Tag Archives: Debt

Every immigrant without a high school degree will cost taxpayers $640,000

Major welfare programs as of 2012
Major welfare programs as of 2012

I am very much in favor of expanding and streamlining immigration processes for skilled immigrants, especially for areas where there is more demand than supply. But I am not in favor of letting in refugees or other unskilled immigrants, especially if they will be eligible to collect benefits paid for by other working taxpayers.

The Daily Signal explains what the cost is:

On Thursday, the National Academies of Sciences, Engineering, and Medicine will release its report on “The Economic and Fiscal Consequences of Immigration.” According to the report, first generation immigrants as a group increase the nation’s fiscal deficit. In other words, the government benefits they receive exceed the taxes paid.

The National Academies’ report provides 75-year fiscal projections for new immigrants and their descendants. The fiscal impact varies greatly according to the education level of the immigrant. Low-skill immigrants are shown to impose substantial fiscal costs that extend far into the future. The future government benefits they will receive greatly exceed the taxes they will pay.

On average, a nonelderly adult immigrant without a high school diploma entering the U.S. will create a net fiscal cost (benefits received will exceed taxes paid) in both the current generation and second generation. The average net present value of the fiscal cost of such an immigrant is estimated at $231,000, a cost that must be paid by U.S. taxpayers.

The concept of “net present value” is complex: it places a much lower value on future expenditures than on current expenditures.

One way to grasp net present value is that it represents the total amount of money that government would have to raise today and put in a bank account earning interest at 3 percent above the inflation rate in order to cover future costs.

Thus, as each adult immigrant without a high school diploma enters the country, the government would need to immediately put aside and invest $231,000 to cover the future net fiscal cost (total benefits minus total taxes) of that immigrant.

Converting a net present value figure into future outlays requires information on the exact distribution of costs over time. That data is not provided by the National Academies.

However, a rough estimate of the future net outlays to be paid by taxpayers (in constant 2012 dollars) for immigrants without a high school diploma appears to be around $640,000 per immigrant over 75 years. The average fiscal loss is around $7,551 per year (in constant 2012 dollars).

Slightly more than 4 million adult immigrants without a high school diploma have entered the U.S. since 2000 and continue to reside here. According to the estimates in the National Academies report, the net present value of the future fiscal costs of those immigrants is $920 billion.

If you want to take in refugees or unskilled immigrants or sponsor elderly family members, then they should not be allowed to collect benefits paid by other taxpayers. The family that is here already must provide for them, and be held accountable should anything go wrong. Unfortunately, that’s not how the system works now, and it’s not what the Democrats want. They want to import more people who will depend on big government, and then give them the right to vote.

Now, you might think that young American students who expect to find jobs will also expect to keep most of what they earn. It’s very surprising then that they keep voting for a party (the Democrats) that seeks to enslave them with the obligation to pay for other people. I know that the next generation will be paying more in taxes than I ever did during my lifetime.

How exposed is your state to the problem of underfunded pensions?

I am thinking about moving to a new state in the future, and one of the factors I am considering is underfunded pension liabilities. This basically refers to the ability of a state to pay out pensions to retiring public sector employees going forward. I’m going to tell you everything you need to know to solve this problem in this post.

First, Investors Business Daily explains the problem:

A new report by Hoover Institution Senior Fellow Joshua Rauh shows that, unless action is taken soon, many local governments could face bankruptcy because they can’t meet their pension obligations.

[…]The problem is surprisingly simple: States and cities overestimate returns on their pension fund investments, while systematically underfunding them. The result is a growing deficit that will require massive tax hikes or dramatic and painful cuts in government services and promised pensions to public workers.

Rauh’s study looked at 564 state and local pension systems, representing $4.8 trillion in pension liabilities and $3.6 trillion in assets — for an apparent current deficit of just $1.19 trillion.

So far, so good. But Rauh notes the average expected return on pension assets is about 7.6% — which means a doubling every 9.5 years. He calls that assumption “wildly optimistic,” and says a more realistic assumption would be the Treasury bond rate of 3% or lower — less than half the expected return.

Unless pension managers, politicians and voters do something now, the unfunded liabilities of the national system will continue to grow out of control, reaching $3.4 trillion in just 10 years. States and cities across the country would have to raise taxes massively to keep from becoming insolvent.

Right now, state and local governments set aside about 7.3% of revenues for public pensions. To keep the funding gap from exploding and taking down governments across the nation, pension spending would have to rise to  17.5% of revenues on average — roughly equal to a 240% tax increase.

How did things get so bad? Generations of feckless politicians have refused to face down public employee unions, which have negotiated massively expensive pensions for their members while concealing their true cost. Politicians have gone along with it because, heck, it’s not their money and anyway, the problems will take place long after they’re out of office. That’s where we are now.

States and cities will come under intense pressure to raise taxes on local citizens to pay for this travesty. Instead, they should get rid of the public employee unions that have plundered the public for too long and have made local government inefficient, expensive and dysfunctional. If not, they can expect to face the same economy-crippling effects as Detroit, San Bernardino and a number of other cities have — financial insolvency.

Now, obviously states with kick-ass governors like Scott Walker of Wisconsin are not going to have the same exposure to such problems as incompetent governors like Maggie Hassan of New Hampshire. Scott Walker know how to rein in public sector unions.

Let’s get the numbers to confirm this hypothesis.

Bloomberg has the numbers:

Bloomberg ranked 49 U.S. states based on their pension funding ratios in 2014 under GASB 25. (Delaware is not included because of insufficient data for GASB 25.)

Here are the best states… Wisconsin is 100% funded:

States with the best-funded pension liiabilities
States with the best-funded pension liiabilities

And actually there is a comprehensive analysis of the fiscal solvency of all the states right here from George Mason University.

Here’s the map:

Overall fiscal solvency by state
Overall fiscal solvency by state

I notice that the deep blue states like California, Massachusetts, Illinois, Connecticut, New Jersey, etc. are just horrible states. No wonder everyone is fleeing them in droves. Socialism doesn’t work. Eventually, the money runs out.

So, if you’re thinking of moving to a new state, look at that. And if you don’t want to move, then vote for governors like Scott Walker who will take on public sector unions – otherwise, you’re headed for a big tax hike in the future, to pay for the big spending liberals of the past.

Is government good at spending taxpayer money to stimulate the economy?

Canada Election 2015: Socialists in red, Communists in Orange, Conservatives in blue
Canada Election 2015: Socialists in red, Communists in Orange, Conservatives in blue

I’ve been seeing a lot of talk up north in Canada from the substitute drama teacher they elected about how he wants to stimulate the economy by taking money out of the productive private sector and putting into the inefficient, wasteful public sector.

Here’s an example of how he intends to stimulate the economy, as reported by Life Site News. (H/T Kevin the Super-Husband)

It says:

The Liberal government is pledging $81.5 million to the United Nations’ Population Fund to fund “sexual and reproductive health services and rights,” International Development Minister Marie-Claude Bibeau announced Monday.

And that could include access to abortion in countries where it is legal, according to a “senior government official,” who told iPolitics reporter Amanda Connelly that the individual countries in the UN Population Fund (UNFPA) are free to allocate funding to provide access to abortion.

“Sexual and reproductive health services and rights” is well-known UN-speak for contraception and abortion on demand, noted Campaign Life Coalition’s Matt Wojciechowski, who represents CLC at the United Nations.

The Liberals’ decision is a reversal of the Conservatives’ stated ban on abortion funding as part of international aid in the 2010 Muskoka Initiative on Maternal Health.

At that time, the Conservatives pledged $2.8 billion over five years towards improving maternal health and the lives of newborn infants in developing countries, but the initiative, including the Tories apparent refusal to fund abortion, was subject to ongoing criticism.

The Conservatives pledged a further $3.5 billion from 2015 to 2020 for maternal, newborn and child health care projects in developing nations in May 2014, at which time Harper was again criticized when he reiterated that his government would not fund abortion overseas as part of that initiative.

The Liberals promised during the October 2015 election campaign that they would “cover the full range of reproductive health services as part of the [Muskoka] initiatives,” which a Liberal Party official at the time confirmed included abortion where legal, reported Connelly.

“Canada is committed to universal access to sexual and reproductive health services and rights,” Bibeau stated in a press release Monday. “We also believe that programming decisions on these matters should be driven by evidence and outcomes, not ideology.”

Trudeau has been very energetic about how he is going to stimulate the economy by taking money from job creators in the private sector and spending it to “create jobs”. Well, this is what happens when Christians vote for government to “create jobs” by “infrastructure spending”. And they are going to be running budget deficits much worse than what they promised. This is what the vast majority of Canadians voted for in their last election.

But we also waste money down here in the United States, too. Do you ever wonder what happens to the cut that the government takes out of your pay for your private sector activities? The Constitution sets out areas where the federal government is authorized to spend money. But the Democrat Party doesn’t believe in the Constitution, they believe in buying votes and pushing the culture to the left.

Congressional Budget Office: Debt to GDP ratio
Congressional Budget Office: Debt to GDP ratio

Here’s a story from the Daily Caller to explain what stimulating the economy looks like in the United States. (H/T Dad)

Excerpt:

Academics at the University of Oregon have determined that glaciers and the science that studies them are deeply sexist.

“Merging feminist postcolonial science studies and feminist political ecology, the feminist glaciology framework generates robust analysis of gender, power, and epistemologies in dynamic social-ecological systems, thereby leading to more just and equitable science and human-ice interactions,” reads the paper’s abstract. The research was published in the peer-reviewed journal Progress in Human Geography in January.

The study, by historian Dr. Mark Carey and some student researchers, was financially supported by taxpayer dollars. The National Science Foundation (NSF) gave Carey a five-year grant which he used to write his “feminist glaciology” paper. Carey has received $709,125 in grants from the NSF, according to his curriculum vitae.

“Most existing glaciological research – and hence discourse and discussions about cryospheric change – stems from information produced by men, about men, with manly characteristics, and within masculinist discourses,” Carey wrote. “These characteristics apply to scientific disciplines beyond glaciology; there is an explicit need to uncover the role of women in the history of science and technology, while also exposing processes for excluding women from science and technology.”

Carey concluded glacier research is intertwined with gender relations, masculine culture, geopolitics, institutional power and racism — these apparently led to to glacier-related academic and governmental jobs being predominantly filled by men. Damages from melting glaciers target women and ethnic minorities, who “are more vulnerable to glacier changes and hazards than are men,” according to Carey.

That’s a shovel ready project, right there. That will create jobs for sure. And no wonder that people in academia tend to support Democrats. They support Democrats for the same reason that people on welfare support Democrats – because that’s where they get their money for sitting around doing nothing. Private sector research into new products and services is more useful, and doesn’t cost taxpayers a dime.

Public Works

Henry Hazlitt’s book “Economics in One Lesson” explains the problem with taxing the private sector to build public works.

Henry Hazlitt’s Economics in One Lesson, chapter 4, entitled “Public Works Mean Taxes”.

Excerpt:

Therefore, for every public job created by the bridge project a private job has been destroyed somewhere else. We can see the men employed on the bridge. We can watch them at work. The employment argument of the government spenders becomes vivid, and probably for most people convincing. But there are other things that we do not see, because, alas, they have never been permitted to come into existence. They are the jobs destroyed by the $10 million taken from the taxpayers. All that has happened, at best, is that there has been a diversion of jobs because of the project. More bridge builders; fewer automobile workers, television technicians, clothing workers, farmers.

And consider Chapter 5 as well, entitled “Taxes Discourage Production”.

In our modern world there is never the same percentage of income tax levied on everybody. The great burden of income taxes is imposed on a minor percentage of the nation’s income; and these income taxes have to be supplemented by taxes of other kinds. These taxes inevitably affect the actions and incentives of those from whom they are taken. When a corporation loses a hundred cents of every dollar it loses, and is permitted to keep only fifty-two cents of every dollar it gains, and when it cannot adequately offset its years of losses against its years of gains, its policies are affected. It does not expand its operations, or it expands only those attended with a minimum of risk. People who recognize this situation are deterred from starting new enterprises. Thus old employers do not give more employment, or not as much more as they might have; and others decide not to become employers at all. Improved machinery and better-equipped factories come into existence much more slowly than they otherwise would. The result in the long run is that consumers are prevented from getting better and cheaper products to the extent that they otherwise would, and that real wages are held down, compared with what they might have been.

There is a similar effect when personal incomes are taxed 50, 60 or 70 percent. People begin to ask themselves why they should work six, eight or nine months of the entire year for the government, and only six, four or three months for themselves and their families. If they lose the whole dollar when they lose, but can keep only a fraction of it when they win, they decide that it is foolish to take risks with their capital. In addition, the capital available for risk-taking itself shrinks enormously. It is being taxed away before it can be accumulated. In brief, capital to provide new private jobs is first prevented from coming into existence, and the part that does come into existence is then discouraged from starting new enterprises. The government spenders create the very problem of unemployment that they profess to solve.

We need to realize that outside of Constitutional spending authority, taxes are a waste of money. We’re $19 trillion in debt. We can’t afford talk of “stimulating the economy” through government spending. It’s a lie. Government spending kills job creation. They can hide the impact by adding the spending to the debt, but eventually, we do feel the impact of wasting money. Especially the foolish young socialists, who are going to have to pay it all back.

Ted Cruz’s plan to lower taxes and simplify the process for filing tax returns

How to get kissed: Heidi Cruz helping her husband
How to get kissed: Heidi Cruz helping her husband

Ted Cruz is very upset with the IRS for discriminating against conservative groups and Christian groups in order to get Barack Obama re-elected in 2012. So, he’s come up with a plan to drastically reduce their influence – and their cost to taxpayers.

Here he is talking about the plan with Megyn Kelly on Fox News.

And he has posted something about the plan on his web site:

Under the Simple Flat Tax, the current seven rates of personal income tax will collapse into a single low rate of 10 percent. For a family of four, the first $36,000 will be tax-free. The Child Tax Credit will remain in place, and the Simple Flat Tax Plan expands and modernizes the Earned Income Tax Credit with greater anti-fraud and pro-marriage reforms.

[…]The IRS will cease to exist as we know it, there will be zero targeting of individuals based on their faith or political beliefs, and there will be no way for thousands of agents to manipulate the system.

For businesses, the corporate income tax will be eliminated. It will be replaced by a simple Business Flat Tax at a single 16 percent rate. The current payroll tax system will be abolished, while maintaining full funding for Social Security and Medicare.

The convoluted tax code will be replaced with new rules of the game – so simple, in fact, that individuals and families could file their taxes on a postcard or phone app. The Death Tax will be eliminated. The Alternative Minimum Tax will be eliminated. The tax on profits earned abroad will be eliminated. And of course, the Obamacare taxes will be eliminated. Also gone will be the unending loopholes in the current code, the stacks of depreciation schedules for businesses, and the multi-tiered rates on income and investments. Under the Simple Flat Tax, the Internet remains free from taxes.

Simple.

The Tax Foundation, which is the leading non-partisan think tank that deals with the issue of taxation, scored Cruz’s plan.

They say:

  • Senator Cruz’s plan would cut taxes by $3.6 trillion over the next decade on a static basis. However, the plan would end up reducing tax revenues by $768 billion over the next decade when accounting for economic growth from increases in the supply of labor and capital and the much broader tax base due to the new value-added tax.

  • According to the Tax Foundation’s Taxes and Growth Model, the plan would significantly reduce marginal tax rates and the cost of capital, which would lead to a 13.9 percent higher GDP over the long term, provided that the tax cut could be appropriately financed.

  • The plan would also lead to a 43.9 percent larger capital stock, 12.2 percent higher wages, and 4.8 million more full-time equivalent jobs.

  • On a static basis, the plan would cut taxes by 9.2 percent, on average, for all taxpayers.

  • Accounting for economic growth, all taxpayers would see an increase in after-tax income of at least 14 percent at the end of the decade.

They conclude:

Senator Cruz’s tax plan would significantly alter the federal tax code. It would completely repeal the corporate income tax and all payroll taxes and enact a 10 percent income tax and a 16 percent “business transfer tax” or value-added tax. These changes to the tax code would increase the incentives to work and invest and would greatly increase the U.S. economy’s size in the long run, leading to higher incomes for taxpayers at all income levels. The plan would also be a large tax cut, which would increase the federal government’s deficit by over $3.6 trillion on a static basis. Accounting for the growth caused by the plan, federal revenues would decline by $768 billion over the next decade.

The non-partisan The Hill says that another major think thank for fiscal conservatism also likes Cruz’s plan:

Ted Cruz’s tax plan would cost less and stimulate the economy more than Donald Trump‘s, a recent analysis found.

“Of the two proposals that we have examined so far, those by Trump and Cruz, we find the Cruz proposal to be the better of the two,” said David Tuerck, executive director of the Beacon Hill Institute and senior fellow at the National Center for Policy Analysis. The free-market groups released a report comparing the economic effects of the tax plans from the two Republican presidential candidates.

[…]Cruz’s plan would also increase business investment and personal income more than Trump’s plan would, the report found.

I want a higher personal income, and I want more money invested into the business that employs me – so I can keep my job, or maybe find a better one. It’s very important to my life plan that I be able to earn money, and keep what I earn. I have a use for that money, whether I marry or not. And that use is not to give it to the government so they can buy people condoms and abortions in exchange for their votes. I have a better plan for the money I earn than what a secular government wants to do with it.

Now, Ted Cruz will have to come up with $768 billion in revenue to balance his plan, but that’s why he has promised to abolish or significantly reduce FIVE government departments. Don’t worry, they aren’t the useful ones. We have too much government, and we can get rid of some, and return the money to the people.

Related posts

CBO: national debt will rise to $30 trillion in the next decade

Democrats took control of government spending in 2007
Democrats took control of government spending in 2007

The Washington Times has a warning for all the young voters who are freaking out over the spending promises of Hillary Clinton and Bernie Sanders.

Here it is:

The federal government will be flirting with $30 trillion in debt within a decade, the Congressional Budget Office reported Monday, blaming an aging population, new spending and tax cuts approved on Capitol Hill, and the growing burden from Obamacare for erasing the progress Washington had made over the past few years.

Analysts said Obamacare will chase more workers out of the labor force over the next five years, adding pressure to an economy still struggling to spring to life more than seven years into the Obama recovery.

The Affordable Care Act itself is still struggling to attract a customer base, the CBO said, lowering its estimate for the number of people who will sign up for the exchanges from 21 million to 13 million — a drop of nearly 40 percent in projections. Customers collecting taxpayer subsidies this year will be 11 million, down from the 15 million the CBO projected a year ago.

[…]Deficits will continue to rise over the next 10 years, topping $1 trillion again in 2022 and reaching $1.4 trillion in 2026, the analysts said.

Basically, we’ve dug ourselves into a whole with all this spending – taking money out of the productive private sector and giving it to the wasteful public sector.

How wasteful?

This wasteful:

The National Aeronautics and Space Administration is spending $80,000 to see what effects space flight has on oral herpes.

The federal space agency has awarded multiple grants and contracts to a researcher at the University of Florida to determine the “Effect of Spaceflight on Herpes virus Genome Stability and Diversity,” beginning last summer. The project recently received an additional $15,000 in December.

“The goal of this study will be to determine the changes in the genomic and mutational diversity that is present in the Herpes virus virome present in astronaut saliva and urine samples collected before, during, and after space flight,” according to NASA’s description of the research. “Ground subjects will serve as the control group providing saliva and urine samples preflight and postflight during the same schedule as the astronauts.”

That $80,000 was taken from private sector businesses and individual families. They could have spent it on jobs, innovation or consumer spending. But instead the government took it and wasted it on garbage.

Texas Senator Ted Cruz
Texas Senator Ted Cruz

There is someone who has a plan to deal with these deficits. And his plan is to shut down or scale back many government departments.

Ted Cruz:

For the individual income tax under his tax reform, Cruz’s plan provides for one flat rate of 10% on everything – wages, capital gains, dividends, personal business income, rent, interest, and all other forms of individual income. The corporate income tax would be abolished, and replaced with a 16% Business Flat Tax, which applies to sales of goods and services, minus all purchases and expenses for inputs for production. It automatically provides for immediate “expensing,” or an immediate deduction for all purchases of plant and equipment, and all other capital investment, which inherently involves purchases of inputs from other businesses. It is essentially a consumption tax for business.

That net business tax, which also automatically abolishes all special-interest, corporate-welfare loopholes, raises an enormous amount of revenue, $25.4 trillion over the first 10 years alone. This enables the plan to include abolishing the Social Security and Medicare payroll tax, which is the highest tax most working people pay, with Social Security and Medicare financed in full. It also enables the plan to include abolishing the death tax, the Alternative Minimum Tax, and all Obamacare taxes, as well as the corporate income tax. With a standard deduction of $10,000 per adult, and a $4,000 personal exemption, the first $36,000 of income for a family of four would be exempt from all significant federal taxes.

Because such tax reform would be enormously pro-growth, the Tax Foundation scores it on a dynamic basis as a net tax cut of $768 billion over the first 10 years. The Tax Foundation, which has developed a formal, sophisticated, and thorough economic model of the economy, estimates Cruz’s tax reform would create nearly 5 million new jobs, increase wages by 12%, and increase real economic growth over the next decade by nearly 14% more than under current tax policies. The after tax income of all workers would increase by 21.3% on average, with those in the bottom 20% of the income ladder seeing income increases of 15.3%.

Cruz intends to pay for these tax cuts by reducing the size and scope of government – pushing many federal responsibilities down to the state level, where there is more accountability to the people.

The four agencies are the standard four that most conservatives want to abolish or streamline:

  • Department of Energy (raises energy prices for individuals and businesses)
  • Department of Commerce (hands our taxpayer money to businesses favored by big government)
  • Department of Education (indoctrinates children in big government dogma, e.g. – global warming)
  • Department of Housing and Urban Development (caused the housing bubble recession by forcing banks to loan money to unqualified individuals, then bailed them out with taxpayer money)

Many other smaller government departments would be streamlined or eliminated. There would be a hiring freeze in the federal government, and pay increases would be based on merit, not tenure. Cruz would also save a trillion dollars over 10 years by repealing Obamacare, and replacing it with a consumer-driven alternative.

Although young people are in love with the idea that government will give them things by taxing others, that’s not sustainable. They ought to be voting for someone who wants to cut spending and cut government.