Thursday, November 16, 2006

The Libertarian Effect

I've always been mixed on my opinion of the value of voting for independents in major elections.

On one hand, voting for an independent can sometimes lead to a worse outcome than just voting for the party you usually support (e.g. a vote for Perot was a vote for Bill Clinton). But, on the other hand, sometimes both major party candidates are worthless so why not make a political point and vote for something new (e.g. Dewine and Brown)? I guess the pragmatist in me says, "Why waste your vote? Isn't a bad Republican better than a good Democrat?"

According to this article from, votes for the Libertarian Party in Missouri and Montana cost the Republicans the Senate.

answer to question

Below is my answer to John Public's tax liability for the year 2006

Federal Tax Liability $314,422
FICA liability 5,840
Medicare 14, 500
Ohio state income tax 68,400

If he worked in the city of Cincinnati, you can tack on another $21,000 for a tax income tax liability of $424, 162.

These figures do not include sales tax paid, taxes paid by his employer, real estate taxes (even if paid indirectly through his rent, etc.

As a comparison, in 1998 using the same fact set, John's federal tax liability would have been $361,074 (a difference of $46,652) and the state $64, 738 (a difference of $3,642).

Someone please explain to me how paying over 42% of your income regardless of how much you earn is fair.

Wednesday, November 15, 2006

Payroll taxes

A couple of choice things are happening in the employment rich state of Ohio.

Starting in 2007, the state unemployment wage base has been raised to $9,500 up from $9,000 for as long as I can remember. So.... assuming a base rate of 2.7%, you'll be paying another 13.50/employee to go along with that increase in the minimum wage.

Not to be outdone, Ohio worker's comp. increased it's minimum fee from $10.00 semi annually to $50.00. The minimum fee is usually charged to sole proprietors that have no employees but wish to have a certificate so companies they contract with are not liable for their coverage. Note, these companies receive no worker's comp coverage from exempting themselves. So $100.00 a year just goes right to the worker's comp fund.

In comparison, Kentucky's base unemployment rate $8,000. So for the average company, you'll pay about $40/more per employee for the "privilege" of doing business in Ohio.

Most people do not realize that nearly in every state in the country, employers can buy worker's compensation insurance from their insurance carrier, essentially allowing the private sector to competitively price their insurance. In Ohio, all employers are required to purchase their workers comp through the state and the state dictates the rates for all professions.

As a result, coverage costs are extremely high in this state as compared to others.

At least our business environment is better than Michigan and North Korea; and so is our football.

Tuesday, November 14, 2006


Just as a curiosity, I just received my 2006 tax software. If you are reading this post please answer these questions in the comment box. Your comments will be posted confidentially.

John Public is a 20 year old internet game maker and is filthy rich. In 2006, he received a W-2 form in the amount of $1,000,000. Since he's still young, he rents an apartment and has no deductions (charitables, real estate taxes, mortgage interest, etc.)

How much will he pay in federal income tax?

How much should he pay if he paid his fair share?

Monday, November 13, 2006

Democrats: Enemies of the middle class

It amazes me how well the liberal Democrats (and their cronies in the press) have done marketing themselves. Or, maybe the real problem is that the Republicans have done such a poor job explaining themselves.

Take for instance a short conversation a co-worker and I had this morning. The topic of high taxes came up and I mentioned that now that the Democrats are running Congress, taxes could very well go back up. To which my co-worker explained, "No way! The Democrats care about the middle and lower class. All the Republicans care about are the rich." (Is this not the most overused cliche in the Democrat's sound-bite arsenal?)

Now think about this: If the Bush tax cuts "for the rich" are allowed to expire, as Chucky Rangel and the House Democrats are suggesting, do you think it will benefit the middle-class and those with lower incomes?

If the child tax credit is reduced from the current $1,000 per child back to $500, do you think it will help or hurt the middle and lower class?

If the marriage penalty, which was reduced, kicks back up, do you think it will help or hurt the middle and lower class?

If the expansion of charitable deduction for Americans that don't itemize is reduced, do you think it will help or hurt the middle and lower class?

If the lower tax rates go back up to the pre-taxcut rates (15, 28, 31, 36, and 39.6), do you think it will help or hurt the middle and lower class?

Now don't get me wrong... I think high taxes on the "evil" upper class is just as stupid and morally misguided, but that's another post. If the Democrats let the tax cuts expire, it will speak volumes towards what they really think of the "working class".


Last week, one of the posts noted that conservatives who ran as conservatives and had a track record as such always win.

One of the readers had the interesting comment.

"Santorum stayed consistent and had his lunch handed to him."

After reading numerous post election articles, I noticed how many analysts mentioned the Terri Schiavo case as a big turn off for economic conservative/ social liberals.

When the Schiavo case was in the headlines I really didn't pay that much attention to the whole spectacle. My only comment at the time was that anyone who thinks her "quality" of life was so bad that withholding her feeding tube was an appropriate course of action then those same people should be willing to hold a pillow to her face to end her life. How many people would be willing to do that?

With that said, one of the things about the whole spectacle was how many national Republicans were willing to get involved in this traditionally states' rights issue.

I think that's where I've underestimated the Schiavo issue and how it impacted candidates like Santorum.

A large majority of the electorate are hell-bent traditional; low taxes, small gov't, law and order, gun rights, strong defense & states' rights, conservatives. A lesser majority are social conservatives... anti- abortion, gay marriage, etc. While states are overwhelmingly passing gay marriage legislation, the South Dakota complete abortion ban (which lost about 55-45) shows even the most conservative of states are not willing to out right ban abortion.

With all this background info, here's how it applies to Santorum. First, Casey ran as a conservative democrat. His father was a well known anti abortion Democrat in the 80's. Democrats, accurately or inaccurately, painted Santorum as a way right religious zealot. Given a congress that could find the time for a 11th hour Terri Schiavo intervention but somehow couldn't manage to draft decent immigration legislation or reduce the government "bloatacracy", it appeared that gays and right to life issues were more of a manipulation of the base than a true priority of the party leadership. Candidates like Santorum suffered the consequences.

Even in Ohio - 2, Jean Schmidt never endeared herself to fiscal conservatives after voting for tax increases in the state house. Her last TV ads beating on Wulsin and gay marriage seemed to be milking a cow that was full of chalk dust; hence her very slim victory.

The lesson is prove you're a conservative on government spending and religious people won't believe that your gay marriage stance isn't a manipulation.

Issue 12

Voters in Hamilton County, Ohio voted down issue 12 which would have increased the local sales tax by .25%.

As a person who is big time law and order, many people were surprised that I voted it down.

Here's why...

As a libertarian, I believe that government should perform finite functions; law and order, fire and roads, everything else is a misuse of government power.

This jail is important... vitally important. Crime is rampant in Cincinnati and way too many people on the street should be behind bars.

This jail is so important it should be number one on the county expenditure list. Instead they spend money on a bunch of crap that should be way down on the priority list and the citizens are blackmailed into voting in a jail that should already be up and running out of the existing general fund.

Here's a look at the actual expenditures for 2003 (the most recent I could find on the auditor's site)

Total Expenditures 239 Million

General Govt 49 M
Public Safety 82 M
Judicial 92.5 M
Social services 1 M
Public Works 2.5 M
Debt Service 13 M

You can't tell me that the county couldn't pair out the money from that budget... especially out of the "general government" budget over 5-10 years.

Maybe this vote will put some smelling salts under the noses of the commissioners and they'll get this jail built under the existing tax structure.