Wednesday, October 18, 2017

BadMedia: Yes, the Texas Tax System is broken.

But the solution is not to replace it with a punitive tax code.


I agree with the Chron's Austin-based business columnist in one area:  Taxation in the State of Texas is one of the most poorly designed systems I've come across.

Where we disagree is on the fix.

Mr. Tomlinson (From the linked article above):

Texas' tax system is as broken as the federal system and desperately needs an overhaul. We need the Legislature to stop punishing business and investment, and instead tax conspicuous consumption, bad behavior and extreme income.

OK then, what is "bad behavior"? And who defines that?  What is "conspicuous consumption" and who defines that?  And what is "extreme income" and who gets the power of defining that?

My guess is that Tomlinson believes that he is the ideal candidate to become the "Texas Tax Czar" placing punitive taxes on Wal-Mart purchases, the energy industry and anyone making more than he. Because, that is what he's calling for, selectively taxing things that he doesn't like while giving those things he does a pass.

That's not a fair and effective tax system, that's a means of punishing those with differing political views than you.

Ironically, he admits, directly above his prescription for Texas, that his system wouldn't work.

A smaller tax on more people and businesses is also better than a high tax on only a few.

Yet his prescription for Texas is more of the same of what it is currently doing, only at higher rates and more tightly targeted against those whom he feels are bad actors.  This is demagoguery at its highest, not a serious attempt to reform Texas taxes.

The best, most equitable tax code is one that is broad, flat, easy to adhere to and free of special interest exemptions. As Mr. Tomlinson points out the current Texas tax code is anything but that. The problem is, his "fix" for the situation is even worse.

He focuses on the so-called Margins Tax, which is awful, but let me give you an under-the-radar way Texas handles tax policy poorly....oil and gas severance taxes.

On it's surface the tax is fairly straight-forward.  Unlike some other commodity taxes it's a value based tax on the "Net Taxable Value" derived from the severance of oil and gas from the soil. In short, it's the gross proceeds less allowed expenses times 7.5%, for oil and produced condensate the rate is 4.6%.  Easy enough.

But then, you have exemptions.  There's the high cost gas exemption (Type 05) which allows for a reduced rate of taxation for up to 10 years or until 50% of the drilling costs are recaptured, whichever comes first. In order to qualify for this there is a lengthy, an unwieldy, application process which involves first dealing with the RRC, and then turning around and repeating the process with the Texas Comptroller.  Then you assigned a reduced rate, and can take that new rate until you meet the deadline or threshold whichever comes first.

Of course, by the time the State gets around to approving the rate reduction over a year can go by before approval. This means that you have to go back and retrospectively adjust your accounting, pay royalty owners late for their share of the increased rates they pay, and ask the Texas Comptroller's office for a refund, which is a time-consuming and expensive process, not to mention the time and expense wasted on the re-work.

Think that's bad? There's also the low-producing well exemption (Type 11) which is triggered by both price and volume. Not only that, but the State index price that has to be rolled back to 2005 equivalents, that's right, the Lege forgot to allow for inflation.  To add to that, a producer has to calculate a 3-month rolling average of production to ensure the tax criteria is met. If a producer makes an error, or uses a different production factor than the State, then the State will revoke your lower rate and charge interest on the unpaid tax.

For oil there's the Enhanced Oil Recover exemption (Type 05, for oil) which provides a rate decrease of 50% (from 4.6% to 2.3%) on all incremental barrels of production realized from secondary or tertiary recovery. In order to qualify for this then you have to initiate a project, file the appropriate paperwork (with fee) to the RRC, and then wait a year to determine if the project was successful or no.  Once it is you have to re-apply with the results to the RRC, and then take their approval over to the Comptroller's office to have them approve the credit, and tell you how long you have to retrospectively fix you accounting on the back periods before you lose the credit. All of the time you are waiting for this money has come into the State on which the are earning interest. Meanwhile, the private royalty owners (who share in the tax expense) are losing out on revenue because a company is charging them full-rate tax (by law) which reduces their income.

All of that for reporting and paying taxes in Texas and I haven't even discussed the Cost to Market deduction yet. A better way to administrate this would be to eliminate all of the exemptions, and lower the tax rates.  A flat oil tax of 2% of Net Taxable Value and a gas tax of 4% of Net Taxable value (calculated as they are currently) would be much easier (and cheaper) for companies to administer and would benefit the State as well.

You could extrapolate that to the Federal Income Tax, most business taxes and a host of other taxes as well. Any tax really where special-interest driven loopholes exist.

Unfortunately, this will never happen because both political parties and their courtiers LIKE the system we have. Not only does it wet the beaks of their patrons, but it proffers them the levers of power to punish their political opposites as well.  It's always been this way, it's just rare when one of the courtiers is dense enough to put the fact in print.

On that note: Thank you Mr. Tomlinson.  Thank you.
 

Thursday, October 12, 2017

BadHumanity: When we Stop Talking

Recently, in Houston, a Republican State Representative was invited to speak on the campus of Texas Southern University. Things did not go well. Missing from the KHOU story any mention of State Representative Borris Miles he of the gun-toting, shooting people persuasion was also there to prevent Representative Cain from making his speech.  Unsurprisingly, the all but worthless Houston Chronicle Editorial Board scrubbed Miles from their missive.  Of course, the useful idiots at the Ed Board sided with "free speech" because Cain is a politician, had it been a normal citizen their proclivities on the matter are not as cut and dried.

"We have always been at war with Eastasia"

The bigger problem here, even bigger than the Texas Leadership Vacuum that is ever-expanding, is that there now exists an active group of civic leaders who are openly trying to suppress speech from the other side no matter the source, or validity of their arguments against.  This is not just a Left-wing phenomenon. President Trump has now decided to attack the media. If you support this at any level I would invite you to check your "Constitutional Conservative" card in at the front desk please.

"Alt-Right"
"Fascism"
"Hate"
"Phobic"
"Liberalism is a mental disease"

All of these are charges made by the sheep to try and silence, or discredit, the ideas of the other side. They do not help forward the conversation.  Yet every time a politicians says the other side's actions are "shocking" or the "worst they've ever seen" (my favorite) they drive the sheep that follow them a little more crazy and into the path of susceptibility to authoritarianism.

Bread and Circuses, peasants and sheep, to the ruling class the lumpen proletariat are feed stock used to feed the machine of politics. This is not hard because a vast, vast majority of Americans want to be led. People don't want to think, they want to be ANGRY (Dammit). And the best way to be ANGRY (Dammit) is to join a tribe.

Because in tribalism there is purity, and a certain basic instinct of thought. Your tribe helps you to dislike the other side and gives you that smug sense of fulfillment when the other tribe effs it up. You see it all the time, especially on the fetid cesspool of Twitter and other social media.  It comes as predictable as the sunrise.

1. Supposed "outrage" of the moment.
2. Spleen-venting by one tribe against the other.
3. A moment of post-orgasmic joy as the endorphins release
4. The smug smile and slow exhalation of someone who has just "destroyed" the other side.

These victories are an illusion hover because a.) no one has actually "destroyed" anything. A "sick burn" only resonates with the tribe, it has nothing to do with actually....winning the argument with logic and b.), your "sick burn" is another person's show of immaturity.  The other tribe doesn't recognize that anything was won, or that any point has been made.  In fact, regardless of which side is "right" or "burned" they are correct.

We cannot "win" arguments any longer because we have entirely lost the ability to both discuss our differences and to process information correctly. The United States has become two giant pools of cognitive dissonance running back and forth with their hair on fire accusing (accurately) the other pool to be guilty of hypocrisy.

And, this should not surprise you, this is exactly the way that the ruling class and their courtiers want it to be. The politicians use this to make breathless appeals for campaign donations and votes, the media uses it for click-bait, the Universities use it to get their names in the papers and secure funding and the entertaining class uses it to curry favor and convince themselves that their careers actually mean something.  Access to power is a bigger drug than is the truth in almost every case.

When will things get better you ask?

Here's the rub, until we stop listening to the ruling class and their courtiers......they won't.

Fixing the current political, social and economic climate is not up to the politicians, it's not up to the media, it's not up to the actors, producers and associated slime of Hollywood and it's not going to be solved by athletes taking a knee or no. It's sure as hell not going to be fixed by ESPN.

The fix has to come from you, and me, by refusing to get caught up in these games and not rewarding the people who do with our time, energy and (most importantly) money.

Give your money to charity, and I don't mean "charity" as defined by the Democratic National Committee I mean real charities that help people, not ones that only exist to help you.

When you think about it, the DNC's actions in this case are the final symptom that illustrates just how sick the patient really is.  The prognosis is not good, not good at all.

Thursday, October 05, 2017

ShutterTheEdBoard: Without oil....

The increasingly irrelevant Houston Chronicle Editorial Board has pronounced itself Pope in the issue of environmental sins.

Sins of Oil will be Shouted from the Rooftops. HoustonChronicle ($$$)

They go on to list all of the 'sins' of oil.

The Catholic Church suddenly doesn't like it and......

And nothing.  Because without the oil and gas industry you don't have the following:

Computers and the Internet
Electric Cars
Green Energy transmission systems
Mobile Phones
Packaging.
Houses
Busses (even ones that run on CNG)
Most medical devices
Industry
Heating fuel for the NorthEast

You name it, and the oil and gas industry probably has a hand in it. Even newspapers such as the Houston Chronicle who would be unable to print a product sans oil and gas.

Now, I'm OK if you don't necessarily approve of the industry, you're entitled to. But to cast such a wide net over all of us and term us "sinners" because we're providing a product that fuels the world (and will continue to, until a replacement for plastics and international shipping and other transportation is found) is not only irresponsible, but dishonest and clumsy as well. It's also inflammatory and (to be honest) vile to term your home cities most important, largest industry as "vile, sinful" or some other nonsense.

It's a good thing the Chronicle Editorial Board has been shoved behind the Chronicle' pay-wall.  There are a lot of good reporters at that publication who shouldn't have their good-names sullied by the increasingly irrelevant, predominantly Caucasian, wealthy and progressive Editorial board who writes decrees for Houston's most diverse city and who, increasingly, feels themselves to be God.

It's high-time for newspapers to rid themselves of the unsigned editorial board, and to redeploy the resources to covering actual news.  In fact, I would argue that most staff-opinion writers are crap, offering up partisan fodder and child-like outbursts offering no real, workable solutions other than "see things my way".

Not that there's no place for that writing, but it would be better served in an opinion outlet such as National Review or Slate not news outlets per se, but a place where people can go and be reaffirmed that their tribe is "on the right side", God-like even. (Full Disclosure: I'm a fan of the writing of Kevin D. Williamson of National Review.)

Houston residents, the few who can read this stuff, would do well to ask the Houston Chronicle why they think it's OK that the largest employer be shut down and the tax base of the city be decimated? Do they really hate you or are they just very angry that you won't STFU and follow their lead? (And, the leads of the politicians they curry favor to.)

What this comes down to is one irrelevant agency calling for the shut-down of a relevant one, and causing great pain and hardship for its customers at the same time. The customers should demand the same of the ed board.

Guess which one will be missed? (Hint, it's not the anonymous scribblers)

Las Vegas Massacre: In Defense of Video Poker

I am a video poker player.

So, apparently, was Stephen Paddock the man who you now know, unless you've been living under a rock, carried-out the worst mass-shooting event in modern American history last Sunday evening.  His choice of gaming, and lifestyle, of course has the media in a tizzy....

Las Vegas Gunman Chased Las Vegas' Payouts and Perks. New York Times

Las Vegas Shooter Lived High-Stakes Lifestyle. Chicago Tribune

Vegas Shooter's Gambling Draws New Attention to Video Poker. Yahoo! News.

Paddock's Game of Choice Allowed Him to Blend In. Las Vegas Review-Journal


It's not surprising that a person good at maths chose video poker as his game of choice. The 'house edge' or expected value of the game is among the best in the casino for the player, IF proper strategy is used. It's also a game, like blackjack, where correct decisions by the player can reduce the house edge even further.

At Paddock's playing level the expected return was probably somewhere around 99.20%.  That means for every $100 you play you can expect, over time, to lose $.80.  Factor in comps for high-end players (free rooms, free meals, shows, alcohol etc.) and you could easily realize a return of greater than 100% over time.

And the goal of any casino patron is to beat the casino right?

We have a propensity in this country to try and find evil in everything an evil person does. And that's what I think is happening here with video poker.  As we struggle to rationalize how a person could be so callous as to kill 58 people and injure 489, we start to look at the things they did in life and make them more sinister than they really are in an attempt to assuage society's blame for his sins.

We tend to find "things" that might have sparked him, and there are a ton of low-rent, headline-chasing social scientists, and so-called "experts" that will tell us whatever we want to know about these "things" to make us feel better.

"Video Poker is the crack-cocaine of gambling!" (From the New York Times Piece)

Except that it's not.  Instead, video poker is a happy-medium between playing slots, and playing on the tables.

A lot of people don't like to play table games for one reason or another. Maybe they don't like the crowds or are uncomfortable having others judge their play. If you've ever sat at "third base" (the last seat next to the dealer's right hand) at a blackjack table and made the "wrong play" and been hollered at for it you might understand why, then you could see why video poker, a game where strategy still counts but is more solitary, has an appeal.

But the main appeal, and the reason for it's popularity, is the relatively high expected value from the game and the very real chance at making some real money on an smallish sized bet.  For example, I am not a high-roller, gambling is entertainment for me but, I frequently win $500 on a $1.25 bet playing at the 25-cent level.  I've won $1683 on a Royal Flush playing the same. My biggest slot win is $2080 on a $5 bet.  Which game do you think has the better expected value?

As a regular Vegas visitor I was distraught when I first heard the news, and was even more sad when the scope of the event became fully known.  Now it's coming out that this evil man was an accountant, a frequent Vegas visitor and a video poker player, just like me.

This makes it difficult because I cannot envision a situation where playing video poker, or anything in life for that matter, would make me act in such a way. Which is kind of my point.

Stephen Paddock did what he did not because he played video poker or because he was chasing the high-end Vegas lifestyle. He did what he did because he was an evil prick.  Full stop.

Video poker had nothing to do with it.  Ask the Millions of people who do "fly into Vegas to play it" despite what the so-called "experts" tell you.  It's a great, fun game and a good way to control your losses if played correctly, much less volatile than slots.  Yes, it's less social than a table game, but so are slots.

Neither should be demonized in this.

Wednesday, October 04, 2017

Gun Control: Which laws exactly?

We have now reached the point where the political outrage machine gets cranked up to eleven and spleen-venting takes the place of grief and shock.  Dutifully, QuestLove tweeted out every Republican Representative and Senator who expressed condolence to the Vegas victims replete with the amount of money the NRA donated to their campaigns. (Strangely, he did not feel the need to single out Democrats thusly).  Jimmy Kimmel came on your TV, spooled up some tears, and emotionally emoted that Something! must be done.

But what exactly?

The early candidate is to outlaw "silencers" which is more of an admission that one doesn't understand guns rather than a call to do something about them. "Silencers" are actually "flash suppressors" and, unlike you see in the movies, the guns still make one heck of a noise when fired.

The second thing you hear is to "close the gun show loophole".  OK, but by all accounts Stephen Paddock purchased his firearms either from a gun store, and completed all of the requisite background checks, or we don't know where he obtained them yet. So it's not clear that that would have had any impact at all.

Limiting the amount of guns is my favorite. Yes, the man appears to have owned several guns but it's unclear that he would have been less successful with five guns than say the 23 that he had. Limiting ammunition is another bad idea, both would only encourage an untraceable black market which would result in us having no idea where the guns or bullets really are.

Finally, and my favorite, is the idea that gun owners should be forced to "voluntarily give up their guns". Nevermind that this proposal is an oxymoron, it's also impractical and will lead to only the law-abiding citizens doing the same. What this means is that only criminals will own guns, and anyone who continues to own a gun will become a criminal. It's amazing how quick our tribes are to try and criminalize behavior they don't like, while simultaneously trying to decriminalize what they enjoy.

While I'm no fan of "conceal and open carry" laws, in most cases having a gun is not going to prevent any crime, none of us are Jason Bourne after all, I don't think their repeal would do much, very few crimes are committed by lawful gun-carriers after all.

I also don't think the answer lies in arresting and incarcerating people who buy guns that are really meant to go to their criminal husbands, boyfriends, etc. Which is nothing more than a way for the Right, this time, to make 'more' illegal things, and people, they don't like.

I might get on board with outlawing bump-stocks, for which I can see no practical application outside of making the gun a more-effective killing machine, and I am on-board with closing the so-called gun-show loophole. Not to prevent criminals from receiving guns but to ensure that everyone who purchases a firearm through legal channels is legally entitled to do so.

The editors of National Review yesterday had a point when they wrote: "not every crime demands a new law" but that doesn't mean that we shouldn't look at ways to prevent them going forward. Not is it advisable to strip rights away from otherwise law-abiding citizens in a vain effort to punish the law-breakers. Unfortunately that is an action that our elected rulers always seem to take.

It is understandable that people are distraught over Sunday night's shootings, that they are angry and looking to lash out. What's not defensible is the belief that the only sane solution to the problem is revoking a key portion of the bill of rights. Especially when you consider the same people that want to repeal number 2 are knee-deep in efforts to kick the shit out of the other nine as well.

Rule of law, as messy as it may be, is vital to the health of a country.  Once that goes so do the last tools to hold back tyranny. Which, ironically, is the reason the 2nd amendment exists in the first place.

Tuesday, October 03, 2017

Las Vegas Shooting: The Government We Deserve

No sooner had the bullets stopped flying in Las Vegas than certain politicians and media outlets (whom I will not dignify) started firing up the political machine. It mostly came in the form of tweets, calls for the political opposition to drop their deep-held beliefs and side with them as the only reasonable course of action.  Of course, the demonization of the NRA began almost immediately as well, and while I'm not a member of the NRA, nor do I agree with some of their resistance to certain issues, I do not think they are the PR arm of a gun-toting political movement hell-bent on allowing people to shoot one another.

They are a political group, similar in nature to the Sierra Club, or any of the single-issue political groups on the right or left, but they are demonized because they a) mostly donate to Republicans and b) have been very successful in their efforts to promote legislation.

One area in the on-going game of political PR where the Democrats have most certainly won is in casting the opponents funding groups as somehow evil or a malignant force for society.  Oil Companies? Polluting the world, the NRA? Actively trying to kill you. Drug companies? Trying to make big bucks on the backs of the dying.  It's not an accident, it's a political plan by the left that they are winning in the same way they have won the culture wars.  In short: The GOP has not become the hot-mess that they are wholly because they have bad ideas, in large part they struggle because their leadership is shite and their messaging is even worse.

It has now gotten so bad that even expressing sorrow and wishing good thoughts to victims of tragedy is seen as a negative event by the left's useful idiots. While the right makes up fake-news about Islamist terrorists where none exist, or continually tries to find a boogeyman for their adherents to latch on to.

What dies in all of this is reason, and reasonable arguments. For all of the bemoaning of the depths to which our politics has fallen both sides firmly believe that the root-cause of this is the actions of the other 'side' exclusively. This is because we've elected a group of carnival barkers to rule us, with no thought given to their intelligence or ability to actually govern.  I've said this many times before and I'll say it again.

The problems in America are not caused by Trump, or by Obama or by the media, or anyone other than US.  We have allowed things to devolve this far because WE abdicated our position of power in the Republic and handed it over lock, stock and barrel to a group of low-functioning idiots with a penchant for strongman style histrionics and rhetorical flair.

In a sane world, reasonable people could disagree on the merits or extent that gun control is needed. However, no reasonable person should disagree that every legal option should be investigated when it comes to preventing mass shootings.

Reasonable people can disagree on whether or not healthcare is a "right" or a "privilege" but should be able to agree that what we currently have is irreparably broken and the entire system needs an overhaul. Reasonable people can also disagree on what exactly the overhaul should be.

Reasonable people can disagree on taxation and government revenue, on where the money is going, but should be able to agree that the current tax code is a partisan, rent-seeking mess filled with too many rules and give-aways to political patrons.

But, and this is a big, big but, we no longer operate as reasonable people in our politics, either in the murky, stupid world of social media or in the increasingly page-click driven world of actual media.

I have made no secret of my disliking of the Republican party. The GOP is a dysfunctional, anti-intellectual mess right now. And while I dabbled with independence before I believe this time it will stick because where before I still found GOP politicians with ideas, I currently find many of the ideas from both parties to be lacking in both reason and logic. I can never be a Democrat because of their authoritarianism and, frankly, pretty scary ideas about how the country should be ran, but I can never be a Republican either because of the same.

It is possible, albeit unlikely, that the current Supreme Court case on gerrymandering could help alleviate some of this by removing the incumbent protection system but I doubt it. I doubt it because we've now all firmly entrenched ourselves within our tribes and our only goal is to "sick-burn" the other tribe.  We don't want to govern, we have a NEED to win. And not just that, to humiliate the other side in large part to feel like we're something, instead of just floating along in life, accomplishing nothing and generally being......a loser.

To be honest, I'm not sure of the fix, if any exists.

And that might be the most depressing bit of all. That this cannot be fixed because most Americans, despite protestations to the contrary, don't WANT it to be.  We NEED to hate the other side because it makes us feel superior, we need to gloat, to assure ourselves through smugness that we are, in fact, the superior people. We NEED to laugh at the stupidity of our political opposites because it helps us cover up our own.

You can't fix stupid, increasingly, it seems that we don't want to.

Monday, October 02, 2017

Las Vegas: Give as you are able.

Last night at around 10PM Vegas time a very deranged man by the name of Stephen Paddock broke his hotel room window on the 32nd floor of the Mandalay Bay hotel and casino and proceeded to fire hundreds of round of bullets into approximately 20,000 people who were attending an outdoor country music festival.

The horrific result was the deadliest mass shooting in modern US History with a (current) count of 58 dead and 400+ wounded. It is a tragedy that knocked a hole into the collective psyche of a city that I love and, more importantly, has permanently damaged the lives of thousands due to loss of a loved one or injury.

There will come a time to discuss next steps but, for now, I would encourage you to either donate blood (if you're able) or make a donation if you can.


Until then, this blog offers up thought and prayers to everyone who is suffering from this.