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Hey, when I said tax the rich, I didn’t mean the rest of us

May 9, 2011

Roger Freberg

OPINION by ROGER FREBERG

When you look around the state to see if anyone, anywhere is doing anything to save our counties and cities; you really don’t see a captain at the helm trying to avoid those big icebergs. I do see a lot of quick retirements, golden parachutes and manning the lifeboats! I don’t feel very confident in our leadership, do you?

However, not making a decision is still making a decision! It is a choice and not always the bad one.

However, our cities, counties and our state are in big trouble and no one anywhere seems to want to change the course of this Titanic. If I were a betting man, I would wager that decades from now, historians will refer to this time as a period of collective paralysis in the political community–when confronted with a rapidly dynamic and changing environment our leaders were unprepared by either training or ideology to be up for the task.

I don’t have a problem with the concept of having ‘hope’ for an economic turnaround or recovery, but I do have a problem with not taking steps to soften what could be a rather hard fall if things don’t turn around.

I pick on the cities because they exist right before our eyes and offer the same sorry excuses for not addressing the pressing issues of the day as their bigger kin. They worry about their own electability. Let’s take a look at a few of the issues that press on cities:

1)    Unfunded pension liabilities

It is no secret that the current and future solvency of the public sector rests on addressing this issue. Is it fair or right to ‘retire’ public employees, any public employees at a salary that is higher than anything they made while working for you and me?

2)    Public sector salaries

Thanks to Governor Jerry Brown, everyone has the ability to see what many public sector folks make on retirement. It might surprise you to see how many actually pull down over $100,000 each year in retirement. As a side note, it took me a very long time just to skim through the last names starting in ‘A.’ I found it depressing.

There are a lot of jobs here that fail to meet the smell test. The City of Bell is definitely not “alone.”

3)    Administrative bloat and huge salary and benefit packages

For example, why should anyone working in the city of San Luis Obispo (population 40,000) make more than the governor of this state? Is what they do really that important and are their skills so precise that no one outside of an elite cabal of public sector administrators could fill their shoes? Personally, I have found most administrators to have limited vision, and instead are rigid clerics of the motto “give me more money, then I can do my job.”

Public supported private cars, credit cards, cell phones, junkets and public funded conferences seem like easy things to cut to save scarce public resources.

The politically tougher call is to how do cities function with ‘less.’

4)    Raise or lower taxes and fees

‘Revenue enhancement’ has been the euphemism used by cities for raising taxes and fees. Since raising taxes creates such a negative reaction in the public mind, other words have been introduced to ease the pain. It goes so far as to redefine how propositions and bonds are described. Only a heartless person would fail to support the “homeless, single mother, environmental protection, pollution control, and fairy shrimp bill,’ but when you read the fine print, you discover such bills raise revenue for the general fund.

I pay about $15 per month to the city on my cell phone. I can see the purpose of paying the city for a land line, as these require maintenance, but as far as I know, the city incurs no costs for my cell phone. It’s just because people don’t have land lines anymore, and the city “needs” the revenue. We’re just an ATM to them, nothing more, nothing less. Expect to see taxes like these go through the roof, just because the governments “can.”

Our current favorite is President’s plan to tax each mile you drive in your car—part of the “Transportation Opportunities Act.”  So now paying more taxes (we already pay a lot of gas taxes for this same purpose) becomes an “opportunity.”  The fact that your car would need a new device to record how much you drive and who knows what else is a bonus for our nosy leaders.

We have had some experience with this with a local school bond bill that promised a lot of good things for students. San Luis Obispo passed this some time ago and it comes up for renewal soon! Correct me if I am wrong, but didn’t a million or so go just to renovate the School superintendant’s office and building?

5)    Stop raising water and sewer rates

Recently, the city of San Luis Obispo has proposed raising water rates roughly 20 percent across the board and sewer rates roughly 13 percent. They trot out the usual reasons: 1) big capital improvement projects needed (when have they ever not said this?), 2) citizen conservation efforts have reduced consumption and use (darn them!) and 3) we just didn’t think this would happen!

The “conservation” excuse can’t have any connection with the large number of vacant homes and apartments in San Luis Obispo, now, can it?

We have never been given data to support the need for water/sewer increases or any evidence that the increased revenues are earmarked for improving the water/sewer system. We need to see where these revenues are being used and find other sources to fund these projects. My guess is that they just go to the general fund.

When you raise these sorts of taxes, well, some people just turn off the water, but we do not live in a third world nation–yet.  Most of us believe that being able to flush a toilet or take a shower are basic parts of the American lifestyle.  I find it darkly amusing that there is actually additional city tax on this ‘tax’ bill. The most dishonest thing about the city flier is that they show your bill actually not going up as much as it will, because they have built in an assumption that you will reduce your already frugal water use by another 10 percent!

“Sir guy, golden days are here!” – Prince John (Robin Hood—What would Errol think about our city leaders?)

By the way, San Luis Obispo city officials, I would have a lot more confidence in buying your product if I wasn’t confronted with water coolers in city offices. I even seem to remember seeing one in the water treatment plant. If you don’t drink the product, why should we think it’s safe?  I guess you really don’t want to tell folks about not testing for heavy metals, or have you started looking into that, yet?

So, what can you do? Well, remember when they say they want to ‘tax the rich,’ they really are talking about all of us.

A Public Hearing on the proposed water and sewer rate increases will be held on: Tuesday, June 14, 2011 at 7 p.m. at the city of San Luis Obispo Council Chambers at 990 Palm Street.

Roger Freberg is a San Luis Obispo resident who is using his retirement to write a culinary-inspired blog, comment on important local events and occasionally enjoy getting sued for his journalistic excellence.


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Okay then, how about taking a look at a history of income taxes and the relationship of those taxes on the very wealthy; Michael Hudson is an economist who feels that America did much better when the wealthiest were taxed at a higher rate, specifically when the top one percent were taxed at 90 %. Thoughts?


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I like the economists that hail from state universities rather than the Ivy schools, I like Hudson’s pov.

Richard Wolf another economist gave this talk recently in Berkeley


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Gov policy matters


The federal tax burden is at an all time low of 60 years, 15%.


FEDERAL INCOME TAXES, AS A SHARE OF GDP,

DROP TO LOWEST LEVEL SINCE 1942, ACCORDING TO FINAL BUDGET DATA (2003 numbers, hmm)


In 2003, total federal revenues as a share of the Gross Domestic Product dropped to 16.6 percent. The last time that total revenues as a share of the economy fell below 17 percent was in 1959, near the end of the Eisenhower Administration.


CONVERSELY, the share of federal revenues consisting of PAYROLL TAXES reached the HIGHEST LEVEL IN THE HISTORY of the tax system


http://www.cbpp.org/cms/index.cfm?fa=view&id=1324


“Starving the beast” is a fiscal-political strategy of some American conservatives to create or increase existing budget deficits via tax cuts to force future reductions in the size of government.”


Prior to being elected as the President, then-candidate Ronald Reagan foreshadowed the strategy during the 1980 US Presidential debates, saying “John Anderson tells us that first we’ve got to reduce spending before we can reduce taxes. Well, if you’ve got a kid that’s extravagant, you can lecture him all you want to about his extravagance. Or you can cut his allowance and achieve the same end much quicker.”


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From 1950-1980 the bottom 90% od US grew our incomes 75%. Next 27 years? 1%.


From 1945-1980 the top 1% took 6%-9% of ALL US income


By 2007? 23%.


Adjusted Gross Income Shares


Top 5%


1980 21.01%

2007 37.44%


Top 10%


1980 32.13%

2007 45.77%


Bottom 50% of US?


1980 17.68%

2007 12.26%


THE PIE ONLY HAS 100% NO MATTER HOW LARGE IT GETS!


http://www.taxfoundation.org/news/show/250.html


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While I agree in general with Roger’s point of view, I noticed that he based them on at least one inaccurate observation and I wonder how many more there are because of that. If he is accepting verbatim the Right Wing propaganda mill’s accusation that Obama was/is supporting a mileage tax on cars, what else has he accepted without critical thinking.


(FYI, the car mileage tax proposal came from a study group at the request of a couple of Democratic congressmen. Obama took no position on it, pro or con. I wouldn’t be shocked if he considered it but let’s be fair about the attributions at this point. It is a bad idea but it is not HIS bad idea.)


As someone who now makes less than rookie cops less than half my age (without their benefits), I don’t have sympathy for their pleas that they can’t survive with a cut in benefits. But my real annoyance is with the administrative set and their salaries/benefits. Anyone who thinks that they deserve $150K-$250K per year (with lots of perks) for managing at the city or county level, is out of touch with a large portion of the population. A family that “struggles” to live on $200K per year doesn’t know the meaning of that word unless they have at least 8 kids. (Sorry, mkaney)


Roger is also right about the over-indulgence in facilities and other office/administrative expenses. I am willing to bet that secretaries are being told to scrimp on paperclips while administrators are billing the taxpayers for very fancy “business meals”, travel to places for meetings that could easily occur on-line or over phones and luxury furniture in their offices.


This is a group of people that acts every bit as “entitled” as those who are accused of substituting welfare programs for working. And they cost us just as much if not more.


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I didn’t say they struggled, I just said they’re not “rich”


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Great article Roger…

The growth of county, state and federal government agencies has exploded. Seems every department has several assistant directors, managers and administrators…


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IF anyone was serious about taxing the rich, then they would start talking about the long term capital gains rate. Centering the argument on people who make $200k a year is just a way to divide the middle class against itself. $200k a year is hardly rich, epeciailly if someone has a few children. On the other hand, John Paulson who runs hedge funds pulled in $5 billion last year and only paid 18% on it.


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While I half-agree, something inside me tells me that ANY new taxation will be shared by all (or at least all the Makers, not the Takers). I’d love to see the Fed abolished, and Wall Street dismantled, at least to the point of the only profits are from dividends. But that also goes against my free market ideals. It is a tricky situation.


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A true free market wouldn’t really have corporations though, only sole proprietorships and partnerships, as corporations depend on the state for their existence. So I don’t think dismantling wall street necessarily contradicts free market ideals. I really am not keen on the idea of raising anyone’s taxes, either, but I’m really trying to point out the fact that the “tax the rich” crowd in the congress is actually being disingenuous, as well as find some short-term middle ground with progressives.


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No one seems to remember that in the mid-90’s, we didn’t even have a public utilities department in SLO….it was then managed by the public works department. The new department came about when the Council decided it needed “water police” to make sure we were not washing cars, watering lawns in the daytime, etc. When the drought of the 90’s disappeared, the public utilities department and it’s water police didn’t. I suggest we do away with the current public utilities department, and its employees, and revert these services back to the public works department. What a novel idea!!!


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Well, as Reagan once said, “No government ever voluntarily reduces itself in size. Government programs, once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we’ll ever see on this earth!”


I think he was right on that one!


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Roger: Where do you make this stuff up? I hope it is just in your head, otherwise your perception of reality might be called into question. You started the article off with your headline, but simply devolved into a rant against our city government after pointing out the excessive state retirement packages, but you did not seriously address what the “tax the rich more” actually means. Every pole made recently that asks the question “Should the rich pay more for the services that all citizens participate in” or something to that effect, a very large majority respond in the affirmative. I understand that most taxpayers are rightfully upset at the state of government in general, and I also wholeheartedly agree that no city official should be paid more than the governor; but you failed to address the fact that many very wealthy people pay a lower percentage of their income in taxes than those in the middle class of earners. More and more people are waking up to the fact that the very wealthy have been skating away from their financial obligation and it is costing all of us more and more for less and less. YES unfunded pension liabilities is and will wreak havoc on governments; again though, you skirt the issue of WHY were those pensions allowed to be unfunded? Too many administrations and legislatures allowed those pensions to accrue without setting aside the funds to pay for them as a way of attempting to balance the state’s books, when if instead they had put those pension funding questions on the table when they came up, there wouldn’t be this sudden awakening to the reality of where we are now financially. Some may even bring up the question of why we have gone down this bad road for so long even suggesting that this has been part of some “grand plan” to bankrupt government so that the pensions and contract obligations could be discarded and a push to make government “smaller” could finally come to realization as the wet dreams of Grover Norquist come to fruition. There is not easy, quick fix, but to disallow the possibility that SOME tax revenue will need to be generated is a conservative talking point that led to the “No new taxes, no tax raises” pledge from Grover Norquist that ALL Republicans have signed. Increased taxes on the very wealthy is a fair way to start to address our current imbalances in government.


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Spoken like a true government employee. Redistribute the wealth, to us.


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Sorry to spoil your fantasy, but I have never worked in government, period. I am semi-retired from a union job that has afforded me a small pension, no health benefits and my wife and I run a small business.


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I think “Government Employee” automatically implies “Union Worker” (the 1970’s version of over-paid, under-qualified, non-competitive worker). Not saying you were such, but I remember all the “union jokes” from the 70’s.


Now-a-days, it’s basically government that is the only union that is thriving, all due to the fleecing of the tax payer.


I grew up with my father in a union (IBEW) and after all his years of paying the dues, they cheated him out of his pension because he did not “work union jobs” the last 20 years or so (but kept his license and all the dues current). Boy how he’d think so highly of organized labor… until it cheated him. So excuse me if I automatically am sour on unions, as from my perspective they haven’t done much good since the robber-baron days of the late 19th/early 20th centuries.


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Seriously man, you are blind. Have you actually looked at the salaries being made by public employees? It is unsustainable now matter how much taxes are raised. Most of us in private industry are frankly ANGRY about this, and are not even willing to discuss anything else until this is addressed.


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No, I am not blind. Yes I have seen the reports of those high salaries being paid to people who work in government, but you really cannot qualify them as simple “state workers” when those with the outrageous salaries are in positions of management, supervisory and leadership. The “regular” state worker does not make outrageous pay compared to those in private industry doing the same or similar jobs. The most “unsustainable” part of the government picture though has to be the unfunded pension liability which was brought on by a complete lack of leadership being able to plan for the future, and both parties in the legislature and governors have contributed to our current situation.


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I’m not tlking about the “reports” of those high salaries being paid… I’m asking you if you have actually gone here:


http://www.sco.ca.gov/compensation_search.html


and looked at ALL the salaries, in black and white? I suspect that when you do, you will take back what you said about the “regular” state (/public) worker not making outrageous pay compared to those in private industry. It is absolutely NOT just management and leadership positions. Their salary “ranges” are *sometimes* tolerable, but when you look at ACTUAL compensation (incl overtime), then it paints a whole new picture. If you haven’t gone to that site and looked up SLO, I would be curious to know if it changes your opinion at all when you do.


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Okay, I perused ALL of the salaries being paid to SLO City workers; other than police and fire personal, I for one did not find that many who made over 50k a year that were not in some sort of supervisory position, other than a few individuals who are in the technology sector of city work. My question to you: What do think that most of the city workers in the “City Worker Category 1,2,3,4,5,6,7,8 and so on should be paid? I don’t remember ANY in those categories making over 50k; are these people being paid too much?


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How to lose an argument 101: Start out by insulting someone’s opinion; follow it up immediately with ad hominem attack (preferably in a Wall of Text!


Seriously, if there ever was a case for TL;DR this is it.


If you had the “short version” at the bottom, it could look something like this:

“Yeah, yeah, many city employees are over-paid and have great benies for life, BUT EVIL RICH PEOPLE ARE NOT TAXED ENOUGH!” – I think that about sums up what you’re saying? Then again, I really didn’t read past the top “bricks” in your wall… hehe


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r0y: Questioning where one comes up with their opinion is an ad hominem attack? Mr. Freberg often starts out his opinion pieces on unfounded accusations or shaky facts or what appear to be total fabrications, in my opinion. If you have the opinion that I attacked him without cause, well, you are entitled to your opinion. As for a “Wall of Text”, how does a response that might be three paragraphs compare to some 17 to 20 paragraphs for the article the response was based on? As for your “short version” of my comment(s); Yeah, there are some, maybe many city employees that do get paid a lot, and some have great benefits, but it isn’t the average or low level employees who are at that level. Those in positions of management, supervisory and leadership roles that garner the outrageous pay scales and pensions and benefits. As for rich people being under taxed, do you disagree with that premise? Really? I hope this is short enough for you to read.


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bobfromsanluis: “Roger: Where do you make this stuff up? I hope it is just in your head, otherwise your perception of reality might be called into question.” – that is an ad hominem attack. Just saying…


Even in your reply, you again attack him. Having a personal beef with someone is fine, but just be honest about it, so those of us who do not know either of you can at least understand the animosity.


Also, aren’t most city employees management types? I’m curious how many low-level “regular Joes” (and Josephines) there are… I did find THIS which does not really show a lot of low-level employees (some temporary, yeah, and un-paid/low-paid elected officials, but most are well-paid, full-time). I’m open to be educated, as I’m constantly learning more and more about this every day.


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I just realized there’s a lot of “City Worker 1” under parks & rec… looking at the City’s HR site, that appears to be temporary work… not bad coming in at $22K for temporary work is REALLY nice, as I know many people working multiple jobs just to make that.


(sorry for the double-reply, it’s getting late)


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Wow, so 22K is REALLY nice? That works out to about $458.00 a week, pre tax, which equals out to $11.45 an hour. And that’s REALLY nice? In comparison to minimum wage, that is an improvement, for sure, but are you complaining about that wage being too much? REALLY? Please, be more explicit as to what you are saying; if temporary workers making $11.45 an hour is too much in your opinion, what do you think they should be paid?


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It is REALLY nice because they have a job? Someone obviously does not have to wonder where their next meal is coming from.


Also, notice that I said REALLY nice for a TEMPORARY (i.e. Part-Time) job. Go ahead, jump into the data. Wade around a bit. Then reply. It’s better than a knee-jerk reaction.


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I did “jump into the data”; there are far too many in supervisory positions that make over 100k for my tastes. You did not answer my question about whether or not $11.45 an hour is too much to pay temporary workers. How much do you think they should be paid?


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