ADN: Fake Quote In Ad

Since the Anchorage Daily News became the Alaska Dispatch News, the local and state coverage has increased significantly.  There are more reporters covering the legislature, the assembly, the university, and other significant organizations and issues.  But in the new world of Fake News, I'd like to see the ADN also take on Fake Quotes in ads.


This anti-income tax ad appeared in the ADN Sunday.

Bob Gillam, Alaska's richest person according to Forbes, and the money behind the anti-Pebble Mine campaign, doesn't want Alaska to reestablish the income tax as this ad in Sunday's ADN suggests.  If I were a billionaire with lots and lots of income, I might feel the same.

But when I read the quote from Johnson - "The 20th Century proved, if you were paying any attention, that taxation is the great enemy of civilization"  - I was skeptical.  Johnson wasn't an anti-tax guy.

So I googled and couldn't find the quote linked to Johnson.  I emailed Jim Gillam's company to see if they could tell me when and where the quote was published or he said it.  Then I emailed the LBJ Library in Austin, Texas.

I haven't heard back from Gillem, but the library was back to me quickly.   Archives Specialist Ian Frederick-Rothwell wrote back:

"I can find no record in the Public Papers of Lyndon B. Johnson that he ever said this. I searched the American Presidency Project website, which holds full, searchable text of all of President Johnson's speeches, statements, messages, and remarks as delivered or published."

He did find an article that included the phrase written by Buffalo, New York attorney Jim Ostrowski.   But I guess Ostrowski's name and picture wouldn't be as meaningful as Johnson's.

And the statement under LBJ's picture about every state that introduced an income tax since 1960 experiencing economic decline seems pretty sketchy as well.  Most states have had periods of 'economic decline' (however one might define that) since 1960.  Is there any cause and effect relationship that can be proven here?  I doubt it since all but a handful of the other states already had income taxes before 1960, so they should be totally depressed by now.  The only 'truth' this add is might prove is that some folks will believe what they want to believe, without any thought.

Billionaires have the resources to check their facts, though as our current president proves, having money doesn't necessarily lead to the truth.

But in this day of FAKE NEWS, I's urge the ADN and other reputable media, to require ads like these to provide sources before they print them.

Another option is simply to put a fact check next to advertisements so that readers don't have to each do this kind of homework.

"Replumbing Permanent Fund doesn't create more water" or Nerd Nite Alaska Budget AND Facial v Verbal Portrait

I went to the Nerd Nite beer and budget meeting last night.  Before I get into that I'd like to offer you a 'how you know' things test.  Regular readers know I'm fascinated by how people come to 'know' things - like what's true, how the world works, how we draw conclusions about people, etc.  All the kinds of things that underlie everything we know and how we act on things.  If everyone were self-aware of all these things would, society would be radically different.  And as we watch this event known as a presidential election, it's clear that all of these things impact what voters take from media coverage, images, words, etc.

So let's do an experiment

I want you to look at the verbal portrait I've made of someone.  And as you read it, I want you to be aware of the images you have of this person.  I don't want you to work at imagining the person.  Rather I want the image(s) that your unconscious creates.  What do you see?  Is it one image?  Does it change as you read more?  At the end is there an image of this person - a face?  a stature?  a voice?
Again, don't think, just capture the image that your brain generates on its own.

Got your image?  OK.  Stash it away until later in the post.

The 49th State Brewing Company is in the old Snow Goose building, which was the Elks Club built in 1918.  (The chandelier in this room is adorned, still, with elk antlers.)   This was an evening of state budget policy with three speakers who have been intimately involved in the topics they took on.

You can see that the room was packed.  Probably 400 or more people to hear about:

1. the origins of the Permanent Fund Dividend (Cliff Groh)
2. the trade offs between cutting the budget and raising revenue (including dipping into the Permanent Fund, various taxes, and oil taxes and subsidies) (Larry Persily)
3. how the oil subsidies work (Dan Dickinson)

There was beer and snacks for sale as a standing room only crowd hung around for two plus hours of policy.  It was a mix of ages, but I would guess most were under 40 which is a different demographic than I've seen at talks on similar topics in Anchorage in the past.  Having beer instead of coffee probably helped.

Groh went back to the debates between the Hickel view (the owner state) and the Hammond view (the people as individuals having a share in the state's wealth) and other reasons for and against having the dividend.  Groh's position was more as a reporter than an advocate.

Persily didn't pretend to be neutral as he discussed the income options open to the state because cutting the budget alone simply won't balance the budget.  He favored taking a part of Permanent Fund earnings (cutting into the dividend), income taxes, changing the oil subsidies.  When an audience member pointed out that cutting the dividend was the most regressive option, Persily didn't disagree, but said including an income tax would balance this by getting the most from those with the largest earnings.  

After each speaker, there was a five minute beer break, so instead of leaving before the third speaker, the audience was fairly mellow.  

Dickinson discussed how the oil and gas credits worked.  Some are related to production, some are intended as incentives to investment in exploration.  They can give companies a huge return - combining can lead to a maximum of 85% return on investment.  But the graphs he had of revenue show a steady decline since these credits have gone into place.  But he pointed out, in response to a question about why we keep funding companies that go bankrupt instead of producing, that usually a new company takes over what the last company did and they keep production going.  He also pointed out that now when companies submit for their credits, instead of taking the money themselves, they often assign it to the financial institutions that gave them their initial loans.  

A key bit of information I learned was that the law doesn't actually guarantee the state will pay the credits.  There's a clause that says something like "if the legislature appropriates funds."  So, he said, if the state didn't pay the credits because there was no money allocated for them, the state wouldn't be violating any laws.  And, in fact, he said by the end of the year forecasters predicted companies would be submitting for about $1 billion in credits.  The legislature allocated about $460 million (not exactly certain of the number) and the governor vetoed all but $30 million of that.  

All three of the speakers, as I said, worked for the state on the issues they discussed.  They knew their stuff cold and their presentations were lively and interesting.  A good way to get this stuff.

Now, back to the verbal image above.  Which of the images below comes closest to the image your head conjured up?

#1	Image Source #2	#3
#4	Image Source #5	Image Source #6

Be honest with yourself.  Which is closest to your image?

What's the point of all this?  When I got home and looked at the picture I had taken, I realized the visual just didn't convey the depth of work and experience I had learned this person had.  It made me realize how much I still - despite my efforts not to - make assumptions about people based on what they look like.  Despite my admonition to myself to treat people I meet as though they will be the president of the US in 15 or 20 years, but no one knows it yet.  Or as though they have won a Nobel Prize or in some other way are highly distinguished and interesting.

For non-Alaskans and for non-political Alaskans, these are the six certified candidates listed in the US Senate race today at the Alaska Division of Elections.  #1 is Joe Miller who recently replaced the Libertarian candidate who withdrew.  #2 is Breck Craig.  #3 is Margaret Stock.  #4 is Lisa Murkowski.  #5 is Ted Gianoutsos.  #6 is Ray Metcalfe.  The one whose bio is briefly summarized in the top image is #3 Margaret Stock.  The info comes from her campaign website.  I met her for the first time last night at Nerd Nite.

Note The Nerds' Numerical Aesthetics

Did you catch it?  The meeting is September 7at 7 pm.  And it's at 49th State Brewing Company.   Pretty nifty, eh?

And the topic is compelling too - if you care about the future of Alaska and the Alaska Permanent Fund.  They left out the address, but I guess they didn't want to mess with beauty of the numbers already on the poster.  But for those who might want to attend:

717 W 3^rd Ave     It's tonight, by the way.  

Dear Sen. Pete Kelly, I Have Some Questions

 Alaska Commons quotes you, Senator, and I have a few questions.   First, here's the Commons' quote:

“I’m not someone who says we should have a government this size,” Senate Finance Co-chair Pete Kelly (R-Fairbanks) began.

As a matter of fact, I’d like it to be smaller, but the fact is that, adjusted for inflation and population growth, I think last year was about the lowest spend we’d had going all the way back to 2003, which was the other low point.
That isn’t to say, “Oh great, we need to tax people.” That isn’t where I’m going with it. The point is that… we’re at the point where we have to view differently how we interact with the administration. One of the things that [Walker] has been so reluctant to support are unallocated reductions. I don’t blame him. What that does is it puts most of the onus onto the executive to figure ways to make government smaller. That’s the way any corporation’s going to work. That’s the way any board of directors — whether it’s a non-profit or a profit-seeking corporation — that’s the way they’re going to work. They’re going to say to the president, “We’re out of money. You’ve got to figure out how to manage this thing. Sorry. That’s your job.”
So what we’ve heard in the past — and I’m not trying to criticize. I think these kinds of backs and forth [sic] were appropriate in years past when we would do something like that, and the governor would say something like, “You’ve got to do your job.” No. The job of the executive is to manage the administration. That is not our job. We are not up to the task because we are a board of directors. That isn’t how a board of directors works. And I think we’re to the point now where we do have to eliminate programs. We probably have to hand the governor an unallocated [reduction]. My apologies. The unallocated that we put into the budget earlier had program reductions and reforms and those kinds of things to back that up. They’re still there… Those statute changes are working through the legislature, but it’s time now to say,
“Uh-oh. We’ve got to make this thing smaller.” And we’re not going to sit at this table and go through line by line and say, “You can lay off that guy and lay off that guy or reduce that program or stop matching those funds.” That is the job of the executive. And I think we just have to deliver a smaller budget, and we have to do it fairly quick because the air’s out of the tires as of that spring forecast.”

Because the Environmental Protection Agency and non-governmental organizations inhibit resource development, Kelly said, “The only choice we have now is to deliver some draconian cuts to the governor.”

First, I would say that you and I have totally different views of the role of government and the role of business.  But let's just start with things that don't stem from those differences.

"One of the things that [Walker] has been so reluctant to support are unallocated reductions. I don’t blame him. What that does is it puts most of the onus onto the executive to figure ways to make government smaller. That’s the way any corporation’s going to work. That’s the way any board of directors — whether it’s a non-profit or a profit-seeking corporation — that’s the way they’re going to work. They’re going to say to the president, 'We’re out of money. You’ve got to figure out how to manage this thing. Sorry. That’s your job.'”

This is not my experience, Senator.  Boards of directors are there, especially with non-profits, to help the organization succeed.  They set policy.  Often the Board members are expected to donate a significant sum and to assist in fundraising.   Especially when times are rough.  But you seem to have   taken raising money off the table.  Most members of boards want their organization to thrive and grow.  You sound like you don't even like the government you're there to serve.    Usually, when an organization is out of money, the board does everything it can to help the organization raise more money to achieve its mission. But you seem to be saying, well, it's tough times Gov, you're on your own.

"I think these kinds of backs and forth [sic] were appropriate in years past when we would do something like that, and the governor would say something like, “You’ve got to do your job.” No. The job of the executive is to manage the administration. That is not our job. We are not up to the task because we are a board of directors. That isn’t how a board of directors works. And I think we’re to the point now where we do have to eliminate programs. We probably have to hand the governor an unallocated [reduction]."

Senator, first, I'd humbly disagree with your characterization that the legislature is a board of directors.  Most non-profit boards don't get paid and like for-profit boards, they meet infrequently.  The legislature has a constitutionally mandated role that is far more significant than a board of directors'.  It's that branch of government (which is much more significant than a non-profit or for-profit organization) that is supposed to allocate funds for the government to use to operate.  They're also supposed to raise new revenues when the government is running out of money.

The Alaska State Constitution says the legislature will pass laws and the governor will execute them. Let's just look at one section - Health, Education, and Welfare - of the Alaska Constitution:

1. Public Education The legislature shall by general law establish and maintain a system of public schools open to all children of the State, and may provide for other public educational institutions. Schools and institutions so established shall be free from sectarian control. No money shall be paid from public funds for the direct benefit of any religious or other private educational institution.
§ 2. State University The University of Alaska is hereby established as the state university and constituted a body corporate. It shall have title to all real and personal property now or hereafter set aside for or conveyed to it. Its property shall be administered and disposed of according to law.
§ 3. Board of Regents The University of Alaska shall be governed by a board of regents. The regents shall be appointed by the governor, subject to confirmation by a majority of the members of the legislature in joint session. The board shall, in accordance with law, formulate policy and appoint the president of the university. He shall be the executive officer of the board.
§ 4. Public Health The legislature shall provide for the promotion and protection of public health.
§ 5. Public Welfare The legislature shall provide for public welfare.

The responsibility is vested in the legislature to provide, not the executive branch.  Now, I understand that the legislature can delegate its authority to the executive branch.  But you're not making that argument.  You're just saying that it's not your job, when it appears that it actually is.


And, excuse me, but I have one more question on this part of your quote.   If it was "appropriate  in years past" as you've said, then why is it inappropriate now?  What exactly changed?  I realize in the past, when the legislature was spending lots of money, and even last year before oil prices plummeted,  the legislators could take credit for the spending of money on projects.  Now that there isn't enough money, and people are going to get hurt by the cuts, I can understand that you might rather put all the blame on the governor.  How else can you explain your change in attitude?

Especially, since you and the rest of majority legislature have picked things the governor can NOT cut,  like  tax credits on the oil companies, and  continuing funding for mega projects like the Knik Arm Bridge.  (Even after the federal DOT rejected their loan requests  for a seventh time because of faulty projections of revenues).  So, from my perspective, you aren't exactly keeping hands off.  You seem, instead to be protecting things you want to keep, but then telling the governor he has to be the one who, because there's no money left, has to cut schools and to programs that assist the disabled and the elderly, etc.

Instead of working hard, like the boards of directors in your analogy, to raise more money when a key revenue source dries up, you are explicitly telling the governor, he's not allowed to raise more money.

"Because the Environmental Protection Agency and non-governmental organizations inhibit resource development, Kelly said, 'The only choice we have now is to deliver some draconian cuts to the governor.'”

So, Sen. Kelly are you saying, "We could have raised more money and kept the same size government if we kept exploiting Alaska's non-renewable resources, but the EPA and environmentalists won't let us?"  I know that is the line that the Koch brothers' Americans for Prosperity have been peddling.  That would also explain why the legislature is continuing with its half a million dollar appeal of the expansion of medicaid in Alaska.   But while Shell did claim EPA regulation caused them to leave Alaska, we all know the real reason was that they didn't strike oil and because the price of oil crashed. And our revenue shortfall isn't because of regulation either, it's also because the price of oil crashed. After all, you and your colleagues gave the oil companies a huge credit recently, which is now part of our budget problems. Please explain to me what I'm missing.

But, Senator, this last quote seems to suggest that if the price of oil hadn't crashed,  we wouldn't have to cut the budget.  If that's true, then your real objection isn't so much big government, but paying for government the way every other state does - through taxes, instead of the oil windfall we've been enjoying for 40 years.

And since you refer to developing natural resources - which our state constitution encourages we do in a thoughtful way -  I'd also like to point out that the inhibiting factor for the development of our most important renewable resource - our people - is the legislature.  For the majority cutting schools seems to cause much less angst than cutting oil company subsidies and mega-projects.

One last point, Senator.  You talk about draconian cuts, as do many people.  I'd like to point out what that term originally meant.  From Merriam-Webster:

"Draconian comes from Draco, the name of a 7th-century B.C. Athenian legislator who created a written code of law. Draco's code was intended to clarify preexistent laws, but its severity is what made it really memorable. In Draco's code, even minor offenses were punishable by death, and failure to pay one's debts could result in slavery. Draconian, as a result, became associated with things cruel or harsh." 

There's more to the quote.  It says that nowadays people use the term to refer to things as trivial as parking fines going up, so in that sense, your usage isn't out of the ordinary.  It's like like calling a school principal who enforces a dress code a Nazi.   It's hyperbole.  It often comes from someone who knows the word, but isn't really familiar with its origin and the horror that really happened.

I noticed, Senator, from your website, that you got a Bachelor's degree in Management from Liberty University, which touts itself as the world's largest Christian university as well as the nation's largest online university.  And since you graduated while you were serving in the legislature, I can understand the convenience of an online degree.  The university's website also tells us

"Learn, develop, and grow at Liberty so you can impact your culture as a Champion for Christ."

Since you got your degree in management, I'd be curious what you studied about government and how government is fundamentally different from private sector management.

I'm also curious, Senator, how you reconcile being a Champion for Christ with making draconian cuts that will undoubtedly make life much more difficult for Alaska's poorest people?

And maybe some day we can meet for lunch and you and I can discuss all these things.   I'm sure you have lots of stories you can tell me and that perhaps I might have some insights you haven't heard before.

Senate Majority Poll Finds 48% Of Survey Takers Support A State Income Tax at 25% Of Federal Income Tax

When I got the email survey last week from the Senate Majority, my eyebrows went up a bit when I saw that their income tax question pegged the tax at 25% of the federal income tax.  I'd just heard the governor's state of the state address where he proposed a 1% level.

Surely, this was meant to suppress the income tax support, I thought.  And today's ADN had a commentary by Dermot Cole making that same point.

And now I got an email with the results of the poll.  I checked the question on income tax first.  Even at 25% of the federal tax, 49% responded positively!  That must be a surprise to the Senate majority.

Click to focus 

There are several full blog posts to write about here.

1.  About the governor's state of the state address - which I thought was a refreshingly clear, straightforward, and honest outlining of the situation.  He laid it all out.  This much is our gap.  We can:

• Cut
• Use Permanent Fund and Other Reserves
• Raise New Revenue

He pointed out that cutting all state employees wouldn't put much of a dent into the deficit.  For some people, shutting down government is the only way they will start to see all the things they depend on the state government for.  Immediate impacts will be no state troopers, no snow plowing or other road maintenance, prisoners would all starve in their cells or have to be released.  You think you'd have trouble flying because Alaska hasn't adopted real ID drivers' licenses, wait until we have no licenses at all, or license plates.  What will the Canadian border folks do with all our out of date plates trying to go through?  The airports would shut down.  Then there are things that will take longer to happen - people will start getting sick from things like bad water.  But that's another post.

The governor offered some options - what he wanted from the Permanent Fund (no limits, but the dividend would come off oil royalties, not investment earnings as I understood the speech), what size income tax (1% of Federal), and no sales tax.  He explained why he made the choices he did - income tax would capture those who were not residents of Alaska but worked here and sales tax is local government's way to raise money and he didn't want to add a state sales tax on top of the local taxes.

And then he said he wasn't set on the specific options, but he was set on the outcome.  He got the biggest applause when he said, "I will always put Alaska’s future above my own.  I didn’t run for gov to keep the job, but to do the job."

2.  About the different revenue options and who wins and loses from each.

Since corporations don't get Permanent Fund Dividends but they do pay income taxes, you can guess what they want.  More money from the Permanent Fund and no income taxes.  We should tap into the Permanent Fund, because that's what it was set up for in the long run - to be an endowment for Alaska.  The non-renewable oil could be turned into renewable capital, and a portion of the state's budget could be funded from the interest.  They key is how big a hit the Permanent Fund should take now and whether income taxes should also be added in.

Poorer folks get a bigger benefit from the PFD than the wealthy.  They would pay less in income taxes.  And they would pay a bigger percent of their income on a sales tax than the wealthy.

And who has the money to sway the public?  The poor and middle income or the wealthy and the corporations?  You can see where this is leading.

GCI has already started a coalition to push for big hits for the Permanent Fund.

But 48,2% in support of an income tax that's 25% of the federal tax is huge!

But the legislative majority hasn't been too good about paying attention to what people think if it's not what they think.  They're still suing the governor over medicaid expansion, despite overwhelming public support.


I'd also note that the * with the explanation for the 25% figure (that's what Oregon has) was NOT on the survey itself.

Here's a link to all the poll responses.

"My client was too poor and disadvantaged to take responsibility." - Three Articles On Wealth And Power

Three articles today in the ADN about wealth.  Actually I'm guessing that one of them is about wealthy people, but the other two clearly are.  And while I saw them in the ADN, my links go to the original sources.

The first was originally a New York Times article about how the 400 wealthiest people have what amounts to their own private tax system that allows them to avoid billions in taxes.  And they use some of that saved money to give millions to support political candidates and organizations that support their loopholes.  I don't see anything wrong with financially supporting your political beliefs, but I do see something wrong with getting that wealth by cheating the system that allowed you to gain wealth in the first place, and I do have a problem with individuals and companies contributing such huge amounts to the political process that their political influence upsets the democratic ideal of one person - one vote. I'm using the blog here as a note pad because I need to follow up on this article.

The second article was what the ADN now labels "Talkers."  I found a Guardian article that gives more detail.  This article is about a couple who have gone to South Korea to clone their recently deceased dog for $100,000.  This is the one I'm assuming involves wealth. There are a lot of questions raised here and because dogs can be such an emotional issue, I don't want to raise them quickly and without careful thought.  Plus I want to know a little more about the couple involved.  The article says almost nothing about who they are and I'm just assuming they have some wealth if they can afford to do this.  And if there isn't significant wealth here, there certainly is an issue here about power.  But I do want to note this for now.  And if any readers have reactions, please leave a comment or send me an email.

The third article, again tracing back to the NYT, was about the young man who escaped a prison sentence after killed four folks in a drunk driving accident when his lawyer made up the 'affluenza' defense -

"he was too rich and spoiled to take responsibility"

The only way a court should accept such a plea is if the parents then become responsible for their kid's crime.   This sounds like the Twinkie defense. (The link says Twinkies played no role in the verdict, so maybe we should be skeptical about the role a affluenza too.)

I guess that public defenders are too rushed, too uncaring, too overburdened, too ethical, or not creative enough to come up with the 'poverty' defense - "my client was too poor and disadvantaged to take responsibility." 

Back Home - Fall Chores And Other IRS Therapy

We're back home and the weather has held off - as it has in recent years - so I still had time to rake the leaves and mulch the flower beds. 

Leaves had abandoned the trees and were snoozing on the ground.  But I had some calls to make first.  The first was easy.  The second was the IRS.  I'm still trying to remain patient.  But I still don't understand how a major national payroll company and my mom's accountant can believe they can file one way and the IRS says they can't.  Basically it's about the payroll deductions for my mom's caregiver.  ADP sent them to the business side of the IRS and the accountant mentioned them on the personal account.  So, the business side has the money and sends notices saying they have the money, but no filing and the personal account says they have the filing but no money.  I started attempting to work this out last January and got a very understanding and helpful agent who made sure I got power of attorney for my mom's taxes for 2014 and 2015.   But then I kept getting notices and I kept calling the numbers. You have to wait two hours to talk to anyone, so make sure the phone battery is fully charged and you have something you can do while the phone is on speaker.  Each notice got copied to the accountant and I called the IRS. 

Finally in August or September a guy on the business side said, no, you can't do it that way.  You need to amend the personal tax form and get rid of the payroll taxes and file 940s with the business side for the quarterly deductions.  So that was done in September.  

When we got home, I had a notice to my mom, c/o me, in Anchorage, saying they were going to seize my property to cover the amount due.  The agent I got this morning - less than a minute pushing buttons and waiting - understood what was happening and said he needed to put the collection notice on hold for 60 to 90 days until the amended return got into the computer system.  But that part of the computer system was down so he couldn't do it then.  I should call back in a few hours and have it done. 

That's when I went outside to rake the leaves. 

The birch had been the first to start falling, then the cottonwoods, then the mountain ash, and last the Japanese maple.  I also cleaned out the rain gutters - there were plants growing in the one in front, in great compost.  And I mulched the flower beds with the leaves. 

And I ate a few rosehips.  I love them, even with the seeds.  And they have huge amounts of vitamin C.   From the Fairbanks News Miner:

". . . rose hips have 20 to 40 percent more vitamin C than oranges. Plus, 25 percent more iron, 28 percent more calcium and 25 times more vitamin A. They provide vitamins E and B, as well as selenium, phosphorus and a host of antioxidants. Finally, they have a lot of pectin, which is one of the water soluble fibers that lowers cholesterol."

And then when I got cleaned up and went back inside, I called the IRS back.  This time a woman answered, again quickly.  I guess the seizure notices get a better phone number.  She started to question my right to talk to her.  But I have power of attorney.  Yes, but once the tax payer dies, the power of attorney isn't good any more.  But I talked to Mr. V this morning and we did this and that and . . . I'm going to cut you off because I can't talk to you.  You have to file Form 56.  Can I turn it in at my local IRS office?  No, they'll just mail it.  But she did extend the time a bit to get the Form 56 in.  When you do that, you'll get a notice to your mom c/o you at your address.  That's exactly what the notice says that I'm calling about.  She was abrupt, cold, never said sorry about your mom (as the others did) and even though she could corroborate on the computer everything I said and that Mr. V had said to call back to extend the time for the amended form to get into the system, she just kept saying, it won't do any good to talk any more.  She couldn't do anything about it.  Grrrrrrr. 

I hung up.  Waited ten minutes.  Everyone else I've talked to since January has been much more understanding and helpful.  I called back and got Mr. VH who did say he extended things for 90 days.  He also suggested I take it to my local IRS office.  I mentioned Ms. A had said not to.  

But I was on the phone in the morning for about 40 minutes with Mr. V, then about 30 minutes with Ms. A, and another 45 minutes with Mr. VH.  The IRS had all the money since January - before the April filing date.  Actually, they've gotten it each quarter in 2014.  It's just that the business side and the personal side aren't talking to each other - even though the business side can see the personal side computer info.  Earlier people I talked to said they'd make sure no penalties were levied, though there is now additional interest and a penalty on the bill.  I'm assuming that will be removed. 

I believe in paying taxes, and while there are things I'd rather taxes weren't spent on - like the Iraq war and contracts with Haliburton - I understand that the many programs I do support need tax money.  But I can understand why people get enraged at the IRS.  And I also understand that part of the problem - like the long phone waiting - is because Congress doesn't adequately fund the IRS.  I think in part the plan of conservatives is to starve government agencies so they can't do their jobs well and this causes people to hate government.  But also, if the government is not funded adequately, they can't enforce the law and so tax dodgers and polluters and embezzlers and all the other types of cheats are less likely to get caught.  But I have to admit that if they can't figure out something as simple as my issue, then I'm sure they totally screw up more complicated filings. 

I was randomly selected to answer a phone survey.  It was relatively well done.  There were questions I could answer with appropriate options.  But the part I liked best was there were parts where I could actually talk and explain.  This was all automated.  And, they gave me the phone number of the IRS citizen advocate and I will definitely contact that office. 

The other good thing I did when we got back last night was take the sourdough starter out of the refrigerator and refreshed it with more flour and water.  I realize I haven't posted about trying out my new bread book I got this summer, but it was touch and go in the beginning when I did follow the instructions carefully, but the starter just wasn't wet enough. I've been making bread for years, but never with sourdough starter.   But I watched some online videos and added more water and eventually baked several credible loaves.  But then I had to put the starter in the fridge when we left town.  This morning it had expanded and was clearly the living thing bakers talk about.  And tonight I started another loaf.  I let it rise once and now it is in the fridge and I'll finish the steps tomorrow. 

Raking and other yard work and kneading bread are all good IRS therapy.

Alaska State Lottery - Governor [Shania Sommers] Announces Everyone Wins $2072

Screen shot of Shania Sommer announcing PFD amount 2015

Technically, it's not called a lottery.  It's called the Alaska State Permanent Fund Dividend.  PFD for short.  Individuals don't have to put any money down for a ticket.  No numbers are drawn from a hat.  But you can't be a winner unless you fill out an application to demonstrate that you've lived in Alaska the whole previous year, that you aren't a resident of any other state, and that you plan to stay.

The total amount each resident wins (the governor announced that total today)  is calculated by formula (from the PF website):

1. Add Fund Statutory Net Income from the current plus the previous four fiscal years.
2. Multiply by 21%
3. Divide by 2
4. Subtract prior year obligations, expenses and PFD program operations
5. Divide by the number of eligible applicants

The fund comes from monies the state collects from mineral related income.  The state constitution says: 

"At least 25 percent of all mineral lease rentals, royalties, royalty sales proceeds, federal mineral revenue-sharing payments and bonuses received by the state be placed in a permanent fund, the principal of which may only be used for income-producing investments."

Originally, it was thought that since oil and other minerals extracted from the state were not renewable resources, the wealth generated should not be used up by just one or two generations.  Instead, it should be conserved for the benefit of all future Alaskans.  It was envisioned to eventually serve as a trust fund for Alaska when the oil revenues ran out.  A small percent would be used each year to help fund the state.

But over the years, Alaska residents have come to view it as an entitlement.  Just this weekend one of the speakers at the Fiscal Future Forum talked about using the earnings of the Permanent Fund as the "third rail of Alaska politics." 

The payoff to Alaskans was originally determined by a formula that gave those who'd been in the state the longest, the most money - the payout was to be $50 per year of residency since statehood. But that was found by the US Supreme Court  to violate the guarantees of the Equal Protection Clause of the Fourteenth Amendment.  The law was changed to allow all Alaskans to receive the same amount.  

I did use the word 'win' in the title and many Alaskans view this as a 'win' though, as I said above, one they are entitled to.  

But I would argue that value of the PFD paid out to individuals may well be less than what we could do with all or even just some of the money were it used for needed services like schools or maintenance of state infrastructure.  

Undoubtedly, the PFD helps many Alaskans pay basic expenses.  And there are a number of Alaskans who economically do not need the dividend.  And there are others who spend their checks  on short term pleasures - drinking, an expensive vacation, etc.   Mine will go directly to the new water heater we had to install last week.  

Others have argued - though the exact proof is elusive - that the dividend attracts lower income migrants with large families from other states.  The $1884 per family member we got last year, sounds pretty good to a family of ten living on welfare.  And even with Alaska's higher cost of living it seems to be good enough to keep folks here.  

The lack of a state sales and income tax, plus the PFD means that most families come out ahead.  

It also makes people who demand that the legislature "spend my tax money wisely" sound pretty silly, because the only tax money they might possibly pay would go to local government for their sales or property taxes.

But then there are many ironies in "the last frontier" where people believe themselves to be ruggedly independent, yet we get the PFD and the state gets much more federal tax money than we contribute. It's easy to be indignant when you're ignorant.  

As I'm thinking about this, I bet Alaskans would be willing to add a lottery twist to the PFD.  I bet we'd be willing to lower the average payout if there was a chance to win some really big prize money for a few who are randomly selected.  I bet most Alaskans would give up 10% of their check for the chance to win $100,000.  

[Note:  I had this ready to post when the governor made the announcement, but was busy at the exact moment.  When I checked the video on the governor's  mulitmedia page, I was pleasantly surprised to see a girl talking about her college plans and how the dividend will help with that.  Announcing the PFD is one of the things that Alaska governors love to do because it's lots of free publicity on something everyone is happy to hear about.  Especially this year when the dividend is the highest on record (by $3). 

But this governor gave that moment of glory to  Shania Sommers.  Another sign that Walker is not only an adult, but also someone who is comfortable with who he is and happy to give away his  limelight to someone else.  Great move on his part. 

 

"Our Representatives Are Still Helping Other Customers, Please Continue To Hold"

After waiting two hours to talk to someone who said she couldn't help me and then transferred me to another line where I've been waiting for over an hour, I started thinking that maybe the IRS needs to contract with an Indian call center.

Among the anti-tax, anti-government crowd are those business people who know that if they starve government, then there will be less enforcement of the rules and they can get away with more sketchy business and safety practices.  They'll hire lawyers who will concoct complicated legal responses that exhaust the thinning staff of the IRS and other agencies.

Meanwhile, law-abiding citizens have to wait for hours (literally) to talk to someone who might possibly be able to figure out how to get their organization to put the pieces together so that they'll stop sending me letters incorrectly saying I owe them money.

Here's the problem.

We hired a caregiver to take care of my mom when she could no longer walk and take care of herself.

We hired a national payroll firm to take care of calculating the taxes and paying them to the state and the federal governments.

So the company sent in the withheld federal taxes.

My mom's accountant sent in her income tax return, which included those withheld taxes as the payroll company said should be done. 

The IRS has not been able to connect the money they got from the payroll company to the tax return they got from the accountant. [As I learned from the guy I eventually talked to, the personal side of the IRS is separate and doesn't communicate well with the business side.]

My mother is getting letters saying that her personal returns owe X thousand dollars.
She's also getting letters saying that they have received X thousand dollars but there is no tax return.

The two parts of the IRS aren't talking to each other.

Despite the fact that

1.  The accountant has sent them letters documenting the connection between my mother's social security number and the Employer ID number and that the payments were made and the returns filed.
2.  I talked at length to an agent back in March or April and he clearly understood the issue and took extensive notes for the file.  He talked to my mom to get me power of attorney for the 2014 returns and told me what form to fill out for the 2015 return, which I did.

I sent the two new letters that were awaiting me at my mom's in LA last week to the accountant so he could respond to them.  But he also suggested I try to call them as well.  I had tried to call already, before talking to the accountant, but the recording I got then said they were too busy and to call again the next day.  It's more than the next day and the first number I called said to call later.  The next number (there's one number on the letter saying my mom owes X dollars and another number on the letter that says they have the money, but my mom needs to file a return) put me on hold for two hours before someone answered.  How many people can sit by the phone for two hours?  I at least could put it on speaker phone and do other work and my wife was around to take care of our grand daughter whom we're taking care of this week.

This agent was less than helpful or understanding.  She never even took my mom's name or social security number.  She just decided I needed to talk to the business side and said, "I'll transfer you."  Then I got told by a recording that the wait would be over 60 minutes.

[I've been writing this as this was unfolding, so I typed the next part 90 minutes later.]

But the man who eventually answered, about 90 minutes later, quickly grasped what I was saying and outlined how to fix it.  The tax deductions for the caregiver, despite what the payroll company said and despite what the accountant did, should not have been reported on my mom's personal tax return, but should have been file on a 941.  I wrote down what I understood and he said that was basically it.  He agreed it was unfortunate that it took so long for the IRS to answer the phone.  And it was too bad I couldn't have the accountant on the line too so he could answer the technical questions I didn't know and could ask things I didn't know to ask.  But he won't tie up his phone for two hours on hold.  He also agreed that the two sides of the IRS - business and personal - don't seem to talk to each other better.

So I have a tentative solution now which includes amending my mom's 2014 tax return - ugh.  
If we funded the IRS properly, it wouldn't take so long to answer the phone.  If they answered the phone, people wouldn't get so frustrated and could solve their problems before lots of penalties and interest fees pile up.  But this also make people angry at the IRS so they are amenable to the anti-government folks arguments, vote for simplistic anti-tax politicians, and make things even worse.  And the big polluters and tax dodgers get away with their shenanigans because the government doesn't have enough staff to handle their cases.  We see that with schools too - the campaigns to trash the public schools, cut their budgets.  This makes schools more crowded and parents more pissed off about schools.

On the positive side is that the man I talked to actually stayed in the office until 6pm his time on the Friday of a three day weekend to be sure he understood what I was explaining, to look up the returns and find that indeed the money was where I said, and to listen to me reread my notes.

Now I have to send my notes to the accountant who is going to say, I'm sure, we did some of the things already and that what he did was perfectly legit.   Grrrrrr.  We'll see.

[Reposted because of Feedburner issues.]

Oil Addiction Prevents Alaskan Politicians From Making Good Decisions

Image Screenshot from Video In 2010 Post

Most people don't change their habits unless they have to.

Alaska politicians (and the people who elect them) have been addicted to easy oil money for the past forty years.  The cozy relationship between some of our politicians (i.e.  ex-governor Parnell was a Conoco-Phillips lobbyist (literally, not just figuratively) and two sitting senators are also oil company employees and others get lots of support and advice from the industry) doesn't hurt either.

So our Republican dominated state government (for the last ten years or so) has spent that money like giddy lottery winners.  They didn't listen to warnings of eventual declines in oil revenues from ISER over the years.  It's true, though, that new technologies allowed for oil extraction longer than originally expected and increasing oil prices kept the revenues up even when production started dipping, letting politicians ignore the economists' warnings.

But the politicians in power positions made no serious plans to find alternative revenues or cut spending.  And because oil so dominated the economy, other traditional sources such as timber or tourism would never come close to what oil has brought in.  And as Republicans, they kept new taxes off the table.  And since none of them have the vision,  the guts, or the charisma to inspire the public to new thinking,  they've avoided the idea of tapping the Alaska Permanent Fund for what it was originally intended to do:  supplement the budget when the oil money runs out.  Nor have they been willing to broach reestablishing a state income tax.

And now the oil is hitting the fan.  The oil price decline plus Republican led tax giveaways to the oil companies have put our state budget into crisis.  Instead of planning for the day when oil revenues would no longer pay all the bills like rational, intelligent people do, they've continued to spend until their fingers come up empty when they stick their hands into the state coffers, at least the ones that don't have special locks on them like the Permanent Fund and budget reserve funds. 

OK, some will complain I'm being partisan here picking on Republicans and letting Democrats off the hook.  Democrats certainly have challenged the big tax breaks the Republican majority gave oil companies, but after redistricting, they no longer had the votes to block them.  And even the public was there, losing a ballot initiative to restore the tax by only 4% despite huge oil company spending on the election. And the Democrats have challenged big capital projects like the Susitna Dam and the Knik Arm bridge.  I don't know that Democrats have been particularly better about leading the way to use the Permanent Fund as a trust fund to help support our budget.

But the fact is that Republicans have been in power - both in the legislature and the governorship - and thus we got to our current dilemma on their watch.  So naming Republicans isn't partisanship, it's factual.

All these thoughts came pouring out of my head after reading an AP piece on the impacts of the low cost of energy  in today's ADN.  Oil and coal and natural gas company stock is down, down, down.  And Alaskan's have known for the last year or so that our stock is way down too.  But it didn't have to be if we had looked beyond the short term and prepared.  But we were drunk on oil money and we weren't forced to.


And just the other day we learned that Sen. Murkowski worked to get Alaska exempted from new EPA rules on energy companies that would require them to lower their carbon emissions. 

I get the short term impacts this will have on rural Alaska.  But the actions they would be forced to take would help wean them off the expensive fuels they've continually been using.  And there are Alaskan locations - like Kodiak and villages around the state - who are already breaking their addiction and finding alternative energy sources. Instead, most places, especially in the Capitol building in Juneau, have continued feeding their and our addiction. 

Some addicts just spiral down into self destruction.  Others break from their destructive ways and learn new, healthier habits.  It's what Alaskans need to do.  And we need politicians who have vision and can inspire Alaskans to break from the unsustainable easy way, to the harder but ultimately necessary path.

We are a state of welfare recipients, getting our state budget funded by oil taxes and the federal government, not to mention the actual individual cash Permanent Fund dividend payouts.  We need to think like the wealthy people we still are -  our Permanent Fund has $52 billion and the constitutional budget reserves has another $10 billion - and use the income of our wealth in a responsible way as others have proposed.  We need to supplement that with some sort of taxes - yes, pay our own way, not rely on others to subsidize our schools, state parks, roads, police, health care.  Let's start being healthy, responsible adults. 

Sunday Beach Bike Ride - Five Blog Posts In One: Heermann History, Chevron Prop Taxes, Hermosa Beach Oil, And More

B and I biked Saturday from the Marina del Rey along the beach path to the end near Palos Verdes.  What a wonderful ride.  Above are surfers from the Manhattan Beach pier.

I took this picture to show the surf board racks people have on their bikes.  When I was growing up here, the boards were much bigger and heavier and if people had bike racks, they were trailers behind the bike.  Another thing I noticed in this shot was how pale the surfers are.  Wearing wetsuits definitely blocks the sun.  These guys look like Alaskans under their wetsuits.

I liked the blue wave bike racks at the Manhattan Beach pier.  But when we got back from walking on the pier about ten minutes, a lot more bikes were parked.

Here's the pier itself.  There's a cafe and aquarium at the end.  The round house aquarium can't be very big, and even though the website calls it "Roundhouse Marine Studies Lab and Aquarium"  it seems more like a tourist attraction than a science center.  The website doesn't mention any research, but it does have a link for parties.

Further down was the Redondo Beach pier.  It's full of tacky looking tourist shops and restaurants.  I took the top picture on the way down.  On the way back it was obscured a bit by fog.  Strangely it was sunny the whole time, but if you looked ahead or back it was foggy.  I think there was just light fog all the way and sometimes it got a little thicker then dissipated.  It was probably in the high 60s. 


Based on the Seattle area's Audubon Birdweb  pictures and description, this is a Heermann's Gull.  I was eating a granola bar and it was clearly hoping I'd share.

The black feet and black tip of the orange beak give it away.  ABCBirds says:

"Close to 95% of the entire world’s population of Heermann’s Gull nests in a single location: Isla Rasa, in the Gulf of California, Mexico, which supports
300,000 breeding birds. The island is protected by the Government of Mexico as a seabird sanctuary. The other nesting locations are islands along the coast of western Mexico; there are no sites where the species has successfully bred within the U.S. The bird undertakes a reverse migration, beginning in May, when non-breeders appear off the California coast, later to be joined by breeders. It moves as far north as Vancouver Island, British Columbia, before all but a few individuals head back south during the fall and winter."

Adolphus L. Herman from here

I was curious about who Heermann was and finally found a photocopy of seven pages of Cassinia - Proceedings of the Delaware Valley Ornithological Club, 1907, by Witmer Stone.   Today it's posted on the Club's website, 106 years later.

He was born about 1818 in South Carolina, according to the text, and was trained as a medical doctor, but seems to have been more interested in ornithology.  He came to California in 1849.

"Upon the organization of the Pacific Railroad survey parties Dr. Heermann obtained the appointment of surgeon and naturalist to Lieut. Williamson's party, which was to explore southern California with the object of finding available passes through the mountains by which the routes along the 32d and 35th parallels might reach the coast."

The proceedings say the gull is named after him and so is a song sparrow (Melospiza melodia heermanni).  I found a Heermann's Kangaroo Rat while I was looking too that lives in California, but I couldn't document a connection to Heermann, but it's likely.  Do look at the proceedings of the Ornithological Club for the whole story on Heermann.  The author who tracked down the notes would have made a great blogger.  And his piece on Heermann has made it on line now.

And if you want to know even more, I found that Dr. Joel Weintraub

"will explore the life and accomplishments of 19th-century California naturalist Adolphus L. Heermann. You will learn about the impact Adolphus had on the natural history of California"

at Cal State University Fullerton, at Mackey Auditorium, on Feb. 24, 2014 from 10 am to 11:30 am.   I think calling him "California naturalist" is a bit of a stretch.  He did important work in California, but from the Delaware Club's publication, it seems he only spent a relatively short part of his life in California.

Moving along on our bike ride - not necessarily in chronological order - we also rode by the Chevron refinery in El Segundo. [Note:  as you go through the following on Chevron's property taxes, you'll see I missed a key point, then found it.  I leave it in so you can see the process of my thinking and writing on this, not just the cleaned up (and possible still erroneous) final version.]

I wouldn't have known it was Chevron - there was nothing that said it was - except that B pointed it out to me.  He said the massive wall with spikes on top was new.

From Chevron's El Segundo website:

"We've been a part of this community since 1911 when the main product produced was kerosene for lamps. In fact, the City of El Segundo (Spanish for "the Second") was named after the refinery, then Standard Oil's second in California. Today, the El Segundo Refinery provides jobs for more than 1,100 Chevron employees and 500 contractors, covers approximately 1,000 acres, has more than 1,100 miles of pipelines, and is capable of refining 290 thousand barrels of crude oil per day. Transportation fuels -- gasoline, jet and diesel -- are the primary products refined from the crude oil. We are responsible caretakers of our land and the environment, we operate our own electricity, steam, and water treatment facilities, and even maintain one of the only two remaining preserves in the world for the endangered  El Segundo Blue Butterfly. "

Previously it only had a chain link fence, he said.  And eventually the medieval fortress wall ended and the old fence began.




From KOLO 8 TV, April 18, 2013:

 SAN FRANCISCO (AP) - Tests of pipe samples from Chevron Corp.'s refinery in El Segundo found corrosion to an extent similar to the pipe that failed and caused a large fire at the company's Richmond facility.

The federal Chemical Safety Board and California Division of Occupational Safety and Health issued a report Thursday that found up to 60-percent wall loss in a pipe at Chevron's El Segundo refinery that processes the same type of crude.

Chevron voluntarily inspected pipes at its El Segundo crude unit after the Aug. 6 fire in Richmond caused by a corroded old pipe.

There's also a lawsuit over Chevron's tax deal with the city of El Segundo.  One can imagine the kind of influence Chevron has on this town.  Here's a snippet from a Daily Breeze article in October  14, 2012:

A county civil grand jury is looking into El Segundo's decision to negotiate tax deals with the Chevron oil refinery, including a 1994 pact over utility-users' taxes that has come under scrutiny in recent months.

Members of the grand jury last month interviewed former City Manager Doug Willmore, who was fired in February and alleges his ouster came in retaliation for proposing that Chevron pay higher taxes. Willmore said he met for more than two hours with five members of the volunteer grand jury.

A followup article on April 23, 2013 article says they negotiated a deal:

"El Segundo city leaders this week finalized a deal with the Chevron oil refinery that will yield an estimated $128 million in net new revenues over the next 15 years, bringing negotiations over the company's tax payments to a close.

The City Council on Tuesday passed the so-called tax resolution agreement on a 4-1 vote, with little discussion. Councilman Dave Atkinson was opposed. .  ."

Look at the dates.  This deal was reported April 23, 2013 as having happened "this week."  Above, the KOLO report on the pipeline corrosion was on April 18, 2013, just a few days before.  But KOLO is in Reno.  I can't find any coverage in the Daily Breeze on that until July 15, 2013.  (That doesn't mean it wasn't reported, only that I can't find it.  But I did several google searches and searched the Daily Breeze website.)  Just find it curious they didn't report it when many other outlets far from them did.  And the July 15 article was from the Contra Costa newspaper which is in the San Francisco Bay area.


And $128 million over a 15 year period?   That comes to a little less than $1.9 million a year for 1000 acres (according to Chevron's website, cited above) of prime Southern California waterfront property.  When you get to Manhattan Beach, Hermosa Beach, and Redondo Beach just past the refinery, the beachfront is lined with million dollar houses.

From eConsultant, we get this:

Place: Hermosa Beach, CA
Population: 129,251
Median Home Price: $1,200,000
Average Property Taxes: $5,884 (2006)

Assuming four properties per acre - just a for a rough estimate - that would be over $20,000 of taxes per acre.  Chevron has 1000 acres.  That would come to $20,000,000 in property taxes per year.  Times 15 years, it would $300,000,000.  And they worked out a deal for $28,000,000 over 15 years.

One could argue that the Chevron land wouldn't be worth that much.  Who would want to build on top of a former oil refinery?  But that only tells us how much Chevron has cost this area.  What would it cost to clean up the land?

Maybe there's something I'm missing, but it sounds like Chevron's got a great deal going.   This is just a quick and dirty calculation, but if I lived in El Segundo, I'd want to check this out further.

As I looked more carefully, there was something I was missing - the $128 million is "net new revenues,"  but the article isn't totally clear on how much this will be.  There's this sentence later on in the piece:

"Chevron's first-year base payment totals $11.1 million - a figure that reflects its 2012 taxes with more than $5 million in added funding. "

Does that mean it's $11 million including the added $5 million?  That's still lower than the $20 million a year I estimated - but my numbers are just back of the envelope calculations and I'm sure people in El Segundo could explain the difference.  

And in Hermosa Beach, there were lots of those million dollar homes with these banners on them. 

Here's a snipped from the StopHermosaBeachOil website:

A few facts: The proposed drill site is located four blocks from the beach on Valley Drive, surrounded by family homes, small businesses, beautiful South Park and our iconic Green Belt. From this site, the oil company seeks to drill, produce, and process up to 8,000 barrels of oil and 2.5 million cubic feet of natural gas per day. The company plans to directionally drill in all directions under homes and below the sea floor to the one-mile boundary of tideland that the City holds in trust for the benefit of the People of California. The oil company’s proposition is, essentially, to plant an “offshore” oil rig four blocks inland from the beach.

Our website provides well-researched information, citing source documents, which we view as fundamental to helping our community reach a well-informed and educated decision about the prospect of drilling in Hermosa Beach.

It is our belief that the City’s ban on oil drilling, which voters studied and wisely adopted in 1932, 1958, and once again in 1995, and which the California Court of Appeals unanimously upheld in 2001, remains our best assurance to secure the welfare of our community and avoid the grave risks inherent in any oil drilling operation.

The company that wants to drill the oil is privately owned  E&B Natural Resources and here's what Business Week says about their President. 

Mr. Steve Layton has been the President at E&B Natural Resources Management Corporation since 2000. Mr. Layton joined E & B Natural Resource Management Corporation in 1983. In 1983, he Layton co-founded Alma Energy and Equinox Oil. He served as President of Alma and Equinox from 1997 to 2000. In November 2000, he purchased the Alma and Equinox assets out of bankruptcy and formed E & B Natural Resource Management Corporation. Mr. Layton has been active in the Independent Petroleum Association of America, Louisiana Independent Oil and Gas Association, and the California Independent Producers Association. He served as President of the National Stripper Well Association and a member of the National Petroleum Council. He has been appointed to the Interstate Oil and Gas Compact Commission by Texas Governors Richards, Bush and Perry. Mr. Layton holds BS and MBA from University Of Tulsa.

And as we were getting back to the Marina where B parked the car - it was about a 25 mile round trip bike ride and B didn't want to push his back more than that - we got to the rise where people were taking beginning hang gliding classes.  Fortunately - given how long this post is already - I thought I pushed the button to video tape the flight, but it didn't go on until I 'stopped' the video which got a picture of dirt before I shut off the camera.

 

 If you click on the picture, you can read the poster on the hang gliding classes.  And, if the lessons don't go well, at the end of the trail, where we saw the Heermann's gull, you can get a beach wheel chair.

This post got way out of hand.  But I think it also is revealing about how much we don't see when we wander around places.  Just trying to get a little background about the things we saw led me to all sorts of (I would say interesting, but you can fill in your own adjectives) things.  It's a reminder to me that everything is more than it seems on the surface.

Caregiver Payroll Taxes - Issues For Adult Children With Aging Parents

When we got a caregiver for my mom, we talked to her accountant about what we'd have to do.  He offered to take care of the quarterly and year end reports.  We just had to send in what we paid for the quarter.  When he got our first quarterly report information, he contacted me to say that we had paid our caregiver gross and not net pay.  I guess that is something obvious to people regularly involved in this, but he hadn't explained that to me and I certainly wouldn't have known how to calculate the various taxes that needed to be deducted and he hadn't directed me to any way to do that.

If you tell someone to boil an egg, you probably assume they know they need a pot, some water, some heat, etc.  I guess the accountant thought he was telling me to boil an egg.

In any case, he did then suggest a company and an online payroll tax calculator.  I tried the online calculator, but it didn't have options I needed.  Like a daily, rather than an hourly wage rate.  I talked to a company representative, but they were really set up for doing a lot more than one or two employees and were much too expensive and suggested we look for a company that specializes in stuff more like we needed.

The accountant sent me another name.  I talked to him yesterday and he came by today.  I still need to get my mom's tax id number.  The accountant applied for it but he didn't get it in his office and thinks maybe it got sent to my mom.  But my mom and I have gone through most of the paper work that came to the house in the mail in the last month, and I haven't seen it.

I'm sure this isn't too difficult and if I could find a program for this I could do it myself, but being split between LA and Anchorage and my mom wanting some control over this, I just gave in and said ok, we'll do this.  Perhaps over time I'll be able to take it over myself, but for now I've had too many other new things to handle and having someone who will do it for me feels like a great relief.

I mention all this because when I've looked on websites for handling issues relating to taking care of seniors, I haven't found anything that got into the details of things like payroll taxes for caregivers.  I'm playing with the idea of another blog that goes into the experiences I'm having with my mom.  My family has said they don't want google to find out info about them on this blog, so I'm generally circumspect with names and photos and details about what they are doing.  And I don't really want to talk about my mom quite as publicly as this blog.  Another blog that's anonymous would work better. And the blog would just be dedicated to the aging and caring issues.

Before I do that though, I need to do more internet searching to see what all is already out there that I've missed. I need to use different search terms too.

Before posting this today, for example, I searched more specifically for "payroll taxes for caregiver for elderly"  and found information from Caregiver I needed four months ago, when I didn't know that I needed it or what I should be looking for.

"The Caregiver as Employer

By Jude Roberts, Staff Writer

(Page 1 of 2)

When hiring a professional in-home caregiver, there are a couple of ways in which they can be selected, either from an agency which specializes in screening and placing professional caregivers, or by doing the research, interviewing, screening, and hiring all on your own. Keep in mind that if you hire a professional caregiver on your own, you will be entirely responsible for paying certain types of taxes that may be new to you, as well as having to know which taxes your new employee should be paying as well. Although you’ve hired a professional caregiver, who is much more than just a “domestic housekeeper”, the IRS will recognize you as the employer of a domestic.

If you pay your professional caregiver more than $1400 in cash wages per calendar year (note: the IRS may change this amount annually), you will be expected to file payroll taxes on such things as: Social Security & Medicare taxes (7.65% of gross wages); Federal Unemployment Tax (FUTA) (0.8% of gross wages or less in most circumstances); state unemployment and disability insurance taxes levied on the employer; and advance payment of the earned income credit for eligible employees."

This was helpful in explaining to the caregiver why we had to do it this way (as advised by the accountant) instead of paying her as an independent contractor.

But I haven't found any really good general websites on aging parents that give good, comprehensive advice on things like this. That alerted me to issues I hadn't thought about but needed.  I'm sure they must be out there. 


For an example of how hit and miss this is, here are the top ten hits I got googling "elderly parents adult children" today:   [All these are brief excerpts, click links to get more.]

1.  Aging Parent offers a way for children caring for their parents to connect.  It offered

The Caregivers' Survival Guide:
Family Caring for Family

FREE when you sign-up for the Caregivers' Newsletter.

 It has a lot of options for different kinds of care for a parent - you can fill in your zip code and check off what you need and they come up with a list of providers in your area.  But I can't find the taxes information.  

2.  Time magazine story:

Caring for Aging Parents: Should There Be a Law?

By Francine Russo July 22, 2013

China’s government thinks so, and as the population of elderly in nearly every society starts to swell, such eldercare laws are becoming more common. But are they effective?

2.  CBS Philly article:

"Survey Shows Adult Children None Too Anxious To Take Care Of Aging Parents 

June 4, 2013 11:49 AM

By Chelsea Karnash
PHILADELPHIA (CBS) – Think your kids will take care of you in your Golden Years? They might, but they won’t be happy about it. . . "

4.  Elder Law Answers

"Requiring Adult Children to Pay for Aging Parents

Did you know you could be responsible for your parents' unpaid bills? Twenty-nine states currently have laws making adult children responsible for their parents if their parents can't afford to take care of themselves. While these laws are rarely enforced, there has been speculation that states may begin dusting them off as a way to save on Medicaid expenses."

5.   Prairie River Home Care

Caregivers in St. Cloud, MN: Adult Children as Caregivers for Aging Parents

July 24, 2013 by Lori Seemann · Leave a Comment

Of all individuals providing care to older adults, 42% of them are adult children. Most child caregivers are the daughters or daughters-in-law of the person receiving care. Throughout the passage of a person’s life, the care, comfort and assistance received are often given by one generation to other family members in a different generation. For example young children are cared for by parents and grandparents. When these children grow into middle adulthood, they may be taking care of their elderly parents.

6.  New York Daily News

Health

China to require children to visit aging parents as elderly care poses problem for nation 

Rates of elderly will skyrocket, make up 35% of population by 2053. New law would require children to visit and care for their aging parents.

7.  The Family Firm offers:

Financial Tips for Adult Children of Elderly Parents

As our parents get older, family roles can shift in big ways.
Older parents can suddenly seem distressed by financial management, and taking it on can be overwhelming for adult children. Siblings need to cooperate, parents need to be willing to relinquish control, and everyone needs to communicate clearly — none of this is easy. . .

8.  A New York Times story:

"Adult Children, Aging Parents and the Law

By JANE GROSS

Are children legally responsible for their parents’ care? (Susan Farley for The New York Times)

At the end of my mother’s life, for six months, a year at most, Medicaid paid for her care in a nursing home. She was broke by then, after living on a pittance since she was widowed at 58, using the proceeds from her house to pay for six years of assisted living and part of her nursing home stay and never seeing a penny from a long-term care insurance policy that cost a bundle but covered none of what she needed. She had given my brother and me no up-front money to hasten her eligibility for Medicaid and died with $26 to her name and nothing to leave to her children. The good news was we didn’t even have to put her will in probate."

9.   The International Business Times also has a story about the Chinese law requiring kids to care for their elderly parents.


10.  And finally, the University of Pennsylvania has an article

5-13-2013

Bridging the Gap Between Adult Children and Their Aging Parents: Developing and Assessing a Life Review Education Program