Category Archives: generational equity

State Government Higher Education Expenditures: 2017 Census of Governments Data

In FY 1977, U.S. state and local government institutions of higher education covered just 20.8% of their expenditures on education with tuition and fees.  That figure peaked at 39.2% in FY 2011, and was 35.0% in FY 2017.   On the other hand, fees and charges at auxiliary enterprises at public colleges and universities, including dormitories, food services, book stores, stadiums, camps and conferences, covered more than 100.0% of their costs more often then not up until FY 2004, interest on debts aside. Such enterprises still covered 92.1% of their costs in FY 2011, but covered just 77.0% of their costs in FY 2017.   And that was before the coronavirus ended the presence of students in on-campus housing, and admission revenues at sporting events.

That is just one of the findings from a tabulation of state and local government finances from the 2017 Census of Governments, along with similar data for prior years.  As noted in the prior post on elementary and secondary schools, local governments also operate community colleges in some states, including New York.  For the most part, however, higher education is a state government function.  While Medicaid, mostly paid to private sector health care providers, and elementary and secondary education, consisting of aid to local government schools, are a larger part of state budgets, public colleges and universities employ more actual state workers than any other government function.  A table, charts and a further discussion about public higher education follow.

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State & Local Taxes: 2017 Census of Governments Finance Data

In FY 1997, New York State’s state and local government tax revenues totaled $132.88 for each $1,000 of state residents personal income, far above the U.S. average of $102.80, and second in the country behind Alaska, where revenues were inflated by state taxes on oil and gas extraction.  And yet by FY 2017 New York State’s tax burden had increased further, to $138.22 per $1,000 of personal income, now first in the nation.  The District of Columbia and Vermont also had above average tax burdens in FY 1997, and saw those burdens increase further by FY 2017.  In FY 1997, Arizona, Colorado, Florida, Georgia, North Carolina, Oklahoma, Tennessee, Texas, and Virginia all had state and local government tax burdens that were below the U.S. average, though all but Tennessee were above $90.00 per $1,000 of personal income.  And yet by FY 2017 the tax burden in each of these states had fallen further, in some cases plunged, and now all are below $90 per $1,000 of state residents’ personal income, in some cases substantially.

Nationally, the overall state and local government tax burden increased from $102.80 per $1,000 of personal income in FY 1997 to $106.92 in FY 2007, but then fell sharply to just $97.77 per $1,000 FY 2017.  It has been in the vicinity of $100 per $1,000 of personal income for decades.  Almost all of that 2007 to 2017 decrease was at the state government level, with the overall state tax burden falling from $63.11 per $1,000 to just $55.89, and with nearly all types of tax revenues falling relative to income, but corporate income tax revenues falling (on a percentage basis) most of all. State aid to local governments also fell sharply from $37.95 per $1,000 of personal income in FY 2007 to $32.41 per $1,000 in FY 2017, due in large part to fewer children in school (relative to the number of adults with income) as the large Millennial generation exited.  On the other hand, federal aid to state governments increased from $33.90 per $1,000 in FY 2007 to $37.86 per $1,000 in FY 2017, due in large part to soaring Medicaid expenditures, which are substantially federally-funded, and go mostly to the old.

Posts on state and local revenues other than taxes and spending by category will come later.   A detailed discussion of state and local taxes follows.

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Imported Oil: American Gutlessness Means Perpetual Slavery

Did you hear about the United States finally becoming energy independent again thanks to our great President Donald Trump, the guy who has essentially declared war on mass transit and alternative energy?  Actually, he didn’t just promise energy independence. He promised energy “dominance.”

https://www.cnbc.com/2017/06/28/trump-america-energy-dominant-policy.html

Here’s how Energy Secretary Rick Perry explained energy dominance to the White House press corps on Tuesday: “An energy dominant America means self-reliant. It means a secure nation, free from the geopolitical turmoil of other nations who seek to use energy as an economic weapon.”  “An energy dominant America will export to markets around the world, increasing our global leadership and our influence.”

You might have missed it, but the Saudis didn’t.  So OPEC has done it again. Jacked up production and sold below cost so the price of oil and gasoline plunge to $20 per barrel. They can count on the neediness, whining and shortsightedness of the generation that is still in control of the United States, the Baby Boomers, and the gutlessness of U.S. politicians, to stand aside yet again as the domestic fossil fuel industry, alternative energy companies, and conservation are wiped out and replaced by cheap foreign oil. And then, when our dependence and vulnerability have been fully re-established, OPEC will again slash production and jack up the price of oil to $100 a barrel, causing another recession and another avalanche of U.S. dollars out of the country.  As they did in 1973, and 1981, and 1990, and 2008, and 2011-14.   Ah, but that’s the future, and we can’t think about that now!  What about my need for cheap gasoline!  I want for me now, and now, and now, and again now!

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Federal Reserve Z1 Data for 2019: The Debt-Driven Party Had to End Eventually, Coronavirus or No Coronavirus

“If something cannot go on forever, it will stop,” Herbert Stein

“Markets can stay irrational longer than you can stay solvent,” John Maynard Keynes

Federal Reserve Z1 data for 2019 was released on March 12, and it shows a continuation of the post-1980 trend.

https://www.federalreserve.gov/releases/z1/default.htm

For the past four decades businesses have paid most Americans less and less, working its way up the income and education scale.  With progressively lower pay and benefits by generation, and Millennials paid 25 percent less, on average, than Baby Boomers had been at the same point in life.  But for most of that period Americans still spent more and more, with the difference between lower labor costs and higher sales showing up as higher profits, converted to higher executive and financial sector pay, and inflated asset values.  That difference was bridged by more household members in the labor force, then by reduced retirement savings, then by soaring personal debt, then by soaring government debt. The result has been a global crisis of demand, and an unsustainable debt-driven economy.

It would have collapsed in 2008 without massive government intervention. That intervention meant the fundamental problems were never solved. Instead, asset prices were re-inflated, to the benefit of older asset holders and the rich, and to the detriment of younger people saving for retirement or seeking to buy a home. Even as most people became worse off, and U.S. life expectancy began to fall.  The global economy has been poised at a precipice ever since, with only interest rates near zero and soaring public debts deferring collapse, even as aging populations seemed sure to cause the whole thing to deteriorate eventually.  In 2019, total non-financial U.S debt increased 4.8%, and federal debt soared 6.7%, but nominal GDP increased just 4.1%, and inflation-adjusted GDP increased just 2.3%.  Not the 3.0% to 8.0% real growth The Donald has claimed yet another tax cut for the rich and corporations would produce.  The question for 2020 is whether the coronavirus will change eventually to immediately.

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Medicare, For All, and the Coronavirus

Last year, I wrote a couple of posts asserting, on both economic and equity grounds, that the federal payroll tax, which funds Medicare and Social Security, should be repealed and replaced by a value added tax (VAT) for the same purposes.

https://larrylittlefield.wordpress.com/2019/08/04/a-value-added-tax-would-be-far-more-fair-than-the-payroll-tax/

Since I tend to put a great deal of information into each post, some may not have read, or might have forgotten, what I wrote at the end of that one.

In fact, I would go further than just having the VAT replace the payroll tax for Social Security.  I would increase the level of exemptions from the federal income tax to the point where only the affluent even have to bother with it, and use the VAT to pay for all federal programs intended to improve the public welfare.  Including food stamps, Medicare, Obamacare, etc.

Furthermore, although the Democratic Party-controlling public employee unions, the rich, and the Republican-voting generations now benefitting from Medicare, are all opposed to a single, equal federal system to provide for everyone’s health care.  On “I’ve got mine jack and am not willing to have others get the same benefits” grounds.  Perhaps a VAT could at least provide the additional revenues required to pay for everyone to have basic preventive health care, for the prevention and treatment of infectious disease (which threatens everyone, not just the sick person), and for the health care of children.

These types of health care provide broader social benefits, not just benefits for the individual beneficiary, and have a high level of bang for the buck.  That is why 100 years ago these types of health care were imposed on the poor by the better off whether they wanted them or not – recall “Typhoid Mary” — to protect the rich from the spread of disease and ensure healthy workers. It is these basics that have been neglected in the U.S., which is why our average life expectancy is lower than other counties despite such high health care spending.

And now here we are, facing a disease that — if it infects the young and poor — could spread to, and kill, the rich, retired public employees and those with seniority, and the old in general.  Our society is about to get audited.  Anyone in the mood to revisit that suggestion?

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New Yorkers Are Going To Pay More and Be Forced To Expect Less, But Shouldn’t Let Them Say It’s Fair or Blame Circumstances or Scapegoats

I was in Target the other day and noticed their motto:  “Expect More, Pay Less.”   That sure is a hell of a lot different from New Yorkers under the age of 60, and in particular under the age of 40, will be paying into and getting from the federal, state and city governments over the next 20 to 40 years.  At the federal level because of four decades of future selling by Generation Greed that have left us with a massive national debt and underfunded old age benefits – underfunded despite later-born generations already being required to pay in more while being promised less.  At the state level because New York City shares a tax base with Upstate cities and rural areas with extensive needs and dwindling resources, and suburban areas with more power and greater entitlement. And at the city level because one politician after another has cut deal after deal to cash in the future, to further benefit already-advantaged unionized public employees and contractors, who are cashing in and moving out.

The theft has occurred, the money is gone, and “Expect Less, Pay More” is inevitable.  In fact a New York City in the 1970s-style institutional collapse is highly likely, and not just in New York City.  So what will our “leaders,” still beholden to the same interests and generations and still promising to hand them even more, say about this?  I want them to be forced to admit the truth.  And let me tell you what I don’t want to hear.

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The Executive/Financial Class, The Political/Union Class, Generation Greed and the Serfs: Wherever You Look It’s Getting Worse

I think people who read this blog would agree that I follow U.S. public finance issues pretty closely, including those related to taxation.  But I recently found out something I had never heard of before, that was never publicly debated in any news source I follow, that no “progressive” politician has objected to as far as I know, and frankly I’m shocked.

https://www.marketwatch.com/story/heres-the-formula-for-paying-no-federal-income-taxes-on-100000-a-year-2019-11-22

In a country with a median household income of less than $62,000, you can get more than $100,000 a year while not working and pay no federal tax at all, because $80,000 in investment income (dividends and capital gains) is tax exempt!  Even as work income for the less well off is taxed twice, by the payroll tax, and the income tax.   It turns out that for married couples, while other income might be taxable if it is higher, that $80,000 in investment income is fully exempt from taxes even if total income is as high as $184,250 — with other deals up to $200,000.

How could this possibly be thought of as fair?   After all, a working couple with half that income from work would pay $7,500 in payroll taxes (or $15,000 if they were “gig” workers) and federal income taxes – at a higher rate – on top of that.  Why hasn’t a single pundit or politician raised a loud objection?

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