Inflatables on Car Dealerships

Driving in to the office this morning, I passed a car dealership with a huge inflated angel on its roof. Seeing that I had to ask myself, “Whatever possessed the car dealer to put an angel on its roof?” An angel would make me think of death. The last thing I would want to think about when buying a car is death. I would be scared away.

Although an angel would discourage me from buying a car, seeing a huge inflated dinosaur always gives me powerful urge to buy a car immediately. It’s the dinosaur-petroleum connection. Inflated leprechauns, bunnies, raccoons, spiders, turkeys, and reindeer do not compel me to buy a car the way dinosaurs do. However, maybe others have a different preference.

In the interest of scientific inquiry, please answer the following question: “What giant inflated thing on a car dealer’s roof would most compel you to buy a car?”

John Payne, Attorney
1800 Grindley Park Street 6
Dearborn, Michigan 48124
Come visit me at: http://www.law-business.com
313.563.4900/fax 313.583.3100

Pittsburgh Office:
9853 Old Perry Highway
Wexford, Pennsylvania 15090
800.220.7200/fax 412.548.0022

Putting Older Michiganians through the Wringer

Over the past several years, the Michigan Department of Social Services has been ratcheting up the difficulty of applying for long-term care Medicaid. In 2007, diabolical rules about anyone over 65 who gives anything away were put in place. While some states, like Pennsylvania, allow gifts that are within certain limits, Michigan’s rules penalize holiday or birthday gifts to grandkids, church tithes, and even handouts to panhandlers. In practice, eligibility workers try to disqualify applicants who sell their homes at market price, if the sale is below the property tax assessment value. In this real estate market, listing at the assessment value and waiting for a buyer would be like sending Lindsay Lohan a 12-step brochure and waiting for her to sober up.

Earlier this year, an eligibility manual revision included rules on jointly-held property that would be farcical if they were not so unfair to vulnerable adults. Michigan DHS goes to great lengths to make it difficult to qualify and get an application approved. The Department seems to believe that the most cherished goal of anyone over 65 is to get into a nursing home and have the state pay for the care. Since it assumes that older Americans spend all their time devising ways to get rid of their money, the Department devises every trick and hurdle it can think of to thwart anyone qualifying for Medicaid.

Having stuck joint owners of property like lambs at Eid, Michigan Medicaid decided to victimize the dead. It instituted estate recovery to grab the homes of deceased Medicaid recipients. The estate-recovery program initiated this past summer was undesirable, but not unreasonable. There was an exclusion equal to half the average price of a home in the county. Now, Michigan Senator Kahn, from Saginaw, has hatched a plot to suck Medicaid recipients’ estates drier than an appellate brief in a utilities rate case. For details review “Can the Kahn Plan,” June 12, 2011.

That the state is so hostile to people in nursing homes is perplexing. The Engler Administration, from 1991 to 2002, was much more accommodating. It made sense for the state to interpret the rules liberally. While the state is now trying to cut corners, Medicaid is the wrong program to scrimp on because the state gains so much by spending Medicaid dollars.

It only costs the state about a quarter to spend a Medicaid dollar. The federal government covers about 55% of the Medicaid budget. Since medical expenses largely fund payroll and building expenses, the state gets back 10-15% of the Medicaid dollar in payroll, sales, and property taxes. In light of the federal subsidy and recovery through taxes cutting back on Medicaid spending is false economy. The state is hurting itself by being so niggardly, as well as making life difficult for some our least fortunate citizens. Lean on your state legislators to vote against the Kahn Plan, Senate Bills 404, 405, and 406, ant to urge the Department of Human Services to stop stuffing elderly citizens into the wringer.

John Payne, Attorney
1800 Grindley Park Street 6
Dearborn, Michigan 48124
Come visit me at: http://www.law-business.com
313.563.4900/fax 313.583.3100

Pittsburgh Office:
9853 Old Perry Highway
Wexford, Pennsylvania 15090
800.220.7200/fax 412.548.0022

Pennsylvania Commonwealth Bureaucracy

Pennsylvania Commonwealth bureaucracy is truly amazing. The Department of Revenue just issued a regulation on the application of realty transfer taxes found at http://www.irrc.state.pa.us//regulation_details.aspx?IRRCNo=2924. Among other changes, the regulation provides clarification that a transfer to a revocable living trust for estate-planning purposes is generally not taxed, which was essentially true before the regulation was issued. No big change, then.

The prefatory material to this 67-page regulation include the following queries and responses:

Q – If data is the basis for this regulation, please provide a description of the data.

R – No scientific data, studies or references are used to justify this regulation.

Q – Describe who and how many people will be adversely affected by the regulation.

R – No parties should be adversely affected by the regulation.

Q – List the persons, groups or entities that will be required to comply with the regulation.

R – Any entity transferring an interest in real property will be required to comply with the regulation.

Q – Approximate the number of people who will be required to comply.

R – The approximate number of people is indeterminable.

Q – Provide a specific estimate of the costs and/or savings to the regulated community associated with compliance, including any legal, accounting or consulting procedures which may be required.

R – This regulation does not increase costs or savings to the regulated community. No legal, accounting or consulting procedures are required by this regulation.

Q – Provide a specific estimate of the costs and/or savings to local governments associated with
compliance.

R – This regulation does not increase costs or savings to the local governments. No legal, accounting or consulting procedures are required by this regulation.

Q – Provide a specific estimate of the costs and/or savings to state government associated with the implementation of the regulation.

R – This regulation does not increase costs or savings to state government. No legal, accounting or consulting procedures are required by this regulation.

According to the Department of Revenue, who should know, the regulation is not based on any scientific or data analysis. It affects anyone who transfers real estate, but no one is adversely affected. It costs nothing and provides no fiscal benefit.

Assuming that all of the above is true, what is the point of promulgating the regulation? It is a lot of work to create a regulation that has no effect on anything. This is a bureaucratic masterpiece. If there were a Nobel Prize for government official self abuse, the author of this regulation would get the award.

John Payne, Attorney
1800 Grindley Park Street 6
Dearborn, Michigan 48124
Come visit me at: http://www.law-business.com
313.563.4900/fax 313.583.3100

Pittsburgh Office:
9853 Old Perry Highway
Wexford, Pennsylvania 15090
800.220.7200/fax 412.548.0022

“Get Your Boot off My Neck” is Class Warfare?

Over the last half century, those who are wealthy by most definitions have doubled their income and net worth over and over, while the rest of us – we ninety-nine percenters – have seen our income and net worth decline. As the fiscal gap between rich and poor has increased, the difference in tax brackets has shrunk. Any talk about increasing the tax rate on the wealthy has been met with porcine squeals about “class warfare.” If there is any class warfare in the United States, it has been going on for 50 years and the poor are losing it. There is a tipping point at which wealth begets greater wealth and poverty begets greater poverty. Conservative talk about “equality of opportunity” is code for the Darwinian model of government – the spoils system. Those with power get what ever they can grab and money is power.

There are many self-made wealthy people in the United States, but stacked against the millions who live and die in poverty, they are very lucky or talented exceptions. The wealthy have an almost insurmountable advantage over the rest of us. When you compare two equally talented children – one from Brentwood and one from Watts – it is easy to see why legal equality of opportunity has little meaning for most of us. Chip, from Brentwood, was raised on the healthiest food, received a superlative education from Montessori at age three through graduate school at an Ivy League university, lacked no dental or medical service that could improve his appearance or health, and left college with a contact list of Fortune 500 CEOs and board members. Jamal, from Watts, lacked no challenge to his very existence. His minimum-wage single parent had a difficult time providing sufficient calories for the family and providing shelter. His education in inner-city schools prepared him for neither an occupation nor college. Barring an exceptional opportunity Jamal has no prospects beyond minimum-wage employment.

This oppression by the wealthy and powerful plays out every day in the corporate sector. Rank-and-file employees, who build the wealth of the company by their work, are either down-sized into the ranks of the unemployed or grossly overworked, performing the tasks of those who are no in the ranks of the unemployed in addition to their own. Meanwhile, those in the upper echelons of management never miss a compensation increase or a bonus.

According to Fortune, the CEOs of the top 500 corporations average $9 million in compensation, bonuses and stock gains. http://www.forbes.com/lists/2011/12/ceo-pay-20-year-historical-chart.html While this is a big drop from the $16 million the CEOs made in 2007, it is much more than they earned. As was explained in “Not All Pirates Are in Somalia,” http://topomyhead.wordpress.com/2011/04/15/not-all-pirates-are-in-somalia/, these CEOs reap such ridiculous compensation through rampant cronyism, but that is not the worst aspect of corporate executive overpayment. It is all deductible to the corporation, so 35% of the $9 million is tax savings. It comes out of the pockets of the very workers who are being so roughly treated.

Federal minimum wage in the United States is approximately $15,000 per year for a full-time worker. If deductible CEO compensation were limited to 100 times minimum wage, or $1.5 million, the Fortune 500 corporations would each pay approximately $2.6 million more in taxes just on their CEO’s compensation. That would be $1.3 billion more in taxes for schools, Veteran programs, road and bridge repair, national parks, student subsidies, and all the other important government functions that are being cut back due to the Bush-era tax cuts. That is $1.3 billion in tax revenues for cutting back the deductibility of the compensation of the CEOs, only. In every corporation there is a whole rat pack of over-compensated vice presidents and directors who contribute nothing to profitability or production. A tax increase would not be necessary; all that would be required is cutting back deductions to what is reasonable.

The compensation deduction for corporate income taxes should be limited to reasonable compensation. It is absurd to suggest that these corporations could not find a competent – even a brilliant – CEO for $1.5 million a year. Corporate boards pretend that they need to give their CEOs and other executives huge compensation packages because they are so valuable, but that is not the case. Corporate CEOs pack their boards with fellow CEOs, who pay them whatever they ask. The fact is that CEO pay is often not in proportion to talent or success.

The Corporate Library’s 2006 report, “Pay for Failure: The Compensation Committees Responsible,” described 11 public corporations that paid their CEOs more than $15 million per year despite five-year track records of shareholder losses. For example, Ivan G. Seidenberg, chief executive of Verizon Communications, received $19.4 million in salary, bonus, restricted stock and other compensation in 2005, half again as much as in 2004. As his compensation increased, the stock fell 26%, bondholders lost value as the company’s debt was downgraded by credit agencies, and 50,000 managers saw their pensions frozen.

Instead of paying additional tax due to the loss of the deductibility of CEO compensation over $1.5 million, the corporations could raise the pay of the employees who actually do the work, or hire more employees. Instead of cutting the workforce to the bone and eliminating fringe benefits, these corporations could reintroduce the type of corporate culture that made it worthwhile to get out of bed and got to work.

A culture of greed and megalomania has taken root among the wealthy and powerful in the United States. Conservative activists and politicians are catering to those who have it all. Anyone who says the “haves” should help the “have-nots” by paying a little more in taxes is accused of class warfare.

This country is being run for the benefit of the plutocrats who comprise the 1%. It is not class warfare for the rest of us to want them to take their boots off our necks. It is time for the 99% to stand up for our rights.

John Payne, Attorney
1800 Grindley Park Street 6
Dearborn, Michigan 48124
Come visit me at: http://www.law-business.com
313.563.4900/fax 313.583.3100

Pittsburgh Office:
9853 Old Perry Highway
Wexford, Pennsylvania 15090
800.220.7200/fax 412.548.0022