Wednesday, March 25, 2015

NO! to increased taxes

Put another way that's a 2 Billion dollar tax increase. The good news is, you can say "No!" on May 5th.

Meanwhile, ads for a "Yes" vote on Proposition 1 are increasing in frequency and hysteria. The public/pirate partnership is telling us we can have either this tax increase or killer roads. This is a false choice. We can have good roads without a 2 billion dollar tax increase. The Michigan House of Representatives even produced such a bill, but it got waylaid in the Michigan Senate.

You can tell something about Proposition 1 from the company it keeps. Unions (here, here) & government are in favor, as are road contractors & Chambers of Commerce (here, here, here). Parties with a vested interest will promote their own welfare by trying to convince you they have your interests at heart. In this case, I don't think the Venn diagram would show a large overlap.

It is interesting that at the state level, the Chamber of Commerce is officially neutral on the question (though James Holcomb, a senior VP of the Michigan Chamber, favors it). Perhaps this is because of a report they commissioned from the Anderson Economic Group LLC, which says, in part:
[T]he issues [with Prop 1-15] include all of the following:
• an increase in the general sales and use tax rates on retail purchases from 6% to 7%;
• a $1.69 billion increase in spending by state and local governments in Michigan, including: an increase in funding for roads, on the order of $1.2 billion per year; for the K-12 system, on the order of $300 million per year; and for local government revenue sharing, on the order of $100 million per year; plus smaller amounts for other purposes;
• a significant weakening of the extent to which road users “pay for” the roads without reliance on other taxpayers;
• an increase in the tax burden on businesses and their retail customers;
• substitution of a cents-per-dollar wholesale tax on fuel used for road-going vehicles, for the current retail tax that is set at a particular cents-per-gallon rate; resulting in a substantial increase in the effective tax burden per gallon and an increase that grows over time;
• increasing registration taxes and causing them to remain the same in succeeding years as in the year of purchase, regardless of the age or value of the vehicle;
• a partial restoration of the Michigan earned income tax credit (MEITC); and
• removal of universities as a constitutionally-allowed use of school aid funds; an implied change in the definition of higher education; and a new authorization to use school aid funds for public “community” and “technical” colleges, scholarships, and related programs.
Additional issues, some of which were undoubtedly unknown to legislators voting on the bills late in the lame duck session, include:
• widely varying tax burdens on fuel users, as certain users will pay both the new, higher motor fuel tax but will not benefit from the motor fuel sales tax exemption;
• serious compliance burdens and enforcement risks for users of fuel for boating, industrial, and other purposes other than driving vehicles on public roads;
• likely federal income tax increase among approximately 1.2 million Michigan households that itemize deductions for state and local property taxes;
• increases in taxes paid by working-poor and working-class households who do not claim the EITC;
• possible infringement of federal nondiscrimination laws regarding state-supported scholarships, should the state use the newly-created authorization to fund “scholarships”
only to “public” community colleges;3
• problems caused by significant increase in the registration tax on older vehicles, including some drivers paying more for this tax than the value of the vehicle; and
• the consequences of requiring the state to commission an “adequacy of funding” study for the K-12 system, which may encourage future lawsuits.
One takeaway: You have to pass it to find out what's in it.

If you are still wondering about the wisdom of voting against increasing your taxes when you're being lied to about the redistribution use of the funds, I offer the following items as worth reading:

Vote yes or you all will D-I-E!!!!!!!!!!!!!!
Remember folks, Prop 1 is a $2,000,000,000 hike with annual tax hike ratchet mechanism on fuel with a whole lotta public sector union payola (everywhere) and fraud embedded into it.
Just Vote Yes, Willya?
So, about three weeks ago, Safe Roads YES! launched their radio and television ad campaign, designed to convince us that jacking up our per-person state tax-and-fee burden by roughly $248.12 – permanently (not including inflation adjustments to the wholesale fuel tax) – is a good idea. To do so, they’re using the standard tactics of bogus statistics and emotional appeals, praying that the typical low-information voter isn’t going to do even the basic homework into the legislative piece of sausage that the GoverNerd and his hodge-podge of allies are doing their damnedest to slide by us roughly six weeks from now.
Taxpayer Cost for Road Fix 'Compromise' Went from $0 to $1.9 Billion
According to the House Fiscal Agency, $300 million of the tax increase will go to public schools, $95 million to local government revenue sharing and an additional $130 million in subsidies to local bus agencies. Another $260 million will be used for payments to low-income wage earners, a concession added to get votes from Democratic lawmakers, said Jack McHugh, legislative policy analyst for the Mackinac Center for Public Policy.

However, there’s a catch: The deal also includes an increase in the state sales tax from 6 percent to 7 percent, which must be approved by voters May 5, 2015. If voters say "no" then none of the above will go into effect. Lawmakers will have to start over.
$700 million of it has NOTHING TO DO with roads.

Finally, just how bad are the roads? Apparently, not nearly as bad as MDOT would have you believe, since they base their analysis on self interested subjective criteria and downplay objective metrics. That is, "government entities which stand to directly benefit" from the revenue that would be generated by approval of Proposition 1, find that passing Proposition 1 would be a good idea.

Michigan Roads – How Bad?
Cumulatively, the politically useful PASER pavement rating methodology finds Michigan’s State Trunkline road system to be in far worse condition than the DI / RSL methodology that MDoT actually uses to prioritize road work. A logistic regression – MDoT’s preferred analytical tool – shows that there is a statistically significant variance between the methodologies as they are applied to the State Trunkline system. Either the PASER or the DI / RSL methodology is not properly evaluating Michigan pavement conditions.

Most civil engineers consider RSL to be the ‘gold standard’ of pavement condition evaluation, so PASER ratings, as performed for TAMC, are likely wrong. Should you be inclined to think that the PASER evaluations better represent the condition of Michigan’s roads, ask yourself why MDoT and all the other State DoT’s do not use PASER evaluations to prioritize road work. You would also have to ask yourself why the other instrumented pavement rating methodology, FHWA’s IRI, shows Michigan’s State Trunkline roads to be in even better condition than the DI / RSL methodology...

It only takes a quick look at the charts above to realize that there is something quite wrong with the TAMC PASER road ratings being touted by Proposal 2015-01 supporters. Michigan’s mainstream media are regurgitating these politically useful PASER data as authoritative without any further analysis, so many voters in Michigan are being deceived. Deceit seems to be the modus operandi of Proposal 2015-01 proponents. It is long past time to clear the air by conducting DI / RSL evaluations of non federal aid-eligible roads in Michigan. Then we can discuss a time-limited plan to remediate Michigan’s roads.

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