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December 28, 2006

Explaining Those “Gaps” and “Disparities” in Income

Thomas Sowell begins a five-part series at Townhall.com by noting the media’s and academia’s obsession with the gaps and disparities in incomes. And who better to explain it so those two elite groups can understand the income disparities that exist than Thomas Sowell, who writes in part:

“Moreover, if this obsession with income disparities is to be something more than mere hand-wringing or gnashing of teeth, obviously the point is that somebody ought to "do something" to change what you don't understand.

“Usually that means that the government -- politicians -- should impose policies based on your ignorance of what is going on. Can you imagine anything more dangerous than allowing politicians to decide how much money each of us can earn?

“Of course, such political control of incomes is usually advocated only to deal with "the rich." But, when income taxes were imposed in the early 20th century, they applied only to "the rich" and they took a very small percentage of their income.

“Once the floodgates are opened to this kind of political power, however, we have seen with the income taxes that they not only spread far beyond "the rich," they took a serious share of even middle class incomes.”

Sowell then writes:

“Today's "progressives" want to expand political control of incomes even more. They call it "social justice" but you could call it Rumpelstiltskin and it would still mean politicians deciding how much money each of us can be allowed to have.

Part II and Part III are equally enlightening.

UPDATE 12/30/06 and 1/1/07: In Part IV, published yesterday, Sowell addresses the question: "Is anyone really worth the millions of dollars a year that some people receive as personal income?" He provides an excellent lesson of why some people are paid so much while others are paid so little.

In Part V, Sowell addresses the issue of why so many people "feel confident to voice strong convictions about things they know little or nothing about -- or, worse yet, are misinformed about." Speficifically, he says:

"One of the hardest things for anyone to be informed about is the value of someone else's productivity. Yet there are cries from all directions that some people are being paid "too much" and others "too little."

December 20, 2006

Merry Christmas

ACTA wishes you and your family a happy and joyous Christmas.

You can even tell your favorite bureaucrat that it's ok to say Christmas. If a quizical look crosses their face, send them to the "Yes, Christmas" website, a project of the Alliance Defense Fund.

There will likely not be any blogging until the middle of next week.

December 19, 2006

Some Think the Federal Tax System isn't Progressive Enough?

Yesterday, the Club for Growth cites four liberal/Democrat sources (with hotlinks) who think the current tax system needs to be made more progressive. Jon Henke writes:

“Progressive taxation and the progressivity of our tax system. It's a very important subject to liberals. Larry Summers recently proposed "restoring the progressivity of the tax system". Wes Clark pledged to "restore progressivity to the tax code". Warren Buffett complained to Ben Stein that, due to tax benefits, "the rich class [was] winning" class warfare. Democratic Congressman Frank Weiner proposed a plan to "restore progressivity to the tax code", and new Democratic Congressman Keith Ellison has demanded the same thing. The Center for American Progress has proposed their own "reforms that would restore progressivity to the tax code.”

Those who think the rich don’t pay their fair share obviously can’t be aware of how much taxes the rich do pay. For example, Henke provides data for 2004 tax returns that show the top 0.1% of taxpayers paying 14.4% of all federal taxes; the top 1% paying 28.2%; and, the top 10% payers 57.7% of all federal taxes. Wondering how “rich” those 10% of taxpayers are who paid over 57% of all federal taxes in 2004? Tables prepared by the National Taxpayers Union shows taxpayers with adjusted gross income (AGI) of slightly more than $99,000 got you into the top 10%.

Henke says, “Progressivity does not need to be "restored" to the system; the tax system is already progressive.” We agree! Politicians need to start slimming down the federal budget rather than using our taxes to buy more votes. To quote Alexander Tytler, "A democracy cannot exist as a permanent form of government. It can only exist until a majority of voters discover that they can vote themselves largess out of the public treasury.”

December 18, 2006

A “Soaring” Number of Federal Subsidy Programs

Chris Edwards, Director of Tax Policy Studies, at the Cato Institute examined current and prior editions of the Catalog of Federal Domestic Assistance, and writes in the October 2006 Tax & Budget Bulletin (requires Adobe):

“The proliferation of special interest spending in the federal budget in recent years has created much waste and corruption. Politicians have helped special interests while helping themselves. But the main problem has not been that politicians have their hands in the cookie jar; it is that the cookie jar has grown so large.

“There are 1,696 subsidy programs in the federal budget, which dispense hundreds of billions of dollars annually to state governments, businesses, nonprofit groups, and individuals. The number of subsidy programs rising rapidly, with a 44 percent increase since 1990.”

Just since 2000, the number of subsidy programs has increased 19% -- growing from 1,425 to 1,696 subsidy programs. New programs include $150 million for the healthy marriage program, $124 million for safety belt performance grants, and $6 million for motorcycle safety education grants. Want to downsize government? Point your Congressman to the CFDA!

December 17, 2006

Per-Student Spending in the Arlington Public Schools

At the beginning of December, we growled (here and here) about per-student spending in the Arlington schools. Unfortunately, we didn’t include the fine story included in last week’s Arlington Sun-Gazette on the issue, especially since the article noted that ACTA’s president raised the issue with the Arlington School Board at the Board’s November 30 meeting by comparing the cost-per student for APS with the cost per-pupil in Fairfax County. The difference between the two school districts is now just over $5,100.

Not surprisingly, School Board Chairman Mary Hynes “said that wasn’t a fair comparison.” The Sun-Gazette reported:

“There are a number of ways Arlington schools are very different from Fairfax,” she said. “There are some important reasons why those numbers are different.”

But a difference of $5,100? If you multiply that by Arlington’s 18,252 students, it means Arlington taxpayers provide the School Board the equivalent of about $93 million more than the Fairfax County school board gets to educate their kids. $93 million is the equivalent of 18 cents on the real estate tax rate.

December 16, 2006

Today in History -- Boston Tea Party

The Boston Tea Party was a protest by the American colonists against Great Britain in which they destroyed many crates of tea bricks on ships in Boston Harbor. The incident, which took place on Thursday, December 16, 1773, has been seen as helping to spark the American Revolution.” [from Wikipedia]

A series of actions including the Stamp Act (1765), the Townsend Acts (1767) and the Boston Massacre (1770) agitated the colonists, straining relations with the mother country. But it was the Crown's attempt to tax tea that spurred the colonists to action and laid the groundwork for the American Revolution.” [Eye Witness to History]

“It does not require a majority to prevail, but rather an irate, tireless minority keen to set brush fires in people’s minds.” Samuel Adams, organizer of the Boston Tea Party. [Brainy Quotes]

Other references: History Channel, The History Place, and PBS.

December 15, 2006

Will Wonders Never Cease?

On Wednesday, the Charleston (WV) Daily Mail editorialized that West Virginia’s Sen. Robert Byrd (D) “joined the new House Appropriations chairman, David Obey, D-Wis., in announcing a brand new day when it comes to spending federal taxpayer money.” The paper noted:

“’There will be no congressional earmarks,’ Obey and Byrd said in a joint statement. That ends the practice of sneaking appropriations for local projects into federal budget bills, a practice if not invented by Byrd, at least perfected by him in his first eight terms in the Senate.”

The paper ends the editorial by saying, “It will be interesting to see what process replaces the earmark.” The paper has every right to be leery. We growled on July 19 of this year when Citizens Against Government Waste awarded Sen. Byrd their Porker of the Month for his legacy as the King of Pork. What's next? The Arlington County Board announcing that it will hold spending increases to the rate of inflation?

HT to Betsy's Page.

December 14, 2006

County Misses Most Important Accomplishment

Arlington County Board Chairman Chris Zimmerman (D) highlighted what he considered the county’s “Top-10 Accomplishments" for 2006 at a press conference on Tuesday. Those “successes” included such subjects as affordable housing, more master plans, and “Arlington Welcomes the World.”

To some, however, he appears to have missed the most important accomplishment this year, which would be that the County Board’s “tax ‘n spend” ways have not run-off the last middle class taxpayers out of Arlington County. As we noted earlier this year, Arlington’s budget for Fiscal Year 2007 passed $1 billion -- about $5,000 per capita. Those numbers exceed by a wide margin those in the other jurisdictions of Northern Virginia.

Here’s the Sun-Gazette’s report on the press conference. And here’s the county’s press release.

December 12, 2006

Merrily We Go Along, Go Along, Go Along

That version of the children’s nursery rhyme could describe how the “tax ‘n spend” Arlington County Board viewed the past six or seven annual budgets as assessments skyrocketed, and the Board benefited from the annual windfalls of tax revenues.

For those concerned about the fiscal sustainability of Arlington County, today’s recessed Board meeting marked another round of that nursery rhyme. This afternoon, during the Manager’s reports, the Board formally received the Comprehensive Annual Financial Report for Fiscal Year 2006. Unlike budget documents, the CAFR at least contains the independent auditor’s report.

One of the first places in the CAFR we start looking is the statistical section. Specifically the chart of general fund expenditures over the last 10 years; this year it’s on page 159 (warning – very large Adobe file). We look to see what the year-to-year change in spending was. From FY 2005 to FY 2006, the change in spending was 6.8%. Inflation over that time period was 4.3%.

So, taxpayers floated the County Board’s rowboat for another year!

December 11, 2006

Election Day and the Gladiators of the Roman Coliseum

In today’s Washington Examiner, John Taylor of the Virginia Institute for Public Policy writes in an opinion column that:

“Election Day can be compared to gladiator day in the Roman Coliseum. The politicians fight it out in the General Assembly and at the end the sovereigns — you and me — look down and pronounce our verdict: political life or political death.”

He then goes on to discuss several principles that voters can use to evaluate incumbents and challengers. In the end, however, he says that we can no longer expect politicians to do the right thing. Rather, he writes, “We have to become better managers. We have to demand more from our employees” – i.e., the politicians, our representatives in the legislative body. Taylor adds:

“Harry Truman was wrong. The buck does not stop with the president, or any other politician or elected body. They work for us and at our pleasure." The buck stops with us.” After all, politicians like to tell us they are public servants.

Here is more information on the Virginia Institute of Public Policy. More information on the Freedom and Prosperity Agenda and how it can improve state government in Virgia is available at Tertium Quids.

December 10, 2006

What is it about government that we want so much of it?

Ask any Arlington citizen whether government is good or bad, and you’re more than likely to get a positive response. The person might even look at you with a look that questions what planet you’re from. It’s not likely they know what America’s Founding Fathers’ views on government were, however.

In a recent column, Dr. Walter Williams, economics professor and former head of the economics department at George Mason University answers the question. Williams begins:

Unlike today's Americans, the founders of our nation were suspicious, if not contemptuous, of government.

For example, Williams cites this quote by Thomas Paine who said:

“We still find the greedy hand of government thrusting itself into every corner and crevice of industry, and grasping at the spoil of the multitude. . . . It watches prosperity as its prey and permits none to escape without a tribute.

Here are the two key paragraphs, though, that address the opening question of why today’s Americans love government so much:

“Today's Americans hold a different vision of government. It's one that says Congress has the right to do just about anything upon which it can secure a majority vote. Most of what Congress does fits the description of forcing one American to serve the purposes of another American. That description differs only in degree, but not in kind, from slavery."

"The bottom line: We love government because it enables us to accomplish things that if done privately would lead to arrest and imprisonment. For example, if I saw a person in need, and I took your money to help him, I'd be arrested and convicted of theft. If I get Congress to do the same thing, I am seen as compassionate.“

The words may be a bit harsh, perhaps, for a location that bills itself as a "caring" community, but they seem to apply equally well to Arlington County.

 

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December 09, 2006

How Much Money Does the Federal Government Waste?

You know it’s a lot, but you may be surprised to learn no one knows the exact amount. That’s according to recent testimony (Adobe) to Congress and a report last month (Adobe) from the U.S. General Accountability Office (GAO).

In 2002, Congress passed The Improper Payments Information Act (Public Law 107-300). According to the White House’s OMB implementation guidance (Adobe), an improper or erroneous payment is:

“An erroneous payment is any payment that should not have been made or that was made in an incorrect amount under statutory, contractual, administrative, or other legally applicable requirement. Incorrect amounts are overpayments and under payments (including inappropriate denials of payment or service). An erroneous payment includes any payment that was made to an ineligible recipient or for an ineligible service. Erroneous payments are also duplicate payments, payments for services not received, and payments that do not account for credit for applicable discounts.”

The bottom line, according to the GAO report:

For fiscal year 2005, 18 agencies reported improper payment estimates for 57 programs totaling in excess of $38 billion, which is $7 billion less than the $45 billion reported for fiscal year 2004.8 Of the 18 agencies reporting improper payment estimates, 14 agencies had one or more programs with improper payment estimates exceeding $10 million, and thus were required to prepare and implement a plan to reduce improper payments and report on actions taken.” In fact, GAO suggested the estimate should be “markedly higher.”

What? An agency can make $10 million in erroneous payments and they don’t have to try to reduce them. To paraphrase the astronauts, Washington, we have a problem. With its budget now in excess of $1 billion, you gotta wonder the amount of Arlington County's erroneous payments. Now, don't you?

December 08, 2006

Metro Wastes Another $0.5 Million

Tomorrow’s Washington Post will report that “Metro spent more than half a million dollars and two years to make the bus station in Friendship Heights safer and more inviting to commuters. Now commuters have a new problem: Many of the buses don't fit.”

The Post story adds “(t)he problem for Metro is that the newer buses, which make up about a third of the 1,500-bus Metro fleet, are anywhere from a few to several inches too tall for the terminal.” Even worse, the Post says a Metro official “was unable to explain how the glitch occurred and why the renovation did not take into account that Metro, like many bus systems, is buying taller buses that run on alternative fuels.”

Gee, will anyone at Metro get fired? And what was Arlington’s representative on the Metro board doing while that bus station was being misconstructed? From Arlington’s experience with Loop Bridge in Rosslyn, he should have known you “measure twice but cut only once.” And they want more taxpayer money. Sheesh!

December 07, 2006

Real Estate Assessments, Tax Rates, and the FY 2008 Budget

Last month, the Arlington County Board charged the Manager to propose an FY 2008 budget that is balanced at the current tax rates. For the first time in many years, that means the Manager will not have the luxury of merely proposing a so-called “continuing services” budget, which would mean a year-to-year increase of about 7%. With real estate assessments expected to increase just over 3%, the question is how much the Board is willing to raise the real estate tax rate when the FY 2008 budget becomes the Board’s adopted budget rather than the Manager’s proposed budget?

The executive summary of a new study on property taxes by the Tax Foundation (full report in Adobe) says:

“No tax riles the American people more than property taxes, especially real estate taxes that are based on the value of their homes and land. According to a recent Tax Foundation poll, property taxes are thought to be the least “fair” of all state and local taxes.”

Key findings from the report are:
  • Property taxes highest in the Northeast, Texas, Illinois, and Wisconsin
  • New York and New Jersey dominate list of high-tax counties
  • About half of all property taxes go to public schools
  • Property taxes rose faster than incomes from 2002 to 2004
  • Housing market decline may force local governments to cut spending or raise property tax rates

With the slowdown in Northern Virginia’s housing market, it’s that last bullet that causes us to wonder how high the County Board is willing to raise the real estate tax rate come next April when they will adopt the FY 2008 budget. Of course, it would have been nice to hear this debated by the candidates for the Arlington County Board this fall.

 

December 06, 2006

Working Over Half Your Life for the Government

For the fourteenth year, Americans for Tax Reform have determined the Cost of Government Day ©. Here’s the overview of the bad news for 2006, according to ATR:

Definition -- “Cost of Government Day (COGD) is the date of the calendar year on which the average American worker has earned enough gross income to pay off his or her share of spending and regulatory burdens imposed by government on the federal, state and local levels.”

The Bad News –“Cost of Government Day for 2006 is July 12th, a one day increase above last year’s revised date of July 11th. With July 12th as the COGD, working people must toil on average 192.5 days out of the year just to meet all the costs imposed by government. In other words, the cost of government consumes 52.7 percent of national income."

Trends in the Cost of Government:

"Cost of Government Day falls one day later in 2006 compared to 2005’s date. In 2006, the average American will need to work an additional 11.8 days out of the year to pay off his or her cost of government compared to 2000. Slower economic growth, a recession, the war, increased spending and corporate scandals were responsible for the dramatic increase from June 29th in 2000 to as high as July 11th in 2003.

"Consistent with historical changes in the index, as the economy began to expand the cost of government declined due to lower levels of spending and higher incomes of workers. However, the drop in the cost of government was short-lived and the index increased back to July 11th in 2005. In 2006, the cost of government increased an additional day and is now at its highest level since 1995. The increasing cost of government while the economy is expanding is unprecedented and should economic growth slow in the future, the index will increase back to the highest ranges recorded."

Do we love government that much that we are willing to work over half of our lives for the government?

December 05, 2006

No Pensions for Congressional Felons

Thanks to the leadership of the National Taxpayers Union, ACTA joined with 22 other groups in urging the new Democratic leadership in Congress to fulfill their “promise to ‘drain the swamp’ in Washington,” as noted in this NTU press release. NTU went on to say:

"Currently, no Member of Congress is required to forfeit a pension unless convicted of crimes related to treason and espionage. As a result, over the past 25 years at least 20 lawmakers guilty of other serious offenses have enjoyed Congressional retirement payments.

"For example, NTU calculates that former Congressman "Duke" Cunningham was eligible for an initial annual payout of as much as $64,000. Regular cost of living adjustments boost these benefits; for example, convicted Representative Dan Rostenkowski qualified for a $96,000 pension in 1995 that would have since swelled to nearly $125,000 this year."

Here is the actual letter that was sent to Speaker-Elect Pelosi (D) and Majority Leader-Elect Reid (D). The Congressional Accountability Project has several CRS reports posted on their website concerning the pay and benefits of Members of Congress.

December 04, 2006

Arlington Senator to Reintroduce Sales Tax

Today’s Examiner reports that Sen. Mary Margaret Whipple (D-Arlington) “plans to reintroduce legislation (in the General Assembly) that would increase the commonwealth’s sales tax to fund mass-transit projects.” The bill would provide the $50 million required by the federal legislation being pushed by U.S. Rep. Tom Davis (R-Va).

The same legislation passed 37-3 in the Senate earlier this year, but failed to get out of the House Finance Committee. Since American taxpayers would fork out $1.5 billion if Davis’ bill passed and local government provided the “matching amounts,” Whipple opined for the Examiner, “You can’t find a much better deal than this.”

Pundit Larry Sabato thinks the legislation will have to wait for the results of the November 2007 elections. If the General Assembly thinks it’s important to match the federal funds (assuming Davis’s legislation passes Congress), let them pay for it through the general fund. There’s no question that traffic congestion is a problem in Northern Virginia, but that doesn’t require a tax increase. Rather, it means that representations in the General Assembly defer some other of their pet spending projects.

December 03, 2006

More on Achievement and Arlington’s Higher K-12 Costs

Yesterday, we noted the overall SAT scores of students in the Fairfax County Public Schools (FCPS) was 23 points higher than the scores of students in the Arlington Public Schools (APS) despite APS spending over $5,100 more per student. With its 18,000 students, the Arlington school district uses over $93 million more to achieve less on the SAT exam.

School Matters is a service of Standard & Poor’s (one of the rating agencies that provides Arlington County with a Triple A bond rating) that among other things provides information and analysis for “Americans about how schools and school districts are performing and help them understand the complex relationships between achievement and” spending on public education. One feature of their website is the ability to compare as many as five school districts simultaneously.

Given the $5,105 disparity in per-student spending between the two school districts, we asked School Matters to compare APS and FCPS. First, we noted that FCPS students scored better in 2005 on state tests (86.3 vs. 81.4 in reading proficiency and 88.5 vs. 84.4 in math proficiency). All subgroups of FCPS students scored better than their APS cohorts except for white students. That includes economically disadvantaged students and ESL students. In addition, for the four categories of college preparation (ACT, SAT, PSAT, and AP scores of 3 or above), FCPS students achieved greater results than their APS cohorts.

Not surprisingly, School Matters reports that FCPS has both a significantly higher Return on Spending Index © and a significantly lower Performance Cost Index © than does APS. Sure sounds as if Arlington’s taxpayers aren’t getting their money’s worth.

December 02, 2006

Higher Cost Might be OK if It Resulted in Higher Achievement

Yesterday, we GROWLED about the high cost to Arlington taxpayers of the county’s system of K-12 public education although noting that APS had dropped to second place behind Alexandria this year. We didn’t mention, however, that the cost-per-pupil in the APS system is $5,105 less per student than in the Fairfax County Public School district. For the estimated 18,252 pupils enrolled in APS, that’s equivalent to a difference of over $93 million if Arlington’s School Board was charged to educate our students based upon the FCPS cost-per-student of $12,853.

Some members of the Arlington School Board may think I dwell far too much on the cost to taxpayers. Well, that might be true if the almost 40% difference in cost produced almost a 40% greater achievement level. Unfortunately, it doesn’t!

Take a look at page 39 in the FY 2007 WABE Report referenced yesterday. You will note that on SAT scores, Fairfax County students achieved a total SAT score of 1,643 while Arlington students’ score was 1,620, or 23 points fewer.

Yes, Arlington School Board, all-day kindergarten and fewer trailers might be nice, but where are the results? And are all the differences worth trusting you with the “additional” $93 million?

December 01, 2006

Arlington Drops Behind Alexandria in ‘Per-Student’ Spending

The Arlington Public Schools recently posted the FY 2007 numbers from the Washington Area Boards of Education, which shows the Alexandria public schools have vaulted into first place as the most expensive in the Washington area at $18,232. The Arlington Public Schools are second at $17,958.

The following table was produced with numbers from the FY 2006 and FY 2007 WABE reports, which are available at the Arlington Schools’ website.

School District Cost-per-pupil FY 2007 Cost-per-pupil FY 2006  Year-Year DifferencePercentage Change

 

 

 

 

 

Alexandria 18,232 15,871 2361 14.9%
Arlington 17,958 16,464 1494 9.1%
Fairfax County 12,853 11,915 938 7.9%
Falls Church 17,700 16,020 1680 10.5%
Loudoun 12,023 11,379 644 5.7%
Manassas City 12,03610,775 1261 11.7%
Montgomery 13,44612,549 897 7.1%
Prince George's 10,332 9,638 694 7.2%
Prince William 10,378 9,374 100410.7%

While Arlington taxpayers can be be happy to be in second place in this comparison, they still need to ask members of the Arlington School Board why the cost-per-student is increasing at several times the rate of inflation.

The WABE report contains numerous factors that we will be comparing over the next several days. Visit often since we make every effort to provide Arlington taxpayers with factors they can use to compare the efficiency and economy of their local government.