RSS Feed  

Nobody says he's dumb, but everyone says he's an asshole.

"rahm both sucks and blows"

making a big deal out of rahmbo's inconsequential tax proposals

Posted by teasel 02/21/2011 at 08:55AM

Two proposals Rahm has made that received some of the widest press during this campaign have been his policies to phase out the city’s $48 a year head tax on employers and shifting a fraction of city and county sales taxes from goods to services. We don’t understand how these trivial adjustments came to dominate so much campaign coverage, considering combined they add up to shuffling around $40 million in a city budget that has a $600 million deficit. But there it is, and here we are, so let’s take a look.

The folks at FactCheck have a pretty good explanation of how Rahm has been misleading voters about his sales tax proposal, and how Chico followed that up by misleading them some more. In a nutshell: Rahm is going to try to reduce sales taxes on goods by 2 cents for every $10 you purchase, and pay for that minor adjustment by creating a bunch of new, bureaucratically cumbersome itemized tax rates for different services, which will force the service sector to lobby the city to get favorable rates for their businesses, increasing the sector’s political costs while giving the Mayor’s office yet another policy weapon to punish some businesses while patronizing others. That sounds clever and ruthless, but it doesn’t sound at all like good tax policy. One year you’ve got separate tax schedules for limousine and pet grooming services, the next you have a sliced bagel tax. Implementing a progressive sales tax, like Rahm says he wants to do by taxing “luxury” goods, doesn’t take rocket science, and doesn’t involve a complicated, politically tangled tax code with line items for certain types of business and exclusions for others, but that’s what he’s proposing.

The head tax, meanwhile, raises some $20 million a year for a city that provides essential services and infrastructure to the businesses that operate here, and the question for business is really whether this city provides what they need and how much they have to pay for it, not how they pay for it. To the extent that the head tax affects hiring patterns at all in Chicago, the flat rate per employee arguably encourages businesses to create fewer low wage, part time positions in favor of better paid full time positions. Some share of the tax is probably shouldered by employees, and one could complain that it’s regressive, but even if the entire tax burden fell on wages if wouldn’t amount to more than a fraction of a percent of the lowest incomes.

The argument from Rahm has been that ”Chicago stands at a competitive disadvantage and will lose new business investment and jobs to other cities” because of the head tax, but this is total nonsense. Chicago’s head tax amounts to a 0.01% tax on median wage salaries, which is a tiny fraction of the employment taxes of other major cities: in New York City there is a 2.5% municipal payroll tax; in Baltimore it’s 3.05%; in Philadelphia employers pay nearly 4% of their payroll to the city. Even in California, where the state bans municipal income taxes, businesses end up paying much higher rates than Chicago’s head tax via business licensing fees that are based on payrolls: in San Francisco employers have to pay a 1.5% payroll tax to get a business license, 150 times larger than Chicago’s head tax. Nationwide 170 cities, including 21 cities with population of at least 100,000 individuals pay municipal income taxes that are absolutely astronomical compared to Chicago’s $4/month head tax.

Chicago has one of the lowest municipal taxes on employment in the nation. If we really are losing business to other cities it’s probably because they’re able to provide the services and infrastructure those businesses need but we can’t afford, because compared to other cities we’re not taxing employment at all. Instead of bragging about our favorable tax environment for hiring, Rahm is going on television and lying to businesses about how we have the highest employment taxes in the country and using his $12 million war chest to scare away investment. Thanks a lot, Rahm.

Filed under: |

"rahm both sucks and blows"

houston, we have a problem

Posted by teasel 02/19/2011 at 07:16AM

During Thursday’s debate on ABC7 Rahm told us what he’ll ask other people to do about education:

EMANUEL: If a kid in Chicago goes from kindergarten all the way to high shool and their cousin is in Houston, kingergarten to high school, the cousin in Houston spends four more years in a class room than the cousin in Chicago. A full high school education. I will seek and go to Springfield to raise the minimum for both the length of the year and the length of the day.

This is a great example. Texas, that ranks 47th in literacy, 49th in verbal and 46th in math SAT scores. Texas, whose Board of Education doesn’t want kids to learn basic biology or anything resembling actual history. We need to do what they’re doing.

EMANUEL: Fourth, make sure parents are involved in their kids’ education, because walking through that front door to the house is the most important door where a child learns an education.

The home is the most important contributor to a child’s education, that’s why he wants them to spend less time there.

I don’t think there’s a candidate for mayor that doesn’t support lengthening the school year, though the others are more candid about how much it will cost, so this policy is a wash for voters. But this is hands down the worst argument any of them has ever made for it. I’m sure it’ll be a real hit in Springfield, where our next mayor will have to argue for it.

Filed under: