Legislature and Governor Agree to Double Capital Gains Tax (Other Taxes and Fees up over $3 Billion)

And …

GM Will Not Re-open Janesville Auto Plant (Kenosha Engine Plant among other companies still on the bubble)

Most of us know that businesses, especially small businesses, rely on capital gains incentives to power their investments in their workers and the community. Small business owners also use these long-term tax rates to provide income in retirement that is inflation-protected. If the irony of these two headlines is lost on our State’s citizens and politicians, its time to re-visit the creation of the State of “Superior”, which would carve out the people of common sense, leaving the insatiable redistributionists behind (maybe a virtual State?).

Gradually at first, and then with accelerating force, an erosion of citizen freedoms began to corrode this hard-won republic. Our people began to stagger under the weight of a set of regulations and mandates, each part of which seemed to be a good and proper construct at the time it was forged. No one realized that together they would so alter the State/Federal balance so as to breathe life into a multi-headed monster accountable to no one, and for which no one would claim responsibility. Initially geographically isolated, the monster today has become a pandemic vectored by the mass media and supported by propaganda techniques against which our people have no defense.

It took nearly 300 years, but we are again being decimated by taxes and further insulted by inflation sponsored by the U.S. Congress and the Wisconsin State Legislature. We have created a new aristocracy that once again is not concerned with obeying that old nuisance the Rule of Law, and we are continually reworking history to conform to new definitions of personal responsibility.  It is as if we are watching a grotesque masquerade dance where black is white, lies are truth, and political proclivities seem to be economic necessity. Terrifyingly, in the middle of it all, the monster continues to grow larger and hungrier.

Our new aristocratic class uses economic trickery, sideshow shell games, disingenuous instances of “fairness”, and secret-lawmaking-in-the-dark as flim-flam tools to lavish themselves and their supporters with jobs, benefits and privileges not available to the rest of us. They brush away inconvenient language in the Constitution as “irrelevant” to the environment today, and invent distracting bogeymen to frighten us into allowing them to extend their tendrils deeply into our private businesses and affairs. They have created a completely new language that mixes connotation with denotation, literally making “wrong thinking” a crime.

Today, this “Ministry of Truth” wields the levers of power, exposing the “wrong thinkers” so they do not receive grants, jobs, or other examples of government largess. Conformance is re-cast in limbic “feel good” terms that trump logic and common sense. Between direct intervention and business mandates, government at all levels now account for over 82% of the economic activity in this country. To put this in context, Zorro led the revolution to overthrow the Mexican government of California when the overall tax rate there climbed to 20% (one bottle of wine for every five).

So what are we to do, fellow citizens? Our rotting body politic, if not dead, is certainly in its last twitches, leaving us heading pell-mell toward the poisonous kingdom of Animal Farm. Where are our protectors? Can no one help us?

Without access, the only thing we can do is drink our one remaining partial bottle of wine to wash away any stubborn notions of creativity; we will then toast the demise of the old reward-for-effort economy where the lazy and quarrelsome sank to the bottom. We will say goodbye to our fantastic visions of what might have been if only we were a little smarter, a little more vigilant, and our representatives were a little more 18th-century.

And we will say:

“Four legs good, two legs better.”

Jonathan writes as follows:

Dear Rep. Pope-Roberts and Senator Erpenbach:

I am writing to each of you to expand on the points made in the email to you below (and including your response to him) from one of our ski patrollers, Rob Wangard, about the likely impact the current state budget provision on joint and several liability will have on Tyrol Basin’s ability to obtain insurance.

I am asking you, no, pleading with you, to please seek to have this provision removed from the budget because of its significant policy implications that quite literally may cause Tyrol Basin, and other tourist and recreational businesses, to close. This provision, if considered at all, should at the least be considered as separate legislation where a full airing of its impacts may be heard and debated.

In reading your response to Rob Wangard’s email, it seems clear that you are not willing to take the position that this proposal should be removed from the state budget and considered separately on its merit. You acknowledge that the reforms of 1995 passed with bi-partisan votes but then  allude to “criticism and suggestions by the minority party that ‘was’ ignored by the majority.” Those reforms were passed by margins of 24-8 in the State Senate and 69-27 in the Assembly (1995 SB 11 Act 17) so they were indeed bi-partisan. More importantly, the legislation adopted in 1995 was considered as a separate bill, apart from the budget, and had full hearings in both houses. If you feel that changes to joint and several liability have merit, then please have them considered only after full hearings and by separate votes.

With the jury instruction section, the Governor’s budget provision actually goes further than, as you say, to “effectively return the law to its previous status” before the reforms of 1995. Also, the conditions are different today and the impact of this will be quite significant on small businesses such as Tyrol.

First of all, the economy has all small business reeling, including Tyrol Basin. If we are able to obtain insurance at all, the costs can be expected to increase very dramatically and this alone could sink us. Even today, the costs for liability insurance alone amount to approximately $2.85 for every regular ski ticket sold. In the years before the 1995 tort reforms took effect, that cost was approximately $6.00 for every regular ticket sold. That difference, in this economy, cannot be made up by raising prices. And honestly, Tyrol was not close to being profitable in this most recent season, due to the economy, so we simply do not have the resources to ‘eat’ these cost increases.

More frighteningly, our attorneys and our insurance advisors have told me that the new liability exposure under the proposed tort changes in the budget are difficult, if not impossible to calculate and that, as a result, we may not be able to obtain any insurance coverage. Today, there are only two insurance companies in the country that will write liability policies for small, single focus, ski areas like Tyrol Basin. I do not know why this is the case, but it is a fact. I have been told that recent Wisconsin court cases that have effectively eliminated any protection we may have had under the Wisconsin Recreational Use Statutes (Wis Stats, sec 59.525 (3)(4) ) are a proximate cause of this situation, but I do not know that with certainty. I do know that these court cases have determined that the previous protections afforded for what is called “assumed risk” under the statutes have been determined not to have applicability where any admission is charged–such as at our ski area. I do know that, over the most recent several years, we could only find two insurance companies that would write liability insurance for our business and that this is the case for others of the 32 ski areas in Wisconsin.

If the two companies who are remaining that will write liability insurance for Tyrol Basin cannot determine what their liability exposure may be, one response may be to refuse to write such coverage at all. Further, insurance is written based on several factors including loss history of the business being insured, the risk management implemented by that business and the existence of accumulated loss reserves from having charged rates that provide for such loss reserve accumulation over time, plus a reasonable profit for the insuring company.

When the 1995 reforms were passed, it took several years before our insurance rates started becoming more affordable. That is, I believe, because the liability equation could not be fully determined except after experience of actual losses incurred and an ‘excess’ of loss reserves had been accumulated. Once it became clear that rates for insurance were more than sufficient to cover losses, competition within the insurance industry caused the rates being charged to be reduced. This process took some few years and rates charged to Tyrol Basin, other tourist businesses, restaurants, and the like slowly became more affordable.

Unfortunately, the reverse of this gradual trend in rates cannot be expected to play out in anything like this manner. If you, and other legislators, cause this change in tort law regarding joint and several liability to be passed in this budget, then the insurers will be faced with both a difficult to determine liability exposure and no accumulated loss reserves. At a minimum, the response by insurers will be to immediately raise insurance rates to unforeseen and likely very high levels. Or, they may just decide to cease writing liability policies to small businesses like Tyrol Basin at all until the situation becomes clearer.�

Either result could lead to the shutting down of Tyrol Basin and several other tourist related recreational businesses across Wisconsin. It may cause the same result to restaurants, Inn Keepers and a host of smaller businesses.

Tyrol Basin has 175 seasonal employees who account for some 55,000 person hours of employment. This is equivalent to about 27 full-time employees. The bulk of these employees live in your Assembly and Senate districts. We have, additionally, 84 ski patrollers, again with many of these great people living in your districts.

Our annual payroll, not including taxes, is over $560,000 with again, most of this going to persons living in your Assembly district and virtually all of this going to persons living in Senator Erpenbach’s Senate district.

Tyrol Basin is, I believe, if you include personal property taxes, the largest property tax payer in the Town of Vermont.

Next to the School District, Tyrol Basin is the largest utility user of the Mount Horeb Municipal Electric Utility.

Tyrol Basin is a significant ‘driver’ of tourism activity in the Mount Horeb area. We bring in quite literally some 70,000 people each year that spend money in the Mt. Horeb area restaurants, shops, motels, filling stations and the like. We are a summer banquet destination for the area.

Tyrol has been selected as the venue for Mountain biking for the 2016 Summer Olympics should the Chicago bid be chosen this October. As the mountain biking venue for the Olympics, we are integral to the area and Wisconsin Olympic road bike events as well and our demise could also lead to this opportunity being missed.

If this budget provision passes, all of this is at risk!

More personally, if this provision passes and Tyrol either cannot afford to stay in business or is forced out by a lack of insurance, I will suffer catastrophic financial damage. We cannot, because of lender requirements and personal recognizance on bank debt, stay in business at all without full liability insurance coverage.

If we cannot obtain or afford insurance, Tyrol will close. But we shall still have a significant bank debt to pay off and that debt will not be supported by the scrap value plus the land value of a defunct ski area. The owners of Tyrol, like most small business owners, have personal guarantees for all debt.

If this budget provision passes and Tyrol cannot afford or obtain liability insurance, 20 plus years of building a business that is a community asset will be lost. Twenty plus years of investment and sacrifice will go up in smoke and still there will be bank debt to pay.

Now I know that I’m a republican and you are partisan democrats.     I also know, that in your assembly district, Rep. Pope-Roberts, you probably don’t have to worry about losing an election any time soon. But I do trust that you are both honorable and representative elected officials who seeks the well being of the people of your  districts  and the state of Wisconsin.

I suggest that you consider the issues that I have raised about the impact of this, in my humble opinion, ill-advised and evidently politically driven policy provision. I think you would agree that this is a substantive policy issue. I would hope that you might concur that such a large issue deserves to have full debate and airing and that it be subject to a vote on the merits (or lack thereof) as separate legislation.

Respectfully, you and I know that policy items tucked into the state budget do not get a full airing, nor even a full hearing and they most certainly are often put in the budget to avoid having to vote on them on the merits.

Please, exercise leadership in seeking to remove this provision from the state budget and in having it considered as stand-alone separate legislation where all of these impacts and issues may be examined. Please help to demonstrate that this is not simply a political payback to trial bar supporters as I, and others fear it is.

If this goes through, and the impact is as I fear, local property taxes will have to go up marginally, at the least, local electric rates may increase, 175 of your constituents will lose their full or part-time jobs, over $560,000 in local wages will be lost, some $2.5 million of direct economic activity to the area will be lost and the Olympic bicycling events may not come to Wisconsin at all.

Please instead, help to support the people of the Mt. Horeb area and all those who enjoy Tyrol Basin.

Sincerely,

Jonathan Barry

After all, if they did that, the students could grow up to question the disingenuous psychobabble emanating from the seats of power, and might hold their representatives accountable for the State’s and our nation’s sorry economic condition. The type of curriculum content that would establish a truely reasoning adult population includes the following:

1. A unit on identifying propaganda and persuasive techniques.

2. A unit on proof requirements and the scientific method.

3. A unit on evaluating syllogisms based upon their merits, ignoring who espouses them (cognitive verses limbic evaluation).

4. A unit on language-based logic, and mathematical logic in advanced classes.

These are not difficult concepts, and it would take no more than two or three English classes to explain them. Maybe the required time can be made available by reducing the chapters espousing the re-writing of history and science to conform to the political proclivities of people who have never labored in the real world. For instance, many of today’s authors attended ivy league colleges that do not aggravate their students by giving them report card grades. Utterances from such sources would be subject to a rigorous logic filter, if our citizens knew how to use such a tool.

Some of today’s schools, both K-12 and college, seem to be places of concept twisting where one unlearns common sense. In today’s incestuous academic world, people who cannot predict the weather for next Friday  somehow know what the weather will be like 150 years from now. These people routinely demonize those who disagree with them. It would be nice to test their assertions by putting them through a logical scrutiny, thereby restoring the concept of dialog.

Unfortunately, our kids today can’t tell when they are being hoodwinked by modus tollens (all cats have four legs; I see an animal with four legs; therefore it is a cat). But if Oprah endorses it, it must be true.

Wouldn’t it be nice if Johnny could not only read, but could truly understand what he or she is reading. Absent that, we get the government we deserve, and maybe that is the point.

The Department of Public Instruction (DPI) puffs itself up and pontificates that the educational needs of ALL of our children must be addressed. However, they have a curious definition of “ALL”. No one is arguing that children with special needs and learning disabilities should not receive the assistance they require to access educational resources. But what about the other children: the “Average” student and, (dare we say it?), our “Best and Brightest” kids?

It is no secret that these higher-median children have been sorely neglected in Wisconsin, especially those that come from a disadvantaged economic environment. Usually, the unique help each of them receives is limited to that required to achieve passing grades in classes that, to them, may be redundant, mistargeted and boring. This loss of potential is tragic when, with a modicum of help, the Average student could be capable of  Above-Average work, thereby vastly improving his future educational opportunities and financial prospects.

In addition, the Best and Brightest children may occasionally be socially awkward and can lack the confidence to seek assistance in locating supplementary educational materials. Guidance and psychological help may be necessary so that, for instance, they can resist the peer pressure to “dumb themselves down”. So, our ghost may ask, why are these children not part of the “ALL”-inclusive designation? Perhaps because may of us believe they will learn at a higher level and accelerated pace in spite of the teacher’s attention. Yet, research has shown this hope is vain at best, and that teachers do indeed enhance the educational experience of nearly all children, even those that are prone to question our assumptions.

So do we need more specialized teachers and higher costs to accommodate this “top half instruction”? I submit that we only need heightened instructor imagination as may be required to bring businesspeople and other resources into the classroom. Here we would couple them with the services of existing special education staff. Traditionally, special education has not been focused on the average-to-higher achievers, but many of the tools used by special ed would certainly benefit the presently neglected higher achieving children. Special education teachers are familiar with techniques on adaptive learning styles and cross-mode education; these can work for everyone, regardless of cognitive ability. Learning enhancement can be as simple as, for instance, teaching children to read aloud to themselves if they are auditory learners.

Of course, this requires a re-think by DPI and would result in a thrombosis for the educational establishment. But the alternative is, with opportunities denied to them, the above-the-median learners will seek to fill their knowledge vacuum as best they can: on the street, in inappropriate adult venues, and all the worse for us, in other states and even other countries. Then will we indeed need to “beware these children.”

As it has done several times in the past, Dubuque (population 58,000) has re-invented itself and leapfrogged the declining economies in adjacent states. It has morphed from a Rustbelt “Flint Michigan” type of town to become the fastest job-growth city in the Midwest by seeking and welcoming new businesses outside of its traditional manufacturing base.

To add to its still viable manufacturing sector, Dubuque today has sought and landed “high tech” industries in health care, education, tourism, publishing and financial services. The latest crown jewel is a new IBM technical center, located here just a hop and a skip from the Mississippi River. So close but so far, Wisconsin’s cities from Platteville to Madison to Milwaukee were never considered by IBM. Rather, in Wisconsin, every private sector job lost results in a public sector job gain, fossilizing the status quo.

In the late 19th century, a similar scenario was played out in Dubuque with respect to Galena, Illinois (see Badgernet category “Disasters and Fiascos”).  Galena continued to subsidize its barge industry throughout the 1890s, and actively discouraged entreaties by the railroads to establish a rail head there. Tired of waiting, the railroads built their facility in Dubuque, and Galena became today’s quaint little tourist town without the political or financial clout it enjoyed when U.S. Grant and Abraham Lincoln would woo the powerful and moneyed interests that used to call Galena home.

Some day, our leaders in Wisconsin will “get it”, and appreciate the course of our state’s creeping europeization. Some day our state leaders will fully understand the lessons of history. It may just require that the bones of today’s creative and productive citizens be in the ground before the light comes on.

1) Work = Power X Time

2) Since Knowledge = Power, and Time = Money, we have (by substitution):

Work = Knowledge X Money

3) Solving for Money, we have Money = Work/Knowledge

Therefore, as Knowledge approaches zero, the Money required to implement any project becomes infinitely large, and the Work done becomes irrelevant and indeterminate.

Conclusion: The less you know, the more money you will waste, including taxpayer’s money if you are a policymaker or bureaucrat.

Your BLog Master recently found himself at this Governor’s Club, an unsought witness to the voices churning throughout the restaurant that were wishing, cajoling and pleading for a share of the U.S. stimulus infrastructure dollars that may find their way to Wisconsin. The following fragments were overheard and speak for themselves.

(Table 3):  “…  have we cozied up to Oskar yet? We can’t take (previous DET administrator name deleted) for a Gulf tour in our yacht and seal the deal any more. He’s under pressure to spend IT infrastructure dollars as fast as he can though, and we should be there to help him out and get our entire share … otherwise we’ll be playing cleanup for what’s left after Cisco goes through Madison like a freight train …”

(Table 6): “… this has nothing to do with public need, or even jobs. You know and I know that nearly 50% of the new (federal) money, including  funding for OJA Homeland Security projects (public safety communications), goes to expanding the bureaucracy …”

(Table 5): “… the initiative has been completely taken away from us (the private sector). They tell us how to get our energy, where to put our towers, and who to use for construction. What the hell is an “intent to negotiate”? Why did we not get an opportunity to send in a bid? Do you suppose they are using our concept design? If they spec to that, someone will get a nasty surprise when they find out the system’s real cost and capacity limitations. If DOA wants campaign contributors, we can get those. If they want particular companies as subs, we can get those. If they want obsolete technology backed by  preferred vendors … that used to be called collusion … I can make one phone call and make it happen … ”

(Table 7): ” … I’m still waiting for the other shoe to drop. With fees, mandates, taxes and other means … separating productive people from their rightful pay, we are slaves of the governor, required to do his will. I thought the Thirteenth Amendment made that illegal …”

And the beat goes on. Each of us may hope that only the guy in front of us in line, and the guy behind us, will have his taxes raised. We can hope that we will get a high-speed train, built with the efficiency of the Eisenhower Interstate System.

We can hope …

That’s the way to take our collective eye off of your agency administrators, Gov. These guys and gals are really bad actors, with their cozy vendor relationships and Gilbertesque knowledge of technology (I am the very model of a modern Major General ta da ta da). Froggy has noticed that, to date, only Scott Walker has the gonads to say “no” to this unabashed hosing of the few productive and non-politically-connected souls left in this State, at least initially. Sorry, Scott, but there is no way you will prevail on this - your political enemies will demonize you, subject you to relentless ad hominem attacks and grind you into fairy dust. And you will capitulate, as would any other political animal, along with every other invertebrate surviving the K-T boundary.

Has anyone noticed that China has recently published a research paper comparing their economic system to ours? They found about the same level of socialism in both countries.

ONE TRILLION DOLLARS?! That will increase inflation 2% all by itself. And, of course, phantom inflated gains will still be taxable in Wisconsin.

Does anyone out there think this will actually put people back to work? Can you imagine Walter Chrysler, Alfred Sloan, or the Dodge brothers lifting their skirts so that congressional committees and administrative agencies can comment upon their anatomy, which, as we all know, is the federal prerequisite to receiving money to pay the United Auto Workers for a few more months?

Bah Humbug. Cry, cry, cry Adam Smith. “Invisible Hand” indeed.

Let us say that you are a taxpaying citizen or an entry level government worker who is still naive enough to believe you can make a difference and improve the lot of state residents or, (heaven forbid) obtain actual value for hard-earned tax dollars. You float what appears to be a logical and reasonable proposal, and are mystified by the responses you receive from the entrenched politicos. This guide will help you decipher what they are really saying.

When they say: “You can attack the pirates only if the captain’s life is in imminent danger.” They mean: Let us see what they mean. The captain is securely bound and three pirates are pointing AK-47 rifles at him. A normal person may conclude this qualifies as a life-threatening and dangerous situation. So why the modifier on the Rules of Engagement? Too bad - you are not thinking like a politician. If the U.S. Navy attacks, and everything goes wrong, the captain obviously wasn’t in danger, and our political/military leader has deniability. If the engagement is successful, the “permission” can be construed as a “go ahead”.

Those of us who are used to real leadership might wish to hear an unqualified “Charge!”, but we haven’t had these stones since Teddy Roosevelt led his troops up San Juan Hill.

When they say: “These spontaneous demonstrations at 200 locations around the country have been orchestrated by the opposition’s national party.” They mean: “I learned my lessons well in Politics 101. Always accuse your opponent of  infractions (or supposed infractions) you are guilty of yourself.”

If the truth be known, even if the demonstrations WERE orchestrated, so what? Are not such petition opportunities the right and duty of our party leaders?

When they say: “Changing the way we do business is not that easy. Where else is the type of thing you advocate being done?” They mean: “I don’t really care where its being done, I just want you to go away and do more research that my staff would otherwise have to do, taking them away from their main job, which is getting me re-elected.”

When they say: “We tried this once and it was not successful.” They mean: “During the last tax revolt, we set up a similar proposal as a straw man in a manner that guaranteed failure. My political nemesis was hoodwinked into drafting the specifications and success criteria for the project, and I was able to get rid of two pains in the neck with one stroke.”

When they say: “I'’m not sure it will save money.” They mean: “I’m afraid it might alter the cozy relationship I have with existing vendors, affecting my re-election fund balance.”

When they say: “There is no room in the capital budget to begin a new project.” They mean: “I can’t attack-spin this proposal because it is a no-brainer way to save money. Therefore I’m going to take your eye off of the ball and claim there is no way to get it started.”

When they say. “We need predictability for the monthly costs we incur.” They mean: “Our existing vendor is a state university graduate and gives us $40 million per year. They charge us the same price each month even though their costs are going down. The resulting margin is used as a war chest to deflect proposals such as this.”

When they say: “This is a good idea. Why don’t you bring it up at the biennial budget negotiations?”. They mean: You know what they mean. The idea will be buried in chaff and never see the light of day.

When they say: “Isn’t this idea similar to one advocated by (place the name of of the most recent media pariah here)?”. They mean ” If you speak about this publicly, you will be demonized and subject to relentless ad hominem attacks and heresay slander, as befits any other ax murderer.”

When they say: “This is much too complicated to implement.” They mean: “I can’t explain it if I can’t understand it. Keep in mind I have successfully avoided taking any science or math since the second grade.”

More to come — let’s hear your favorites. It is no coincidence that corruption and corrode have similar Latin roots (”to break” and “to gnaw to pieces”).