May 23, 2015

Some Thoughts on the 'War on Poverty'

"In 2014, the Census Bureau reported that the American poverty rate was 14.5%.  In 1965, the very first year the War on Poverty programs began, it was 17.3%.  In sum, $22 trillion purchased not even a 3% reduction in real poverty.  Even this “reduction” is illusory, because the poverty rate fluctuates year by year with the rate of the economy growing or slowing.

"This, the greatest erasure of wealth in the history of humankind, was all the more tragic because when the programs began to be implemented in 1965, the U.S. poverty rate had already been cut in half.  In 1950, as Robert Rector of the Heritage Foundation recently pointed out, the poverty rate was 32.2%.  Basically, the gigantic War on Poverty stopped the decline of poverty and froze the rate in place.

"The federal and state governments collectively spent almost one trillion dollars in 2013, averaging a tab of $9,000 per recipient on anti-poverty programs, not including Social Security and Medicare.  It is important to note, as Dr. Rector has, that when the Census Bureau defines the poverty rate, it does not include the government transfer payments.  This means that the “poor” are not nearly as poor as one might think, but it also means that without the transfer payments, the poor would still be with us in the same ratio as they were in the 1960s.

"In other words, what the War on Poverty accomplished was that it kept the underclass frozen in place, with no reduction in the ratio of people climbing out of poverty.  If the goal of welfare transfer payments was to give people a chance to climb out of their straightened circumstances, the War had no effect.  If the goal was to artificially inflate poor people’s income at the expense of taxpayers, then President Obama’s claim this month at Georgetown was correct – a 40% reduction was indeed accomplished, if you call that an accomplishment at the inconceivable expense of $22 trillion.

"With the all the transfer payments, the poor today are much richer than the middle classes were in 1965 . . . .

~ Christopher S. Carson

Source: His article, "No Progress Since the War on Poverty began a Half Century Ago, posted at American Thinker.

May 22, 2015

CAGW Names May 2015 Porker of the Month

Porker of the Month is a dubious honor given to lawmakers, government officials, and political candidates who have shown a blatant disregard for the interests of taxpayers.

Citizens Against Government Waste (CAGW), which grew out of President Reagan's Grace Commission, has "named Rep. Sam Graves (R-Mo.) its May Porker of the Month for his misguided and costly proposal to gut the Center for Medicare and Medicaid Services’ (CMS) Recovery Audit Contractor (RAC) program." Here is how CAGW justifies its award:

"Medicare improper payments have been a chronic fiscal scourge.  In fiscal year (FY) 2014 alone, $46 billion was lost in the program’s fee-for-service improper payments, the most of any federal program.  In an effort to stem the tide of these improper payments, Congress approved the nationwide adoption of the RAC program in January 2010; it has returned more than $9.7 billion to the Medicare Trust Fund with a 96 percent average accuracy rate.  Those savings become even more impressive since auditors are allowed to review no more than 2 percent of claims from a given provider.  Under pressure from hospitals and other providers, Congress and CMS have collaborated to sideline the RAC program since October 2013.  It is no coincidence that the Medicare improper payment rate jumped by 49 percent from 8.5 percent in FY 2012 to 12.7 percent in FY 2014.

"There are few bills so wrongheadedly and laughably named as H.R. 2156, Rep. Graves’s Medicare Audit Improvement Act of 2015.  The bill takes direct aim at the RAC programs’ most positive feature: its contingency fee based compensation model, which operates at no expense to taxpayers.  RACs are paid only for when improper Medicare payments are identified and the overpayments are recovered to replenish the Medicare Trust Fund.  This same payment system is used by private sector insurers to recover improper payments from the same providers that serve Medicare patients.  Removing it would lead to appropriations of substantial sums of taxpayer money to pay contractors to perform the audit function.  The funds to conduct audits would have to compete with other expenditures or be offset with spending cuts, and there is no assurance that any recovered money would go into the Medicare Trust Fund.

"In addition, Rep. Graves is relying on flawed and exaggerated claims to make his case against the RACs.  Allegations that RAC judgments are overturned on appeal at a dramatically high rate are simply untrue.  CMS’s most recent data from FY 2013 shows that 9.3 percent of claims were overturned at the administrative law judge (ALJ) level, the third tier of the appeals process.  Anti-RAC forces also claim that the program puts an onerous burden on providers.  That assertion is ludicrous on its face since it cannot possibly require more than a few employees to assist RACs in their review of no more than 2 percent of claims from any one provider, and RACs must pay providers for any additional document requests.  On the other hand, the cost of appealing RAC audits is so low that a few hospitals have become “frequent filers” by appealing every denied claim and are responsible for vast majority of the appeals to the ALJ level.

"CAGW President Tom Schatz said, “If Rep. Graves’s bill is signed into law, it will do irreparable damage to the Medicare post-payment process by opening the floodgates to a tidal wave of new waste in the form of billions of dollars in improper payments.  Congress should reinstate and expand the RAC program, not cause it to be permanently paralyzed.  Instead of attacking the RAC program and flooding the appeals process, providers should direct their resources toward better compliance with CMS rules for accurate Medicare claims.”

Instead of trying "to destroy the most successful auditing tool that Medicare – and perhaps the entire federal government – has ever had," Rep. Graves should be working to expand the concept of RAC audits to every possible government agency experiencing significant amounts of improper payments.

Kudos to Citizens Against Government Waste (CAGW) for their efforts on behalf of America's taxpayers.

We urge Growls readers to ask their members of Congress what they are doing to bring federal spending under control. Contact information is available at Thomas (use left-hand column). Taxpayers living in Virginia's Arlington County, can contact:

  • Senator Mark Warner (D) -  write to him or call (202) 224-2023
  • Senator Tim Kaine (D) -- write to him or call (202) 224-4024
  • Representative Don Beyer (D) -- write to him or call (202) 225-4376

Ask for a written response, and tell them ACTA sent you.

May 21, 2015

Maryland Taxpayers Win "Broad Victory" at U.S. Supreme Court

Under a story entitled, "In Landmark Case, Supreme Court Finds Maryland's Tax Scheme Unconstitutional,"  Kelly Phillips Erb, contributor to Forbes magazine, wrote on Monday, May 18:

"Last May, Dominic Perella, argued that the way that the State of Maryland treated tax credits was wrong, arguing, “Maryland’s approach is unfair to people who make money in more than one state.”

"As it turns out, the Supreme Court agrees, holding in Comptroller v. Wynne that Maryland’s tax scheme is unconstitutional because it doesn’t offer credit to its residents for taxes paid in other states.

"This – as it applies both to state and local tax policy – is a big deal. To understand the case, we need to understand the context. How did this case find its way to the Supreme Court? Here are the details:

"A married couple (the Wynnes) reported taxable net income of approximately $2.7 million to the State of Maryland. More than half of that amount represented a share of earnings in an S corporation with operations in several states. The Wynnes claimed a credit on their Maryland tax returns for taxes paid to 39 other states. The State of Maryland denied the credits and issued a notice of deficiency. The Wynnes appealed. At a hearing, the assessment was affirmed, meaning that the Wynnes were stuck paying the tax.

"The Wynnes disagreed with the finding and amended their petition, claiming that the tax credit statute, as written, was in violation of the Commerce Clause of the United State Constitution. That claim was rejected.

"So the Wynnes tried again, arguing this time that the State of Maryland was constitutionally required to extend the credit for taxes paid to other states to the county as well as the state. Their bigger question was whether a state had the unconditional right to tax all income based on residency (they, of course, said no). This time, the Circuit Court agreed with the Wynnes."

Read the remainder of Ms. Erb's story here; there is a link to her 5/28/14 story, which reported tjat SCOTUS had agreed to her the Wynne's case.

A press release from Fagre Baker Daniels is here.

At SCOTUSblog, Bradley Joondeph provides an analysis of the opinion. Here's his "plain English" summary:

"In Comptroller v. Wynne, the Supreme Court invalidated the county component of Maryland’s personal income tax as violating the Commerce Clause because it discriminated against interstate commerce. The Court applied its “internal consistency” test for state taxes: If every state in the Union adopted an identical tax scheme, would commerce that crosses state lines be taxed the same as commerce staying entirely within one state? Because Maryland failed to offer a credit to Maryland residents against the county tax for taxes paid to other states – and Maryland nonetheless imposed the county tax on non-residents earning income in Maryland – the tax scheme was internally inconsistent. Were every state to adopt the same tax scheme, commerce crossing state lines would be taxed more heavily than commerce occurring exclusively in one state."

Meanwhile, at Reason magazine's Hit&Run Blog, Damon Room notes  that Justice Alito wrote the majority opinion, and then adds:

" . . . Chief Justice John Roberts and Justices Anthony Kennedy, Stephen Breyer, and Sonia Sotomayor all joined Alito’s opinion.

"Alito’s sharpest critics proved to be two of his most conservative colleagues, Justices Antonin Scalia and Clarence Thomas. Scalia and Thomas each filed separate dissenting opinions, as did Justice Ruth Bader Ginsburg, whose dissent was joined by Justice Elena Kagan. According to Scalia, the dormant Commerce Clause is a “judicial fraud” that allows federal judges to rewrite state laws according to their own preferences. Thomas, meanwhile, argued that Alito’s take was totally at odds with constitutional history. “It seems highly implausible that those who ratified the Commerce Clause understood it to conflict with the income tax laws of their States and nonetheless adopted it without a word of concern,” Thomas wrote."

At the Tax Foundation's Tax Policy Blog, Joseph Henchman, Vice President, wrote:

"This is a broad victory for taxpayers. Today’s 5-4 decision upholds what should be noncontroversial: state tax powers do not extend to harming interstate commerce by levying multiple taxes on it. This is important not just for one Maryland business, but for anyone who does business in more than one state, travels in more than one state, or lives in one state and works in another. The court also held that these protections apply not only to businesses, but to individuals as well.

"As explained in the Tax Foundation’s brief in the case, state tax practitioners knew these were the rules even though the Supreme Court never explicitly said so. Today, the Supreme Court explicitly said so. Anyone who thought that a state’s tax power extends to all income earned by its residents anywhere in the world, now knows they were wrong."

Patrice Lee, writes at Independent Women's Forum:

"Some 55,000 Maryland taxpayers have in essence been double taxed. One couple learned that the hard way paying an estimated $25,000 in taxation which the Supreme Court now says are not legal. The Wynnes owned half of a homecare and medical staffing company that does business in more than 36 states and reported an income of $2.7 million in 2006.

"The state is nervous; they are on the hook for an estimated $200 million in refunds and interest to taxpayers like the Wynnes. They are also losing an estimated $42 million a year in revenue going forward.

< . . . >

"State officials are balking at the lost revenue, especially in Montgomery County, one of the nation’s wealthiest counties, which stands to lose big from the busted piggyback tax."

Click here for Google's "full coverage" of Maryland v. Wynne.

Given the justices who jointed in the majority opinion, anyone wish to venture how the Justices will rule in the ObamaCare exchanges case?

Congratulations to the Maryland taxpayers for taking this case to the Supreme Court.

May 20, 2015

Some Thoughts on the Size of the Welfare State

"Four years ago I wrote a book about modern American liberalism: Never Enough: America’s Limitless Welfare State. It addressed the fact that America’s welfare state has been growing steadily for almost a century, and is now much bigger than it was at the start of the New Deal in 1932, or at the beginning of the Great Society in 1964. In 2013 the federal government spent $2.279 trillion—$7,200 per American, two-thirds of all federal outlays, and 14 percent of the Gross Domestic Product—on the five big program areas that make up our welfare state: 1. Social Security; 2. All other income support programs, such as disability insurance or unemployment compensation; 3. Medicare; 4. All other health programs, such as Medicaid; and 5. All programs for education, job training, and social services. (emphasis added)

"That amount has increased steadily, under Democrats and Republicans, during booms and recessions. Adjusted for inflation and population growth, federal welfare state spending was 58 percent larger in 1993 when Bill Clinton became president than it had been 16 years before when Jimmy Carter took the oath of office. By 2009, when Barack Obama was inaugurated, it was 59 percent larger than it had been in 1993. Overall, the outlays were more than two-and-a-half times as large in 2013 as they had been in 1977. The latest Census Bureau data, from 2011, regarding state and local programs for “social services and income maintenance,” show additional spending of $728 billion beyond the federal amount. Thus the total works out to some $3 trillion for all government welfare state expenditures in the U.S., or just under $10,000 per American. That figure does not include the cost, considerable but harder to reckon, of the policies meant to enhance welfare without the government first borrowing or taxing money and then spending it. I refer to laws and regulations that require some citizens to help others directly, such as minimum wages, maximum hours, and mandatory benefits for employees, or rent control for tenants. (emphasis added)

"All along, while the welfare state was growing constantly, liberals were insisting constantly it wasn’t big enough or growing fast enough. So I wondered, five years ago, whether there is a Platonic ideal when it comes to the size of the welfare state—whether there is a point at which the welfare state has all the money, programs, personnel, and political support it needs, thereby rendering any further additions pointless. The answer, I concluded, is that there is no answer—the welfare state is a permanent work-in-progress, and its liberal advocates believe that however many resources it has, it always needs a great deal more." (emphasis added)

~ William Voegeli, Senior Editor, Claremont Review of Books, and Visiting Scholar, Claremont McKenna College’s Henry Salvatori Center

Source: Imprimis speech digest, October 2014.

May 19, 2015

Are Flat Taxes Really Flat

At the Tax Foundation's Tax Policy Blog today, Kyle Pomerleau writes. "Several Republican presidential hopefuls have stated their support of the “Flat Tax.” Ted Cruz, Ben Carson, and Rand Paul have all expressed interest in a tax reform plan that moves our current code to a new “Flat Tax.” As a result, there is renewed interest in what a Flat Tax is, what its pros and cons are, and how it could impact different taxpayers.

He first provides a definition of a flat tax, saying:

"When most people hear “Flat Tax,” they usually think a tax system with one, flat tax rate on all income. They also imagine a tax system with little or no deductions or credits. While this is a possible way to design a flat tax, it is not what makes a flat tax a flat tax. The key to a flat tax goes beyond its rates. The key is that it is a consumption tax. You would not call a low-rate tax on all transactions in an economy a flat tax, even though it had one, flat rate.

"A consumption tax is a tax on what people spend, rather than what people earn. Economists like consumption taxes because they are what is called “temporally neutral.” They are neutral with respect to consumption today and consumption tomorrow (saving). Another way to think about a consumption tax is that it taxes, one-time, all the money people spend today plus the money people save, either when they save it, or when they spend it in the future."

Pomerleau then describes the types of flat or consumption taxes. He goes on to explain why economists like flat taxes. He also answers the question of whether flat tax raises taxes on the poor and whether flat taxes reduce revenues. He ends by answering the question can the flat tax abolish the IRS.

For a more indepth treatment, David R. Burton, a senior fellow at the Heritage Foundation has written a "backgrounder" entitled "Four Conservative Tax Plans with Equivalent Economic Results" (No. 2979, December 15, 2014). Here's the abstract:

"The four leading conservative tax reform plans are the Hall–Rabushka flat tax, the new flat tax, a national sales tax, and a business transfer tax. Each is a consumption tax with an equivalent tax base. Except for secondary design choices and the choice of which taxes to replace, each would apply the same tax rate to raise a given amount of tax revenue. They would also have the same economic effects. The choice among them, therefore, rests on non-economic grounds."

In a Cato Institute "policy analysis" paper (No. 536, February 24, 2005), Chris Edwards examines a flat tax, a national sales tax, and a savings-exempt tax. And at the Center for Freedom & Prosperity, among other papers, Dan Mitchell posted a paper April 18, 2014 that compares the flat tax and a national sales tax.

Finally, in a search of about the first 50 'hits' at the leftist Center on Budget and Policy Priorities, your humble scribe found no papers or studies discussing a flat tax. Although I wouldn't expect CBPP to advocate for the flat tax, I expected at least a paper or two criticizing the flat tax.

May 18, 2015

Arlington County Board Jacks Up Parking Meter Rates

ARLnow.com, the online local news site, reported this afternoon that the Arlington County Board approved an increase in parking meter rates of $0.25 per hour,, which will result in increases ranging from 12 1/2% to 25% per hour.

According to the ARLnow.com story:

"The Arlington County Board on Saturday approved a 25 cent-per-hour rise in metered parking rates. The rate increase is expected to be implemented in September and bring in nearly $1 million per year in extra revenue.

"(The increase won’t apply to some reduced-rate meters, currently priced between $0.50-0.75 an hour.)

"The Board unanimously approved the rate increase and also voted unanimously to delay action on a proposed extension of metered parking hours from 6:00 to 8:00 p.m. A public hearing on parking hours is now planned for September."

As if to make good with county residents so they know the county's parking meter rates are the lowest in the region, the Manager provided the following background in their report to the County Board (report for Agenda Item 33, May 16, 2015 Agenda):

"Parking meter rates have remained unchanged since 2011. However, during the four year period, parking pressures have increased and parking operating costs have increased. The proposed increase in maximum rates is $0.25 per hour. On-street parking rates in Arlington lag behind those in the region (rates as of April 2015):

District of Columbia -- $2.00/hour in premium demand; $0.75/hour in remote areas

Alexandria -- $1.75/hour; $1.25/hour at older single space meters

Bethesda -- $2.00/hour on-street; $1.25 in off-street lots


Leesburg -- $1.50/hour on-street

Arlington -- $1.50/hour short term; $1.25/hour long term (Proposed)"

So let's see. When the Board adopted the FY 2016 budget, it was balanced. Consequently the estimated $950,000 from jacking up the parking meter rate wasn't needed to balance the budget. Therefore, it must be a windfall for the county coffers, and will add to the Board's slush fund. Is there a vanity project in the wings waiting for this windfall? Or is the county raising the rate because it hasn't done so in four years?

Alternatively, if the increased rate is intended to more fully recover the cost of providing, administering, and maintaining curb-side metered parking, then why isn't the Manager providing program cost so that Arlington County taxpayers can know and compare the cost and benefits of this program?
 
The Board also deferred action on extending parking meter hours by two hours, a staff recommendation. You can read the press release here.

Growls readers who haven't recently told members of the Arlington County Board that taxpayers in Arlington County are overtaxed and expect better from a county government that self-identifies itself as a world-class community are urged to take a few minutes to tell the County Board that they and the Manager need to do better. Just click-on the link below:
  • Call the County Board office at (703) 228-3130
And tell them ACTA sent you.

May 17, 2015

A Thought on Tax Fairness

"The government may impose heavy taxes on the rich in the name of fairness, but that “fairness” comes at the expense of the economy and those not yet rich.”

~ John Tamny, page 10, "Popular Economics: What the Rolling Stones, Downton Abbey, and LeBron James Can Teach You about Economics”

Source: Barnes & Noble.

May 16, 2015

A Thought on Income Inequality

 “Income inequality in a capitalist system is truly beautiful. It provides the incentives for creative people to gamble on new ideas, and it turns luxuries into common goods. Income inequality nurses sick companies back to health. It rewards hard work, talent, and achievement regardless of pedigree. And it’s a signal that some of the world’s worst problems will disappear in our lifetimes.”

~ John Tamny, page 47, "Popular Economics: What the Rolling Stones, Downton Abbey, and LeBron James Can Teach You about Economics"

Source: Barnes & Noble.

May 2015
          1 2
3 4 5 6 7 8 9
10 11 12 13 14 15 16
17 18 19 20 21 22 23
24 25 26 27 28 29 30
31            

The ACTA Watchdog

Latest Issue of The ACTA Watchdog

Join ACTA

Links

Archives

May 2015
April 2015
March 2015
February 2015
January 2015
December 2014
November 2014
October 2014
September 2014
August 2014
July 2014
June 2014
May 2014
April 2014
March 2014
February 2014
January 2014
December 2013
November 2013
October 2013
September 2013
August 2013
July 2013
June 2013
May 2013
April 2013
March 2013
February 2013
January 2013
December 2012
November 2012
October 2012
September 2012
August 2012
July 2012
June 2012
May 2012
April 2012
March 2012
February 2012
January 2012
December 2011
November 2011
October 2011
September 2011
August 2011
July 2011
June 2011
May 2011
April 2011
March 2011
February 2011
January 2011
December 2010
November 2010
October 2010
September 2010
August 2010
July 2010
June 2010
May 2010
April 2010
March 2010
February 2010
January 2010
December 2009
November 2009
October 2009
September 2009
August 2009
July 2009
June 2009
May 2009
April 2009
March 2009
February 2009
January 2009
December 2008
November 2008
October 2008
September 2008
August 2008
July 2008
June 2008
May 2008
April 2008
March 2008
February 2008
January 2008
December 2007
November 2007
October 2007
September 2007
August 2007
July 2007
June 2007
May 2007
April 2007
March 2007
February 2007
January 2007
December 2006
November 2006
October 2006
September 2006
August 2006
July 2006
June 2006
May 2006
April 2006
March 2006
February 2006
January 2006
December 2005
November 2005
October 2005
September 2005
August 2005
July 2005
June 2005
May 2005
April 2005
March 2005
February 2005
January 2005
December 2004
November 2004
October 2004
September 2004
August 2004
July 2004
June 2004
April 2004
March 2004
February 2004
January 2004
December 2003
October 2003
September 2003
August 2003
July 2003
June 2003
May 2003
April 2003
March 2003
February 2003
Creative Commons License
This weblog is licensed under a Creative Commons License.

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