Tag: Politicians

MLLG

My Days with Jeb Bush and Rand Paul 

George Noga
By: George Noga – January 10, 2016

     I have spent the better part of entire days one-on-one with Jeb Bush and Rand Paul; this is a simple account of the time I spent with each. Let’s begin with Jeb.

In the 1990s I founded the first school choice program in Florida by raising money to pay for private school for disadvantaged kids. The program was an instant success and I asked Jeb to speak at our inaugural banquet. While conversing with Jeb at the dinner, he asked if there was anything further he could do to help. Not being one to pass up an opening of such magnitude, I averred that since we had a waiting list of over 2,500 children, he could help me raise more money to fund these kids.

Without a moment’s hesitation, Jeb committed a day of his time to help raise money. The arrangements soon were made; I was to pick up Jeb at the airport one morning and drop him where he had a speaking engagement later that afternoon. Jeb was by himself, without staff or security, and we spent the day driving from meeting to meeting with heads of foundations and corporations. Jeb was well briefed and did his best to help me raise money. He solicited my thoughts about how best to expand school choice in Florida. He always was pleasant, modest and unassuming.

Jeb later got a corporate tax credit scholarship bill through the legislature permitting businesses to obtain dollar-for-dollar tax credits for donations to qualified scholarship funding organizations such as the one I started. Fast forward to 2016; the organization I founded now raises $300 million annually to fund nearly 70,000 scholarships for children from poor families attending failing government schools.

My day with Rand Paul occurred recently. Senator Paul and his family had planned a vacation to Disney World and, being a low handicap golfer, he wanted to play a great course while here. I serve as co-chair of the Center-Right Coalition of Central Florida and am known in political circles; further, my son had once done volunteer work for the senator. To complete this circle, I happen to belong to a club with a highly regarded golf course. The arrangements soon were cemented.

Rand drove his wife and children from Kentucky to Orlando without staff or security, He arrived at my club precisely on time. We practiced, played 18 holes (sharing a golf cart) and had a two hour lunch afterward. He never once used or even looked at any electronic device. He was an accomplished golfer and shot his handicap on a difficult golf course. At lunch, where we were joined by a few others I had invited, he solicited advice from each person about what needed to be done for the good of the country and answered all questions in a straightforward manner.

Both Jeb and Rand met Teddy Roosevelt’s famous approbation of “Hale fellow, well met“. They were unerringly pleasant, modest and solicitous of others. They did exactly what they said they would. Our beloved republic would be in good hands with leaders that had the character of Jeb Bush and Rand Paul.
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The next MLLG post identifies the keys to the 2016 election – look for it in about a week
MLLG

School Choice: The Civil Rights Issue of Our Time

George Noga
By: George Noga – December 1, 2014
        In seven years of authoring this blog, I  wrote about school choice only one other time – once in 300 posts. I have shied away from that subject despite (perhaps because of) having been deeply involved in the school choice movement for ten years from 1994 to 2003. I started the first school choice program in Florida, and only the fourth in the entire USA, in 1995. The program I began (now called Step up for Students) funded 68,000 scholarships this year with a budget of nearly $300 million. During much of that time I also served on the board of the leading national school choice organization, Children First America, which began school choice programs in 100 US cities. This subject is not a new one to me.
“Imagine many kids died because ambulances drove right past private hospitals and would take seriously injured kids only to a public hospital.”
        It is not hyperbole or overstatement to assert school choice is the civil rights issue of our time. Actually, it is far more than that. Although people of color suffer most from the current educational paradigm, everyone is victimized. Imagine there was a terrible accident involving a school bus full of kids and there was a private hospital nearby ready, willing and able to provide high quality care. Now imagine the ambulances would not take the severely injured children to the nearby private hospital – insisting they could only be taken to a more distant public hospital that provided inferior care. Imagine some kids died as a result and imagine the ensuing public uproar. That is precisely what is happening in our schools; poor and middle class kids are dying educationally (and some literally) – yet there is little or no public outcry.

       Never have I seen an issue so demagogued and so rife with downright lies and with those promulgating the lies knowing full well they are lies. In the following parts of this post, I address many of these canards.

  1. School choice takes money from public schools: Let’s stipulate there are one million students in a particular school district and spending is $12,000 per pupil; total spending therefore is $12 billion. If 20% are given vouchers for $6,000 (50%) and total spending remains the same, the per pupil spending on the remaining 800,000 kids in public school now is $13,500 – an increase of $1,500 per pupil. Yet educrats and teachers unions want you to believe public school funding has been cut when it actually increased $1,500 per student or 12.5%. If every student had a voucher we could slash spending on education by 30% to 40% and improve school quality to boot.
  2. Private schools are not accountable: This is the biggest lie of all. If a parent has a problem with a public school, it is nearly impossible to seek redress. Public schools are accountable only to stultified bureaucracies and unresponsive school boards and not to students or parents. Private schools are directly accountable to students and parents. A consumer armed with a free choice is the most potent force on earth – recall New Coke and Blackberry.
  3. We don’t spend enough on schools: Real (inflation-adjusted) spending has doubled or even tripled in recent decades while schools got much worse. The US spends more per pupil than nearly any other OECD country while test scores in math, science and reading are in the middle of the pack. Actual public school spending is much higher than reported because much of it is hidden, i.e. off the school budget in capital budgets, pension plans, health care, debt service and grants. Often, real spending is double that shown on the education budget. Washington D.C. in 2010 spent $30,000 per pupil and had the worst schools in America. Sidwell Friends, one of the most elite private schools in the USA and where the Obamas send their children, spends only slightly more. Moreover, there is no proven correlation between school spending and any measure of educational output.
  4. Teachers unions and educrats care about students: The educational blob is nothing more than a jobs program for adults. New York state (population 19 million) has more school administrators than all of Europe with a population of 700 million. The head of the teachers union once said he would begin to care about students once they started paying union dues. Out of over 100,000 teachers in California, an average of 2.2 are fired each year for poor performance. Union tenure and seniority rules are nothing but a union racket.
  5. Private schools skim the best students: Every study published shows this is false. Voucher students in private schools are indistinguishable from public school students in every demographic. There is absolutely no skimming of the best students. The popular movie, Waiting for Superman, depicts the cri de coeur  from ordinary, anguished parents facing long odds to save their kid’s life by securing a voucher in a lottery.
  6. Teachers are underpaid: If this ever was true in the past, it has not been true for a long time. When accounting for hours worked and all benefits, teachers are overpaid by more than 50% per a study by the American Enterprise Institute. A typical teacher with a $50,000 salary will receive another $52,000 per year in benefits compared to $20,000 in benefits for a worker in private industry. Teachers have great pay, outstanding benefits, light work loads and ironclad job security despite graduating in the bottom two quintiles of their class.
  7. Vouchers favor the rich, resegregation, scare tactics: With all the facts against them, the education blob (educrats, unions, politicians) resort to scare tactics. They play the class warfare card by asserting vouchers favor the rich. News flash: the rich already have school choice by controlling where they live and via private schools. The blob then says the “rich” could add to the vouchers and send their kids to even better schools. Their argument is they don’t want to help poor kids just because some rich kids might possibly do even better. Race baiters play the race card claiming private or charter schools are more segregated – an argument shot down by the Supreme Court.
         In addition to the above myths, many other significant facts favor school choice. Foremost among these is the matter of values. Public schools teach a vapid, secular, valueless orthodoxy. School choice permits parents to select schools that reinforce, rather than contradict, parental values. Another issue is child safety. Public schools require metal detectors and a perpetual police presence and for good reason. Public schools, particular those in inner cities, have become petri dishes for social dysfunction and breeding grounds for behavioral pathologies. The blob is holding the kids hostage.
“Inner city schools are petri dishes for social dysfunction and pathologies.”
         The favorite story from my time in the school choice movement concerns Tommy. When he attended a failing public school, he continually feigned illness and did everything possible to avoid going to school. In utter desperation, his parents applied for a voucher from our organization for Tommy to attend a private school. After a few months at his new school, Tommy awoke one morning with a fever and obviously was ill. Nonetheless, Tommy insisted on attending school that morning. When his astonished mother asked him why, Tommy replied, “Because my teachers are counting on me.”
        There are millions and millions more Tommies in America and we are killing them educationally just as surely as the ambulances that would not take dying kids to a private hospital. The ones we don’t kill, we doom to lives of dysfunction and desperation. Shame on educrats, teachers unions, politicians, NAACP and their enablers. And yes, shame on unionist public school teachers too, for they are part of the problem. All these people are standing in the schoolhouse door, just like Orval Faubus in 1957, blocking desperate children from leaving. School choice is the civil rights issue of our time!
MLLG

What You Should Know about Tax Inversions

George Noga
By: George Noga – October 24, 2014
      I had not planned a posting about corporate tax inversions but I am working this in because I believe you will read a perspective herein not to be found anywhere else and, as a CPA, I don’t need to invest a lot of time in research. To begin, a tax inversion is the relocation of a US corporation’s headquarters to a lower tax nation so that it “inverts“, i.e. becomes a foreign corporation for US tax purposes. The US, unique among developed nations, imposes taxes on income earned abroad by American corporations – but the tax is not payable until the income (cash) is repatriated, i.e. returned to the US from abroad. Although there often are crucial non-tax considerations involved in inversions, the main driver usually is avoidance of US tax on income earned abroad and the ability to repatriate such funds.
    Because US taxes are not due until the foreign-earned profits are repatriated, US corporations with foreign operations keep the money offshore. For perspective, 75% of US corporations’ cash is kept outside the US – about $2.1 trillion currently. For example, Microsoft has $70 billion but less than $10 billion is in the US. Money held outside the US can’t be used for investment in plant, equipment or training in the US or to hire Americans; instead, it stays abroad.
       The Obama administration rails against inversions because they assert it reduces the amount of corporate income tax collected. Bear in mind that most companies currently do not pay the tax anyway – that’s why they keep the $2.1 trillion overseas. Following an inversion however, profits (cash) can be brought back into the US without tax and be used to invest within the US to create new American jobs. The increased productivity from this added investment in capital goods, job training and hiring of new workers helps all Americans and increases their standard of living. Arguably, inversions are a net blessing to America in the long run even if corporate tax collections suffer in the short run.
       I return to tax inversions and repatriation infra, but inversions do not exist in a vacuum. They are but one part – and a rather small one at that – of the overall US tax scheme. To put inversions into a proper framework, we must step back, understand what is really going on and look at US tax policy from 30,000 feet.
Getting the Most Feathers from the Geese with the Least Amount of Hissing
       As described in the above aphorism from Louis XIV’s finance minister, Jean-Baptiste Colbert, politicians approach taxation as an art form in which they pluck the geese (taxpayers) to get the most feathers with the least hissing. The main alternatives (cutting spending or raising taxes directly) are anathema. Politicians always enact or raise taxes to make everything as opaque as possible to taxpayers. This, of course, is diametrically opposed to the best interests of taxpayers who should want all taxes to be as transparent and direct as possible. The best tax for taxpayers would be a tax on consumption or a flat tax on income with no deductions or exemptions whatsoever.
“Don’t tax me; don’t tax thee; tax the man behind the tree.” 
       Let’s postulate the US had a flat consumption tax of 19% with no other federal taxes, exemptions, or  deductions whatsoever and that 19% tax represented 100% of the revenue to the government. If politicians wanted to increase spending, the only alternative would be to raise the tax rate to 20% or higher. Such a tax increase would be 100% transparent to every American every time he/she purchased anything. Citizens would know the true cost of government and everyone would have an interest in keeping spending under control. The reason we have a corporate income tax (and are now discussing tax inversions) is because it is a tax that takes many feathers from the geese without the geese ever being aware they are missing feathers. This is an important concept and is explained below.
Corporations Never Pay Taxes – Only People Pay Taxes
        Wouldn’t it be nice if no homo sapiens ever again paid tax? Only artificial constructs like corporations, with no heartbeat or pulse, would be taxed. This is like the mythical Germanic kingdom where candy grew on trees, lemonade flowed in rivers and the fattest, ugliest and stupidest  man was king. Alas, non humans paying tax can’t happen even though politicians would like you to believe it. All taxes always are paid by real, living, breathing people; corporations never have, do not now and never will pay a penny of tax. If the government increases the tax on a company by “say” $1 gazillion, there are three, and only three, possibilities for bearing the burden of the tax.
       It is true that businesses may remit tax revenue to the government, but it is not their money; they are simply transmitting funds to the government they have collected from other people. If the business chooses to pay the tax by reducing its profits by $1 gazillion, the owners (stockholders) pay the tax via lower dividends and/or a lower stock price. Most stockholders are ordinary thinking, feeling Americans investing through mutual funds, IRAs or 401(k) plans. Second, the company can cut its costs $1 gazillion; this of course means firing employees –  again, very much alive ordinary Americans. Third, the company can increase its prices by $1 gazillion (and this is what happens 90% of the time) meaning consumers, again scient, feeling ordinary Americans, are paying the tax in the form of higher prices.
       In reality, unlike in the mythical German kingdom, corporations don’t pay income taxes; there are only real-life human beings paying taxes; but politicians want to beguile you into believing fat-cat corporations are somehow not paying their fair share. Politicians want you to buy into their class warfare canard and they are counting on keeping you ignorant. In reality, the issue of tax inversions is moot and is a contrived tempest-in-a-teapot. Moreover, as observed supra, inversions in the long run may be a net benefit to ordinary Americans as it enables more money to be repatriated which can be used in America for capital investment to increase productivity and to employ more Americans.
       Now that we all understand just how inconsequential inversions are, we still are faced with a political issue searching for a solution. The US corporate tax rate is the highest in the world at 35% federal and 6% state for a total of 41%. Everyone, including President Obama, agrees it should be lowered. Everyone also agrees the $2.1 trillion being kept abroad should be repatriated. A reasonable compromise would be to lower the US tax rate to 20% for a combined federal/state rate of 26% even though this still is higher than many countries that are between 12.5% and 20%. This should be combined with a tax holiday for companies to bring home the $2.1 trillion being held offshore by paying a nominal one-time tax. This was done in 2004 and 800 companies participated, repatriating over $300 billion in overseas profits.
       In any other time with any other president, a compromise would be easy. However, President Obama, is intransigent; he will only compromise to lower the tax rate and to repatriate the funds if new and highly punitive corporate tax measures are part of the deal. Consequently, nothing will happen while Obama remains president. Inversions will continue; trillions of dollars will remain offshore; and ordinary Americans will suffer the consequences. Obama is banking that these same ordinary Americans will succumb to his anti-business, class warfare narrative that corporations pay tax and that inversions are a manifestation of corporate greed. In short, he is demagoguing the issue to death.

Why I Write This Blog?

George Noga
By: George Noga – September 10, 2014
        This posting marks the beginning of the end. Between now and mid-December I will publish the final MLLG posts. I often have been asked why I have taken the trouble. Why have I spent 1,000 hours writing 300 posts filling 900 pages containing 500,000 words since November 2007? Why have I written fact-based and principled tracts about public policy even though I am unenamored with politics and politicians? This post answers the question: why. In the Federalist, Alexander Hamilton questioned and challenged his fellow Americans thusly:
“Whether societies of men are really capable or not of establishing good government from reflection and choice, or whether they are forever destined to depend on accident and force.”
       If any society of men fails to get its politics right, it affects every aspect of life and life itself. Get politics right and we live our lives in freedom, prosperity and pursuit of our dreams. Get politics wrong and liberty, happiness and property are forfeit and life itself is nasty, brutal and brief. Politics, grubby as it is, is the sine qua non to having a life worth living.
      Examples abound of those who got their politics wrong: Hitler’s Germany, Mussolini’s Italy, Imperial Japan, Mao’s China, Pol Pot’s Cambodia and Stalin’s USSR were all black holes where life and liberty were trampled. Today we have,inter alia, Putin’s Russia, the Jongs’ North Korea, the Castro brothers’ Cuba and Mugabe’s Zimbabwe. And don’t forget the entire Arab world, nearly all of Central and South America, Africa and any place ending in “stan”.
       If you believe the western world is exempt, think again. WWI was a senseless slaughter with 40 million casualties; its politically inept conclusion led to WWII with its 150 million casualties. This was due to a failure of politics in Europe and also in the USA. In the past century and continuing to the present, “civilized” Europe has experienced 100 genocides, pogroms and ethnic cleansings. Vietnam was a  colossal failure of American politics to get it right; it cost 58,220 American lives and 303,644 more wounded. Nor have we learned; we continue to get it wrong right up to this day.

       If we don’t get our politics right, our children and our children’s children will live in an Orwellian torpor with their lives, liberty and property constantly at risk because of obeisance to failed ideologies, fantasies, vote buying, political correctness and the never ending and fruitless search for Utopias. Politics is inherently personal. Following are but some of the ways I have been directly harmed throughout my life by our failure to get politics right.

  • I had no father at home for 4 years during WWII which resulted from government ineptitude in fighting and ending WWI. Father was in Korea, also the result of political blunder, for another year during my childhood.
  • I received an execrable, pathetic non education in government schools from age 5 to 18.
  • The Federal Reserve created economic conditions that resulted in severe cycles, bubbles, panics, meltdowns and deep recessions throughout my life continuing to the present.
  • I was subject to income taxes of over 90%, creating perverse, uneconomic incentives.
  • It now requires $15,000 to buy what cost $1,000 when I was born due to government currency debasement.
  • Regulation run amok made owning my business onerous. The regulations, all in the guise of protecting consumers, in actuality, caused them (and me) great harm.
  • The politically micromanaged Vietnam War disrupted my life for the 6 years I served in the military.
  • The Fed has brutally devalued a lifetime of hard work via chronic negative real interest rates intended to protect a feckless government from the consequences of its ongoing debt binge.
  • A torpid, Europesque economy has been imposed, dooming me to economic stagnation instead of robust  growth.
  • The current crisis of spending, debt and deficits ultimately will result in a lost generation.
  • Our government has recklessly created and/or exacerbated dangerous situations throughout the world by weakening our military and appeasing tyrants. An existential crisis likely will result.
  • Obamacare death panels will ration and deny medical care and ultimately could kill me.
       Due entirely to failed politics I was fatherless for five years and lucky I wasn’t orphaned into a life of poverty. I survived utterly wretched government schools, incessant and severe economic cycles, debilitating inflation, astronomical tax rates and hyper regulation. Vietnam discombobulated my life. And all this was because of a government most consider one of the best extant. And all because we failed to get our politics right.
       Now, in my eighth decade of life, our once vibrant economy is riven by government-created anemia. America has transmogrified into sclerotic Europe where men lead lives of quiet desperation. Government has created a crisis of spending, debt and deficits, one consequence being sustained negative real interest rates that savage my decades of prudence. My final indignity is Obamacare; its rationing and death panels may end my life prematurely.
       Unfortunately, it doesn’t end with me. Our children and our children’s children are doomed to a much poorer and more dangerous future; they will be a lost generation. They will pay for our debt binge and generational theft with vastly reduced opportunity. They will inhabit a Clockwork Orange world where nuclear arms proliferate in places committed to our destruction and solely because we weakened our defense and kowtowed to tyrants. Our weakness invites terror and slaughter for which they will pay dearly, perhaps with their lives. And all this from a government most consider one of the best extant. And all because we failed to get our politics right.
“The correct answer to Alexander Hamilton’s question may be in the negative.”
       As you can see, if we don’t get our politics right, our lives are vastly diminished and trivialized in countless ways; we condemn our progeny to economic stagnation and loss of freedom. Their lives and liberty are at grave risk because we failed to get our politics right. It appears the correct answer to Alexander Hamilton’s question may be in the negative.
       I have tried mightily through this blog to show that the answer lies in more liberty and less government. Hopefully, my efforts have given our children’s children that infinitesimally better chance for liberty. And that is my answer to the question: why I write this blog.
        Note to readers:  I am striving to make the final postings between now and mid-December special as I seek to end my MLLG blog on a high note. I hope you enjoy them.