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April 30, 2010

Kudos to Washington Examiner Reporter

Washington Examiner reporter Mark Heid has a great article in today’s print edition. He begins:

“Arlington County's government has exploded in size and scope during the last decade, though cash spent on some core services -- such as police -- has failed to keep pace.

“Total county government spending has jumped about 58 percent since 2000, after adjusting for inflation.

“Arlington County's total government expenditures increased from about $490 million in fiscal 2000 to about $773 million budgeted for fiscal 2011. Those figures are both given in today's dollars and do not include spending on education.”

And the best lines may indeed be these:

“Taxpayer cash has fueled the expansion.

“Along with home values, the tax burden for Arlington residents has nearly doubled. The average homeowner, after adjusting for inflation, paid about $2,621 in property taxes in 2000, compared with $4,821 in 2010.”

Other reporters with other newspapers have focused on issues in more depth, but this is the first time that I can recall that a reporter has taken a multi-year look, or a trend analysis, of the growth in county spending. Hopefully, the Examiner’s editors will provide Heid more space for future articles about the spending habits of the five panjandrums who authorize the expenditure of taxpayer money.

April 29, 2010

Get Rich; Work For Federal Government

The editorial in today’s Washington Examiner takes on federal salaries and public unions. The lede paragraphs sets out the problem:

“For decades, public sector unions have peddled the fantasy that government employees were paid less than their counterparts in the private sector. In fact, the pay disparity is the other way around. Government workers, especially at the federal level, make salaries that are scandalously higher than those paid to private sector workers. And let's not forget private sector workers not only have to be sufficiently productive to earn their paychecks, they also must pay the taxes that support the more generous jobs in the public sector.

And the data fully supports the Examiner’s editorial:

“Data compiled by the Commerce Department's Bureau of Economic Analysis reveals the extent of the pay gap between federal and private workers. As of 2008, the average federal salary was $119,982, compared with $59,909 for the average private sector employee. In other words, the average federal bureaucrat makes twice as much as the average working taxpayer. Add the value of benefits like health care and pensions, and the gap grows even bigger. The average federal employee's benefits add $40,785 to his annual total compensation, whereas the average working taxpayer's benefits increase his total compensation by only $9,881. In other words, federal workers are paid on average salaries that are twice as generous as those in the private sector, and they receive benefits that are four times greater.

With the federal deficit already out of control, the editorial is right on point with their conclusion that “taxpayers can no longer afford to support such lucrative government compensation.”

April 28, 2010

Thought For The Day

"[T]he illusion that by means of progressive taxation the burden can be shifted substantially onto the shoulders of the wealthy has been the chief reason why . . . the masses have come to accept a much heavier load than they would have done otherwise."

   ~ Friedrich A. Hayek

HT "As Certain as Death - Quotations About Taxes (2010)," page 132

April 27, 2010

Another Month, Another Congressional Porker

Citizens Against Government Waste (CAGW) named Senator Thad Cochrane (R-Miss.), Ranking Member of the Senate Appropriations Committee as the Porker of the Month for April 2010. CAGW went on to say he received the award:

“for being the biggest porker in the 2010 Congressional Pig Book, the third consecutive year he has received this dishonor.  Sen. Cochran obtained 240 earmarks worth $490 million.  Since fiscal year 2008, Sen. Cochran has obtained more than $2 billion in pork-barrel earmarks.  This year also marks the 20th anniversary of the Congressional Pig Book.

“The 2010 Congressional Pig Book documented 9,129 earmarks worth $16.5 billion and features “Oinker Awards,” which bestow special recognition on the most extraordinarily wasteful projects.  The “Thad the Impaler Award” went to Sen. Thad Cochran (R-Miss.) for securing the most pork. (emphasis added)

“In a March 17, 2010 Politico article, when Sen. Cochran was asked about his earmark spending he said, ‘“I don’t have any guilt trips.”’  Sen. Cochran’s attitude illustrates how fiscally irresponsible members put wasteful parochial interests ahead of the fiscal strength of the country and taxpayers.”

The CAGW press release provided the following examples of Cochrane’s $490 million in pork:

“$4,841,000 for wood utilization research; $1,608,000 for dietary supplements research; $1,000,000 for the University of Southern Mississippi for transitioning space technologies into the commercial sector; $850,000 for the Center for Innovation and Entrepreneurship; $231,000 for e-commerce; and $200,000 for the Washington National Opera.”

What a profligate!

April 26, 2010

The Political Class and the Deficit of Will

In yesterday’s Washington Post, the paper’s Joel Achenbach wrote a long essay in the Outlook section regarding “The national debt and Washington’s deficit of will,” writing:

“Over the past decade, lawmakers have avoided the kind of unpopular decisions -- tax increases, spending cuts or some combination -- needed to keep the debt under control. Federal Reserve Chairman Ben Bernanke testified recently that, for investors, the underlying problem with the debt isn't economic. "At some point, the markets will make a judgment about, really, not our economic capacity but our political ability, our political will, to achieve longer-term sustainability," he said.”

However, he also adds:

“Debt is the grease of Washington legislation; for short-sighted leaders, it is less a political problem than a political solution. As long as the government can continue borrowing at reasonable rates, citizens can have their tax cuts and government services, and eventually the growing debt becomes someone else's problem.”

Achenbach’s essay is worth reading, but let’s turn to a report from the Committee for a Responsible Federal Budget, a bipartisan, non-profit organization that attempts to educate the public about issues with a significant fiscal policy impact. The organization is unique in that most of the officers and directors have headed such organizations as Congress’ budget committees, the Congressional Budget Office, the Office of Management and Budget, and the General Accountability Office.

The Committee’s report reviews the CBO’s analysis of the President’s FY 2011 budget. The report also provides a clear and concise comparison of the CBO’s numbers and the OMB numbers as well as  the deficit impact of various policy changes in the President’s budget. Here is the brief conclusion from the report:

“The warning coming out of this analysis of the President’s budget could not be clearer: the country is on an unsustainable fiscal path. Despite the inclusion of some deficit-reducing policies, the President’s budget would make the situation far worse. The budget would increase the public debt to 90 percent of GDP by 2020 -- a dangerous rise that would be completely irresponsible during a time of economic growth, which the budget assumes will occur.

“Absent major structural policy changes to address the medium-term debt situation, the nation’s economy is at real risk from excessive borrowing. The Administration thus far is leaving the work of addressing this threat to its newly formed fiscal commission. While we support the effort and are hopeful it will be successful, early signs are not promising that it will be.

“It is therefore critical that the Administration develop a “Plan B,” that focuses on reforming spending, the tax code, and budget enforcement procedures. If the commission does not succeed in its effort, the White House will have to take the lead in championing a credible debt reduction plan. The federal government will need to make changes one way or another. We can either enact reforms on our own terms, or wait for the markets to force changes upon us -- an act of fiscal procrastination that would have damaging effects on our economy and standard of living for decades to come.” (emphasis in the original)

As Achenbach says, “Unlike a real Ponzi scheme, which collapses when no new suckers offer money that can be used to pay off earlier investors, the government can restore fiscal sanity whenever our leaders decide to do so.” That is if the political class had any will.

April 25, 2010

Read It, And Weep!

The Arlington County Board adopted the Fiscal Year 2011 budget yesterday, and increased the real estate property tax rate by 9.5%, raising it by 8.3 cents, from $0.875 per $100 of valuation to $0.958 per $100 of valuation. The Arlington Sun Gazette reported the story this morning writing:

“County Board members on April 24 adopted a fiscal 2011 operating budget totaling nearly $956 million, with increases in tax rates and fees that will hit a typical household for more than $6,300 in the coming year, up about $350 from the current burden.

“Board members voted to increase the real estate tax rate to 95.8 cents per $100 assessed value, up 9.5 percent from the current rate of 87.5 cents per $100. Fees for water and sewer service and trash collection also will rise, as will the cost of vehicle-decal fees and a host of other fees.

“The cumulative effect is a budget about $14 million higher than that proposed by acting County Manager Barbara Donnellan two months ago, but one that board members said meets the needs of Arlingtonians.”

Here is the Washington Post’s take on the Board’s adoption of the FY 2011 budget. And here is Arlington County’s press release yesterday, which contains the budget highlights. For the nitty-gritty details, see “County Board Adopted Budget Documents” at the Department of Management & Finance’s webpage. We will have more analysis of the Board’s actions both here and in the Watchdog newsletter.

April 24, 2010

Thought for the Day

"There is only one way to kill capitalism -- by taxes, taxes, and more taxes."

    ~ Karl Marx

HT "As Certain as Death - Quotations About Taxes" (2010), page 113

April 23, 2010

Your Federal Government at Work? Not!

The NY Daily News may have the best line involving the pornography story at the Securities and Exchange Commission (SEC): “At the SEC, all they thought about was SEX.” The lede of the Washington Post article provides the background: “Dozens of Securities and Exchange Commission staffers used government computers to access and download explicit images and many of the incidents have occurred since the global financial meltdown began, according to a new watchdog investigation.”

Mark Calabria of the Cato Institute suggests recent speculation about the SEC’s case against Goldman Sachs may be misguided. He blogs:

“There has been much speculation that the Securities and Exchange Commission (SEC) released its charges against Goldman Sachs on the eve of a Senate vote on new finance regulation in order to help Democrats win that vote.  Perhaps that theory is wrong: It now looks more likely that the SEC timed its Goldman case in order to divert attention away from two SEC inspector general (IG) reports criticizing the commission.

“In one of the reports, the SEC IG found that several of the top staffers at the SEC were spending their days surfing the web for porn, rather than looking for securities fraud.  One senior manager spent almost 8 hours a day looking a porn, getting to the point where he even filled up his government issued hard-drive with porn.  His actions were not some isolated incident.  Over 30 employees were found to have regularly used SEC computers to download and view porn.  Some of the senior employees had salaries as high as $222,000 a year.  Sounds like nice work, if you can get it.

“But the porn charges are the least of the SEC’s worries.  Also released was the IG’s report on the SEC’s failure to stop the Stanford Ponzi scheme.  The report shows a clear pattern of incompetence at the SEC.  Given the SEC’s failure to act on the Madoff scheme, and the repeated warnings about Stanford, one has to wonder how good SEC investogators are at discovering fraud if they don’t even pursue the clear-cut cases brought to them."

Some of the SEC employees were not low-level grunts, but according to the Washington Post today, several earned between $99,300 and $222,418 annually. And this from the law blog at the Wall Street Journal:

“Some of the findings are jaw-dropping. Like that senior attorney at the SEC’s Washington headquarters spent up to eight hours a day looking at and downloading pornography. And an accountant was blocked more than 16,000 times in a month from visiting websites classified as “Sex” or “Pornography.” Yet he still managed to amass a collection of “very graphic” material on his hard drive by using Google images to bypass the SEC’s internal filter.”

Finally, in a video at Real Clear Politics, Rep. Barney Frank (D-Mass.) “blames SEC porn scandal on Republicans” since “the culture of the SEC . . . Republican philosophy that was dominant during this period was one they do not regulate, let the market do it better.” Huh? But was there any Congressional oversight of the SEC? A search of the House Committee on Financial Services, chaired by Rep. Barney Frank, website for the 109th and 110th Congresses (2005 - 2008) for “pornography” found results related to child pornography or to the Internet, but nothing related to SEC employees “surfing” for pornography. So sorry Barney.

April 22, 2010

Thought for the Day

"Taxes are paid in  the sweat of every man who labors. If those taxes are excessive, they are reflected in idle factories, tax-sold farms and in hordes of hungry people, tramping the streets and seeking jobs in vain."

   ~ Franklin D. Roosevelt

HT "As Certain as Death - Quotations About Taxes" (2010), page 29

April 21, 2010

How Washington Spends Your Taxes, 2010 Version

It’s always difficult to find a brief overview of any topic, let alone a quick picture of the federal budget. Well, Brian Riedl, a budgetary affairs fellow at the Heritage Foundation has a brief commentary showing where the majority of your federal tax dollars go; the op-ed first appeared in the McClatchy newspapers.

Mr. Riedl starts with the really high level numbers, writing:

“Washington will spend $31,406 per household in 2010 — the highest level in American history (adjusted for inflation). It will collect $18,276 per household in taxes. The remaining $13,130 represents this year's staggering budget deficit per household, which, along with all prior government debt, will be dumped in the laps of our children.

“Government spending has increased by $5,000 per household since 2008, and nearly $10,000 per household over the past decade. Yet there is no free lunch: If spending is not reined in, then eventually taxes must also rise by $10,000 per household.”

A breakdown of the $31,406 per household shows:

  • Social Security and Medicare - $9,949
  • Defense - $6,071
  • Anti-poverty programs - $5,466
  • Unemployment benefits - $1,640
  • Interest on the federal debt - $1,585
  • Veterans benefits - $1,052
  • Federal employee retirement benefits - $1,018
  • Education - $914
  • Highways/mass transit - $613
  • Health research/regulation - $550
  • Mortgage Credit - $470
Total of 11 items above - $29,328
  • All other - $2,328

As one campaign slogan in 1992 said, “It’s the spending, stupid.” Riedl's commentary has more details, but the numbers above provide the "big picture."

For a more indepth discussion of the federal Fiscal Year 2011 budget, Heritage Foundation Backgrounder 2382 provides greater detail, including charts.

April 20, 2010

Your County Tax Dollars At Work?

Scott McCaffrey reports in a story posted at the online Arlington Sun Gazette that the HOT-lanes legal fees, for which the Arlington County Board has obligated county taxpayers, have topped a half-million dollars. He reports:

“The county government’s bill for legal services related to its fight over high-occupancy-toll (HOT) lanes on Interstates 95 and 395 headed into Arlington has now topped a half-million dollars.

“The local government received bills of $66,683.70 on Jan. 21 and $37,076.68 on Feb. 16 for work done by Schnader Harris Segal & Lewis LLP, the D.C. law firm hired by the county in its lawsuit against federal and state officials.

“Added to the roughly $442,000 billed previously by the firm, the total tab to taxpayers now stands at about $546,000. The case has yet to move forward to trial.” (emphasis added)

McCaffrey adds the two parties “began settlement negotiations last November.” Yes, your Arlington County tax dollars hard at work. Not!

April 19, 2010

Thought for the Day

"Why are the people starving? Because the rulers eat up the money in taxes."

   ~ Lao Tzu

HT "As Certain as Death: Quotations About Taxes," page 100

April 18, 2010

Rep. Moran's "Pork Barrel"

Last Thursday, Citizens Against Government Waste (CAGW) released the 2010 Congressional Pig Book. It’s the 20th anniversary exposé of pork-barrel spending, and reveals 9,129 earmarks worth $16.5 billion.

CAGW president Tom Schatz said in the organization’s press release:

“Recent actions in the House to stop funding for-profit earmarks and the House Republican Caucus’ decision to not request earmarks, indicates that politicians from both parties recognize that taxpayers are enraged about the broken spending process in Washington . . . They have noticed that it is popular to posture as an anti-earmarker.  Unfortunately, the 2010 Congressional Pig Book illustrates that most members of Congress still aren’t willing to eliminate the practice and why meaningful reform is necessary.”

CAGW also pointed out (t)he number of projects declined by 10.2 percent, from 10,160 in fiscal year 2009 to 9,129 in fiscal year 2010, while the total tax dollars spent to fund them decreased by 15.5 percent, from $19.6 billion to $16.5 billion.”

A search of the 2010 Pig Book database shows that Arlington County’s Congressional representative, Rep. Jim Moran (D) is credited with 62 separate earmarks valued at $71.4 million, including the following where Arlington is specifically identified:

  • George Mason University, $550,000 (infrastructure improvement)
  • Four Mile Run infrastructure improvements, $500,000 (with Alexandria)
  • Four Mile Run, $112,000 (jurisdiction unspecified)
  • Signature Theatre, $500,000 (arts education program)
  • Marymount University, $200,000 (science equipment and technology)
  • Vanguard Services Unlimited, $250,000 (vocational counseling training)

The nationwide average pork per capita was $27.36. Hawaii ranked first in per capita pork with $251.78 while  Virginia ranked 34th, receiving $23.00 per capita.

In addition, other resources at the CAGW webpage are the Pig Book Summery; list of pork per capita; the annual Oinker Awards; and the searchable database.

To question Rep. Jim Moran (D) about the earmarks, you can write him or call his office:

Write to him via the Internet

Call (202) 225-4376

April 17, 2010

Thought for the Day

"Those who create the wealth naturally want to keep it and devote it to their own purposes. Those who wish to expropriate it look for ever more-clever says to acquire it without inciting resistance. One of those ways is the spreading of an elaborate ideology of statism, which teaches that the people are the state and that therefore they are only paying themselves  when they pay taxes."

    ~ Sheldon Richmam

HT to "As Certain as Death . . . Quotations About Taxes"

April 16, 2010

Squeezing the Turnip

According to one adage, when people say that you can't get blood out of a turnip, it means that you cannot get something from a person, especially money, that they don't have. Well, Congress continues to squeeze the rich in order to redistribute income.

The study, released yesterday, says the recently passed health care reform bill “takes (an) additional $61.2 billion from the top 1% of families on (the) income spectrum,” according to the Tax Foundation’s press release. It goes on to say:

“The health care reform bill signed into law by President Obama would take an additional $52,000 on average from families in the top 1 percent of the income scale -- on top of the existing income redistribution of roughly $485,000 from those families under current policies, according to a new Tax Foundation report. Families earning an average income of $23,600 stand to benefit the most, by about $2,000 per family.

“As a group, the top 1 percent will lose the most -- an additional $61.2 billion, while the income group that gains the most - families in the 10th-20th market income percentile -- will receive an additional $37.4 billion.

“Tax Foundation Fiscal Fact, No. 222, "Health Care Reform: How It Redistributes Income," summarizes the latest findings of the Tax Foundation's ongoing "fiscal incidence" project, which is designed to gauge income redistribution of U.S. fiscal policies by measuring the effects of tax and spending policies.”

The report, available online, describes who benefits from the income redistribution this way:

“Overall, we estimate that as a result of the health care reform, the top 1 percent would go from earning 14.7 percent of post-redistribution income to around 14.35 percent of post-redistribution income.

“This income will be redistributed, not mostly to the lowest income group, but to the lower-middle income groups. The lowest income group gains little because most of the families already receive Medicaid and/or Medicare benefits. Families in those second and third deciles (10th percentile through 30th percentile) will see an average increase in their income redistribution of around $2,000.

“Middle- and upper-middle income groups (50th percentile through 90th percentile) would also be slight benefactors of the bill if not for corporate tax increases and the fees imposed on insurance companies, drug makers and medical device manufacturers . . . .”

Stealing from Peter to give to Paul. Well, at least Paul will be happy.

April 15, 2010

A Voice in the Pork-Barrel Wilderness

Even if Congress eliminated all pork-barrel projects, aka earmarks, the dent in the federal budget would not be significant because earmarks represents only a small portion of the federal budget. However, it seems safe to say that if Congress is unable to stop the abuse of earmarks, there is no hope of making a serious dent in entitlements, which are the far greater problem of the federal budget.

With publication of its 2010 Pig Book, Citizens Against Government Waste (CAGW) takes its 20th annual look at wasteful federal spending. Tom Schatz, president of CAGW, has a column in Pajamas Media announcing the new expose of wasteful spending. He writes:

“For fiscal year 2011, House Democrats are not requesting earmarks that go to for-profit entities; House Republicans are not requesting any earmarks (although there are both exceptions and definitional questions). Not surprisingly, the Senate has rejected any limits on earmarks. None of these reforms are sufficient to eliminate all earmarks, so CAGW expects there will still be a 2011 Congressional Pig Book.

“The transparency changes are far from perfect. The fiscal year 2010 Defense Appropriations Act contained 35 anonymous projects worth $6 billion, or 59 percent of the total pork in the bill. Out of the 9,129 projects in the 2010 Congressional Pig Book, there were 9,048 requested projects worth $10 billion and 81 anonymous projects worth $6.5 billion.  These projects included $2.5 billion for C-17s and $465 million for an alternate engine for the Joint Strike Fighter.

“The latest installment of CAGW’s 20-year exposé of pork-barrel spending includes $4,481,000 for wood utilization research, $400,000 for the Brooklyn Botanic Garden, $300,000 for Carnegie Hall in New York City, and $200,000 for the Washington National Opera in the District of Columbia.  Two of these projects were among the 14 winners of CAGW’s “Oinker Awards.”

“Pork is not only wasteful, it is also inequitably distributed. Some states receive far more than other states. Hawaii led the nation with $251 per capita ($326 million), while Wyoming received $12.28 per capita ($6.68 million.) The average for all states was $27.36 per capita.”

Congrats to CAGW on the publication of its 2010 Pig Book, and as Liz from Maryland comments:

“I’m sick of people who trivialize the size of pork spending compared to the overall budget. I put a “pittance” into a jar everyday, and it pays for an extra mortgage payment each year.

“Those who receive pork are as greedy and corrupt as those delivering it.”

Let’s hope that after the November 2010 elections, there will not be a need for a 2011 Pig Book. It’s safe to say, I think, that Liz from Maryland, is a leader in the Tea Party movement, too.

p.s. You can also watch Tom Schatz on PJTV describe "20 Years of Exposing Pork” in addition to reading his column.

April 14, 2010

Virginia and "Rich States, Poor States"

In releasing the third edition of Rich States, Poor States, a press release from the American Legislative Exchange Council (ALEC) points outs:

“As states face their toughest budgetary climates in a generation, the authors of a new report . . . point out what states should do to alleviate the fiscal pain, and also what they should avoid, (and) shows how many states responded to the economic crisis with higher taxes, new spending, and more debt. Instead of continuing down this road to a financial meltdown, the authors outline the steps states can take to bring about economic recovery.”

[ . . . ]

“The correlation between poor policy and poor economic results is indisputable, just look at California, New Jersey, and New York,” Williams said. “Our research shows that states with responsible spending and competitive tax rates enjoy the best economic outlook. States do not enact changes in a vacuum – every time they increase the cost of doing business in their state, their state brand immediately loses value.”

The study by famed economist Dr. Arthur B. Laffer, senior economics writer at the Wall Street Journal Stephen Moore, and Jonathan Williams of ALEC’s Tax and Fiscal Policy Task Force, “ shows that states with responsible spending and competitive tax rates enjoy the best economic outlook. States do not enact changes in a vacuum – every time they increase the cost of doing business in their state, their state brand immediately loses value.” The top and bottom five states were:

Top Five States            Bottom Five States

1. Utah                            46. California

2. Colorado                      47. Illinois

3. Arizona                        48. New Jersey

4. South Dakota               49. Vermont

5. Florida                         50. New York

Virginia fares well in this latest edition of Rich States, Poor States, ranking 4th in economic performance, including 12th on growth in personal income per capita, 12th in domestic migration, and 16th non-farm payroll employment growth. Virginia also ranked 8th in economic outlook.based on such factors as top marginal tax rate, sales tax burden, debt service as a share of tax revenue, state minimum wage, and Virginia as a right-to-work state.

In closing, let me cite John Stephenson’s comments about the research study (he also gets the HT) at the National Taxpayers Union blog, Government Bytes:

“What strikes me about this list is that the states that are ranked the highest are ones that have either undertaken real budget and tax reforms over the last several years or have limited tax burdens. In Colorado, the state has spending and tax limitation provisions in its constitution. Florida, Wyoming, South Dakota, and Tennessee all have no personal income tax. Meanwhile, the states that rank the lowest, including New Jersey, New York, and California, have some of the highest tax burdens and spend the most in the nation.

"Rich States, Poor States" also looks at the impact that the "stimulus" from Washington is having on the states. The impact is not good because states are using the stimulus as if it were found money to budget for programs they cannot afford over the long term. This should serve as a warning to the politicians in Washington who think we can spend our way out of problems instead of reforming policies to promote economic activity, job growth, and prosperity.

“Of course, the report is not all negative. In fact, the report spends an entire chapter discussing Missouri and the good policies it is pursuing. There is an effort underway in the Show Me State to reform the tax code to make it simpler, fairer, and more competitive. It is worthwhile to read about Missouri and its effort is a story we should all follow closely in the months ahead.”

April 13, 2010

Thought for the Day

“The great virtue of free enterprise is that it forces existing businesses to meet the test of the market continuously, to produce products that meet consumer demands at lowest cost, or else be driven from the market. It is a profit-and-loss system. Naturally, existing businesses generally prefer to keep out competitors in other ways. That is why the business community, despite its rhetoric, has so often been a major enemy of truly free enterprise.”

    ~ Milton Friedman

HT OnPower.org

April 12, 2010

Thought for the Day

"The same government that requires a taxpaying citizen to document every statement on his tax return decrees that questioning a welfare applicant demeans and humiliates him."

   ~ Ronald Reagan

HT "As Certain as Death - Quotations About Taxes (2010 Edition)" from Tax Analysts; Tax Foundation's Tax Policy Blog

April 11, 2010

What It Means That 47% Pay No Income Taxes

In a poll released today, Rasmussen Reports™ writes, “Sixty-six percent (66%) believe that America is overtaxed. Only 25% disagree.” What will likely surprise many liberals, Rasmussen also reports, “Lower income voters are more likely than others to believe the nation is overtaxed.”

The Rasmussen poll comes on top of a report last week from the Tax Foundation showing that Friday, April 9 was Tax Freedom Day® 2010, which we growled about last Wednesday. With April 15 fast approaching, an Associated Press story, posted at Breitbart, reports:

“Tax Day is a dreaded deadline for millions, but for nearly half of U.S. households it's simply somebody else's problem.

"About 47 percent will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. That's according to projections by the Tax Policy Center, a Washington research organization.”

Leave it to the inimitable Mark Steyn, however, to make the numbers perfectly clear. In an essay at National Review Online, Steyn writes:

“By 2012, America could be holding the first federal election in which a majority of the population will be able to vote themselves more government lollipops paid for by the ever shrinking minority of the population still dumb enough to be net contributors to the federal treasury. In less than a quarter-millennium, the American Revolution will have evolved from “No taxation without representation” to representation without taxation. We have bigger government, bigger bureaucracy, bigger spending, bigger deficits, and bigger debt, and yet an ever smaller proportion of citizens paying for it.”

Which brings us to liberty, and how it is affected by taxation. As Jonah Goldberg pointed out in a USA Today op-ed last week:

“Individual liberty is far from the only concern, either. The kind of country we want to be is deeply bound up in taxation. The Tax Foundation estimates that some 60% of American families already get more from the government than they pay in taxes (and the top 10% of earners pay more than 70% of the income taxes). If all of President Obama's plans are enacted, that percentage will increase. We are heading toward being a country where instead of the people deciding how much money the government should have, the government decides how much money the people should have.”

The concluding paragraph of Mark Steyn's essay pretty much puts a final touch on where the nation is headed if we don't clean-up our current tax system:

“We are now not merely disincentivizing economic energy but actively waging war on it. If 51 percent can vote themselves government lollipops from the other 49 percent, soon 60 percent will be shaking down the remaining 40 percent, and then 70 percent will be sticking it to the remaining 30 percent. How low can it go? When you think about it, that 53 percent of American households props up not just this country but half the planet: They effectively pick up the defense tab for our wealthiest allies, so that Germany, Japan, and others can maintain minimal militaries and lavish the savings on cradle-to-grave entitlements. A relatively tiny group of people is writing the check for the entire global order. What proportion of them would need to figure out that the game’s no longer worth it to bring the whole system crashing down?”

p.s., For more details on who pays income taxes, and how much, visit the National Taxpayers Union “Tax Basics” webpage. Note especially how the numbers change from year to year.

April 10, 2010

Thought for the Day

“If you put the federal government in charge of the Sahara Desert, in 5 years there would be a shortage of sand.”

   ~ Milton Friedman

HT OnPower.org

April 09, 2010

Spending Addicts, Trial Balloons, and a VAT

The Washington Examiner’s editorial today suggests that what speedballs do for drug addicts is “a lot like what Washington's political establishment is trying now to avoid admitting its spending addiction” with the value-added tax (VAT). The Examiner explains it this way:

“The political speedball would combine the quick rush of income tax increases with the euphoria induced by a value-added tax on consumption. Tax increases typically produce a revenue spurt that quickly cools off as people find creative ways to evade them, while the VAT keeps taxing consumption at every stage from production to purchase of a product. European VATs typically create substantial revenue streams, but stifle entrepreneurial energy and job creation. That's why all of Europe's welfare states are slow-growth economies. As Greece's need of a bailout to avoid bankruptcy demonstrates, political speedballs eventually produce the economic equivalent of the lethal heroin overdose that is so common among speedballing drug addicts.”

The Examiner points out that the push for “a VAT became clear this week as former Federal Reserve Board Chairman Paul Volcker, now among President Obama's chief economic advisers, hit the hustings talking up a "European-style VAT" to eliminate the government's massive and growing deficit.” This was in addition to statements by Speaker Nancy Pelosi and Fed chairman Ben Bernanke. However, the Examiner editorial correctly points out:

“That's why the fundamental problem here is not that Americans pay too little in taxes, it's that Washington politicians can't stop spending more and more of our money every year. By 2020, according to the Congressional Budget Office, federal spending will equal 90 percent of the country's gross domestic product. So our politicians clearly have no intention of checking into spending rehab. They're counting on getting that euphoria with the VAT fix. If they do, the rest of us will be left with a dead economy.” (emphasis added)

Investor’s Business Daily (IBD) also has an editorial today focusing on the VAT, and the title pretty much says it all:

“VAT Will Spell Anything But Relief”

And J.D. Foster, blogging at the Heritage Foundation's blog, The Foundry, says the "push to enact a massive tax increase in the form of a new value-added tax (VAT) is now clearly underway," concluding with:

"Today’s deficits, and tomorrow’s, result from too much spending, not too little revenue.  Reverse the massive Obama spending surge (and the Bush surge before that) and the deficits would quickly fall to sustainable levels.  Instead, Paul Volker has done the nation a great service in telling us what Obama and his congressional allies are planning.   If that is not the case, if the President and the democratic leadership in Congress really are not planning a VAT attack, let them declare their opposition to a VAT plainly.  Every current and would-be member of Congress should say where they stand on the VAT.   And unless they favor a huge government, much higher taxes, and less transparency from government, they will stand against it."

April 08, 2010

Thought for the Day

"The income tax laws in the nineteenth century applied to everyone. During the Civil Wars and in Napoleonic times, the income tax was essentially uniform, with the same or similar rates for all citizens. Then, with the advent of Marxism, high progressive tax rates for the rich were proposed, as a device to destroy capitalism. Finally, in 1894, Congress passed our first peacetime income tax. It was progressive not in its 2 percent rate, but in the fact that it exempted 98 percent of the population, and was simply class legislation against the rich. The idea of taxing only the rich and letting everyone else ride freely on the government was good politics in a democracy, because the vote of the top 2 percent was insignificant , , , ,"

   ~ Charles Adams, page 145, "Those Dirty Rotten Taxes: The Tax Revolts that Built America"

HT Barnes & Noble

April 07, 2010

Starting Friday, You Get to Work for Yourself

In a new special report (number 177) the Tax Foundation reports that Friday, April 9th will be Tax Freedom Day® that marks the day when American taxpayers “have earned enough money to pay this year’s tax obligations at the federal, state and local levels.” Nevertheless, they add the warning:

“Despite all these tax reductions, Americans will pay more taxes in 2010 than they will spend on food, clothing and shelter combined.”

A key finding in the report is that each state celebrates it’s own Tax Freedom Day, with Alaska’s the earliest (March 26) and Connecticut’s the latest (April 27). Virginia’s Tax Freedom Day is April 13, ranking it 10th.

In addition, the report provides a discussion, and table, of Tax Freedom Day since 1900 when American taxpayers worked only 22 days to pay taxes. Between 1900 and 1917, the number of days needed to work to pay taxes ranged between 19 and 25 days. That number started a continuous march upwards, finally reaching triple digits in 1960.

According to the Tax Foundation, Tax Freedom Day “was conceived by Florida businessman Dallas Hostetler in 1948 . . . (and) deeded  the intellectual property to the Tax Foundation” in 1971. They add that it provides “a vivid, calendar-based illustration of government’s cost, and it gives Americans an easy way to gauge the overall tax take.”

Provide the young people in your life a copy of the special report so they will know there was a time in American history when government didn’t plunder the productive members of its society.

April 06, 2010

Thought for the Day

"We have learned that Thomas Paine was right when he warned that it is a great mistake to look upon government as some 'wonderful mysterious thing.' When people believe that illusion, excessive taxes are obtained, just as he predicted. Add to that wisdom his observation that there are two classes of citizens: those who pay taxes and those who live on other people's taxes. When taxes are excessive, you disunite these two classes and set the stage for a revolution in government -- for a government less expensive and more productive."

   ~ Charles Adams, page 143, "Those Dirty Rotten Taxes: The Tax Revolts that Built America"

HT Barnes & Noble

April 05, 2010

Thought for the Day

"People backed (health care reform) because they thought it "the right thing"; it made them feel good about themselves. What they got from the political process are what I call "psychic benefits." Economic benefits aim to make people richer. Psychic benefits strive to make them feel morally upright and superior. But this emphasis often obscures practical realities and qualifications. For example: The uninsured already receive substantial medical care, and it's unclear how much insurance will improve their health."

    ~ Robert J. Samuelson

HT Real Clear Politics

April 04, 2010

Protesting Too Much?

On March 15 of last month, we growled that since 2002 the county government became 6.8% more productive while the Arlington Public Schools became 13.1% less productive.

It seems some of the numbers that we based our calculations on were not entirely comparable. As least according to APS finance personnel who responded to “school board question #53.” In that growls, we used the “fiscal indicators” on page 394 in the Manager’s FY 2011 proposed budget. In our March 15, growls, we said APS productivity had decreased 13.1%.

However, using the revised enrollment and FTE data that APS finance personnel provided to the School Board in the response to question #53, APS productivity still decreased by 2.3% since 2002.

Since APS schools personnel emphasized the use of comparable data, we turned to the Washington Area Boards of Education report for FY 2010, and computed the productivity for each WABE school district. The following numbers provide the number of school district personnel (measured in full-time equivalent. FTE, personnel) per 1,000 students.:

      School District                  FTE per 1,000 students
  • Alexandria                              161.49
  • Arlington                                168.95
  • Fairfax County                       128.97
  • Falls Church                            179.66
  • Loudoun                                   130.84
  • Manassas City                           127.24
  • Montgomery County               132.04
  • Prince George's                        121.51
  • Prince William                          110.53

Staff provided School Board members some of the factors that have affected productivity since 2002, e.g., class sizes, addition of SOL remediation, changes in planning factors, etc. However, for a school district with among the highest costs per student, we would expect the school board and school district management to be far more sensitive about reaching further into the pockets of Arlington County taxpayers.

April 03, 2010

Thought for the Day

“It is impossible to introduce into society a greater change and a greater evil than this: the conversion of the law into an instrument of plunder.”

    ~ Frederic Bastiat, 1801-1850, French Economist, Legislator and Writer

HT OnPower.org

April 02, 2010

Not Docile Sheep

Alan Reynolds, a senior fellow at the Cato Institute writes in an article on who will pay for the recently passed health care reform (aka ObamaCare) that appeared in the Wall Street Journal on March 30, 2010:

“Add it up and the government is counting on squeezing an extra $1.2 trillion over 10 years from a tiny sliver of taxpayers who already pay more than half of all individual taxes.

“It won't work. It never works.”

Reynolds explains it this way, and cites several supporting studies:

“In short, the evidence is clear that when marginal tax rates go up, the amount of reported incomes goes down. Economists call that "the elasticity of taxable income" (ETI), and measure it by examining income tax returns before and after marginal tax rates claimed a bigger slice of income reported to the IRS.”

To put it another way, Reynolds writes:

“Punitive tax rates on high-income individuals do not increase revenue. Successful people are not docile sheep just waiting to be shorn.”

Reynolds concludes by saying:

“The federal government has embarked on an unprecedented spending spree, granting new entitlements in the guise of refundable tax credits while drawing false comfort from phantom revenue projections that will never materialize.”

A great article worth reading in its entirety although it might be a little too difficult for many members of Congress to understand.

April 01, 2010

Thought of the Day

"[T]he present Constitution is the standard to which we are to cling. Under its banners, bona fide must we combat our political foes -- rejecting all changes but through the channel itself provides for amendments."

    ~ Alexander Hamilton, letter to James Bayard, 1802

HT Patriot Post