The Washington Post reports on cuts proposed in the budget in Montgomery County, Maryland. The proposed budget cuts in Montgomery, which require county approval, reflect not just the recession but also decisions made by officials over many years. Salaries and benefits have risen sharply over the past decade. "There is pain in this budget, for our county and for our county employees," Leggett told subdued county employees and others gathered in a Rockville auditorium Monday. The total budget is down 3.8 percent. "There are some things we will do differently, and some things we will not do at all." Historically, the public employee unions have owned this state. Until I see a "teacher-approved" candidate lose, I assume that the public employee unions still own the state. My guess is that the proposed cuts do not do nearly enough to reduce salary and benefits for "teachers" (probably half of the teachers' union members never set foot in a classroom under our featherbedding system) and other overpaid county workers. And my guess is that when deciding which cuts to approve the County will try to maximize the impact on services while minimizing the impact on employees.

Reuters - New York state's film tax credit has generated about $7 billion in economic activity since 2004 and become a key economic driver, the state's comptroller said on Tuesday.

On this week's show, we find out how many people pre-ordered an Apple iPad (including someone you might not expect), then we check out a huge taxi scam in NYC, undone by ...

Originally posted at Digital City Podcast

AP - Missouri tax officials are warning people who live in rented housing that they do not qualify for a tax break unless their landlords pay property taxes.

AP - Gov. Pat Quinn refused to say Monday whether he has a plan to avoid deep cuts in education if lawmakers resist his call to raise the state income tax.

CQPolitics.com - As a rule, big business hates higher taxes. So it would come as no surprise to find the oil and gas industry upset about climate change legislation that would increase levies at the gas pump.

Before I came to Congress, I spent more than two decades in the local Sheriff's office serving and protecting the people of Indiana. The most basic role of law enforcement is respecting our laws and bringing criminals who violate them to justice. In the Sheriff's office, we would never dream of rewarding those who break the law. Yet, that's just what Congress is doing: rewarding government contractors who are delinquent on their taxes with lucrative federal contracts.

The problem is more widespread than you might think. Studies by the Government Accountability Office (GAO) have repeatedly shown that thousands of federal contractors owe over $5 billion in unpaid taxes. Despite these disturbing numbers, federal agencies are not required to consider tax debts in making contracting decisions. In fact, current law actually prohibits agencies from accessing the tax data necessary to identify and stop these tax cheats from receiving taxpayer-funded contracts.

Everyday Americans play by the rules and pay their taxes; I don't think it's too much to ask companies that receive millions, sometimes billions, in taxpayer dollars to do the same. Not only do these bad actors cheat our government of tax revenue, they also gain an unfair advantage over businesses that are doing the right thing.

That's why I teamed up with Senator Claire McCaskill to introduce the Contracting and Tax Accountability Act. The bill requires contract and grant applicants to give contracting officers permission to check their tax status, and it withholds large federal contracts from businesses and organizations that fail to file tax returns and are delinquent on their taxes.

President Obama introduced similar legislation as a Senator, and he continues to be a strong advocate for these important reforms in the White House. In January, he signed a Presidential Directive ordering the Office of Management and Budget, Treasury Department, and other federal agencies to take steps to prevent contractors who are delinquent on their taxes from receiving new government contracts. While this was an important step forward, it's time for Congress to get tough and hold these tax cheats accountable once and for all.

Our bill is a practical and cost-effective way to ensure all companies compete on an equal playing field and that our tax dollars are being used wisely. By passing these simple reforms, we can begin to restore some needed accountability to the contracting process, as well as the public's trust in Washington.

AP - A wave of new consumer price hikes has hit Greece as European Union finance ministers gathered in Brussels to discuss the country's debt crisis.

THE opposition has warned Kevin Rudd to do more with the Henry tax review than simplify tax returns.

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Grahame Armstrong in the SST writes:

THE GOVERNMENT is putting the finishing touches to its package of tax cuts and is now confident that low and middle income earners will have more money in their pockets – even after paying a higher GST.

The Sunday Star-Times understands the government has settled on lowering the tax rate for those earning between $14,000 to $48,000 – which represents the bulk of wage earners – from 21% to 19%.

The May budget is also expected to lower the tax rate for those earning up to $14,000 from 12.5% to 10%.

The Star-Times also understands the government will, in one hit, lower the top rate for those earning more than $70,000 from 38% to 33%, rather than doing it gradually.

So that would give up three tax brackets – 10% for low income earners, 19% for middle income earners and 33% for higher income earners.

What would be the reduction in income tax for people at various income levels:

• $26,000 – 13.8% or $590
• $30,000 – 13.1% or $670
• $40,000 – 12.1% or $870
• $48,000 – 11.6% or $1,030
• $70,000 – 6.4% or $1,030
• $100,000 – 9.2% or 2,530
• $150,000 – 10.8% or $5,030

That is pretty well targeted. Those on the minimum wage get the largest percentage increase, and everyone earning under $50,000 a year gets a double figure percentage drop in the tax they pay. And in fact, with WFF, many of these people are net tax recipients anyway, not net tax payers.

What would be the fiscal cost?

• Dropping the 38% rich prick rate  to 33% – $500 million a year
• Dropping the 21% to 19% – $780 million a year
• Dropping the bottom tax rate from 12.5% to 10% – $820 million a year

So total foregone revenue is $2.1 billion.

Now how much extra GST might people pay. Let us assume that on average people spend 90% of their after tax income, and that the GST increase of 2.5% will lead to an average price increase of 2.0% (as estimated by Stats NZ). What is the impact at each income level:

• $26k – $391 more GST and $590 less income tax = $199 better
• $30k -$448 more GST and$670 less income tax = $222 better
• $40k -$590 more GST and $870 less income tax = $280 better
• $48k -$704 more GST and $1,030 less income tax = $326 better
• $70k – $969 more GST and $1,030 less income tax = $61 better
• $100k – $1,304 more GST and 2,530 less income tax = $1,226 better
• $150k – $1,862 more GST and $5,030 less income tax = $3,168 better

So it does indeed look like no one would be worse off (even if you assume 100% of after tax income is spent).

Obviously those at the top tax brackets do best in an absolute sense, but they are also the ones most likely to be property investors, and may in fact end up worse off overall. Also worth remembering two that half of the 100 wealthiest people in NZ do not actually pay the 38% tax rate, so will not in fact benefit from its reductions – they will just not need to operate through their family trust.

I have no idea if this is the package the Government will go with, but it looks pretty workable, and affordable. Most of all, it is not meant to be about just the redistribution of any changes, but the large benefits to the economy of increasing the incentives to work, save and invest and reducing the incentive to borrow and spend – plus the shifting of incentive for investment income from property to other areas.

Tags: GST, tax, tax cuts, tax rates

In a taxi with @noreaster ready to rock @techcocktail SXSW: Blackout Sunday presented by @BizSpark & @Volusion

AP - Kristie McNealy blogs from her suburban Denver home about raising four children and health issues. Her husband, Rob, a floor installer, runs another Web site offering product reviews and advice on hardwood floors.

SAN FRANCISCO (AP) -- How do you know that the sender of an e-mail that has landed in your inbox is trying to steal your money or your identity? The message comes right out and asks for it.

(Reuters) - A taxi drives along Havana's seafront boulevard "El Malecon" as waves break March 13, 2010. REUTERS/Desmond Boylan (CUBA - Tags: SOCIETY ENVIRONMENT IMAGES OF THE DAY)

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AP - Thousands of New York City taxi drivers overcharged passengers by more than $8.3 million over the past two years by setting their meters at a rate that was supposed to be used for trips to the suburbs, the Taxi and Limousine Commission said Friday.

A roundup of economic news from around the Web.

• Toxic Asset: NPR’s Planet Money purchased a toxic asset, and now we can all watch it die. “Our toxic asset has 2,000 mortgages, many of them in hard-hit states like California, Arizona and Florida. A lot of the people in our bond are really struggling. Almost half are behind on their mortgage payments, and 15 percent of the homes are already in foreclosure. At some point those homes will be taken over and sold for a loss. Every time that happens, the bond shrinks. Eventually, our part of the bond will disappear entirely. Until then, we get a little money every month from people paying off their mortgages. We just got a check for $141. If it goes to Thanksgiving, we could double our money. By the way, we bought the asset with our own money. Any proceeds will go to charity. If we lose money, we take the loss.”
• Cigarette Taxes: Writing for voxeu Deliana Kostova looks at the correlation between higher cigarette taxes and demand. “Do higher cigarette prices deter smoking? This column finds that policymakers in developing countries could reduce cigarette consumption by youths by raising taxes. A 10% increase in the price will reduce youth cigarette demand by 18.3%.”
• Consumer Satisfaction: Bryan Caplan on EconLog looks at how to measure consumer satisfaction. ” For the past few years, social scientists have been arguing over the One True Measure of consumer welfare. Most economists still cling to the Demonstrated Preference Standard: If A buys X, then X makes A better off by definition. Psychologists and psychologically-minded economists have been pushing the Happiness Standard: If A buy X and feels happier as a result, then and only then is A better off. I think both standards have some merit. But I’d like to suggest a middle way. I call it the Consumer Satisfaction Standard. According to this standard, if A buys X, and would do so if he had the chance to make the decision over again, then X makes A better off. The Consumer Satisfaction Standard is less tautologous than the Demonstrated Preference Standard; it allows for the possibility - which we often observe in real life - that a person will not be a satisfied customer. At the same time, if someone complains about X but keeps buying it, the Consumer Satisfaction Standard treats his grousing as empty verbiage.”

Compiled by Phil Izzo

CBC - The provincial government may be fuelling the black market with a coming tax increase on private sales of cars, boats and airplanes, the B.C. NDP says.