WI DoR - Friendly and Easy-to-Work-With?

A bill from the WI Department of Revenue (DoR) arrived yesterday for estimated employee withholding taxes for a company I own, which has never had employees.  I thought they must be confusing the tax ID for my wife's business or the ID for our domestic employees with my company's ID.  I steeled myself for a long wait to talk to some languid bureaucrat.  If it got too annoying, I could just have our accountant deal with it.

After a three minute wait on hold, a friendly and knowledgeable person was helping me.  He explained that it was because I failed to file a zero-dollar withholding report form.  There was no fee or hard feelings.  He showed me how to add this company to my account on the DoR's website, so I can report this online.

Governor Walker keeps saying Wisconsin must be cheap on taxes to bring jobs.  It's far more important, though, for Wisconsin to be easy.  The company for which they helped me resolve the tax issue just so happens to be hiring someone in the next six weeks.  Having a user-friendly DoR website and a supportive staff there makes me sanguine about the process.

Maybe Governor Walker is doing something right behind the scenes to have such helpful people answering the phones, but his public rhetoric borders on demonizing the state's employees.  We need to be inspiring to these people and look for ways to retain the really good people who help small businesses rather than looking for a way to cut their pay or benefits.

I'm not sure who's responsible for the quick service I received today, but I say thank you to the WI DoR.  User-friendliness, a positive attitude, and a Wisconsin work ethic are important things to have on the front lines of a government agency that directly deals with job creation.

Personal Finance Concerns Go Beyond Politics

NYT says Americans' wariness about their economic circumstances may allow Romney to convince them he could fix their problems.  Polling numbers apparently show many people not having their act together financially.

• 67% - Worried about paying for their housing
• 20% - Owe more on their house than it's worth
• 40% - Will have trouble paying for their kids' eduction
• 33% - High gasoline prices ($200/mo per car roughly on average) are causing problems

These are amazing statistics.  Are houses' valuation is based on what the market will bear, and apparently that means prices that people can't afford.  Most people bought or rented a house they can't afford?  That seems hard to believe.

The next most shocking statistic is about fuel prices.  If the average car is driven 1000 miles/mo and gets 20 miles/gallon, that's 50 gallons/mo.  At $4/gallon, that's $200/mo.  $200/mo can make or break someone's financial world?  If a family with two cars received $400 more per month, i.e. free gasoline, it would change their financial circumstances?  Maybe this refers to people who use their cars way more than average for business or a special circumstance.  I wish the NYT probed further.

I also wish they had probed why 40% of Americans have had to alter expectations for the type of college they can afford for their children.  What changed between their old expectations and today's?  The stock market has recovered from the crisis three years ago.  Contributions to a typical college fund made during the crisis have nearly doubled. 

I am not trying to make light of the suffering behind these numbers.  They point to a problem bigger than what all the branches of all levels of government combined could do.

Issue of Public Unions is Complicated for Madison

Last February I got a couple of anonymous comments asking why I didn't address the labor protests in Madison at that time.

The main reason is that the Madison vs the rest of the state conflict is not just ideological. Everyone in the state pays taxes, but Wisconsin spends and inordinate amount of that money here in Madison. So all of Madison gets an economic boost at the expense of the rest of the state. Madison is economically successful because of all the knowledgeable people from the university and because of the Wisconsin work ethic. All the government money spent here helps too. Although no one in my immediate family works for the government, many of our clients work for the government. The tide of government money indirectly lifts all boats in Madison. This is not fair to the rest of the state. It would be nice to see government offices spread around the state and linked using IT.

Then there is the issue of the merits of labor unions. I completely rejected Governor Walker's argument that weakening the unions would save money for the state to help balance the budget. The unions were already agreeing to the pay cuts, so it wasn't necessary to dismantle them. My main criticism of unions is that they stifle innovation. They discourage giving people wide authority over a cost center and ability to innovate even if involves hiring and firing people or giving large bonuses based on managers' personal judgment. I am hoping future politicians use the weakened state of unions to shake things up and give great pay for great results, not to nickle-and-dime money out of employees.

It's easy for people to claim critics of unions don't care about helping the poor. Unions can help the poor, but they can also encourage mediocrity. We need to find ways to help the needy without the negative side effects of unions.

Taxes and Jobs

I heard a piece on Marketplace this evening about small business owner's reaction to the "Buffet Rule" increasing taxes on families earning more than a million dollars per year.

The question is whether a tax change would affect hiring and other investment behavior.

Within reasonable tax rates, it's absurd to say tax rates affect hiring and investment. The only reason for business expenses is they earn money. People are taxed on what they earn after expesnes.

You could use the same logical error to say increasing taxes causes hiring and investment since the value of the write-offs increase with tax rate.

This is all absurd. Between state and federal taxes even people with modest earnings set aside a third of what they earn. It's legitimate to ask if we want to take any more. It's legitimate to ask if social services and a military larger that most other militaries combined are worth the cost. If every one, not just business owners, had to write checks for a third of their income people would reevaluate the size of government. But let's not pretend like the issue of taxes is about "jobs".

Fuel Prices Grab Inordinate Attention

I caught a great interview on Marketplace with President Obama today. Ryssdal asked good questions and followed up on the answers.

One thing that stood out is that we're still carrying on about fuel prices. I know this is just something politicians must talk about, but why?

President Obama mentioned someone who has to commute 50 miles per day being severely affected by fuel prices. Let's do the arithmetic.

50 miles/trip * 2 trips/day * 20 days/ month = 2000 miles/month. That twice the typical 1000 miles per month. This person puts almost 100,000 miles on the car in four years, causing it to depreciate faster than average.

If they get 25 miles/gallon, that's 2000 miles/month / 25 miles/gallon = 80 gallons per month. So if fuel prices go from $4/gallon to $2/gallon, that's $160/mo savings. That's nothing compared to the maintenance, insurance, and depreciation on a car being driven 2,000 miles/mo.

Critics will say, "yeah, but what about the poor and near poor? What about people living so close to the edge that the $160 really affects their life?" Poverty is a problem. People spending over an hour each way in a car every day is another problem. Trying to find a way to keep to squeeze $160 out of fuel cost is an unreasonable approach to these real problems. People need to find ways to earn more money, reduce their commute, and use an inexpensive car for long commutes (to minimize depreciation).

I suspect the reason we focus on fuel, is we sit and watch the meter tick off gallons with nothing else to do. The same people who unnerved by this completely ignore that a reasonably late-model car losses >$160/mo in depreciation. They also may being paying interest on the car and hardly think about that.

A politician can't be expected to be the one to do it, but someone needs to show people worried about fuel costs that fuel costs aren't that big of a problem.

An Illinois and Wisconsin Politicians

I wonder if the juxtaposition in this e-mailing I received is intentional.
It looks like a stereotype of an Illinois politician and a Wisconsin politician, from a Wisconsin point of view. The Wisconsin guy is down to earth and friendly. He saying, "This weather feels like June, hey." The Illinois politician is containing his laughter at Wisconsin naivety about crooked politics. It's unfortunate Barrett's picture didn't get the top location.

Victorian Vestiges Presist in Dane County

Madison.com reports that a 29 year-old (at time of arrest) coach, Jason Hairston, at East High was sentenced to seven years in prison for having a sexual relationship with a student. It goes without saying that it's unacceptable to have a sexual relationship with a student or subordinate at work. Our response to this unacceptable behavior is ill-conceived and extremely expensive. It's expensive in terms the cost of locking someone up for seven years but also in the lost productivity and the lost respect for the law. If the young woman had been two years older, this would have been a civil and employment issue. Making this case a criminal issue on par with armed robbery undermines respect for the law.

I condemn the way Dane County and District Attorney Shelly Rusch's handled this. In 100 years historians going over our records will struggle to understand what we were thinking.

I can't imagine how hard it must be for Mr. Hairston's family to have his worst mistakes made public and to have him jailed for something that's easy for people to be sanctimonious about. To those people I say let the one who's never in his life made a mistake that really hurt someone cast the first stone at Jason.

"Encouraging News"

My Representative in Congress, Tammy Baldwin, is running for Senate. She is doing a great job, and I support her for Senate.

She sent out an e-mail today that listed some problems for the middle class and some approaches Congress has taken, which she calls "encouraging news".

Stated Problems:

• People's jobs have been "shipped overseas".
  
• Financial companies' abuses have caused middle-class people to lose money.
• Powerful interests manipulate "the system" to their benefit.
  

Stated Solutions:

• Gov't worked out a settlement with banks regarding a technicality that will result in about 1% of their customers receiving about $20,000 in loan forgiveness of some sort.
  
• Make sure the rich are playing as much in taxes as the middle class.
• Make Congressmen disclose if they're going to trade stocks they have inside info on.
• Help people winterize people's homes.

I cannot understand this approach. Suppose you're someone who believes in the stated problems. Your job is being "shipped overseas", and financial institutions are hitting you while you're down. Congress will winterize your home.

My point is not whether I agree with the problems and solutions. I agree with some and not others. I don't get this marketing approach though. If you start out with these large problems, it seems lame to say the actions Congress has taken are things like loan forgiveness (perhaps for people who couldn't pay anyway) and winterizing homes.

It seems to me that Republicans have a clearer marketing strategy: Evildoers are threatening you. We'll lock them up or kill them (without regard for the cost). That makes logical sense. I don't get this Democratic argument: Structural problems in the economy prevent you from succeeding. We'll winterize your home.

If you must pick a simple threat and solution to be elected, it seems like Democrats should work out a better narrative.

WI Should Have Accepted Federal Healthcare Money

It's unfortunate to read that Governor Walker turned down $37 million in federal money to help create healthcare exchanges. I'm unclear whether this means we don't have to implement the exchanges as fast or if this is pure politics.

Governor Walker says he wants to wait until the US Supreme Court rules on the constitutionality of the healthcare reform law. This seems like a bogus argument because they won't rule he exchanges illegal and the very argument that it's unconstitutional is flawed. I say it is flawed because before any of the reforms went into effect, paying customers subsidized those who couldn't pay and did not have insurance that would pay. The law says people need to buy insurance, pushing those costs from other paying customers to the people actually using the healthcare services. The only reason I can see it being unconstitutional, in my non-attorney opinion, is because the federal government is involved in it. That's a mere technicality since the condition existed prior to the health reform law.

I opposed the healthcare law in the form it passed. It would be a good idea to change it. It has done some good, but it risks creating problems when the rest of it is implemented.

Wisconsin rejecting the federal money, though, is foolish. We should try to make it work and try to pressure Washington to give us more autonomy and let us have a more privatized system. Governor Walker's rejection of the money is wrong and alienates pragmatists and moderates.