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It’s a pun off of the word stagflation which was short for stagnant inflation.  Stagpression is short for stagnant depression.  It is the most accurate indicator of our economic situation today, and tomorrow, and tomorrow, and tomorrow…

We seem to be in a Depression. but we aren’t.  The Housing market is recouping, jobs are consistently growing, energy costs have dropped,  corporate profits are now at record, higher than just before the 1929 crash, and an all time record high stock market..  We should be booming. But we aren’t.  We still have too high of an unemployment both on and off the books, we still have depressed low wages, we have lost massive wealth within the middle class over this century so far, we have record high student loan debt, we have low consumer confidence,  Hence, one class of America is booming.  The other class is still in Depression mode.  Hence we are in Stagpression….

It is easy to see why.

Here is a chart showing the free cash flow of businesses……

Free Cash Flow

Record highs. See?  Record highs.  We should be growing faster than China, we have so much investment money at our fingertips. But no.

Here is our investment track record…

Fixed Reinvestment

Ironically as we gave our businesses more and more money with lower taxes, less regulation, tax funded price supports, hand-tied their unions, and made free new technology at our taxpayers expense, despite all these perks and incentives, they invested less.  So what are they doing with their money?   Pick up any financial publication and read the headlines. They all will let you know.

Rather than invest in plants and equipment, businesses are primarily using their funds to repurchase their own stocks in order to boost management earnings and ward off hostile take-overs, pay dividends to stockholders, and accumulate large cash and bond holdings.

None of which help our economy. It is as if we work hard, buy their products, and they put that money into a mattress. Soon, we are going to run out of money. Fortunately the Fed has filled the gap by printing more and giving it to banks for free. It too, filters though the system, and when it gets to the top, it goes into the mattress.

Instead of recycling money, we are letting the tap flow from our printing presses to the top echelon of our society… Now do you get it?

What is missing is a system that recycles the materials back into our economy so we have less money we need to print. If we were talking about paper, we would be saying we need to recycle paper to keep from cutting down more and more trees simply to fill up our landfills….

We need a system to return that money to the bottom so it can rise again and again and again.

Here are the options that have been tried.

  • Price and pay freezes.
  • Government set and regulated prices.
  • Lower tax rates.
  • Cash incentives from taxpayers to reinvest.
  • Pleas and entreaties from the Oval Office.
  • Higher marginal tax rates.

Only one of these has worked.  Can you guess which one?    If you guessed higher tax rates spur reinvestment you are absolutely correct.

Notice the rates of reinvestment climbing in each of these presidencies:  Eisenhower, Kennedy-Johnson,  Carter,  Clinton each time  Congress legislated higher marginal tax rates.  Also notice the drops under Nixon, Reagan, and George W. Bush as Republicans cut the taxes…  The Bush Tax Cuts held through Obama’s first term, and account for today’s sluggish reinvestment. More precisely, the reinvestment turned upwards under Obama  until 2010 when Republicans took over Congress, and has fallen since. I can’t wait to see 2013’s numbers, for I expect to see real investment increase there as well. However those higher tax rates on the top half percent implemented at 2013’s beginning, sent financiers scurrying and bargain empty homes were bought up by investors with lots of cash which brought up the floor of the housing market (perhaps to our future peril).  It also accounts for stocks becoming an area of liquidity to hold cash,..explaining the record highs ….

So we have an opposite relationship:  cutting taxes increases corporate profits which go elsewhere other than reinvestment back into the ecnomy.

Increasing taxes, cuts into the Free Cash Flow, and funnels some of that flow over to reinvestment projects.

Ever wonder how Delaware’s 3 banks lasted for decades and then all disappeared very close to each other?  Bank of Delaware, Delaware Trust, and Wilmington Trust. are now owned  by other entities. (Wilmington Trust had some hand in cutting off its own foot).  Commerce Bank, which was New Jersey based had the same fate.

They lasted for years because big banks never had enough free money to buy them out.  Just think.  In Delaware there are now 3 less bank presidents.  18 less bank officers,  and who knows how many clerical workers are missing because the work goes to the owners headquarters, not located here…. One still wonders if our state could be better off, had MNBA not been bought up by an outside conglomerate.

So giving more money to businesses and corporations in this case, cost us jobs… and destroyed 3 long termed Delawarean corporations…

That was one example.  Across this nation, in every city,  every county, every state are millions more….

Raising the tax rates drives re-investment.  It is the only thing we know of so far that consistently works to drive re-investment.   Everyone who insists on cuts and de-regulation, no matter how they spin it, is pursuing a policy that has been completely disproven by reality and fact and of course, recent history..

Are you better off than you were under Clinton?  Your income level will probably determine your answer…..  Because yes, some people are indeed, a lot better off.   John Carney.  Tom Carper.  Chris Coons,  Jack Markell, to name 4 off the top of my head….  Better off too, are those who these four represent… the 1%.  Much better off!

If you find someone willing to raise taxes, stick to them like glue. They are the ones who will lead us back to prosperity…..

Until then, economic stagpression will continue…. continuing through tomorrow, and tomorrow, and tomorrow….(at a) petty pace that creeps from day to day….

Governor Markell in a distraction to focus attention away from Charter Schools breaking all sorts of statutes, has proposed a controversial 10 cent tax increase on each gallon of gas…

If you are like me at all, and I’m sure a large number of you are, when you first heard that you probably echoed my words or something to it.  “Are you effin crazy?  We just finally got prices back down under $3.33 a gallon (the feel good mark since $10 will buy you 3 gallons which will get you 60 miles or 150 in you have a 50 mpg car…. )!!!

Seriously, how are we going to get back on our feet?

Then I saw the car in front of me swerve and I didn’t and hit the pot hole digging it out another inch… Someone’s got to fix those I said…

Light bulb.

Now I have to get an alignment….  The cheapest alignment in Delaware is $69.95…  but I know the guy.  He charges everyone else $89.95…   So I asked myself how often to I have to get an alignment?  The correct answer if I was being truthful to myself?…. every time I hit a pot hole.  How much does it cost me if I don’t get alignments?  At $150 per tire, $600 dollars.  $300 if I just do the front…

I don’t know if you have noticed but there are an awful lot of potholes that just showed up this week.  i can name locations of about 20, some of which are pretty scary.

Is it cheaper for me to  pay 10 cents a gallon I wondered instead of buying new tires?   So I turned off Rick Jensen and did the math.

At 10 cents a gallon, my cheap alignment would equal  699.5 gallons.   Meaning if I didn’t pay the tax and suffered paying alignments, I would have to  burn up 699 gallons to break even… At  gallon 700, the cost  of the alignment becomes cheaper than the tax on the gas.  And that is a cheap alignment.  The $89.95 version would cost you 899 gallons of gas.  When you burn gallon 900, no tax and the allignment becomes cheaper.

How far does 899 gallons take you?… At 20 miles per gallon, it would carry you 17,980 miles….   if you get 25 mpg, it takes you up to 22,475 miles.  That is almost 2 years of driving in a leased car…. It is almost a year of driving for a normal family car with teen age kids.

So  if you don’t pay taxes on gas at 10 cents a gallon and just pay for alignments, at mile 22,476 you break even.  How many alignments will you have over that time? Bad as roads are today, possibly 4. at 3 month intervals…   Therefore by saving 10 cents a gallon, you would be spending  the amount for 4 alignments, or $359… in 22,476 miles…   So which would you rather pay?  $89.95 or $359 each year?

So what if you buck it and skip the alignments and just buy tires when the metal pokes through?  Well,  in two days since the pothole incident, I’ve lost all the tread off the corners of my tires, or about 50,000 miles worth.  The centers are still like new so at that rate, it would probably be a month before I have to buy two new front tires, and the going rate for big tires on sale is near $150 each installed, some more, some less of course. That equals 3 alignments right there…

So what if I don’t pay 10 cents a gallon tax, and never hit a pot hole… What happens then?   Fat chance that will ever happen, but if such a miracle ever were to occur, it would have saved you  $89.95 across every 22,475 miles…..

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Now I certainly understand the emotional side of putting ones foot down and saying no to paying 10 cents more per gallon.   if you are like me you watched gas go up after George Bush was elected, and climb, and climb, and climb, and climb, and climb, and then, when the speculators had to cover their margins, it dropped to $1.40 a gallon.  Remember that?  Today the sell-shorts are larger than the sell-longs. That means BIG money is betting on the price of oil to fall over time, not rise.  Prices will continue to be near this level for a long time.  It sort amounts to a savings for us when we fill up at the pump.  A weeks driving at $4.00 cost us $100.  Now it costs us $83.25…  We have $16.75 to spend on other things,  Like 5.67th Rita Water Ices….which honestly, we wouldn’t have bought if gas was $4.00 a gallon….

I understand the emotional backlash.

It’s like being frustrated and behind, frustrated and behind, frustrated and behind, and finally there is an opening, a break going our way, and someone is trying to scoop that up away from us… How dare they!..Makes perfect sense….. that is on an emotional level….

But, what if you had a leaky roof?

Would you, when money finally came into your possession after a long drought, say, well we need to have some fun, lets blow it, whoopee?

Maybe… but if you had a roof that dripped, and could never have afforded the cost of a patch or replacement, and fatalistically accepted your plight in life with buckets mapped out in precise arrangements every time precipitation was announced,  would that change your calculations?  Would it make sense to first use that first extra money coming in, to fix that roof now, instead of letting it go, increasing its future repair cost with each month it goes unfixed?  Wouldn’t it be wise to put off going to the beach and use more extra money, instead of going now on the little bit you have, and having the roof cost more later?

That is where we are with this 10 cents a gallon controversy.  We want to spend our money at the beach this summer, and let the roof go.  But we should fix the roof first, and we all know it…  we just don’t want to do it…..

Politics aside, this is just a smart decision.  Putting a tiny bit aside now from everyone, to prevent a huge cost later in the future.  If you look at the costs of doing nothing, this 10 cents a gallon saves us money…. It really doesn’t hurt us; it really does help us save beaucoup de dollars…

Between last Thursday night and last Friday morning, the price of gas jumped 12 cents. from $3.27 up to $3.39.   Has anyone complained vociferously?  Have you heard anyone complain vociferously?  Have you seen any news media outlets running stories on the corporate price hike that was 20% HIGHER than the proposed gas tax increase?…. No.

Because it really isn’t that big of a deal.  Compare that to how many people you tell when you buy tires and get the sticker shock!  Because that is a big deal…

There are 1 million people in Delaware.  But 70 times that, 70 million come into Delaware every summer to visit our beaches…  Mathematically that  means the gas tax will be paid by 1 million Delawareans for 52 weeks a year and 70 million for one week a year while they are here on vacation.  So if we use 50 gallons of gas per week, per person (imagine little babies driving cars, lol)  that $5 of extra tax would be generate from Delaware’s citizenry, ($5.00 X i million X 52 weeks per year) or  $260 million each year, and from the visitors, ($5.00 X 70 million X 1 week)  or $350 million would be added to our coffers.  So the total  would be $260 of which came from us, and $350 which comes from our visitors.

Delaware then gets a benefit of $610 million dollars while coughing up $260 million… which as we said above, really doesn’t hurt us at all on an individual scale.  So if people were cars, we’d have $610 million.  But, the ratios opf in-state and out-of-state automobiles remain the same, since the allotment of vehicles is similarly proportioned to the amount of people.  Just with Motor Vehicle data I didn’t bother to look for, we can make a very close calculation in dollar figures which should closely mirror the  42% of the total received revenue that Delawareans would actually pay…..

It is very rare when one finds a tax where it costs one less to pay, than not to pay….  This one is…

1.  Increase Taxes on Top Echelon at a 60/40 split. They keep 60; they pay 40.

2.  Allow capital improvement inside the geographical USA to be written off the year it is expensed.

3. Return Federal Jobs to levels before 2008.

4. Return State jobs to levels before 2008.

5. Return Local jobs to levels before 2008.

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The arguments have been long expounded as to how, as to why, and as to the details of when.  I’ll save time by not repeating them. …

Every county in America would get a jump on their own unemployment immediately.

Cons

Raises tax on gasoline by 10 cents  per gallon.  If gas costs $3.33 today, with tax it will cost $3.43.

Does not tax the wealth as much a percent of their income, as it would tax those on the lower levels.

Takes consumer’s money away from discretionary spending on other items.

Could cause truckers to fuel up in other states.

At a drive rate of 25,000 miles per year, at an mpg of 20 miles per gallon, the number of gallons used would be 1,250.  A ten cent tax on each of those gallons amounts to $125 per year…  Per month that would be .. $10.41… Per day…$ 0.32…  If one drives less, or has higher mpg, one pays less.

Gasoline tax has lost its value over the past decade. Changes in fuel-saving automotive technology and driving habits are resulting in less revenue to repair crumbling bridges, repave highways or upgrade buses and trains.

Pros

Jobs, jobs, jobs,  with funding highway construction can get into gear.

Solidifies the Transportation Trust Fund, which has been robbed to simply run government. That’s been squeezed and squeezed and squeezed, and specifically what has been squeezed out of it is the ability to build more capacity to deal with congestion. All that’s left, pretty much, in the capital budget at the state level (for roads), is maintenance and repair.

DelDOT’s capital budget would increase from $128 million this year up to $192 million next year.

Opens door of super high tax rate on the super high wealthy in this state. Those who should be paying 15%.

Encourages people to use less petroleum.  Smaller cars, higher MPG’s, more public transit, less pollution,  get bumps when gas rises higher.

Allows state to tap in on all those people using 95 who pull into the best service center on the East Coast, perhaps the nation.

County and local roads which have also have suffered, may now finally receive repair.

The current poor condition of roads costs drivers in Delaware cost $2,500 per person per year in extra fuel, wear-and-tear and lost time.  This cost must be balanced against the cost of an additional 10 cents per gallon. (Compared to the $125 per year cost of the tax.)

We paid more in the past.  Driving the same 25,000 miles back when cars ran on 10 mpg,  the same mileage would have generated.  $250 dollars…  Fuel efficiency has cost state transportation funds half of what they once used to receive….

The tax was last raised in 1995… Since then, what we could once buy for $250.00, we would now need $382.00.  The money we collect does not go half as far….

States with lower gas taxes actually pay more for the gas in the pumps because the market will bear it.  Sam’s Gas (Walmart) in Athens, Georgia, where there is  a 7.5 cents Georgia state tax on gasoline…. sells gas for $2.99….   Putting the price of  the cheapest Athens, Georgia gas today is $2.915… In Delaware, Wawa has $3.23 up on their sign, (as of a couple of hours ago.)  Today Delaware’s tax is 23 cents per gallon…  The cost of the gas minus taxes is $2.99….  some may say… aha!  Georgia is cheaper.  But that would be comparing Sam’s Club to Wawa.  One would expect Sam’s Club to be cheaper… It is a “club”… is it not?  The lowest priced national brand in Athens, Georgia is the Shell Station on Atlanta Ave. near Trade Street.  It’s pump cost is $3.19…  Deduct the 7.5 cent gasoline tax, and Georgians are paying $3.115 per gallon for gas;  the comparative Delawarean price with Delaware’s tax tacked on, would be… $3.35….  Today that is 8 cents higher than most stations sell in Delaware today…..  Point is… consumers don’t absorb the gas cost… The $4 billion dollar gas companies do!

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The benefits outweigh the cost.

——

With so many great benefits, it seems senseless to halt them all for a price jump that can occur on it’s own at a moment’s notice…  No more difference from driving past a gas station in night checking the price, and doing it again in the morning and cursing you didn’t fill up the night before…

Thus, are the pros and cons of raising a gas tax….  if the poor and middle class are being asked to sacrifice, come later, THE WEALTHY HAD BETTER BE FORCED TO DO THE SAME…. IT’S AN ELECTION YEAR YOU KNOW……  Pass this minor tax on the poor, then raise state income rates where they should be… As a reminder I’ve included them below…….

Recommendations for 2014:

Go to multiple tiered tax rates:

15% on $1 billion or more
10% on $100 million to $1 billion
9% on $10 million to $100 million
8% on $1 million to $10 million
7% on $500,000 to $1 million
6.75% on $60,000 up to $1 million

In New York they are debating the cost of Pre K.  Everyone thinks it is a good deal, but to pay for it by raising taxes on only the rich?  The tax which is in discussion will cost roughly $1000 on incomes over $500,000.  New York has a lot of those.

The anti-taxers are beginning their push-back. …. A little history might be right for the rebuttal….

Taxes are too low and that is the reason for most of our economic slump.  Today’s low rates make it too profitable to skim money’s off the top… and nothing is getting reinvested back into the economy….  Taxes, we discovered across the expanse of the 20th Century,  are a tool of public policy and today, they are not being effectively used…

Higher taxes and a stronger government presence in the economy, is essential to economic stability.  The evidence to that is unquestionable.  Deregulated markets do some good, but are not the  complete answer to running a great society….  When one runs a business, one is always under constant pressure to reinvest some of ones profits back into ones business, or…  choose to  take the other option and keep the extra as profit.  We all hate those who chose the latter.

If something is broken, one should fix it, right?  That means spending money now.

Children of low income and minority households enter our school system with half of the vocabulary-words needed.  There is no way that can be fixed at home.  If one’s household does not use a wide vocabulary, one cannot get a wide vocabulary at home.  Having Pre-K and exposing all children to 10000+ words upon entering school, would almost close the achievement gap at it’s beginning.

We know what has to be done.  10,000+ words per child.  Just reading story-books with children would be enough to develop that… And the  benefit would dwarf the tiny cost….  It is that simple; reading children’s stories to them… something affluent parents do daily.

On to taxes.  From the 1940’s to the 1960’s the top tax rate gradually lowered from 100% to 72%… The JFK dropped it down to 60% to where it stayed until the great tax cutter, Ronald Reagan, dropped it to 50%…  Obviously every Republican who loves Ronald Reagan should have no qualms with accepting a 50% top marginal rate… They should be volunteering to pay that high, don’t you think?

Rates were cut again to 28% and when the cut  hit, the huge recession of ’91 began.  Upon entering office, Clinton raised them to 39% and the economy took off.   Took off until Bush cut taxes down to 35%…. They stayed at that level until last year, when the top half of one percent, got hit with a top rate or 39.5%….

This was the 1% most prosperous year ever….  needless to say, higher taxes improves one’s fortunes, not diminish them….

How much is $1000?  To the super rich?   If your average rate of return on $500,000 is 7%, over the year you should gain $35,000…. Divided by 365 days of the year, that would amount to  96 dollars a day…  So $1000 would be 11 days of interest off your $500,000.  That means you could keep the other 355 days worth…

Plus, at bringing all children in at 10,000 words, think of all the future costs that can be saved by then doing away with Pearson, MacLatchey, AIR and all the other consultants…. Pay a little now; save a lot later.

Any argument over being taxed more for kindergarten, or for any other viable reason, needs to be taken worth a grain of salt.    of course people are going to yell.  Even babies yell and they don’t even know why.  But we don’t let babies rule every aspect of our lives now, do we?

Or, do we?

 

In 2012,…. 21.8% of all people under 18, lived in poverty, that is defined as a family of 4’s income under $23,050 (total yearly income)..That comes to under $443 per week. …

One in 5 children across America or 21.8%, live like that.   (More than a majority of Americans (58.5%) will spend at least one year below the poverty line at some point between ages 25 and 75.)..

The ratio is one in five.  In a class of 10, two students will be attending from a home under poverty.  In a class of 20, four students will come from families living in poverty.

Below is childhood poverty tracked across 53 years starting in 1959.

Image

Whatever we did from 1965 to 1979, we need to do again… See the low dip on the chart?  Our current high level of poverty is very near the record, with one major exception.  Unlike all other peaks we have plateaued at this bubble’s highest amount.  Notice how in 1993 and 1983, the same levels were reached under those two presidents, but quickly descended thereafter?  Since the election of the Tea Party Republicans to Congress, for the first time, poverty has stayed steady at the high water mark, for over 3 years in a row..

As soon as President’s Lyndon Baines Johnson’s War on Poverty took effect (50 years ago) child poverty declined until Reagan cut taxes in 1981… After he raised them back in a now famous agreement with Tip O’Neil, as the economy grew, childhood poverty fell.  Again after Clinton raised taxes in 1993, the poverty level dropped over the rest of his term, until George Bush and the Republicnas cut taxes again… Since those taxes were cut, the childhood poverty level has risen to the record levels it is near today….

Tax Cuts have repercussions that extend far beyond the wealthy getting more money back in taxes.  Higher tax rates boost the working economy; lower tax rates shred it…….

It is imperative that tax rates get raised as quickly as possible so this current plateau, the first 3 year one ever, the one created by the inaction of Congress because Republicans put the Tea party iin control of hte House…begins to drop down the other side.

Time is running out.  like global warming there will be a critical point we know is coming but where it comes we can’t predict.  The same urgency and fear need applied to childhood poverty and education’s role in helping end it…

First Buffet, now Gates.  Higher rates of taxation are necessary to rectify our society, even if limited for the short term….

It is nice when those who have much money, recognize the reality.

Dear Diary:

What if we raised income taxes on the top 1% several percent with a sunset clause not tied to a year, but based on achieving a certain state unemployment rate.? Perhaps 4.9%?

Work that through sometime soon, please?   

Thanks, 

me.

Thats 30 people more than have died from an overdose of marijuana, EVER.

It depends on how much you make.

Bloomberg just published the top income estimates for 2013.  It is 1928 all over again….

“the top 300 seeing their collective net worth rise by US$ 524 billion to US $3.7 trillion as 2013 ended,”

Were we to raise taxes on just that increased amount by only 1%…. we’d could cut our deficit by $5 billion dollars.  Five billion dollars on the other hand, would pay for 16.7 million weeks of $300 Federal unemployment payments.   1,260,400 are currently waiting on Congress to pass an extension.

Twelve weeks of all their benefits could be covered by a 1% increase of taxes just on 300 people…. How badly will this hurt them?  Well, it would be as if you were selling lemonade on the corner for $1 a glass, and some kid only had 99 cents.  Sure, you’ll sell it… Point is that $5 billion dollars equals only one penny to these guys…

So why not take 2 pennies?  Really?  No one pays $1 anymore.  Everyone pays 99 cents and discount stores start at 98 cents…

Two pennies would fund unemployment for 24 weeks… Will you take 97 cents for a glass of lemonade?  Gee, 36 weeks, Done.  Covered…  How about 96 cents for an ice cool cup of sweetened Lemonade?  Let see, it’s cost is only 16 cents per cup, so.. why not?   Done!  48 out of a year’s 52 weeks, covered.  Accomplished!  Just like that…

And with no bump to deficit either… 

===

You are smart enough to figure what to do next.

 

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