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April 30, 2007

Finally Free . . . at Least This Year . . . Well, Almost

Today is Tax Freedom Day ® according to this study from the Tax Foundation. This year, Tax Freedom Day is April 30 – two days later than 2006, but six days earlier than 2000. Although April 30 is Tax Freedom Day nationwide, it ranges from May 20 in Connecticut to April 12 in Oklahoma.

For any young people visiting Growls, Table 1 in the Tax Foundation study provides the Tax Freedom Day and the percentage tax burden for selected years dating back to 1900. Some examples include:

Year/Tax Freedom Day/Taxes as a Percentage of Income

  • 1900/January 22/5.90%
  • 1910/January 19/5.02%
  • 1930/February 12/11.61%
  • 1960/April 12/27.88%
  • 1980/April 22/30.68%
  • 2007/April 30/32.69%

Add in the cost of regulation, as Americans for Tax Reform does for their Cost of Government Day, and government gets downright burdensome.

 

April 29, 2007

Dreamin’ in Newport News

The editorial in today’s Daily Press (may required free registration) does a heap of dreaming about tax policy. In an especially long editorial, the newspaper urges taxpayers to take their tax revolt to Richmond rather than to Virginia’s city halls and county courthouses because it’s the General Assembly that determines the taxing authority of local governments.

The newspaper says they’re not advocating either lower or higher taxes, but just “a more intelligent tax policy, one that more fairly distributes the cost of the benefits of living in Virginia.” That’s all nice theory, but if the Daily Press’ editorial writers want to know where all that theory ends, they should drive north to visit the "Peoples’ Republic of Arlington."

Of course, the Arlington County Board will tell them the General Assembly needs to provide the Board, too, with greater taxing authority. – oops, make that the way to increase the local tax burden. When I moved here 20+ years ago, I didn’t know a thing about the Dillon Rule. Now I know that it’s the only thing between Arlington taxpayers and a much higher tax burden.

There may be local governments in Virginia that have difficulty meeting basic needs, but it’s been years since the Arlington County Board had to worry about how it was going to pay for basic needs such as police and fire. Need proof? The Board now subsidizes owners of luxury hybrid cars that use 'clean fuels' and dishes out $500+ homeowner grants to taxpayers earning up to $72,000, not to mention doling out tax dollars to the arts and paying employees to walk to work.

April 28, 2007

Latest Congressional Porker of the Month

Each month, Citizens Against Government Waste choose a lawmaker or government official who shows "a blatant disregard for the interests of taxpayers.

For April, CAGW “named Representative Don Young (R-Alaska), the “Congressman for all Alaska,” as Porker of the Month for defending earmarks and pledging to continue his state’s disproportionate harvest of federal tax dollars.” According to this CAGW press release:

“Earmarks  add to the national debt by acting as the gateway drug to Congress’s spending addiction.  Pork-barrel spending allows politicians to target benefits to specific groups at taxpayers’ expense.  That vote-buying mentality spills over into other areas of the budget, like entitlements, leading to higher overall spending.  Pork also conditions voters to re-elect incumbents based on their ability to “bring home the bacon.”  Democracy is corrupted when Congress stops acting in the national interest and becomes source of handouts to lobbyists and special interests“

Thanks to Rep. Young, Alaska is the “earmark welfare state, and according to OMB data it’s the “number one state in pork per capita.” BTW, the press release has the contact information if you care to tell April’s Porker of the Month what you think of his nomination. Afterall, pork per capita amounts to about $100 per person.

April 27, 2007

More Unaccountable Government

This time it’s something called the National Capital Region Transportation Planning Board (TPB). According to the editorial in today’s Examiner, last week the TPB “postponed a scheduled vote on an $882 million plan to convert existing” HOV lanes to HOT lanes that would “help ease congestion in Northern Virginia." The Examiner editorial explains how the HOT lanes would reduce congestion in a cost-effective way:

"The differences between HOV and HOT lanes are minimal, but the latter expands the advantages of the former. HOV lanes are free for emergency vehicles, buses and carpools. So are HOT lanes, but they also allow single-occupant vehicles — for a price. Ideologues object to Lexus drivers buying their way out of the Washington region’s legendary traffic jams. The poo-bahs would rather that everyone suffer equally, except, of course, single drivers in green chic hybrid vehicles who now can use HOV lanes for free.

“Converting HOV lanes to HOT lanes expands road capacity without laying new asphalt, raises money to subsidize remaining HOV lanes and eases congestion in regular lanes. Tolls on Interstates 95/395 and 66 would be set at a level needed to maintain free-flowing speeds up to 55 mph, yet low enough to maximize potential users.”

The editorial notes the virulent anti-car mentality of the region’s political elite, and closes thusly:

“The poo-bahs don’t say it outright, but their actions make clear they want neither new roads nor new ideas to relieve commuter misery because they believe misery will eventually force everybody to use Metro.”

Any Arlington taxpayers vote for members of the TPB?

April 26, 2007

Saying So Doesn’t Make It So

David Schultz begins the Arlington Connection’s coverage of the County Board’s approval of the FY 2008 budget last Saturday by noting the frequency that Board chairman Paul Ferguson used “stability” to “describe the current financial situation of the county government.”

In years past, sustainability and fiscal prudence were popular ways of describing annual budgets passed by County Boards. Of course, past County Boards have had other priorities. Indeed, my recollection is that just last year, the top priority was so-called affordable housing. However, with global warming being the latest religion of liberals, there’s a new priority, according to Schultz, who notes:

“Board Member Barbara Favola (D) said that, with this year’s budget, there could be no mistaking that the environment is high on the list of the county’s concerns.

"Of all the budgets I’ve worked on, this one makes the most discernable statement," she said. "It is a well-articulated vision.”

Our view of the budget is much like Arlington’s budget sage, Wayne Kubicki, who said the following to the Connection:

"[Seven percent] growth is just too much," he said. "It's not sustainable and it's not warranted."

April 24, 2007

The Looming Entitlement Crisis Threatens Taxpayers

The Washington Post reports today:

"The trustees who oversee Social Security and Medicare issued new warnings yesterday that the two programs are becoming unaffordable but pushed back slightly their predictions of when the crunch will hit.

“By 2017, Social Security will pay out more in benefits than it collects in taxes, the trustees said in their annual report. The program's trust fund is projected to be exhausted by 2041, one year later than estimated last year.”

And the National Taxpayers Union has this to say about the trustees’ report:

An expert in federal finance, (NTU President John) Berthoud noted that restoring balance to Medicare alone will require either an immediate 122 percent tax increase or a 51 percent reduction in benefits, both of which are politically infeasible. “Though the White House and Congress are controlled by different parties, Democrats and Republicans must start to grapple with the largest federal deficit threat this nation has seen. Balancing the budget and providing market-based reforms to curtail government debt are keys to turning this menace into a meaningful victory for taxpayers,” Berthoud noted.”

“Berthoud also observed that these entitlement shortfalls will occur much sooner than many believe. In the next nine years, federal Disability and Hospital Insurance will run a combined deficit of $141 billion, up more than $18 billion from last year’s projection. Just a few of the many NTU-backed initiatives for change include modestly restraining the growth of future benefits, preventing a cost explosion in the Medicare Part D prescription drug program, and helping Americans save more for their own retirement.

For those who believe a picture is worth a thousand words, the U.S. General Accounting Office has a graphic of the fiscal long-term challenge.

April 23, 2007

Exercising by Reaching into Your Wallets

Scott McCaffrey of the Arlington Sun-Gazette begins his third story on the FY 2008 budget, which the County Board approved on Saturday by questioning county priorities. He begins:

“County government officials who want local residents to lead healthier lifestyles have come up with a new exercise routine for them: reaching into your wallet a few extra times.

“County Board members on April 21 approved higher fees for the government-run fitness center, with annual passes set to rise 26 percent for adults and 28.3 percent for seniors.

“A host of other park and recreation fees will rise, too, from admission to the skateboard facility at Powhatan Springs Park to participation in adult sports leagues to rental of a picnic shelter.”

Meanwhile, as proof of the adage that if they have it, they’ll spend it, Maria Hegstad of the Examiner writes that the budget, which the County Board approved on Saturday is “$14.9 million more than the budget the county manager originally recommended in February.

It is any wonder some see the only way to achieve limited government is to “starve the beast?”

April 22, 2007

Not Asking For Frugality, But Shouldn’t It Be Fiscally Prudent?

The Arlington County Board approved a FY 2008 budget yesterday, and although there was no increase in the real estate tax rate, the Board approved a utility tax that along with other subsidies and fee increases will significantly reach into taxpayers’ pockets. As Bob Atkins has observed, it represents “Arlington’s version of Robin Hood, which is to steal more from the rich so that you can steal less from the poor.”

Kirstin Downey of the Washington Post summarized it nicely, saying:

“The Arlington County Board unanimously adopted an $888.5 million (general fund) budget yesterday for fiscal 2008, up 7.2 percent from the budget approved for 2007, allowing it to boost school spending, restore human services that had been cut, broaden its environmental initiatives and give employees a raise.”

And Scott McCaffrey of the Arlington Sun-Gazette (budget and employee COLA) wrote this about one member’s reaction to the fact that Arlington’s budget has grown to more than $1 billion:

““My goodness!” marveled County Board member Barbara Favola, as she tallied up the various components of the budget and noted the record-breaking result prior to the vote Saturday. Whether her exclamation was in awe, enthusiasm or fear was left to those watching the proceedings to ponder.”

Since the "devil is in the details," see what the County Board has wrought and check out agenda items 32.A through 32.U., which relate to FY 2008 taxing-and-spending. And, if you want to know how the Board tried to spin it all, here’s yesterday’s press release. And remember that 7.2% year-to-year increase since inflation is currently less than half that number! That's neither frugal nor prudent, but rather profligate.

April 20, 2007

Who is Pulling, and Who is Riding in, the Wagon?

According to Monday’s Christian Science Monitor, “Slightly over half of all Americans – 52.6 percent – now receive significant income from government programs . . . That’s up from 49.4 percent in 2000 and far above the 28.3 percent of Americans in 1950. If the trend continues, the percentage could rise within ten years to pass 55 percent, where it stood in 1980 on the eve of President Reagan’s move to scale back the size of government.”

The Monitor’s reporting is based upon an analysis by economist Gary Shilling who found “about 1 in 5 Americans hold a government job or a job reliant on federal spending. A similar number receive Social Security or a government pension. About 19 million others get food stamps, 2 million get subsidized housing, and 5 million get education grants.”

According to the 2005 Congressional Budget Office report (requires Adobe), which the Monitor cites:

“As the U.S. tax system is now configured, federal revenues will grow faster than the overall economy. Under current law, taxpayers will face higher rates, with detrimental consequences for work, saving, and economic growth.”

Dan Mitchell of the Cato Institute blogs that the situation is akin to “having a nation where the people riding in the wagon out-number (and maybe out-vote) the people pulling the wagon.”

When does the revolt begin?

April 17, 2007

Tax-Law Complexity Grows Like a Bad Weed

The National Taxpayers Union (NTU) released their annual study of trends in tax law complexity yesterday (press release and policy paper). According to NTU:

Taxpayers using any of the 1040 tax form series will spend an average of 24.2 hours and $207 completing their returns this year, up from 23.3 hours and $179 three years ago.

Two of the more significant findings from NTU’s study include:

Americans spent 6.65 billion hours in 2006 complying with the tax laws; the IRS accounts for nearly 4 out of every 5 paperwork burden hours imposed by the entire federal government.

“Approximately 3.45 billion of those hours were incurred by businesses. The value of this time is $156.5 billion -- an amazing 44 percent of total corporate income taxes collected in 2006!

Is there any doubt that a flat tax or the FairTax would be an improvement?

April 15, 2007

Robbing Peter to Pay Peter

An op-ed in today’s Washington Post by Kevin Hassett, director of economic policy studies at the American Enterprise Institute asks, “Why we pay (taxes) without a whimper?” The question is especially provocative since we had a revolution over 200 years ago when Hassett estimates their taxes were “a measly 2 percent.” Compare that to today when “taxes eat up about 30 percent of income.”

According to Hassett:

“Perhaps the most contentious question about taxes is: Who should pay them? Progressives argue that the government should use the tax code to redistribute income from the wealthiest to others, while economic conservatives worry that high taxes will slow the economy and hurt the poor.”

After noting that the poor have largely been removed from paying taxes, as we’ve growled about in the past, Hassett then calculates what two different families pay in taxes, a family of four making $50,000 and a family of four making $150,000. It will surprise some, but the family earning $50,000 went from paying 29% of their income in taxes in 1983 to paying 31% in 2003. By comparison, the family earning $150,000 paid 30% of their income in taxes in 1983 and also 30% in 2003. The explanation:

“Lots of things have changed, but one thing is constant: Government has been robbing Peter to pay Peter. The similarity between the tax proportion for the high-income family and that of the middle-income family will surprise many. That's because the federal income tax, which is steeply progressive -- the higher your income, the more you pay in taxes -- gets all the media attention. But other taxes that are less visible, such as sales taxes, hit lower-income families with a heavy thud and quickly fill in the gap between their lower federal income taxes and the higher rates paid by those with high incomes.”

Hassett also explains the motivations behind this chicanery:

“Governments at all levels have voracious appetites for cash, but taking revenue from the middle class is a politically risky maneuver; after all, that's where the votes are. So lawmakers have crafted ingenious ways around the dilemma, imposing hefty levies on those with lower incomes but relying on stealth taxes to do it. If you're going to tax widows and orphans, you'd better be quiet about it; use a sales tax.

“Government thus takes more from the wealthy through income taxes, but extracts more from the poor with all the other taxes. By doing this, politicians get to pretend that they are virtuously redistributing wealth from the richer to the poorer, and they can maintain that fiction without sacrificing the cash. Voters seem to like this approach.”

Do they? Do taxpayers? One thing for certain, though, governments "have voracious appetites."

April 12, 2007

More Joy from Unaccountable Government?

Today’s Examiner newspaper carries three stories on the out-of-control pension and overtime costs at WMATA. They include:

  1. Metro drivers make $100,000 in pay in which they report that over “100 Washington Metropolitan Area Transit Authority bus and train operators took home paychecks topping $100,000 in fiscal 2006 because of lush overtime earnings that have skewed Metro’s budget and sent pension costs spiraling out of control under a uniquely generous employee retirement plan.”
  2. Metro staff hop on overtime gravy train, which notes WMATA “makes hefty overtime payments to more employees than just bus and train operators. Personnel putting in lucrative extra time include police officers, station managers, mechanics and maintenance workers.”
  3. Pension formula sends costs soaring for Metro. The Examiner quotes the chairman of WMATA’s board who says “to have any chance of significantly cutting its budget-busting overtime bills, the authority must change key provisions in its labor contract with its primary employee union.”

If none of the above bothers you, then you probably won’t mind the unaccountability of the Northern Virginia Transportation Authority, which must be licking its chops with the money that will pour into NVTA’s coffers resulting from passage of the transportation bill (HB 3202) by the 2007 General Assembly. In fact, tonight’s NVTA meeting will discuss the next steps needed to implement HB 3202. We’re guessing it will do nothing but require additional concern on the part of Northern Virginia taxpayers. By the way, the Examiner stories provide a list of WMATA's workforce that received the large overtime payments.

April 06, 2007

Higher State & Local Taxes, but are You Living Better

Yesterday, we growled about the County Manager’s proposed FY 2008 budget. Now we learn the Tax Foundation on Wednesday released its latest report on the burden of state and local taxes. The report’s executive summary began:

“State and local taxes will consume a record-setting 11 percent of the nation's income in 2007. Since 1986, the state-local tax burden had never fallen below 10 percent or risen above 10.9 percent.”

The highest state and local tax burdens are borne by Vermont (14.1%), Maine (14.0%), and New York (13.8%), according to the accompanying press release. Guess we’ll have to stop using Taxachusetts when referring to a particular New England state.

Are you wondering where Virginia was ranked by the Tax Foundation? The Commonwealth’s tax burden for state and local taxes has increased from 9.0% in 1970 (ranked 35th) to 10.2% in 2007 (ranked 33rd). At the same time, the nationwide average increased from 10.0% to 11.0%. The bottom line is that Virginian’s burden increased by 13.3% while the nationwide average tax burden increased by 10%.

Are you living better? We report, you decide!

April 05, 2007

Just How Much Blood is in that Turnip?

Scott McCaffrey of the Arlington Sun-Gazette has two stories reporting on Tuesday evening’s budget debate at the Civic Federation’s monthly meeting. First, he has one that covers the overall budget debate, and includes the Federation’s recommendation on a range of tax and spending issues. The second article deals with the “cornerstone” of the County Board chairman’s initiative to have county taxpayers subsidize the fight against global warming.

But what about the squeezing of that turnip? The answer is summed-up nicely, and includes a quote by Burt Bostwick, chairman of the Federation’s budget committee:

“Federation delegates agreed with (County Manager Ron) Carlee that the real estate tax rate could be maintained at 81.8 cents per $100 assessed value, but rejected his call for a new residential utility tax, which could cost households up to $6 per month.

“This new tax does seem a bit over the top,” Bostwick said, when added to a plethora of higher taxes and fees proposed in Carlee's spending package.”

The entire report of the Federation’s revenues and expenditures committee is available at the organization’s website.

April 02, 2007

Shaming Bureaucrats into Doing the Right Thing

According to yesterday’s Chicago Sun-Times, in 2004, the state passed the Line of Duty Compensation Act, which the Sun-Times says is “the most generous military death benefit offered by any state.” Under the law, the state paid out $27 million to 102 families. However, the paper reported:

“Four families that have waited more than a year to receive an approximately $277,000 death benefit from the state will be paid immediately, officials said, and 18 other families will get partial payments until more money is approved this month.”

Unfortunately, it took a threat by the lieutenant governor to hold a news conference today to light a fire under the state bureaucracy. The Sun-Times wrote:

“A day after Lt. Gov. Pat Quinn said the governor's budget department "dropped the ball" on funding state death benefits for fallen soldiers, both sides announced a deal to immediately infuse cash into the program.”

Amazing what you sometimes have to do to get government bureaucrats moving!