March 03, 2015

A Thought on the So-called Gender 'Pay Gap'

"Innumerable studies, going back decades, show that women do not average as many hours of work per year as men, do not have as many consecutive years of full-time employment as men, do not work in the same mix of occupations as men and do not specialize in the same mix of subjects in college as men.

"Back in 1996, a study published in the New England Journal of Medicine showed young male physicians earned 41% higher incomes than young female physicians. But the same study showed young male physicians worked over 500 hours a year more than young female physicians.

"When the study took into account differences in hours of work, in the fields in which male and female doctors specialized and other differences in their job characteristics, "no earnings difference was evident."

"In other words, when you compare apples to apples, you don't get the "gender gap" in pay that you get when you compare apples to oranges."

~ Thomas Sowell

Source: His March 3, 2015 column, posted at Investor's Business Daily

March 02, 2015

Dynamic Scoring and the Congressional Budget Office

The Wall Street reported on Friday (but behind their paywall) that the Congressional Budget Office will have a new director, saying that that "Keith Hall, who served as commissioner of the Bureau of Labor Statistics, will replace Doug Elmendorf starting April 1. The story, reported by Nick Timiraos, pointed out:

"The decision over who would follow Mr. Elmendorf—the director doesn’t need to be voted on by Congress—attracted all the more interest because House Republicans passed a rule earlier this year requiring nonpartisan budget and tax offices to analyze the macroeconomic effects of certain bills in their influential estimates, known as “dynamic scoring.”

Since frequent Growls include CBO data, e.g., February 3, 2015, January 27, 2015, and November 27, 2014, we took special note a report by Scott Hodge for the Tax Foundation last month (Fiscal Fact No. 451). [Or you can search Growls for additional entries]. The Tax Foundation report had five key findings:

  • "Dynamic scoring is a tool to give members of Congress the information they need to evaluate the tradeoffs in tax policy changes.
  • "Dynamic scoring provides an estimate of the effect of tax changes on jobs, wages, investment, federal revenue, and the overall size of the economy.
  • "Using dynamic scoring, policymakers can differentiate between policies that look similar using conventional scoring methods, but have vastly different effects on economic growth under dynamic scoring.
  • "For example—using Tax Foundation’s Taxes and Growth model—we find that five tax change with the same static revenue cost can have vastly different effects on GDP, investment, jobs, and federal revenue—ranging from virtually no change in GDP to an increase of over 5 percent.
  • "The use of dynamic scoring is crucial to ensure that comprehensive tax reform grows the economy and meets revenue expectations."

In concluding Fiscal Facts No. 451, Hodge writes:

"Despite the recent criticism of dynamic scoring, Members of Congress are being ill-served by the current conventional, or “static,” scoring method, which provides lawmakers a very one-dimensional picture of the effects of tax changes.

"If Members of Congress are to make sound tax decisions that impact today’s complex, global economy, they need the three-dimensional perspective that is only possible with dynamic scoring.

"As we have seen, five different tax policies that conventional scoring would say have the same cost to the U.S. Treasury, can have very different effects on the economy and, ultimately, on federal revenues when those effects are accounted for.

"The primary goal of comprehensive tax reform is economic growth. Conventional scoring treats this process as an exercise in arithmetic, whereas dynamic scoring makes the process an exercise in economics. The well-being of the American people is at stake. It is critically important that lawmakers make the right choices that lift everyone’s standards of living. Only dynamic scoring can help them do that."

For more about the appointment of Keith Hall as CBO director, see this release from George Mason University's Mercatus center as well as this Washington Post story, this story from Politico, and this Fiscal Times story.

At Townhall.com on February 12, 2015, columnist Dan Mitchell, a senior fellow at the Cato Institute, has a detailed explanation, with numerous links, explaining both the Laffer Curve and "why 'dynamic scoring' is far more accurate measuring the impact of fiscal policy changes."

At the New York Times on January 7, 2015, Jonathan Weisman reported the House of Representatives adopted the dynamic scoring rules. And here is a Google Search for other stories about 'dynamic scoring.'" At the Washington Examiner on December 16, 2014, the CBO director says it's up to Congress to decide on 'dynamic scoring." In the Wall Street Journal on February 3, 2015 (behind the WSJ paywall), Michael Solon, former adviser to a U.S. Senator, points out:

"The recent rule change by House Republicans to incorporate the macroeconomic impact of major legislation into official budget estimates—“dynamic scoring”—has triggered heated criticisms. But three decades of hard accounting data, in addition to supporting the rule change, should prompt Washington to reconsider the way it thinks about what drives federal revenues.

"Since 1984 the Congressional Budget Office has tracked all revisions to its triennial projections of federal revenues, outlays and deficits to account for economic, technical and legislative changes. Its data—from the “Changes in CBO’s Baseline Projections” tables that are published annually in the CBO Budget Outlook, the Budget Update and the Analysis of the President’s Budget—indicate which federal policies grew or shrank the economy significantly enough to generate measurable revenue gains or losses. The data also reveal the failures of core Democratic economic policies and flaws within the CBO’s current economic model.

"One fact above all others emerges from the data: Economic growth is the single most powerful determinant of federal revenues."

And finally, in Investor's Business Daily on February 1o, 2015, Ernest Christian and Gary Robbins, for Treasury Department officials, write (Mitchell references this article, too):

"The 114th Congress can make history by using computer-aided dynamic analysis to quantify and disclose to voters in stark dollars-and-cents terms the heretofore hidden, but nevertheless real, harm that government is doing to them. Voters can then for the first time weigh the true costs of government against its benefits."

In concluding their IBD op-ed, Christian and Robbins write:

"Like truth in general, dynamic analysis can help bring about beneficial changes in taxes, regulations, spending and almost everything else Washington does.

"Putting the facts out on the table may also beneficially affect how election campaigns are conducted and who wins.

"No matter how the truth is arrived at, the overriding goal is accurate scoring of the costs and benefits of government."

Without economic growth, it is hard to see how the nation can emerge from all the debt that our politicians have created. Of course, we probably should not have elected them, but that is a story for another day.

February 28, 2015

Leftists and Progressive Taxation

 In his column today at Townhall.com, Dan Mitchell, senior fellow at the Cato Institute, asks "what’s the higher priority for Leftists, raising revenue or punishing success?"

Mitchell begins the column by writing:

"On the issue of so-called progressive taxation, our left-wing friends have conflicting goals. Some of them want to maximize tax revenue in order to finance ever-bigger government.

"But others are much more motivated by a desire to punish success. They want high tax rates on the “rich” even if the government collects less revenue.

"Some of them simply pretend there isn’t a conflict, as you might imagine. They childishly assert that the Laffer Curve doesn’t exist and that upper-income taxpayers are fiscal pinatas, capable of generating never-ending amounts of tax revenue.

"But more rational leftists admit that the Laffer Curve is real. They may argue that the revenue-maximizing rate is up around 70 percent, which is grossly inconsistent with the evidence from the 1980s, but at least they understand that successful taxpayers can and do respond when tax rates increase.

"So the question for grown-up leftists is simple: What’s the answer if they have to choose between collecting more revenue and punishing the rich with class-warfare taxation?"

He then delves into several research efforts that look at the tradeoffs involved. He also includes several helpful charts and tables, and concludes by writing:

"We like a flat tax because it treats people equally and it raises revenue in a relatively non-destructive manner.

"But because it is an “efficient” form of taxation, it’s also an “efficient” way to generate revenues to finance bigger government.

"Indeed, this was one of the findings in a 1998 study by Professors Gary Becker and Casey Mulligan.

"So does this mean that instead of supporting a flat tax, we should a loophole-riddled system based on high tax rates solely because that system will be so inefficient that it won’t generate revenue?

"Of course not. At the risk of stating the obvious, this is why my work onfundamental tax reform is intertwined with my work on constitutional and legal mechanisms to limit the size and scope of government.

"And it’s also why Obama’s class-warfare approach is so perversely destructive. If you think I’m exaggerating, watch this video – especially beginning about the 4:30 mark.

Here is the link to the Dan Mitchell's entire article, which itself includes links to various documents.

For more on progressive taxes, see this Econlib article by Joel Slemrod.

February 27, 2015

Science Groups Get $1 Billion in Grants; Can't Show How Spent

In a story posted two weeks ago at Washington Examiner, Luke Rosiak writes, "Science groups that got more than $1b in federal grants can't show how they spent the money."

Rosiak writes:

"Problems with the National Science Foundation allowing grantees to spend tax dollars for unallowable purposes may extend well beyond a recent case of a $25,000 Christmas party, $11,000 for “premium coffee services,” and $112,000 in federal funds that were spent to hire lobbyists to ask for more funding.

"We found that NSF approved proposed budgets for four major projects, totaling more than $1.4 billion, although it lacked sufficient information to ensure that the budgets represented the basis for a fair and reasonable price," the National Science Foundation’s Inspector General wrote in a new report.

"After 17 months of back-and-forth with auditors, the Ocean Observatories Initiative could still not provide “adequate documentation” showing how it had spent $88 million.

"The $344 million Advanced Technology Solar Telescope proposal was “twice found unacceptable for audit in 2010 due to: Unsupported estimates and outdated vendor; Lack of support for labor costs; Lack of support for indirect costs; Unallowable contingencies.”

"The science foundation gave $500 million to the Large Synoptic Survey Telescope in August 2014 even after the foundation’s own review found problems with their budget estimate. Out of 136 transactions the foundation sampled, it could not find supporting documentation for a single one.

"The latter two projects are administered by the Association of Universities for Research in Astronomy."

Rosiak concluded, writing:

"But most troubling to congressional overseers was that documents showed that the science foundation had known about what the National Ecological Observatory Network was doing since at least 2008, and did not stop it. It has also accepted other budgets despite problems raised by auditors.

"On Feb. 11, Sen. John Thune, R-S.D., and Sen. Bill Nelson, D-Fla., chairman and ranking minority member of the Senate Committee on Commerce, Science and Transportation wrote to the science foundation that the inspector general had identified "accountability over large facility cooperative agreements" as a "challenge."

"The committee asked for "a full accounting of funds" for the projects "to assure Congress and the American public that NSF is prioritizing ... financial management."

Read Rosiak's entire report here.

This story caught my attention because global warming activists frequently claim that scientists who are skeptical about the causes of global warming do so because their science projects are funded by producers of fossil fuels -- Exxon and the Koch Brothers being frequent targets. However, those same activists fail to be consistent whenever scientists who believe in anthropogenic global warming receive government funding. Marc Morano comments on this at Climate Depot in a post headlined, "Analysis of ‘tiny’ skeptic funding vs. warmists funding: ‘Total budgets for all of these [skeptical] efforts would probably not add up to a month’s spending by just the Sierra Club.'"

Not to mention that government employees at NSF are allowing grantees to live large on the taxpayers' tab, what with $25,000 Christmas parties and premium coffee service. Sheesh!

February 26, 2015

Why Arlington County May Not Want an Internal Auditor

In a story posted today at Watchdog.org, Kenric Ward, Watchdog.org's Virginia Bureau Chief, reports, "The Virginia Department of Health may be the most wasteful and inefficient agency in state government, a new audit suggests." (HT Townhall.com)

Ward went on to report:

"The department was cited for “material weaknesses” in five areas by the state’s Auditor of Public Accounts. No other state agency was found to have more than one material weakness — the most serious financial category in the fiscal 2014 report.

"Auditors dinged VDH for not submitting $5.1 million in infant formula rebates and Medicaid claims, even though the department has rebate contracts through the Women Infants and Children feeding program.

"The income from these contracts is used to offset food expenditures incurred by the program,” the auditors said. “By not submitting the invoices for rebates and Medicaid claims, the WIC program required more federal funds for operation than necessary.”

"Health Department officials agreed with the findings and reported the issue “is now corrected.”

You can read Ward's entire story here. And the audit report issued by the Virginia Auditor of Public Accounts report, dated June 30, 2014, is here.

We look forward to the day that Arlington County has an independent and fully-staffed, fully functioning internal audit department so that our trust in the efficiency, effectiveness, and economy of county operations is significantly raised.

February 25, 2015

Real Truth Is in the Notice of Proposed Tax Increase

Readers of the online Arlington Sun Gazette and ARLnow.com learned on Monday morning, February 23, 2015, that the Arlington County Board voted at their regular meeting on Saturday to advertise a 1.5 cent increase in the real estate tax rate (from $0.983 per $100 of valuation to $0.998 per $100).

From Scott McCaffrey's online story in the Sun Gazette, headlined, "Arlington single-family homeowners might face average tax bill near $8,000," we learn:

"Arlington homeowners may feel it’s like adding insult to injury: County Board members on Feb. 21 voted to advertise a higher real estate tax rate for the coming year, which if adopted would add to an already record-setting tax burden.

"Board members voted unanimously to advertise a rate of $1.011 per $100 assessed value, 1.5 cents higher than the current rate of 99.6 cents per $100.

"If that rate is adopted, the owner of a single-family home assessed at the countywide average of $790,300 would be on the hook for $7,990 in real estate taxes this year, an increase of 7.3 percent from the $7,447 a year before – owing both to the increased tax rate and higher assessments.

"At the County Board’s Feb. 21 meeting, chairman Mary Hynes acknowledged that wages of many living in the county are not rising at all, let alone at the rate of 7.3 percent. But she said advertising a higher rate would give the government flexibility to consider additional programs and funding beyond that contained in County Manager Barbara Donnellan’s budget."

The ARLnow story, headlined "Board Advertises Higher Tax Rate," includes the following reporting:

“While no one on the County Board wants to see tax rates increase, we believe that having flexibility at this point in time is necessary as we hear from the community, scour the budget for savings, evaluate programs and monitor economic circumstances,” Hynes continued. “Our final goal is to arrive at a sustainable, balanced budget that best serves all Arlingtonians.”

"Even if the tax rate were to remain the same, the average Arlington homeowner’s annual tax bill would increase $281 to $7,567, due largely to a rise in residential property assessments."

Both stories are accurate, but Arlington taxpayers need to dig deeper to learn the real truth in the numbers. To do that, one must look at numbers, which normally don't get a lot of sunlight. They come from the Manager's report to the Board for agenda item 22.A., i.e., advertising of the real estate tax rate (see February 21, 2015 Arlington County Board meeting). Turn to Attachment V, which is the Notice of Proposed Real Property Tax Increase; notice, however, that item #3 contains three instances of TBD, or to be determined.

Additional details can be found in the county's press release issued after the Board meeting on Saturday, or the press released issued on Thursday after the County Manager said that her budget was balanced with no tax rate increase.

For legal requirements, the Notice was advertised on page A5 in yesterday's Washington Times. Here is where taxpayers learn things that are not normally discussed elsewhere:

  1. First, we learn the rate of increased assessment. More specifically, we learn the "(t)otal assessed value of real property, excluding additional assessments due to new construction or improvements to property, exceeds last year's total assessed value of real property by 2.7 percent." (emphasis added)
  2. Next, we learn the "Lowered Rate Necessary to Offset Increased Assessment." This is "(t)he tax rate which would levy the same amount of real estate tax as last year, when multiplied by the new total assessed value of real estate with the exclusions mentioned above, would be $0.974 per $100 of assessed value. This rate will be known as the "lowered tax rate." (emphasis added)
  3. Third, and perhaps most importantly, we learn the "Effective Rate Increase." It involves a number that can be used in an "apples-to-apples" comparison with any other Virginia jurisdiction, telling taxpayers  "(t)he County of Arlington, Virginia proposes to adopt a tax rate of $0.998 per $100 of assessed value. The difference between the lowered tax rate and the proposed rate would be $0.024 per $100, or 2.5  percent. This difference will be known as the 'effective tax rate increase.'"
  4. Fourth, we learn the amount "the total budget of Arlington County will exceed last year's revised budget" based upon "the proposed real property tax rate and changes in other revenue." The increase would be 1.7%.

The Arlington County Board likes to tout that Arlington County has the lowest real estate tax rate in the region. That's true, but critics will point out it's also true that Arlington has some of the highest property values in the region. Fortunately, we have the Effective Rate Increase number so that we can make an "apples-to-apples" comparison. We don't need to hear Board members talking about trying to keep tax rates steady.

One other item relevant here is that between December 2013 and December 2014, inflation, according to the CPI-U index (Table 24, December 2014 CPI Detailed Report), inflation increased by less than 1%, specifically 0.76%.

So, once again, we have a greedy Arlington County Board plundering the taxpayers of Arlington County. See the Frederic Bastiat quotation we cited in our February 22 Growls earlier this week.

Growls readers who are Arlington County taxpayers are urged to write or call the Arlington County Board to express their opinion(s) on the need for Arlington County government to control spending so there is no need to increase tax burdens. Just click-on the link below:

  • Call the County Board office at (703) 228-3130.

And tell them ACTA sent you.

February 24, 2015

Internal Audit Bill Clears Senate

Two weeks ago, we growled when Delegate Patrick Hope's bill -- HR 2308 -- passed the House of Delegates.  The bill:

"Allows the governing body in a county with the county manager plan of government (Arlington County) to appoint a county auditor. The county auditor shall have the power to make performance reviews of operations of county agencies or county-funded programs to ascertain that sums appropriated are expended for the purposes for which such appropriations were made and to evaluate the effectiveness of those agencies and programs."

Now comes news, according to this online Arlington Sun Gazette story yesterday, that the bill cleared the "state Senate unanimously."

"So long as Gov. McAuliffe puts his signature on it, County Board members soon will have the authority to appoint a government auditor responsible directly to them.

"The state Senate OK’d the measure Feb. 20 on a 38-0 votr, sending it to the governor’s desk. It was patroned by Del. Patrick Hope (D-47th).

"Under Arlington’s form of government, the County Board has supervisory responsibility over only three people: the county manager, county attorney and clerk to the board. All others in the government workforce go up through the ranks of a bureaucracy led by County Manager Barbara Donnellan.

"Hope’s measure would allow, but not require, the County Board to hire an auditor. Like most new Virginia laws, it would go into effect with the start of the commonwealth’s fiscal year on July 1.

"When Hope first suggested the measure, it seemed an unlikely candidate for success, as it appeared to have no support among either Donnellan or a majority of the County Board. But board members opted not to stand in the way, clearing its path for passage Feb. 10 on a 100-0 vote in the House of Delegates."

You can read  the remainder of the Sun Gazette story here.

Readers of Growls are encouraged to thank Delegate Patrick Hope for sponsoring HB 2308. You can also contact the other members who represent Arlington County in the Virginia General Assembly: Senators (Adam Ebbin, Barbara Favola, or Janet Howell) and Delegates (Rip Sullivan, Patrick Hope, Alfonso Lopez, or Rob Krupicka).

And tell them ACTA sent you!

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Items in Growls are written by individual ACTA members and do not necessarily represent the views of the Arlington County Taxpayers Association, Inc. Please send comments about Growls to The Growl Meister