Bridges Too Far

Anybody who drives - I'm guessing most of the people reading this - is probably receptive to the meme of "our nation's infrastructure is crumbling". Yet, though billions of dollars are spent annually between all levels of government as soon as one thing gets fixed or improved, another starts falling apart. What's the real story of America's infrastructure? Frankly it's us, the taxpayers, getting screwed.

A couple of weeks ago, a story in the Pittsburgh Post-Gazette by Jon Schmitz, "Pennsylvania bridges better, but still need work", caught my eye. The article mentions how in the last three years the number of "structurally deficient" bridges in Pennsylvania has dropped by 1,100. Before you breathe easy, that still leaves about 4,500 in the Commonwealth that need some TLC ("structurally deficient...does not mean they are unsafe but that they are showing signs of deterioration that, if unaddressed, could lead to weight limits or closings").

Later in the article, Mr. Schmitz points out that one of the most important bridges in the Pittsburgh area is on the needy list:

One of the biggest bridges on the deficient list, the Liberty Bridge in Downtown Pittsburgh, is in need of rehabilitation that will cost an estimated $40 million to $60 million, he said. Final design of the project is expected to begin this year but construction funding is not yet available. More than 16,500 vehicles use the bridge on an average day. 

The bridge superstructure is marred with patches of rust and there are areas of corrosion and deterioration in the steel, but Mr. [Dan] Cessna said the span is safe. It is currently undergoing an in-depth inspection. 

The best-case scenario has rehabilitation starting in 2015 if funding becomes available. The department will make interim repairs as necessary until then, Mr. Cessna said.

Dan Cessna is the executive of Pennsylvania Department of Transportation District 11, comprising Allegheny, Beaver, and Lawrence counties. Everybody in Pittsburgh knows the Liberty Bridge, the tunnels that join the bridge to pass under Mount Washington, the lengthy traffic jams during rush hours on both, and what a complete pig's breakfast transportation around here would be if the bridge failed or had to be closed for safety reasons. $40-60 million seems like a bargain to keep the bridge safe and sound. But is it?

Rick Perry: Cut, Balance & Grow

GOP Presidential Candidate Governor Rick Perry of Texas released his tax and budget plan today, entitled "Cut, Balance & Grow".  I encourage all my readers to download the PDF from Gov. Perry's website and read the full plan. I'll be citing page numbers from the document below.

The quick hit - what would this do for or to me and my family?

The first evaluation of Gov. Perry's plan I did was how it would have altered my 2010 taxes had the plan already been in force and we opted to file under his 20% flat tax with the simplified tax form. In 2010, we paid taxes with a net effective rate of 14% after all deductions, exemptions, and credits. Under the Perry plan, our taxable income would have been reduced by 41.3% and our federal tax due would have dropped by 16.7%, even with the net higher tax rate of 20% on taxable income. In real dollars and cents, this would have put just over $2,000 back in my family's wallet. On that, I have no complaints whatsoever and just from my own personal financial perspective, the plan looks good.

Nevertheless, my own personal situation does not make this a winner for the Nation. For now, I'm going to mainly analyze the tax provisions. The larger issues such as balancing the budget and entitlement reforms  deserve more attention than I can give now. So, let's look at the nuts and bolts.

999: Right but Mostly Wrong

GOP Presidential Candidate Herman Cain is to be commended for issuing his "999 Plan". Mr. Cain's plan is "Right" in that he is the only candidate who is - so far - beginning the discussion of tax reform with a complete scrapping of the current tax code. I agree with him. The current system is completely broken and, whether it can be fixed or not, should not be fixed but replaced.

Several prominent economists, notably Dr. Arthur Laffer, have come out in favor of 999. I have come to the conclusion however that the 999 Plan is not the solution. My main problem with the plan centers around the second "9", which Mr. Cain characterizes in his public statements and on the plan's page as a "9% Business Flat Tax" on "gross income less all purchases from U.S. located businesses", or simply as a "9% business income tax". Trouble is, it isn't. It's a value-added tax (VAT), and therefore I have to judge it as "wrong".

In an op-ed published today by Dr. Laffer in the Wall Street Journal, the mis-characterization of 999 as a "9% flat-rate tax on net business profits" persists.

I encourage everybody to look at the supporting documents for 999, both the "9-9-9 Scoring Report" and the "9-9-9 Scoring Tables". I'll be citing page numbers from the report below.

In the scoring report, the business tax is properly called a "Business Transactions Tax" (page 7).

Each business would pay tax on gross receipts less payments to other businesses. Allowing the subtraction of payments for intermediate goods yields the value added by the company. Subtracting investment as well yields a subtraction method value-added tax." (my emphasis)

So, there it is in black and white, a VAT. It is not what I'll call a compound VAT since business purchases of materials and resources for production are deducted, but there is one important cost of production that is not deductible from revenue: labor costs.

Big Brother wants to know how much you drive...and tax you for it!

This proposed new tax would require you to have a GPS device embedded in your vehicle so the government can tax you on the miles you drive.

Be very clear on this - if enacted, the government will be not only tracking how much you drive, but where and on what roads, just so they can tax you accordingly. Yeah, right.

Also be very clear: the thought that this would "replace" current gasoline taxes is laughable.

Be very afraid.

Hat tip: Drudge

Pittsburgh: We want NO flights!

Just saw this article from the Pittsburgh Post-Gazette that talks about the increased fees - taxes, that is - that will be imposed on airlines operating out of Pittsburgh International Airport beginning in January.

Southwest Airlines, one of my current favorites, is particularly incensed - as they should be.

Increase in landing fees? 34.8 percent.
Increase in terminal space? 35.9 percent.
Increase in ramp space? 191 percent!

Yes, Allegheny County is sitting on a white elephant - a top of the line hub airport with no hub airline. Yes, there are significant issues surrounding servicing the airport's debt.

Every time I'm at the airport, it is very depressing. The place is an absolute ghost town, even at peak travel times. Clearly though, travel originiating here is strong - the extended parking lot is usually mostly full, anyway.

Here's a suggestion for the powers that be: cut the fees for landing, terminal space, and ramp space, you dolts! Obviously RAISING fees hasn't exactly ATTRACTED airlines here. You want a new airline to take Pittsburgh seriously as a hub location? Make our airport the least expensive for airlines to operate from!

If you lower the fees, more airlines will operate and maybe we'd get a hub back, whether for passengers or cargo. If there are more operations, you'll get more fees. DUH!

Washington DC: Business as Usual

The Congress has rejected a one-year moratorium on earmark spending - that is, pork-barrel spending (let's call a spade a spade, shall we) - and has also announced their intentions to impose what I believe would be the largest tax increase in US history by not affirming the tax cuts enacted under President Bush.

If you haven't filled out your Form 1040 for 2007 yet, remember these actions with each digit you enter.

Remember that the Congress cares not about your money; they care only for their power.

Remember that the Congress cares not about the constitutionality of the programs they fund; they care only for their power.

Of everybody in America, why is it the Congress that is never asked to do with less?