Chicago Sales Tax Hike Proposed

It is sad when two of my more depressing prophecy-type posts intersect…

Cook County is the vast county within which the city of Chicago resides, along with a large number of affluent suburbs. Cook County has a population of over 5 million and is the 2nd largest county in terms of population in the United States.

In this post from March of 2007 I discussed how a succession movement could be in the future of Cook County. Specifically, I noted how the huge expenses of maintaining hospitals was burdening the county and killing their ability to live within a balanced budget.

In this post from December 2006 I went through sales taxes, which are among the most regressive taxes in the arsenal of tax tools and the fact that Cook County and the City of Chicago have one of the highest and most unfavorable sales tax regimes in the country.

Now, in a single article in the Chicago Tribune titled “County Urged To Boost Sales Tax – City Total Would be 11% Under Plan” dated September 25, 2007 shows the likely intersection of these negative trends. Todd Stroger, the epitome of political nepotism, who campaigned on a plan to streamline the bloated Cook County work force, has done nothing of the sort and is now looking about for a revenue boost to cover the inevitable annual increases in expense growth.

The line from Mayor Daley says it all – “A sales tax is a hard pill, but how do we fund three hospitals?”

Read more

Health Care and Fixed Costs

There are many health care plans being proposed to “fix” the growth in medical costs in the United States. Each of these plans has different elements but I haven’t really seen the particular linked issue addressed that I am going to speak of in this blog post.

I make a point of reviewing my medical bills. When you have surgery, for example, you receive an itemized bill. In that bill you can see services from each provider and also the cost for the room, medicine, etc… Frequently the costs seem far out of line from reality (outside the walls of medicine); a room could cost hundreds or thousands of dollars a night; an aspirin or readily available over-the-counter medicine could cost many dollars per pill.

The real issue is that the medical industry is primarily a “fixed cost” business, with very low “marginal costs”. For example, if you look at the Northwestern Hospital facility downtown, a vast series of interconnected buildings, and asked yourself this question:

How would costs vary on a given day if the facility was full of patients vs. having NO patients?

The answer is that the costs for that day would be virtually identical whether or not the hospital had patients. You still need to pay for the facility, the doctors, the electricity, and all the support workers and nurses. Virtually the only “variable” costs that would be avoided are the cost of medicines and food, but the medicines are inventoried and they need to hold stocks in advance and the food must be purchased based on planned demand and the spare food would just be thrown away (the costs would be pretty much the same).

Read more

Nuclear Power and The Chicago Tribune

On the editorial page of the Chicago Tribune they recently wrote an article titled “Restored Faith In Nuclear Power”. This article summarizes the recent earthquake in Japan and the fact that it occurred right under a nuclear plant. Even though the plant wasn’t rated to support an earthquake, it withstood a 6.8 magnitude earthquake with only minor damage and no radiation leakage.

Next, the article talks about the fact that there is some nuclear construction occurring in the US. They cite the Tennessee Valley Authority (TVA) and the fact that they restarted the Browns Ferry Nuclear Plant in mid-May 2007 after a $1.8 billion effort, which took 5 years. Other nuclear plants on the drawing board are supposedly reducing the licensing frame to four years and construction to three years, meaning that nuclear plants could come online in seven years.

The article also mentions that the UN report on global warming mentioned that nuclear power had to be part of the mix alongside wind and renewable resources to reduce global warming. Thus, they conclude, the US can have faith in nuclear power, and left the feeling that in fact more nuclear power is on the way.

While I personally believe that nuclear power IS an essential part of our energy portfolio and that encouraging nuclear power is good for the country and our balance of trade, I think that this editorial is way too optimistic and there in fact is little hope of a nuclear power revival in the US.

Read more

Better Greenery Through Tax Minimization

Hardly a month goes by without an IKEA catalog showing up on my door. For those that haven’t been to an IKEA store, they are immense “destination” stores full of low priced furniture and other household items. IKEA is famous for its “green” activities; you can hardly walk without a placard explaining the pristine source of its raw materials and how they are operating in a sustainable fashion. Here is an article from their Seattle store lauding their commitment to the environment. I’d quote from the article but it is the usual “commitment” gibberish and not particularly enlightening.

One of the core elements of the environmental movement is a huge governmental role in the economy; we need to put taxes on activities that are not viewed as beneficial and an army of lawyers and regulators to ensure that “Big Business” doesn’t run roughshod over ma’ nature. In my experience a libertarian philosophy and serious environmentalism have very little in common.

Read more