Public Pension Problems.

[ERD50]

2018 Federal tax receipts are at an all time high, so it isn't the tax cuts that are causing the problem. It's the spending.

No they're Not !! --- Not sure where you get your news from, but it is completely False! ....

It is? Completely false?

Looking at your own source/quote, it sure seems to be true. At least according to grade school arithmetic:

.... http://www.crfb.org/blogs/has-revenue-risen-2018

**********************************************************
"While individual income tax receipts have increased in nominal dollars since last fiscal year, ..."

So in what world does "increased in nominal dollars since last fiscal year" make the statement "Federal tax receipts are at an all time high," completely false?

And yes, they are higher than previous years as well, so there is no out there.

It is you who are adding the conditions regarding 'inflation adjusted' and trying to account for sources. That's OK, but it in no way makes Winemaker's statement "completely false".


I've seen this technique in several "Fact Check" sites - they change the quote, adding conditions that they want, and then claim it is false. Drives me nuts. I'm waiting for the fact-checking the fact-checkers site, ad infinitum...

-ERD50

 

[Cut-Throat]

So in what world does "increased in nominal dollars since last fiscal year" make the statement "Federal tax receipts are at an all time high," completely false?

In the World of Accuracy... And quote the entire sentence... You left out Corporate Tax Revenue.... Read the entire article.

 

[ERD50]

2018 Federal tax receipts are at an all time high, so it isn't the tax cuts that are causing the problem. It's the spending.

In the World of Accuracy... And quote the entire sentence... You left out Corporate Tax Revenue.... Read the entire article.

I don't appear to be leaving out anything. What are you talking about?

"2018 Federal tax receipts are at an all time high" appears to be a true statement. It does not warrant a "but it is completely False! " comment (complete with "!") from you.

If you want to dig deeper, fine. But I see no reason at all to call his statement "completely False! ".

If someone tells you they just purchased a CD that pays 2%, do yo tell them they are "completely False!", because they didn't mention inflation? It's important of course, but that does not make the statement false.

-ERD50

 

[Another Reader]

Yes. This is the basic mechanism that causes the quality of the public employee workforce to be lower than the national average workforce. Even if the government starts with a normal Gaussian distribution of talent, the right hand side of the distribution, the high quality people, are often recruited away. On the left, however, no one can be fired so the distribution of employee talent ends up skewed towards the low quality, left, side. This is just math. No political or ideological thinking is necessary. This observation would also lead one to predict that the age of the government workforce is higher than that of the national workforce, and indeed it is.

Re the pension problem, this is old news. Illinois and Chicago are almost certain to go bankrupt. California may, too. Those who continue to live in these states will foot the bills and the retired public employees, who are really not to blame for counting on what they were promised, will suffer.

There is a lot of truth to this with some interesting exceptions. Early in my career, I worked for a local government agency. The job required a college degree for the entry level professional position. The schedule was somewhat flexible because because field work was about half of the job. A large number of the employees were college educated women with kids in school that needed some flexibility. Many of them were married to men that were starting and pursuing tech related businesses and had variable income and no benefits. The government jobs provided the benefits, the flexibility, and some pension accrual the families needed. These were all excellent employees and had zero interest in leaving for more money.

We also recruited a number of burned out engineers in their forties that wanted a 40 hour week and to accrue what were pretty good pension benefits over the last 10 to 20 years year of their careers. A lot of them were tired of the layoffs and periods of unemployment and felt that there was not much difference in what they netted, including their time unemployed. They were also pretty good employees and were not interested in leaving.

Most of these folks were as good as or better than their private sector counterparts. The business side of the profession was very cyclical and that tended to discourage people after a few years. That in of itself meant the outside work force was younger, although the engineering refugees also skewed the workforce age.

 

[OldShooter]

There is a lot of truth to this with some interesting exceptions. ...

No argument from me. Like any generalization there will be exceptions.

Another reason for some exceptions is pure idealism -- wanting to do good and seeing the government job as one that does good. I was once active in the National Conference on Weights & Measures and saw a lot of idealism there. Now I was seeing the cream from NIST and from the state W&M offices so I can't say what the whole employee cadre was like. Another place I have seen it, though its not quite the same, is in the military officer corps.

But the fact that poor employees are rarely or never culled is a major drag on the average quality of any government workforce.

 

[Cut-Throat]

I don't appear to be leaving out anything. What are you talking about?

"2018 Federal tax receipts are at an all time high" appears to be a true statement. It does not warrant a "but it is completely False! " comment (complete with "!") from you.

If you want to dig deeper, fine. But I see no reason at all to call his statement "completely False! ".

If someone tells you they just purchased a CD that pays 2%, do yo tell them they are "completely False!", because they didn't mention inflation? It's important of course, but that does not make the statement false.

-ERD50

Well, I guess, I have to read the article for you ....... OK, forget inflation and use nominal numbers..... So, yes, the statement was Completely False And with a "!" ....

"Yet even these numbers understate revenue losses between 2017 and 2018, since they count revenue raised in 2018 but under 2017's pre-tax cut laws. Roughly three-quarters of the increase in nominal individual income tax revenue since 2017 is the result of non-withheld tax payments made in April (and March) to cover last year's taxes. Another quarter of the rise is from revenue in October, November, and December of 2017 – months which are part of fiscal year 2018 but were under the old tax code.
Excluding October through December as well as non-withheld tax payments, individual income tax revenue is essentially unchanged from 2017. Under this scenario, total nominal revenue is down 4.3 percent, real revenues are down 6.4 percent, and revenues as a share of the economy have decreased by 8.8 percent. Revenues from May through July have fallen even more steeply.*
In other words, revenue has dropped substantially post-tax reform."

 

[skipro33]

As for states, I'm not aware of a state capital where the incomes are lower than the state as a whole.

2016
Sacramento; median income of $64,052
California; median income of $67,739

 

[gerntz]

No they're Not !! --- Not sure where you get your news from, but it is completely False! - So yes, the Tax Cuts are a Major Part of the Problem!

What problem? If people don't want taxes higher than they are, then current taxes are not a problem at all. That people want current spending, which is independent of tax revenue, is not a problem either. The people that expect those two independent beliefs to match are the problem.

 

[gerntz]

Another reason for some exceptions is pure idealism -- wanting to do good and seeing the government job as one that does good.

That's one form of idealism. Another is believing you're responsible for your life independent of the damage government causes. Each of us need to decide.

 

[Winemaker]

Well, here's one source.

https://www.investors.com/politics/editorials/trump-tax-cuts-federal-revenues-deficits/

And another.

https://www.wsj.com/articles/tax-revenues-are-higher-1533941919

 

[MichaelB]

From the St Louis Fed, a chart of current tax receipts for the past 5 years. https://fred.stlouisfed.org/series/W006RC1Q027SBEA
.
.

 

[Bir48die]

We in the great state of Oregon have record revenues. Educational spending grows every year. However the unfunded pension hole is $26 billion. Because the hole gets bigger the portion of educational dollars going to the classrooms gets smaller. We are #2 in dropouts in the nation.

Now they want $2 billion in new revenue on top of more carbon tax money. A greater portion of that new revenue will only go to pensions so we'll never get over the hump.

The best part of all of this is the implied return rate of 7.2%! So if returns are less then that the unfunded portion goes up (so 100% chance that's going to happen) so a higher portion of that new tax revenue would again not get to the classrooms. Sheesh! What a racket. By the way, who's the #2 most compensated PERS person? The old Oregon Duck coach getting north of $450k per year [emoji24]

 

[Texas Proud]

We in the great state of Oregon have record revenues. Educational spending grows every year. However the unfunded pension hole is $26 billion. Because the hole gets bigger the portion of educational dollars going to the classrooms gets smaller. We are #2 in dropouts in the nation.

Now they want $2 billion in new revenue on top of more carbon tax money. A greater portion of that new revenue will only go to pensions so we'll never get over the hump.

The best part of all of this is the implied return rate of 7.2%! So if returns are less then that the unfunded portion goes up (so 100% chance that's going to happen) so a higher portion of that new tax revenue would again not get to the classrooms. Sheesh! What a racket. By the way, who's the #2 most compensated PERS person? The old Oregon Duck coach getting north of $450k per year [emoji24]

Interesting about a carbon tax.... has the state required the farmer to stop burning their fields


When I went to visit my sister up there I was really surprised on how many fields were on fire and all that smoke that was going into the sky... sister said it was an annual thing to clear the land... it was many years ago...

 

[ERD50]

From the St Louis Fed, a chart of current tax receipts for the past 5 years. https://fred.stlouisfed.org/series/W006RC1Q027SBEA
.
.

"Seasonally Adjusted"? Also does not appear to cover the entire fiscal year?

Geez, all Winemaker said was "all time high". Was he wrong? Cut-Throat throws in "inflation adjusted".

A simple statement made simply isn't wrong if it doesn't include adjustments. I've never heard anyone exclaim "wrong" when talking about a CD that pays 2% (you didn't include inflation!).

I'm not saying these things are not important, they are. But the statement does not deserve a "wrong".

How about this:

https://home.treasury.gov/system/files/236/AFR_Full 111518_clean_508.pdf

page 40:

[FONT=FreeMono, monospace]Net revenue received was $3.1 trillion for FY 2018, an increase of $10.8 billion(or 0.3 percent) over the prior fiscal year. This increase is attributable mainly to an overall growth in individual income tax collections, partially offset by reduced corporate income tax collections and deposit of earnings from the Federal Reserve System.[/FONT]

An increase is an increase, isn't it?

-ERD50

 

[JoeWras]

I grew up in Chicago, The City That Works. We laughed at NY's issues. As a kid, all the corruption seemed far away. For example, The Mirage. Payoffs at a tavern? Who cares? I moved away before I could pay taxes.

But it isn't funny. The demographic bubble, and oddities like selling the parking meters and expressway created one time cash that now is enriching the private owners for the long term. The city lost that revenue stream, for what? And now the city is on thin ice.

So, it is sad to read another article exposing some of Da Mayor's sketchy dealings.

https://chicago.suntimes.com/politi...etting-worse-for-city-as-meter-revenues-rise/

The nephew, Robert G. Vanecko, and his business partner Allison S. Davis, a developer who gave campaign money to Daley and was appointed by the mayor to head the Chicago Plan Commission, started investing in a series of property deals that, by the time the last of them are unwound by the end of December, will have cost the city workers pension funds 80 percent of the $68 million they put in — $54 million in all.
...
There’s no question about what happened to $9 million of it: It went to Davis and Vanecko in fees, primarily for managing the pension funds’ money that they largely lost.

 

[Chuckanut]

A while back Michigan used pension fund money to back some movie making business. Another fiasco.

https://www.michigancapitolconfidential.com/18384

“At a time when Michigan's public sector employees' retirement plans are underfunded by tens of billions of dollars, the state is tapping those funds to pay the bills of a Michigan movie studio that defaulted on its own bills.”

You can’t make this stuff up. [emoji31]

 

[MichaelB]

"Seasonally Adjusted"? Also does not appear to cover the entire fiscal year?

Geez, all Winemaker said was "all time high". Was he wrong? Cut-Throat throws in "inflation adjusted".

A simple statement made simply isn't wrong if it doesn't include adjustments. I've never heard anyone exclaim "wrong" when talking about a CD that pays 2% (you didn't include inflation!).

I'm not saying these things are not important, they are. But the statement does not deserve a "wrong".

How about this:

https://home.treasury.gov/system/files/236/AFR_Full 111518_clean_508.pdf

page 40:
An increase is an increase, isn't it?

-ERD50

I take no sides in this debate, only attempt to add some hard data. There is nothing wrong with seasonally adjusted data, as long as you understand what adjustments are being made.

Detailed quarterly data for fiscal 4Q are not yet available. Here is a detailed breakdown of receipts and expenditures for periods through FY 3Q ‘18. https://fred.stlouisfed.org/release/tables?rid=53&eid=5272&od=#

The conclusions I would draw are, through the first 3 quarters, individual income tax is about the same in absolute $, corporate income taxes are down sharply. The combined amount is down slightly becasue the corporate component is a small % of the total. Other tax and income items are higher. The total amount is close to the same. Individual income tax and total tax collected have not changed in a way that is significant or meaningful.

Spending is substantially higher. A detailed breakdown of 4Q numbers will be available soon, which will allow us a better and clearer understanding of the full fiscal year.

The discussion about “taxes at an all time high” misses the bigger picture. There was a deficit before the tax cuts were implemented, there is a larger deficit now, and spending has increased faster than tax revenues. 4Q data, when available, will not change that.

 

[Cut-Throat]

An increase is an increase, isn't it?

-ERD50

Except when the numbers have been fudged to try and prove a point...


"Yet even these numbers understate revenue losses between 2017 and 2018, since they count revenue raised in 2018 but under 2017's pre-tax cut laws. Roughly three-quarters of the increase in nominal individual income tax revenue since 2017 is the result of non-withheld tax payments made in April (and March) to cover last year's taxes. Another quarter of the rise is from revenue in October, November, and December of 2017 – months which are part of fiscal year 2018 but were under the old tax code.
Excluding October through December as well as non-withheld tax payments, individual income tax revenue is essentially unchanged from 2017. Under this scenario, total nominal revenue is down 4.3 percent, real revenues are down 6.4 percent, and revenues as a share of the economy have decreased by 8.8 percent. Revenues from May through July have fallen even more steeply.*
In other words, revenue has dropped substantially post-tax reform."

 

[ERD50]

I take no sides in this debate, only attempt to add some hard data. There is nothing wrong with seasonally adjusted data, as long as you understand what adjustments are being made. ....

Spending is substantially higher. A detailed breakdown of 4Q numbers will be available soon, which will allow us a better and clearer understanding of the full fiscal year.

The discussion about “taxes at an all time high” misses the bigger picture. There was a deficit before the tax cuts were implemented, there is a larger deficit now, and spending has increased faster than tax revenues. 4Q data, when available, will not change that.

No disagreement with any of that. But it is still wrong for anyone to call out Winemaker's statement as "Completely False!". That's what I commented on, nothing else.

I'll stand by my comparison to a statement of purchasing a CD with a published 2% yield. No one should claim that to be "Completely False!", even though leaving out inflation does miss the bigger picture. One can move on to discuss that, but it does not make the initial statement "Completely False!". It's not a good start.

Except when the numbers have been fudged to try and prove a point...

Winemaker never said [-]"nominal"[/-] [edit: I meant to say "inflation adjusted"] Take up your issue with these people:

https://home.treasury.gov/system/files/236/AFR_Full 111518_clean_508.pdf

I think we've had enough of this here. If someone does want to discuss the 'big picture' of the effect of the tax changes (a good topic, but good luck surviving a visit by Porky), it probably should be its own thread.

-ERD50

 

[Cut-Throat]

Winemaker never said "nominal". Take up your issue with these people:

[ERD50

Well, you're the one that didn't like Inflation Adjusted, so I gave you what wanted. So which is it Inflation Adjusted or Nominal?

 

[MichaelB]

No disagreement with any of that. But it is still wrong for anyone to call out Winemaker's statement as "Completely False!". That's what I commented on, nothing else.

I'll stand by my comparison to a statement of purchasing a CD with a published 2% yield. No one should claim that to be "Completely False!", even though leaving out inflation does miss the bigger picture. One can move on to discuss that, but it does not make the initial statement "Completely False!". It's not a good start.

-ERD50

Others did, but I never said Winemaker was wrong. In fact, he may be right. We need one more Q of data broken out, as details matter. If the intent of his post was to say “there has been no noticeable or relevant decline in taxes collected” I would agree, as the data supports that conclusion.

Sometimes we take the absolute meaning of a post to an extreme, and the discussion gets distorted, and also a bit silly. Could that be happening here?

 

[ERD50]

Well, you're the one that didn't like Inflation Adjusted, so I gave you what wanted. So which is it Inflation Adjusted or Nominal?

Sorry, I mixed my terms - should never post before I finish my first cup! Winemaker made a simple statement, it should not be inferred that was an inflation adjusted view.

Others did, but I never said Winemaker was wrong. In fact, he may be right. We need one more Q of data broken out, as details matter. If the intent of his post was to say “there has been no noticeable or relevant decline in taxes collected” I would agree, as the data appears to support that conclusion.
...

Yes, it was others that said he was "Completely False!", I was tacking that onto your post, since it also used a different view than what Winemaker referred to.

... Sometimes we take the absolute meaning of a post to an extreme, and the discussion gets distorted, and also a bit silly. Could that be happening here?

Yes! And I was trying to "un-silly" it. IMO, it was silly for anyone to say Winemaker was "Completely False!", just as it would be silly to say that when someone says they purchased a CD with a 2% yield.

But this really has gone far further than it deserves. Again, a separate thread on the issue of the 'big picture' of the tax changes could be interesting.

-ERD50

 

[Lancelot]

The problem is with Voters believing and voting for what George Bush Sr. used to call "Voodoo Economics".


The Federal Government just this year passed over a Trillion Dollars in Tax Cuts, which it will have to borrow money to Pay for them.

Yes and when Papa Bush broke a campaign promise "read my lips" reference, because additional funding was in the best interest of the countrys sound fiscal position, he was voted out of office. Politicians heard that loud and clear, so now its cut taxes and/or offer some freebees and kick the can down the road

 

[Rianne]

In Illinois, our new Gov. Pritzker is pushing for recreational legalization of pot. There's no benchmark for the value of legal pot, except the illegal street value. But also paying for purity and safe/uncut product.

When in Colorado last year, it was like going into a Walgreens with all the various types, neatly arranged behind glass. The sales person well educated on the effects of each type. What are you looking for? Calm, sleepy or energetic pick up. Or somewhere in between. I personally don't like the smell or effect, never did. But my family-co travelers were in Disneyland. Like six year olds looking at the magical castle. I sat outside people watching.

 

[Bir48die]

Interesting about a carbon tax.... has the state required the farmer to stop burning their fields


When I went to visit my sister up there I was really surprised on how many fields were on fire and all that smoke that was going into the sky... sister said it was an annual thing to clear the land... it was many years ago...

I know this is a late response. Field burning in Oregon is down about 95%. Years ago there was a major burn off I-5 and a tragic multiple car accident. Since then on select crops and areas may be burned. Sometimes it will look like a field burn but actually dust from tilling up the old crops.