Will Fresno's High Speed Rail Look Like Vermont's "Higher" Speed Rail?

CNN's Drew Griffin did an excellent report examining Federal high speed rail funds that were paid to Vermont in order to fund a "high speed rail" project through the State.  The only problem . . . the funds in Vermont weren't used for "high speed rail", but were instead used to turn a "slow speed" rail line into a slightly faster rail line.  In all, the new line shaved a minuscule 28 minutes off the commute time with the "higher" speed trains occasionally reaching max speeds as fast as 79 mph.

Mr. Griffin's report is a must see:

  

Grover's Anti-Tax Pledge Spreads to Italy

So Grover Norquist's anti-tax pledge has spread to Italy, and beyond: 

Today, as questions loom in the U.S. over whether the recent fiscal cliff negotiations show Norquist's pledge is dead, the conservative anti-tax activist's signature document is proving its tenacity by spreading its tentacles of influence to another unlikely place: Europe.

A group called Tea Party Italia, inspired by the tea party movement in the U.S. and by Norquist's pledge, created a similar taxpayer contract it is pushing ahead of the country's general election next month. The pledge says politicians won't raise taxes and will work to reduce the country's debt, which the Associated Press reports hit a record $2.64 trillion in December.

David Mazzerelli, a co-founder of the Italian tea party group, tells Whispers that getting supporters hasn't been a problem. The group has hosted 200 mostly well-attended events over the last several years, he says. But getting politicians to sign on to the pledge might prove more of a challenge.
"Candidates in the U.S. want to sign this pledge because they have to do a difficult and hard campaign," he says. Italian candidates, on the other hand, are chosen by the party and don't go through a campaign season. "So it's very difficult to find [politicians] that believe in our ideas in Italy."

The Unintended Consequences of Plastic Bag Bans: An Armful of Designer Clothes and Ecoli

Recently, I was visiting with my sister and her family who told me of San Louis Obispo County's "plastic bag ban".  I had heard of other counties and cities implementing such bans but always assumed that these bans only applied to plastic grocery bags and not any other vendors.  To my surprise, the SLO County ban applied to virtually all types of plastic bags provided by retailers to customers in which to carry purchased items.  So not only did it apply to grocery stores, but it also applied to clothing stores.  Of course, while most people had gotten used to bringing their own cloth tote bags into grocery stores--they were not accustomed to carrying their own bags into other stores.

My sister hilariously told me how shortly after the ban was implemented they visited a large mall.  Hundreds of mall shoppers were walking around the mall with their arms full clothes and other items because they did not bring their own cloth tote bags.  It looked like the shoppers had ransacked and looted the place, walking off with as much as they could carry. 

This unintended consequence, however, is a mere inconvenience when compared to the health concerns. As reason magazine points out, a recent study by my Alma Mater shows that in jurisdictions where plastic bags were banned, ER visits increased by about 25% compared with neighboring counties where the bags remained legal.  Essentially, people were carrying leaky packages of meat and other foods in their canvas tote bags, then wadding up the bags in the trunk of their cars for awhile, leaving bacteria to grow until the next trip, when they would fill the contaminated bags with fruit and vegetables.  

France's Richest Man Leaves County to Avoid France's High Taxes

First, it was famous French actor Gerard Depardieu who announced he would be leaving his home country for the lower taxes offered by neighboring Belgium. 

Now, Bernard Arnault, head of luxury goods group LVMH, and France's wealthiest man, has moved billions in assets to Belgium for "family inheritance reasons".  However, others believe it is because he too is trying to avoid the 75% top rate introduced by Socialist President Hollande. 

It appears that American actor, Will Smith's initial reaction (some would say shriek) to the announced 75% rate was spot on. 

Surprise, Surprise...Prop 30 Funds Steered Towards Salaries and Benefits--Less Than Half For Education

Governor Brown's budget proposal for the upcoming fiscal year has a big surprise for those who voted for its passage, believing that the bulk of the funds would be used for education.  Of the $6 billion raised by Prop 30, only $2.7 billion would go to K-14 eduction.  In addition, the budget has at least $1.3 billion for salaries and benefits to state employees who don't work in education and would generally cease the one furlough day a month policy.  The budget also includes $502 million for negotiated pay raises and health care benefit contribution hikes for state employees.

The OC Register points out that the advertising for Prop 30, however, led voters to believe that this wouldn't be the case:

Yet the Prop. 30 campaign led voters to believe that the majority of the money from higher sales and income taxes would go to schools. One TV ad run by Gov. Brown's official Prop. 30 campaign, "Teachers for 30," featured several teachers explaining the need for the money for schools. Then state Controller John Chiang was shown, assuring voters: "With strict accountability, money must go to the classrooms and can't be touched by Sacramento politicians." The spot ended with Gov. Brown positioned in the midst of 17 school kids about age 8, as he implored, "For the students, and for California's future, vote Yes on 30." The kids cheered.

2012 Tax Relief Act Hammers Certain Trusts

Like many of the provisions of the 2012 Tax Relief Act that flew under the media radar, one aspect is particularly troubling.

To the casual observer, they were aware that for those with incomes above$450K they would be in the top tax bracket of 39.6% and subject to an increased capital gains rate of 20%--and that those making above $250K would be subject to the Obamacare 3.8% tax on investment income. 

What most didn't realize is that these taxes hit non-grantor trusts on any income that it does not distribute over just $11,950.  In other words, trusts that retain small amounts of income will get hit much hard and at an accelerated rate, even though its beneficiaries will be in a lower bracket.

While there are ways to navigate through these issues, careful consideration should be made as to how much should be distributed and when it should be distributed from the trust as there is always a tension between the current income beneficiaries and the remainder beneficiaries who stand to inherit what is left.

The biggest complication arises when you have a trust established for a spendthrift child or special-needs child who, under the terms of the trust, really isn't supposed to gain access to 100% of the trust's income.

2013 Tax Surprise--Everyone Pays More

While the media focused myopically on the impending changes in tax rates as part of the fiscal cliff negotiations, scant attention was given to the scheduled and automatic expiration of the payroll tax holiday--namely, an increase from 4.2% to 6.2%.

Because of this lack of coverage many low and middle-income Americans, contrary to what they had expected and understood, face a sober reality that their taxes will increase by a substantial degree.  It is estimated that this increase will result in an average of $2,000 in extra taxes for middle-income families during 2013.    

Notably, the tax burden will rise more for someone making $30,000 a year (1.7%) than it does for someone earning $500,000 a year (1.3%) 

Is the New $450,000 Threshold of "Increased" Taxes Political Fiction?

From the Wall Street Journal, The Stealth Tax Hike:

Anyone still need a reason to abandon "grand bargains" and deals negotiated between this President and GOP Congressional leaders? Here it is: The revival of two dormant provisions of the tax code means the much ballyhooed $450,000 income threshold for the highest tax rate is largely fake.

The two provisions are the infamous PEP and Pease, which aficionados of stealth tax increases will recognize immediately as relics of the 1990 tax increase. Those measures, which limit deductions and exemptions for higher-income taxpayers, expired in 2010. The Obama tax bill revived them this week. It isn't going to be pretty.

Under the new law, some of the steepest tax increases may fall on upper-middle class earners with incomes just above $250,000.

...

A store manager married to a dentist with a combined income of, say, $350,000 may pay a higher tax rate under the new law than if the tax code had simply reverted back to the Clinton-era rates that Mr. Obama championed. Those earning more than $450,000 would see their de facto tax rate rise to about 41% under the new law, not 39.6%. Add in the new ObamaCare investment taxes and the tax rate on interest income is close to 45%.

...

Democrats are advertising the higher $400,000-$450,000 threshold as a victory for affluent taxpayers in blue states. But with PEP and Pease these Democrats are hammering their own constituents via the backdoor.

If your wondering just how much your taxes will be affected in 2013 compared to 2012, the nonpartisan Tax Policy Center in Washington has updated an easy-to-use calculator that will help you estimate your 2013 tax bill. It offers results for typical taxpayers from the lowest to the highest incomes, and also has a feature allowing users to create their own example.  It’s available here.

Senate Passes Tax Bill To Avert Fiscal Cliff-Now Up to the House

After midnight last night the Senate passed a tax bill in an effort to avert the fiscal cliff. In short, those joint filers making over $450K will have their top rates increased to 39.6%. Capital gains and dividends will be increased to 20% for them as well. Also there will be a lot of phaseouts of deductions for those filers making more than $250K.

Perhaps the biggest taxpayer victory is that the estate tax exemption will stay at $5MM per person and be transferable between spouses. The highest rate will now be 40%.

Of course, keep in mind that this does not effect the obamacare taxes that are to take effect--namely the 3.8% investment tax, amongst several others

Now its up to the House. More to follow shortly.