In the “You Just Can’t Make this Stuff Up, Department” comes this:
Editor’s Note: The following article comes from Worldcrunch, an innovative, new global news site that translates stories of note in foreign languages into English. This article was originally published in Suddeutsche Zeitung.
BONN – Before going on shift in the limited public space reserved for street prostitution in Bonn, the city‘s prostitutes must now purchase a “sex tax” ticket from an automatic dispenser. The six-euro ticket is valid for one night’s work, no matter the number of clients.
To get the system up and running, fiscal authorities had a machine normally used to dispense tickets for parking places converted so that the words “Steuerticket-Automat” (tax ticket automat) are now painted on it, and the display now reads: “Die Nacht 6,00 Euro” (6 euros a night). The display also states that tickets are required from Monday to Sunday, from 8:15 p.m. to 6 a.m.
In Germany, Bonn is a pioneer of this automatic up-front taxation system. Dortmund has tickets that sex workers buy in gas stations, but no automatic dispenser.
The system is meant to make taxing of prostitution more equitable, since those working inside “Eros centers“ and sauna clubs were paying taxes. The sex tax itself was introduced at the beginning of 2011, and is expected to generate some 300,000 euros. City tax controllers are responsible for monitoring the ticket system; anyone caught without a ticket will first receive a warning followed by more severe measures if caught a second time.
Street prostitution in Bonn is limited to a space opposite an “Eros Center.” After a sex worker agrees to go with a drive-by customer, the client drives his car into one of the six “sex boxes” – parking spaces separated by wood partitions – which are equipped with an emergency button to alert the night watchman in case of trouble. The new “meters” are located nearby.”
In the interest of good taste, no editorial commentary will follow!
The lessons from the TEA party influence in shaping the 2010 election are being felt beyond the election of Congressional and state officials. The principles of limited government, fiscal responsibility and getting our money’s worth out of government spilled over into the education decisions made across the country.
This is bad news for the teachers unions that have dominated education decisions for years leaving us with huge unfunded pension liabilities, high rates of per pupil spending and unsatisfying student performance results. While unions rage about standardized testing parents clamor for answers about why their kids are falling behind since spending more money has not produced better outcomes.
Across the country voters made choices about education. In many local elections voters approved parcel taxes or levies to support local school districts when it was clear where their money was going and what the need was that the measure addressed. But it was a very different story at the state level where measures sought to raises taxes or impose fees in teachers union supported causes:
- No income tax in Washington State where voters rejected a plea from unions and Bill Gates to impose an income tax on couples making over $400,000 per year to fund education and health care programs.
- No raiding Arizona early-childhood health and education fund to balance the state budget the voters said rejecting a legislative proposal for more budget flexibility.
- Oklahoma voters say NO to new education spending rejecting $830 million in new tax spending on education. There were two measures decided, one required the state’s per-pupil spending to match the average of other states in the region. A second would have amended the state constitution making the first measure advisory not mandatory on the legislature. These measures were prompted by teachers unions lawsuit in 2007 calling per-pupil spending was inadequate. Voters did not agree.
- Florida voters kept class size limits in the State Constitution rejecting a ballot proposal to relax the class size limits in public schools. Teachers unions had campaigned hard to reject the measure so the problem of how to pay for it goes back to the Legislature to solve.
- Colorado voters shot down three measures to limit the state’s revenue raising capabilities including one that would have cut $337 million in property-tax revenue for schools during the first year.
- Oregon voters rejected casino gambling to raise money for education.
- Hawaii voters end elected state school board replacing it with one appointed by the Governor. The Legislature will need to pass enabling laws to put the action into effect.
The message from voters seems to be that they want public education to be well funded and effective but they expect results that benefit their kids to be the first priority rather than arbitrary per pupil spending ratios. Teacher unions had a tough time winning further tax increases for education setting up battles in State Legislatures over balancing the budget by setting spending priorities with revenue available.
A slow economic recovery assures that education funding stays on the front burner as schools increasing face competition from other equally high priorities like public safety, health care and infrastructure maintenance for tax revenues.
We have just begun the soul searching reform of education. The recession, budget cuts and looming unfunded pension liabilities will force this soul searching to accelerate and be productive in living within our means and making each dollar count to get good education results for kids. Crude per pupil spending formula for measuring schools is not going to cut it. Standard test scores are useful but not the only thing school must teach kids. Teachers are important in our childrens’ education success but so is accountability for education results. Educations rules are too rigid, education management is too restricted in making changes needed for future success including removing poor performing teachers, and restrictions on using new methods, resources, technology and people with skills from outside the traditional teaching profession are holding us back.
Change is in the air in education and parents need to take back control of education and not let the Government reduce it down to the lowest common denominator to the detriment of our kids.
In my email this morning was this message from Charles Schwab about their take on what Congress might do with tax rates:
2011 Taxes Remain in Limbo
Michael T. Townsend
Vice President, Legislative and Regulatory Affairs, Charles Schwab & Co., Inc.
September 29, 2010
- Unless Congress takes action, most Americans will see their taxes rise next year.
- We handicap the likely outcomes of the tax debate.
- Helpful information for all investors and taxpayers.
Congress returned to Washington in mid-September with relatively few “must do” items on its list. But the one topping that list is a biggie: dealing with impending tax increases that could affect virtually every American.
The Bush-era tax cuts enacted in 2001 and 2003 are set to expire at the end of 2010. If Congress does not act, most Americans will see a tax increase in 2011 as income-tax rates rise, taxes on capital gains and dividends increase, and the estate tax—currently at zero—returns in a big way.
The deadline isn’t a surprise to lawmakers—it’s been looming for years. However, as the calendar turned from summer to fall, there was little indication that a solution was coming anytime soon. Congress will wait until it convenes after November’s mid-term elections in a “lame duck” session to resolve the tax conundrum.
Here’s our analysis of the likely outcomes of the tax debate, and the political hurdles that must be overcome to reach agreement.
First possibility: Congress does nothing
Under current law, all of the tax cuts are set to expire December 31, 2010, with rates reverting (in most cases) to their pre-2001 levels. The 10% bracket would disappear completely, and the other tax brackets would rise (see chart below). In addition, the per-child tax credit would fall from $1,000 to $500, and the “marriage penalty”—married couples filing jointly getting a smaller deduction than if they filed separately—would return.
Capital gains taxes would increase from 15% to 20% for all taxpayers, and dividends would be taxed as ordinary income. The estate tax, which was eliminated at the beginning of 2010, would return at a rate of up to 55% on estates valued at more than $1 million.
If Congress can’t agree on an alternative proposal, the old tax provisions would be restored on January 1, 2011. In the pre-election atmosphere, this worst-case scenario will be a popular talking point on the campaign trail, as candidates from both parties point the finger of blame at each other for possible tax increases in 2011.
Realistically, however, once the election is over, it seems highly unlikely that lawmakers will let taxes go up for nearly everyone, particularly given the economy’s continuing struggles. Serious negotiations on a compromise solution will take place shortly after the election.
And even in the unlikely event that the current Congress does nothing, expect the new Congress to act in early 2011 to implement some sort of fix that’s retroactive to the beginning of the year.
Second possibility: Congress approves President Obama’s proposal
President Barack Obama has stuck with his long-standing position of allowing taxes to go up only on individuals earning more than $200,000 and couples earning more than $250,000. Under his plan, only the top two tax brackets would increase: The 33% bracket would return to 36%, and the 35% bracket would go back to 39.6%.
In addition, the president has called for taxes on dividends and capital gains to increase from 15% to 20% for filers in those top two tax brackets only. Most filers would see the rate remain at 15%, while the lowest tax bracket would continue to have 0% tax rate on capital gains and dividends.
Finally, President Obama recommends that the estate tax be made permanent at a 45% rate on estates valued at more than $3.5 million ($7 million for couples).
Senate Democratic leaders put forward legislation that mirrors the president’s proposal in late September. However, several key Democrats have publicly expressed concern about raising taxes on anyone given current economic conditions. It doesn’t appear right now that the necessary super-majority of 60 votes in the Senate (where Democrats currently hold a 59-41 majority) is attainable. That could change after the election.
Third possibility: Congress extends all the tax cuts for one or two years
The outcome that appears most likely—though far from certain—is that Congress simply extends all of the tax cuts for one or two years. Republicans would unanimously support such a proposal, and several Democrats have signaled their support for the idea. If faced with a choice between letting the tax cuts expire and extending all of them for a year or two, most observers think Congress would choose the latter.
The big stumbling blocks are the budget deficit and an obscure rule governing budgetary items. Extending all of the tax cuts, even for just a year or two, would increase the budget deficit, which is already approaching $1.5 trillion. Many lawmakers are deeply concerned that the massive debt the United States is compiling is creating a hole that may be almost impossible to escape.
Further, under rules known as “pay as you go,” any tax cut must be offset with either spending cuts or tax increases. There are a number of exceptions, including one for income-tax rates for taxpayers with income up to $250,000 ($200,000 for single individuals).
Also, keeping the capital gains and dividends tax rate at 15% would technically require Congress to find approximately $100 billion in offsets, which seems unlikely in the current environment. Congress could just ignore the “pay-go” requirement, but some Democrats are reluctant to do so, since it was they who pushed for this new statutory requirement at the beginning of 2009.
Potential income tax rates for 2011
If Congress extends current law Obama proposal If Congress does not act 10% 10% 15% 15% 15% 15% 25% 25% 28% 28% 28% 31% 33% 36% 36% 35% 39.6% 39.6%
Fourth possibility: Some other compromise emerges
None of the three options described above yet enjoys broad support. That may change in the weeks ahead, but it also leaves the door open for another proposal to be put forward to resolve the issue.
Some lawmakers have proposed letting the estate tax return to where it was in 2001, while preserving the other tax cuts. Others have proposed dealing just with income tax rates, while allowing the capital gains rate to return to 20% for everyone and dividends to be treated as ordinary income. Other proposals could emerge. At this point, though, the three scenarios outlined above are the main players.
The final complicating factor is the election itself. Republicans are widely expected to make significant gains in both the House of Representatives and the Senate, narrowing the current large margins and possibly even taking control of one or both chambers.
While newly elected members will not take office until January, the lame-duck session looming in November and December is likely to include a number of lawmakers who have lost their seats. Freed from political repercussions, these members could vote in unpredictable ways.
There are numerous moving parts to the tax endgame, and it remains very difficult to predict the outcome. We’ll continue to provide updates as developments warrant.
Did you know ObamaCare Imposes a 3.8% Capital Gain Tax on Home Sales?
I discovered this fact on a great site I highly recommend by the Tax Foundation. On it you will lots of information that will probably turn your face from blue to red by Election Day.
The Tax Foundation blog reports that the recently approved ObamaCare health reform legislation imposes capital gains taxes on some home sales made by married couples making more than $250,000 in adjusted gross income or $200,000 if single. The capital gain must exceed $500,000 if the house is your primary residence and a married couple or $250,000 if singles. Got a vacation house? No exclusion for that one.
There are plenty of people here in California and elsewhere who dream of once again having such equity in their homes—and if you ever get there the Federal Government will want 3.8% capital gains tax if you meet these threshold tests. But just like the alternative minimum tax the “gotcha” in this home capital gains tax is that the provision is NOT indexed for inflation meaning each year more and more people become subject to the tax.
What does this have to do with healthcare, you ask?
Only the chilling reminder that the Government is going to tax everything that walks, quacks and breathes, everything you sell, invest in or play with in order to pay for the aspirations of our politicians. And if you have anything left when you finish your bucket list—and kick that bucket—the Government will want that too.
Thomas Friedman wrote a very interesting op-ed piece in the New York Times recently entitled “Superbroke, Superfrugal, Superpower?” He hit on all my hot buttons about the profound consequences of America’s diminishing competitiveness in the world and why we must turn that around fast. He talked about the role of America as the world’s sole superpower and why there is no logical replacement for us on the world stage today. He talked about the need to set priorities and make choices that live into our values.
That really is what this election year is all about isn’t it? Setting priorities and making choices about what we want our country to be like for our children. The economy suks and so does our attitude about how it’s going. But this testing of our values and resolve may prove to be just what we needed to wake up to the slow slide we have been on for some time.
This is not a commentary on either the Democrats in power today or the Republicans who were and may be again. We had grown complacent. We bought into a globalization theme that has sapped our strategic strengths and we spent too much time apologizing for America’s successes. We fought wars no one else would fight and we saved—or tried to save—countries that the world might have been better off without.
But something happened to us as a result of this great recession. We woke up! Sat up and said wait a minute, we don’t like what is happening to America. This is not about blaming someone for the problem—it is about fixing it.
That’s where we are now and all of our politicians are rightfully running scared because we want change WE can believe in. And that does not mean going backward either. It means we are ready for a fresh start and are in the midst of defining what that requires and who best to lead us back to competitive advantage. The TEA party movement is the political equivalent of an IED unleashing America’s pent up anger and frustration wreaking havoc when it goes off but causing us to play smarter defense and then take offensive action to deal with our real problems.
Thomas Jefferson would love this volatility and “little bit of rebellion” alive in America today. He saw the ability of the people to shout “Wait a Minute” as the singular best feature of the system of checks and balances embodied in the Constitution.
If what we want as Americans is to ‘get our groove back’ economically, politically, globally we need more than income redistribution through stimulus spending we have today or the Republican alternative of redistribution of essentially shifting America’s economic engine overseas through complex financial transactions and tax manipulation that make Wall Street rich but create little value except in the “flip and churn” of transactions.
This is the Thomas Jefferson rebellion our political class on both sides of the aisles fears. It is that we are coming to take back America seeing its promise as more than the sum of its debts. We are ready for change, but we want it our way this time.
Principles of an Insurgent Recovery
- STOP SPENDING MONEY WE DO NOT HAVE. Calls for additional stimulus spending are landing with a thud because the previous rounds have not produced a satisfying effect. The uncertainty created by the impact of rising spending and deficits has business sitting on its cash and biding time instead of investing, hiring and growing the economy faster.
- SHOW ME THE ROADMAP. Business wants to see where the economy is going and what the government will do—and how much it will cost. When that is known they can decide whether to invest in America or not. What everyone wants is certainty in uncertain times. Not everything can be fixed quickly, we know. But we want as few surprises as possible and we need to know the Government has adult supervision.
- GET OUT OF MY WAY SO I CAN GROW MY BUSINESS. The cumulative costs of ObamaCare, higher tax rates, regulatory costs in finance, energy, environment, health, state taxes to cover deficits and the fear of looming inflation are job killers. The best way to restore confidence is to create an economic and political foundation that encourages economic growth—that rising tide lifts all boats.
How to Get from Here to There
This is the hard part isn’t it? And the added problem is we mistrust both parties with majorities because they tend to revert to their worst instead of looking out for our best interests. So my formula for getting our groove back includes the following:
- VOTERS TO POLITICIANS: A POX ON BOTH PARTIES. WORK TOGETHER OR ELSE! We should elect as many non-incumbents who seem reasonable not ideological as we can this November. Congress needs more Main street people and fewer professional politicians. Throw out the leadership of both parties and start over. Elect a Republican majority in the House but with many insurgent TEA party members to give the old guard fits. Retain Democrat control of the Senate but not 60 votes so they must compromise. The President is entitled to propose his agenda but majority control of both houses by either party just leads to too many opportunities for bad behavior when we want checks and balances to require both parties to work together or face our wrath in 2012.
- VOTERS POLICY ROADMAP FOR WASHINGTON: GET IT DONE OR ELSE! Here is what we want a bipartisan effort to deliver for us by the 2012 election:
WE WANT A FAIR, FLAT TAX SYSTEM. We want it simple, easy to understand, no loopholes, few deductions and no need for an army of accountants and lawyers. We want everyone to pay something. No alternative minimum tax, no double taxation, low capital gains tax, and corporate rates lower than competing countries. The goal is to turn America into an investment magnet for the world to jumpstart investment, entrepreneurship and job creation.
ROLL FEDERAL SPENDING LEVELS BACK TO 2008. Un-appropriate all unspent stimulus money using it to reduce the deficit. Stop spending money we don’t have and reset the budget base to pre-stimulus levels across the board—and we mean it! Force a zero-based competition for available new spending and a public vote on the ranking of priorities. Ban all earmarks. Give the President line item veto authority or impounding authority to manage spending to revenue. We want this done before the 2012 election.
FIX ENTITLEMENT SPENDING. Repeal ObamaCare entirely and substitute reforms aimed at introducing interstate competition into healthcare and lowering costs by the 2012 election. Make individual healthcare premiums tax deductible just as group plan premiums to create a level playing field for coverage. Means test other entitlements so the resources are spent on those most in need and put other cost savings or reform ideas on the table by 2012 election to be decided after that election for long term reforms.
When we get these things back on track we’ll focus on our global leadership role during the 2012 election. Listen up Congress, what part of get this done don’t you understand?
There ends the rant. Damn, that felt good.