I remain unemployed long term, to keep my home without further assistance.

In this blog post loosing my house means selling it, not foreclosure, unless the housing market falls further.

In case you wanted to know how unemployment is paid, from the State of California’s website:

“UI is paid by the employer. Tax-rated employers pay a percentage on the first $7,000 in wages paid to each employee in a calendar year. The UI rate schedule and amount of taxable wages are determined annually. New employers pay 3.4 percent (.034) for up to three years. EDD notifies employers of their new rate each December. The maximum tax is $434 per employee per year. (Calculated at the highest UI tax rate of 6.2 percent x $7,000.)”

“Loser”

It’s interesting seeing what people’s reactions are to questionable calls are. I was recently dealt AQ of hearts and raised it to 2x's the big blind early in a SNG. The small blind raised it up and the big blind folded and I called the raise. The flop came out 6h, 7d, 3h giving me a flush draw. I made a small bet thinking that if the other person probably didn’t get anything from the flop. Unfortunately he raised it up to 630 indicating he probably either hit or had a high pair. I decided to risk it and go all in with my remaining 1290 chips. The other person called and showed Ks, Kh. Fortunately for me 7h came on the turn and a Jh came on the river. I won the pot with an ace high flush. The person who didn’t win came back and called me a “loser”.

I’m not quite sure what the person was trying to accomplish with the comment. I would think he’d want me to feel good about hitting the flush because it wasn’t the best call. Early in the SNG I should probably waiting for a better time to put all of my chips in the middle, for instance when I had hit a flop. By coming back with the comment the other player made me think about my play and why he thought it would be the wrong play. The next time I might not make that bet and I probably wouldn’t have hit my flush and he wouldn’t get all of my chips. I’m sure he felt somewhat good about the comment, but in the long run it will probably cost him chips.