Wednesday, March 25, 2009

Wednesday. We’re told it might be a little warmer here, primarily because the wind is dying or has died down. This has been a very cold week so far. Sure, the temperatures have gotten into the 30s, but the wind has been howling thanks to a low pressure system off the coast. It’s a psychological cold more than anything. After all, it is spring. It’s just that the creator of weather hasn’t glanced at the calendar yet.

It’s not just Wednesday. It’s the last one of the month. That means our little group of retirees will be meeting around noon today for our monthly luncheon session. We’ve been having these sessions for a dozen years and they’re always fun and relaxing. Although we touch upon the events of the world, especially the sports world, we make no attempts to resolve problems. Politics is generally left outside the restaurant. It’s just a good hour or so. Two of the group are in Florida so we will be down by a couple today.

There was a good story yesterday in the Portland Press Herald about something we don’t very often get pointed out to us. The story explained how the loss of jobs sends economic ripples throughout the economy. And if the premise is true for Maine, it must also be true for the whole country. We all know there have been a lot of jobs lost in America in the past several months.

The reason is very simple: if you don’t have any income, you have to cut way back your outgo. It’s the peripheral businesses that take the biggest hit. Families can’t eat out as often so restaurants aren’t making as much money. People can’t afford movies or other places of entertainment. Recreation is cut back. Those are good examples, but people also cut back in necessities like groceries, clothing, etc.

Bills get prioritized and paid as best as people can. As businesses get fewer dollars, they also have to make adjustments, often resulting in layoffs or closings. So the ripple grows.

Government revenue takes a huge it, too. The State is experiencing shortfalls in revenue in just about all tax categories, including state income tax and sales tax. Job losses and the ripple effect of spending cause both those shortfalls. As more people lose their income, the state gets less tax money. As people cut back spending, the state gets fewer tax dollars. As business shutter their doors, business tax falls short.

And the beat goes on.

That brings us to a tax reform idea being promoted by Democrats in Augusta. At least the Democrats are calling at reform. Republicans refer to it as a shift and shaft plan. Basically it would lower the state’s highest income tax rate from 8.5% to 6.5%. That tax kicks in below the $20-thousand income level. But simply cutting taxes is never on Democrats’ minds. To replace the lost revenue, they would add a whole bunch of items that would be charged a sales tax and would increase some of the other taxes we now pay.

It is true that some of the state’s population would pay up to two percent less on their income, but they would more than make that up in the increased sales and other taxes. Curiously, the hardest hit on the new sales taxes would be the Democrats’ strength, the state’s poor, many of whom do not pay income taxes but will now have to shoulder the higher sales taxes. That’s higher because of the number of items added, not because of a rate increase.

The Democrats delude themselves, or not as some believe they know exactly what they are doing, or at least their supporters by calling it revenue neutral and that they taxpayers will have more money in their pockets. Just one place this is delusional is the meals’ tax. The Democrats want to increase it because, they say, that makes visitors to the state pay more of their share. Yet the restaurant association points out that the majority of folks eating in their establishments…far less now with the economy already in the tank…are Mainers. An increase in taxes could very well cause even more people to eat out less often thus decreasing the state’s coffers even more.

I could easily go through a whole litany of similar situations, all of which would lead to the same place, an even greater shortfall in state revenue.

In any event, the state cannot put two dollars in the Mainers’ left pocket and take out $2.50 and call it revenue neutral or convince many taxpayers they have more money. People in the state are spending less because there is less to spend. Sure, a recent report says the income grew a little, but since the report was prepared, even more Mainers have lost their jobs. The revenue in Augusta is demonstrating the fallacy of the report.

Is there an answer? Sure, but the Legislature will neither recognize it or the solution. Shucks, they don’t even recognize the problem. The answer? Reduction in spending. Our welfare system must be reined in. One simple place would be to pass a Republican legislator’s welfare reform bill which defines standards on welfare, such as bringing the system into compliance with Federal guidelines, restricting the length of time recipients are eligible, make sure people are truly Maine residents with residency requirements, among those standards. My bet is the Democrats will not let it pass.

Insurance reform could eliminate the dubious need for the unbelievably expensive Dirigo health project, the one similar to one that Congressional Democrats along with the President want to bury us with.

There are many more places where spending could be reduced. It won’t happen because the Democrats will tell us all that would result would be no response to fires, no police protection, children and the elderly would die, and the list goes on.

Meanwhile, I can’t speak for you, but this household is suffering. We need real, honest change, such as less government, and we need it now.

Speaking of hope and change, have you been following the latest from the Feds? Obama officials are calling for even more authority to take your property away from you. Don’t think the request to Congress just involves business…Business is generally supported by stocks and bonds. That means you.

And finally, The Florida Gator women played UConn last night in the Women’s NCAA basketball tourney and the men played Penn State in the NIT. ‘Nuff said.


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