Bye-Bye Carolina?

Democrats in the North Carolina legislature are proposing a slew of increases in our state income and sales taxes. One Democratic leader said it was the "least painful thing that we could come up with." That's a serious indictment, in my view, on their leadership skills, economic understanding, and innovative thinking. And it could prove to be the "straw that broke the camel's back", the scrub that removes the tar from our heels and send us fleeing to another state with a less-onerous tax burden.

North Taxolina?

According to the Tax Foundation, North Carolina ranked 20^th in 2008 in its state/local tax burden on its citizens, with a total burden of 9.8%, already worse than Taxachusetts. If these proposed increases are passed, North Carolina will likely vault into the Top 10 (or should that be the Bottom 10 – certainly the Worst 10), edging ever closer to states like California and New York.

It's interesting to note that our state ranks only 47^th in tax collections from non-residents (see Table 6 in the above link). The most familiar form of this sort of taxation is the state/local tax on hotel rooms, rental cars, etc. But some states are experimenting with separate property tax rates for non-residents, such as non-North Carolinians who own beach homes in Corolla, or mountain chalets in Boone. I don't know if NC does this, but it would seem like a better solution, or at least a better place to start.

If North Carolina could raise its tax collections on non-residents to the 50-state average of such collections (and with our vibrant tourism, from beaches to mountains, you'd think we could do just that), then that would raise an additional $3.6 BILLION annually, almost 4 times what would theoretically be collected from this proposal. (The math: an extra $397 per capita x a population of over 9 million.)

Vote With Your Address

One reason why I prefer local and state government over the federal government is that citizens can more readily vote with their addresses to support or oppose government policies. In the case of state income taxes, I could move to Texas (or Florida or Tennessee or a few others) today and pay ZERO state income tax. Yes, I'd find a slightly higher sales tax and probably a higher property tax rate, but my net income would rise by about 1.5%. And that's BEFORE these proposed hikes. By raising sales taxes to 7%, and the top income tax rate from 7.75% to 8.5%, the gap grows from 1.5% to 2.5%.

Now, I'm not in that top tax bracket, but having just started my own business, I do hope to see it (the business) grow to that level. My business is such that I could locate it anywhere I choose to live. And while we love living here, the tax burden is definitely a consideration.

So what happens if you raise taxes? Why is it any different from another "good or service" when its prices are raised? You raise the cost of working here, and fewer people will want to work here. How does that help narrow the budget deficit, and increase tax revenues? In short, it doesn't help.

Isn't That A Contradiction?

On the one hand, I seem to be arguing that additional taxes on out-of-state tourists and business travelers will help, but additional taxes on in-state residents and businesses will hurt. Isn't that a contradiction? It's a fair question. Let's face the truth – tourism type taxes are less visible, and less likely to foment behavioral change, compared to income taxes. In the short run, any tax hike is likely to increase tax revenues, until behavioral changes and address changes take hold.

Budget Cuts

With all this discussion of which type of tax is less onerous, don't think I've forgotten a first principle that governments are into way more things than they should be. Yes, there've been some cuts already, but I don't get the sense that the legislature is really working hard enough to make the state government as efficient as it could be. In lean times, things have to be cut, even things that we like.

You're already doing it with your family budget, I would guess. The proposed tax hike is supposed to raise an extra 5% to close the budget gap. Couldn't our representatives find 5% of the $18-20 billion budget to set aside for now? In our family budget, we are cutting back significantly more than 5% in our spending. We've cut out things that we enjoy, things that are important to us. But you have to make hard choices in times like these. Shouldn't we expect our elected representatives, of all people, to stand up and make some hard budget-cutting choices?

Rent vs. Own: TX Governor Style

So I read today that the Texas Governor's Mansion is being rebuilt – after an arson fire last summer – for a cost of around $20 million. The state of Texas is putting up half, and the federal government, under the guise of "stimulus", is putting up the other half. While that's surely a better use of tax dollars than, say, studying the drinking behaviors of Argentinean homosexuals, it's hard to fathom why the mansion would cost that much to begin with. Part of the problem may be that the Governor vowed that the home would be rebuilt no matter what it cost. And potential contractors all went cha-ching. The Governor set up a charitable fund for Texans to help pay for the repairs, but reports earlier this year suggested that less than 10% of the cost had been given.

In today's economy, does it even make sense to spend that much on the Governor's Mansion (if it ever did)? One lawmaker proposed saving a few bucks and turning the burned home into a museum, then buying another historic mansion as the new home (a mansion that the state once owned, but sold – now it's worth more than double what the state sold it for in 2002). Currently, Governor Perry is living in a rented home in Austin, with the state paying about $9900 a month. At that rate, the Governor (and his successors) could live there for the next 168 years, for the same cost as it would take to rebuild the old mansion. 168 years!

Or perhaps the Governor could follow the example of former Arkansas Governor Mike Huckabee, who moved his family into a double-wide when the Arkansas mansion was under repairs. OK, it was a triple-wide. That cost $110,000. And was DONATED to the state by the mobile home association. And to think that people still think Governor Huckabee was not fiscally conservative.

In Praise of Heel Eaters

 

My mother is the most self-less person I know. She has, throughout her life, been a model for me, demonstrating the priceless quality of putting others first. By her example, I saw how such servant leadership enriches her own life, and how it makes others feel about her. Selflessness, if we were to think of it as an investment, would be a true blue-chipper, without the need for fine-print disclaimers that "returns are not guaranteed".

Consider… my mom would always eat the heel pieces of the bread loaves for her last-made sandwiches. No one else wanted to eat the heels, but mom always did. She claimed to prefer the heels, and although I never knew her to lie or even truth-shade, I always wondered if that wasn't just a don't-you-worry-about-it suage for a concerned son. Even as a kid, I wondered why mom always had to be the one to eat the heels, but I wasn't sufficiently caring (or brave or sacrificial or what-have-you) to take her place and eat them myself. That's just one small example from a lifetime ago, but it has stuck with me.

Who are the heel eaters in your life? In your home, at church, at the office? (Perhaps it's you – God bless you!) Seek them out, and at least tell them thank you. Better yet, find a way to honor, reward, recognize them. Heel-eaters tend not to seek their own rewards, not to self-promote. And while they may protest any ray of a spotlight, shine on.

Credit Crisis Cartoon

If my previous post about the housing bubble was too esoteric for your taste, or if you'd just like to see a clearer explanation of the whole mess, here is a short (10 minutes) video that gives a simplified take on things. He even uses my hot potato metaphor.



The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.

All-ACC Awards

The ACC finished its regular season yesterday, capping a season with great depth, loaded with all-conference caliber players. Here are my picks. (The # in parenthesis is the score from my statistical model. See the Methodology section at the bottom.)

All-ACC First Team

1. Toney Douglas – FSU (67)
   
2. Ty Lawson – UNC (58)
   
3. Jeff Teague – Wake Forest (58)
   
4. Trevor Booker – Clemson (56)
   
5. Gerald Henderson – Duke (54)
   

I tried to base this on conference games only. What I like most about this list is that it honors the best player from each of the conference's top 5 teams. The first 4 were stellar all season long – in fact, the model picks Jeff Teague as the best player when we look at all games. Henderson really came on for Duke

All-ACC Second Team

1. Malcolm Delaney – Va Tech (54)
   
2. James Johnson – Wake Forest (53)
   
3. Tyrese Rice – BC (51)
   
4. Kyle Singler – Duke (48)
   
5. Tyler Hansbrough – UNC (47)
   

Hansbrough is the surprise here, as I'm sure he'll make the first team for the 4^th time. But his play, at least as measured by the stats, fell off enough in conference games to drop him. He gets hardly any blocks, especially for a big man. And his steals are way off from last year. I actually dropped a higher-ranked player to get TH on the 2^nd team, because I do feel he deserves at least that, and because there's not much statistically significance in scores just a few points apart.

All-ACC Third Team

1. Danny Green – UNC (50)
   
2. Jeff Allen – Va Tech (43)
   
3. Gani Lawal – Ga Tech (42)
   
4. AD Vassallo – Va Tech (41)
   
5. Jack McClinton – Miami (40)
   

McClinton is easily the most over-rated (by the media) player in the ACC. He scores in bunches, but doesn't contribute anywhere else, at least anywhere that we measure. If he makes the 1^st Team again, it will be an injustice, though not as ridiculous as last year's selection. The next 5 are: Greivis Vasquez, Wayne Ellington, Al-Farouq Aminu, Jon Scheyer, and Rakim Sanders.

The scores from the model really show how deep the ACC is this season. In most years, you'd only need to get into the mid-to-high 40s to make 1^st team, mid-to-high 30s for 2^nd team, and high 20s for 3^rd team.

Rookie of the Year

The media will probably select Sylven Landesberg of Virginia, since he is the high scorer among freshmen. But Al-Farouq Aminu of Wake Forest has had the better season. Pretty clearly, in my view. Aminu may have scored less, but he was a materially more efficient scorer, averaging 1.45 points-per-shot attempt, compared to Landesberg's 1.29 PPS. Even in Steals. Rebounds and Assists offsetting each other. Landesberg has a knack for getting to the FT line, a harbinger of an excellent career, but his team was the worst in the conference. Aminu, meanwhile, was a full-year starter for the #2 team in the conference, and one ranked in the top 10 nationally.

Coach of the Year

I expect Leonard Hamilton of FSU to win, and Al Skinner's BC team has had the biggest jump in conference wins (from 4 to 9), but I would vote for Dino Gaudio of Wake Forest. Gaudio should have won it last season (over Seth Greenberg of Virginia Tech). I really like what he has done with the Deacons in the aftermath of the death of Skip Prosser. After only 5 conference wins two seasons ago, Gaudio led the Deacons to 7-9 in 2008, and up to 11-5 this season.

Player of the Year

You might guess from the lists above that I'm selecting Toney Douglas of FSU as the ACC Player of the Year. And I am. Not only was he #1 in my model, but he was the conference's leading scorer, and was widely hailed as the best defender in the conference. Duke's Coach K called Douglas the best perimeter defender in the country. Ty Lawson has been awesome offensively for the Tar Heels, but his defense is not good. Douglas is the most complete player in the conference, and he deserves to be POY.

___________________________

Methodology

My statistical model looks at 8 categories: Points Scored, FG %, 3-pointers Made, Free Throws Made, Rebounds, Assists, Steals, and Blocks. Each player's result in each category is compared to the average of the league's top ~70 players. I do some math, and end up with a scoring scale that runs roughly from 0 (technically, several players are below zero, but that's not important) to 100. The best season I've recorded is Tim Duncan's senior year, when he pegged a 90.

On Steroids, Bubbles, and Bailouts

There is much brouhaha in major-league baseball about a critical mass of star players who have admitted or accused of taking steroids and other performance-enhancing drugs. The leading icons like Barry Bonds, Roger Clemens and Alex Rodriguez, just to name a few. Part of the consternation stems from baseball's fondness for statistics, and steroided outcomes have skewed those numbers such that some fans just dismiss them altogether. That may help their cognitive dissonance, but it doesn't solve anything officially. We are still left to ponder the validity of home run totals from modern boppers, and the trophy mantles of modern hurlers. Were these guys really this good? Do their stats truly reflect their value to the game?

In some sense, the steroid era could be thought of as a bubble in the baseball system, generating numbers far beyond historical norms. Unsustainable numbers, perhaps, once the depravity (if that is too strong a judgment for you taste, how about "shenanigans"?) is reined in by competent testing. As this bubble pops, measurements like the number of Home Runs hit, the league average Slugging %, and the # of players with 40+ HR will decrease to historical MLB norms.

Should we bailout the sluggers then?

For that is the government's approach to the steroid equivalents in the housing bubble. Those who dabbled in exotic mortgages – Interest Only, Neg-Ams, and the like – and leveraged to beyond-the-hilt, lured first by look-at-me-lust and later by keep-up-with-the-Jones-lust. And those who institutionally fomented the bubble, by using discredited, exotic risk formulas to securitize mortgage bundles in a high-stakes game of greedy-hot-potato, or by using political favoritism and out-of-their-depth Fannie Maes to pretend that the potato isn't really hot and that no one will really get hurt.

So many parties injected this poison into our housing market. Their metrics soared beyond reason and they got rich. When it all comes crashing down, shouldn't we let them lay in their own foreclosed made-beds, and let the market flush all this crap out? Let dumbly-run (really not so much dumbness, but as normalcy paved over by greediness) companies go out of business or scramble to reconstitute as something worthwhile. Let overextended homeowners scale-back, retrench, and bring some sanity to their budgets, with a multi-year scar on their credit scores.

p.s. I understand the differences between the two situations, one of which is that PED usage is more of a dichotomous variable, whereas overheating housing is more of a continuous variable.

Water Wednesdays

Trying something new this year. Water Wednesdays. On Wednesdays, i will try to drink only water. Certainly no caffeine drinks. This is an attempt to break my cycle of dependency on the caffeine in my beloved Diet Dr Pepper, and to just generally be more healthy.

Today is the first such day. So far, so good. Finding the desire for the DDP to be more psychological and habit-formed than anything physiological.

Making a Clean Start

Shaved off the beard before Christmas, and left a goatee and 'stache. Y0u can catch a glimpse in the newly loaded family photo at the top left of the blog.

Shaved off even that last night, leaving only the sideburns. Making a clean, fresh start for the new year.

O Bearded One

During my "down time", i decided to stop shaving and grow a beard. Have never done anything close to that before, and figured this was the perfect time to do so. Last shaved in mid-November. Well, until yesterday, when i finally got tired of it and hacked most of it off. Had been hoping to make it all the way to Christmas and surprise the family on our trip to San Diego, but i just couldn't take it anymore. Guess i'm just not a beard guy.

Here's a photo, a rare and precious photo of a one-time phenomenon:

Detroit Santa

I thought this was a pretty funny cartoon, concerning the proposed Big 3 auto bailout.

http://yubanet.com/cartoon/Detroit-Santa.php

And i liked this quote from Dick Lamm, former Governor of Colorado:

"Christmas is a time when kids tell Santa what they want and adults pay for it. Deficits are when adults tell the government what they want, and their kids pay for it."