IDS Budget and Tax Committee

[Associate Justice PiT]

     The Education Tax is equivalent to the difference between the Education budget & the amount put into the Lottery Education Fund, which is equivalent to 90% of what is raised by the regional lottery. If we could find out how much that is, it would be possible to figure out the value of the Education Tax.

Are there any other statutes in the region relating to the lottery?

     To my knowledge, the Lottery Regulations, the Lottery Initiative, & the Expanding Choice Initiative constitute the totality of the laws passed by the region on the subject. Looking at the laws, it seems that the Education Tax is actually only meant to fund the scholarships prescribed by the Lottery Initiatve.

[Associate Justice PiT]

     Actually, we never added in the income tax stuff. We already have a ~5.8% income tax rate, which will certainly eliminate the gap when accounted for.

[Associate Justice PiT]

     Actually, we never added in the income tax stuff. We already have a ~5.8% income tax rate, which will certainly eliminate the gap when accounted for.

So we multiply the tax paying portion of the IDS population by 5.8.  The question is, how many citizens of the IDS are taxpayers?

     According to ths, there was 142 million tax returns filed in 2008, or 28.4 million in the region. I once estimated the average income of a citizen of the region at $40,000, which translates into a payout of $2,320/person, on average. Multiplying that with the 28.4 million taxpayers, I get $65,900,000,000/year? That seems rather high, though I suppose it makes sense when we aren't taking tax credits directly into account, though there are some provided for elsewhere under regional law that we have already calculate (Southeast Educational Incentive Act, for one).

[Associate Justice PiT]

     I'm not sure how one would write such a bill, unfortunately. Perhaps say that we are counting all state spending & revenue as part of the region's spending & revenue for accountability purposes?

[Associate Justice PiT]

     I'm not sure how one would write such a bill, unfortunately. Perhaps say that we are counting all state spending & revenue as part of the region's spending & revenue for accountability purposes?

Basically, though we would want to specify which portions from the state ledgers are being combined and which are being dropped.

     I think we're only dropping the corporate tax portions. Should we drop state income taxes as well for the sake of simplicity?

[Associate Justice PiT]

     How about:

IDS Budget Combination Bill

1. For budgetary purposes, collection of revenue for state-level taxes and payment for expenditures due to state-level programs shall be handled by the regional government of the Imperial Dominion of the South.

2. No state in the Imperial Dominion of the South may levy an income tax on its citizenry.

[Associate Justice PiT]

     Oh yeah, we never did that. Assuming we can't find anything, I think we could just approximate Puerto Rico's numbers by assuming they are the same per capita as those for the rest of the region.

[Associate Justice PiT]

     Actually, we never added in the income tax stuff. We already have a ~5.8% income tax rate, which will certainly eliminate the gap when accounted for.

So we multiply the tax paying portion of the IDS population by 5.8.  The question is, how many citizens of the IDS are taxpayers?

     According to ths, there was 142 million tax returns filed in 2008, or 28.4 million in the region. I once estimated the average income of a citizen of the region at $40,000, which translates into a payout of $2,320/person, on average. Multiplying that with the 28.4 million taxpayers, I get $65,900,000,000/year? That seems rather high, though I suppose it makes sense when we aren't taking tax credits directly into account, though there are some provided for elsewhere under regional law that we have already calculate (Southeast Educational Incentive Act, for one).

Whoa, whoa, whoa here!

I would insist we use this calculation instead. For determination of income tax revenue.

     When I posted that, the personal & corporate income tax rates were different, so I don't think that doing it that way would have been valid. Now that they are the same, doing it that way should be fine. However, that means that we will have to eliminate the $32.5 billion that we calculated for the regional corporate tax, since the $61.65 billion accounts for that.

[Associate Justice PiT]

     Actually, we never added in the income tax stuff. We already have a ~5.8% income tax rate, which will certainly eliminate the gap when accounted for.

So we multiply the tax paying portion of the IDS population by 5.8.  The question is, how many citizens of the IDS are taxpayers?

     According to ths, there was 142 million tax returns filed in 2008, or 28.4 million in the region. I once estimated the average income of a citizen of the region at $40,000, which translates into a payout of $2,320/person, on average. Multiplying that with the 28.4 million taxpayers, I get $65,900,000,000/year? That seems rather high, though I suppose it makes sense when we aren't taking tax credits directly into account, though there are some provided for elsewhere under regional law that we have already calculate (Southeast Educational Incentive Act, for one).

Whoa, whoa, whoa here!

I would insist we use this calculation instead. For determination of income tax revenue.

     When I posted that, the personal & corporate income tax rates were different, so I don't think that doing it that way would have been valid. Now that they are the same, doing it that way should be fine. However, that means that we will have to eliminate the $32.5 billion that we calculated for the regional corporate tax, since the $61.65 billion accounts for that.

Fixed again.  We still have over a $25 billion surplus.

For Puerto Rico, I was thinking we could just take the average of each state category and assign that figure to Puerto Rico's expenses and revenues.  Is that ok or does it need to be scaled to population?  Once we figure that out we can go through and combine the two budgets.

     Scaling it to population would probably be wise. I am guessing that Puerto Rico is somewhat below average for population among states in the region.

[Associate Justice PiT]

     Average population for a state in the region is 7,352,934 people. The population of Puerto Rico is 3,967,288. So to estimate Puerto Rico, we should divide the regional numbers by 11 & then multiply them by (3967288/7352934), which gives us $17,270,000,000/year for its expenditures & $24,960,000,000/year for its revenues.

     Also note that the state-level income tax numbers are now zero following the passage of the IDS Budget Combination Bill. I calculated Puerto Rico's revenue taking that into account.

[Associate Justice PiT]

     I get $311.7 billion for state spending & $531.9 billion for state revenue after the adjustments have been made. Regional numbers are basically correct. We should probably recalculate the tax break for nuclear plants since we reduced the corporate income tax rate, though the difference would be so small that it's not really worth it.

[Associate Justice PiT]

     I think we've covered everything that will have a non-trivial effect on the final budget.

[Associate Justice PiT]

I admit I've lost total track of the calculations here (and that's a compliment to the number and detail of posts here). If possible, could we post a summarized budget with calculations noted herein so I can review/grade it all at once please?

Again, great job guys.

     As I understand it, this is essentially final, though the state-level income tax hasn't been zero'd yet there.

[Associate Justice PiT]

     The revenue for fees & charges should be $107,050,100,000.

[Associate Justice PiT]

     The revenue for fees & charges should be $107,050,100,000.

Fixed.  Anything else?

     No, everything seems to be added up correctly now.

[Associate Justice PiT]

     Didn't see this sooner. I'll take care of it right away.

[Associate Justice PiT]

     I have compiled the 2012 budget. In doing so, however, I have obtained revenue numbers that were very different from those that we got last year. Nevertheless, here is the new budget, presented for inspection:

2012 Budget

Notes

• Base shall be understood to refer to the combined totals of the state governments minus Puerto Rico.
• Total shall be understood to refer to the combined totals of the state and regional governments minus Puerto Rico.

Regional Spending

Pensions
-Base: $35.8 billion
-Total: $35.8 billion

Health care:
-Base: $113.9 billion
-Total: $113.9 billion

Education:
-Base: $66.8 billion
-Tertiary Education/Other Capital Outlay-Higher Education/Southeastern Educational Incentive Act: $3.5 billion
-Total: $70.3 billion

Defense:
-Base: $0.7 billion
-Military Defense/IDS Militia Structure Act: $0.4365 billion
-Total: $1.1365 billion

Welfare:
-Base: $36.5 billion
-Total: $36.5 billion

Protection:
-Base: $21.0 billion
-Total: $21.0 billion

Transportation:
-Base: $30.1 billion
-Total: $30.1 billion

General government:
-Base: $6.7 billion
-Total: $6.7 billion

Other spending:
-Base: $20.5 billion
-Puerto Rico: $16.61 billion (total spending of PR- PR is not included in any other category in Spending but the Total Regional Spending)
-Total: $37.11 billion

Interest: $6.6 billion (assumes that Regional Government does not have to pay its own interest)

Total Regional Spending: $359.1465 billion (includes Interest)

Regional Revenue

Income Taxes:
-Base: $0 (state cannot collect their own income taxes)
-Corporate Income Tax/Tax-Corporate Net Income/Put the "free" back in Free Enterprise Bill: (see personal income tax rate)
-Corporate Income Tax/Tax-Corporate Net Income/Southeast Nuclear Energy Initiative, Chapter 4: -66.1 million (-0.0661 billion)
-Corporate Tax Rate: 8.6% (part of Free Enterprise Bill above - remember other provisions).
-Personal Income Tax Rate: 5.8% ($61,650,000,000/year)
-Total: $61,583,900,000 or $61.5839 billion

Social Security Taxes: 
-Base: $20.1 billion
-Total: $20.1 billion

Ad-valorem Taxes:
-Base: $140.0 billion
-Excise Taxes/Tax-Alcoholic Beverage Sales/Southeast Alcohol Initiative, Section 8: $1.3127 billion ($1.00/proof liter or $0.385/gallon for beer, $0.909/gallon for wine, $3.31/gallon for spirits)
-Excise Taxes/Tax-Tobacco Products Sales/Southeast Tobacco Initiative, Section 6:  $0.04/cigarette ($6,034,000,000/year), $0.08/cigar ($80,000,000/year), $2.00/kg tobacco ($24,000,000/year)
-Excise Taxes/Tax-Marijuana Products Sales: $3.00/ounce ($48,000,000/year)
-Sales Taxes/Tax-Public Utilities Sale/Southeast Nuclear Energy Initiative, Chapter 4: 80% of standard electricity excise tax: $0
-Sales Taxes/Tax-Public Utilities Sale/Southeast Biomass Initiative, Section 3: 80% of standard electricity excise tax: $0
-Property Taxes/Tax-Property/Southeast Nuclear Energy Initiative, Chapter 4: n/a ($0)
-Transportation/Tax-Motor Fuel Sales/Transportation Commission Initiative, Chapter 3, Section 22: $0.08/liter ($17,284,230,161/year)
-Transportation/Tax-Motor Vehicle License/Fair Consequences Initiative, Section 3: $10,700,000/year
-License/Tax-Other License/Off-Shore Religious Organizations Initiative, Section 2: n/a ($0)
-Total: $147,265,400,000 or $147.2564 billion

Fees and Charges:
-Base: $42.7 billion
-Other/Charges-All Other/Pentagram Creation Act: $5,700,000/year
-Other/Charges-All Other/Safe Roads Initiative, Section 6: $44,400,000/year
-Total: $42,750,100,000 or $42.7501 billion

Business and Other Revenue:
-Base: $87.9 billion
-Puerto Rico: $17.28 billion
-Total: $105.18 billion

Gross Public Debt: $382,028,869,839 (assumes that Regional Government has not accumulated its own public debt)

Rainy Day Fund: $35 billion

Total Regional Revenue: $376,870,400,000 (does not include Gross Public Debt or Rainy Day Fund)

Balance: $17,723,900,000

[Associate Justice PiT]

     No interest in the 2012 budget?

[Associate Justice PiT]

You have a positive balance?! 

     We've passed very few expenditures over the years.

[Associate Justice PiT]

Can I move to give surplus to taxpayers in the form of rebate?

     Well, the Legislature is currently debating the adoption of this proposed budget. After that, there should be no issue with doing that, or considering another course of action. I know Yelnoc suggested eliminating fuel taxes.

[Associate Justice PiT]

     It did not because the Legislature did not. The Budget reflects current law.