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May 31, 2010

Irresponsible Governance, Unsustainable Commitments

In “a tale of two counties” the editorial in yesterday’s Washington Post wonders what has happened to Fairfax and Montgomery counties since they “used to be about even.” The editorial writers set the stage this way:

“Montgomery County has just completed a nightmarish budget year. Stressed, squabbling and besieged elected officials savaged services and programs and jacked up taxes to eliminate an eye-popping deficit of almost $1 billion in a $4.3 billion spending plan. Meanwhile, across the Potomac River in Fairfax County, all was sweetness and light by comparison. With a budget roughly equal to Montgomery's, Fairfax officials erased a deficit a quarter as large with relative ease and far less drama.”

According to the Post, the two counties have taken different paths, and they describe it this way:

“The region's two largest jurisdictions -- demographic cousins with populations around 1 million, school systems among the nation's biggest and best, and public spending equal to that of small countries -- have parted ways. To put it bluntly, Montgomery is lurching under the weight of irresponsible governance, unsustainable commitments and political spinelessness -- particularly in the face of politically powerful public employees unions.” (emphasis added)

The Post concludes their lengthy editorial saying Montgomery County requires a cultural shift, after saying that:

“ . . . The county has just about run out of revenue-raising options, having boosted nearly its entire menu of taxes to the legal or practical limit. Montgomery's higher taxes already put it at a competitive disadvantage with Fairfax, which has a wide lead in attracting business and creating high-wage jobs; now Montgomery risks a downward spiral. To avoid that, a cultural shift must take place . . . .”

One difference between Montgomery and Fairfax counties, as the Post points out, “Virginia law denies public employees collective bargaining rights; that's helped Fairfax resist budget-busting wage and benefit demands. ” Would Arlington County be in the same fiscally unsustainable position as Montgomery County if not for being a part of the Commonwealth of Virginia? Maybe the five panjandrums on the Arlington County Board should stop asking the Commonwealth for greater authority, e.g., on property rights or weakening of the Dillon Rule? Take a few minutes and read the entire Post editorial, and then ask yourself whether Arlington County taxpayers could withstand similar fiscal commitments as the taxpayers of Montgomery County?

May 30, 2010

Memorial Day

Click-on and listen to Trace Adkins sing "Arlington," his Memorial Day tribute to members of the United States armed forces who now rest in peace in Arlington National Cemetary.

U.S. MemorialDay.org introduces its Memorial Day History this way:

“Memorial Day, originally called Decoration Day, is a day of remembrance for those who have died in our nation's service. There are many stories as to its actual beginnings, with over two dozen cities and towns laying claim to being the birthplace of Memorial Day. There is also evidence that organized women's groups in the South were decorating graves before the end of the Civil War: a hymn published in 1867, "Kneel Where Our Loves are Sleeping" by Nella L. Sweet carried the dedication "To The Ladies of the South who are Decorating the Graves of the Confederate Dead" (Source: Duke University's Historic American Sheet Music, 1850-1920). While Waterloo N.Y. was officially declared the birthplace of Memorial Day by President Lyndon Johnson in May 1966, it's difficult to prove conclusively the origins of the day. It is more likely that it had many separate beginnings; each of those towns and every planned or spontaneous gathering of people to honor the war dead in the 1860's tapped into the general human need to honor our dead, each contributed honorably to the growing movement that culminated in Gen Logan giving his official proclamation in 1868. It is not important who was the very first, what is important is that Memorial Day was established. Memorial Day is not about division. It is about reconciliation; it is about coming together to honor those who gave their all.

“Memorial Day was officially proclaimed on 5 May 1868 by General John Logan, national commander of the Grand Army of the Republic, in his General Order No. 11, and was first observed on 30 May 1868, when flowers were placed on the graves of Union and Confederate soldiers at Arlington National Cemetery. The first state to officially recognize the holiday was New York in 1873. By 1890 it was recognized by all of the northern states. The South refused to acknowledge the day, honoring their dead on separate days until after World War I (when the holiday changed from honoring just those who died fighting in the Civil War to honoring Americans who died fighting in any war). It is now celebrated in almost every State on the last Monday in May (passed by Congress with the National Holiday Act of 1971 (P.L. 90 - 363) to ensure a three day weekend for Federal holidays), though several southern states have an additional separate day for honoring the Confederate war dead: January 19 in Texas, April 26 in Alabama, Florida, Georgia, and Mississippi; May 10 in South Carolina; and June 3 (Jefferson Davis' birthday) in Louisiana and Tennessee.”

Just one of many Memorial Day quotes from a Quote Garden collection:

“These heroes are dead. They died for liberty -- they died for us. They are at rest. They sleep in the land they made free, under the flag they rendered stainless, under the solemn pines, the sad hemlocks, the tearful willows, and the embracing vines. They sleep beneath the shadows of the clouds, careless alike of sunshine or of storm, each in the windowless Place of Rest. Earth may run red with other wars -- they are at peace.  In the midst of battle, in the roar of conflict, they found the serenity of death. I have one sentiment for soldiers living and dead:  cheers for the living; tears for the dead.

    ~ Robert G. Ingersoll

And if you haven’t shed a tear yet, take a look at the picture below (from Google's Picasa Web Album) from the funeral of Cpl. Brian A. Medina who was killed November 12, 2004 in Al Anbar province, Iraq:

Update (5/31/10): Page Johnson, whose both parents are buried at Arlington National Cemetary, wrote a short essay while visiting the cemetary Memorial Day weekend 2009. She concludes by"I  writing:

"I turn to leave as a bird alights on a headstone and chants a twilight benediction. I realize that I, too, am like this little bird -- free as well to sing my own song wherever and whenever I choose -- because someone I never knew died to ensure I could. I am grateful for the gift."

May 29, 2010

The New Culture War

Last Sunday’s Washington Post contained an excellent essay by the president of the American Enterprise Institute in which he explains that America's newest culture war is between free enterprise and government control. Brooks explains it this way:

“It is not at all clear which side will prevail. The forces of big government are entrenched and enjoy the full arsenal of the administration's money and influence. Our leaders in Washington, aided by the unprecedented economic crisis of recent years and the panic it induced, have seized the moment to introduce breathtaking expansions of state power in huge swaths of the economy, from the health-care takeover to the financial regulatory bill that the Senate approved Thursday. If these forces continue to prevail, America will cease to be a free enterprise nation.

“I call this a culture war because free enterprise has been integral to American culture from the beginning, and it still lies at the core of our history and character. "A wise and frugal government," Thomas Jefferson declared in his first inaugural address in 1801, "which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government." He later warned: "To take from one, because it is thought that his own industry and that of his fathers has acquired too much, in order to spare to others, who, or whose fathers, have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, the guarantee to every one of a free exercise of his industry and the fruits acquired by it." In other words, beware government's economic control, and woe betide the redistributors.”

After citing several polls showing that Americans strongly support free enterprise, Brooks says that we are essentially a 70-30 nation, and asks, “If we love free enterprise so much, why are the 30 percent who want to change that culture in charge?” He notes the tipping point began in 2008, and then opines:

“The meltdown presented a golden opportunity for the 30 percent coalition to attack free enterprise openly and remake America in its own image.”

“If we reject the administration's narrative, the 70-30 nation will remain strong. If we accept it, and base our nation's policies on it, we will be well on our way to a European-style social democracy. Punitive taxes and regulations will make it harder to be an entrepreneur, and the rewards of success will be expropriated for the sake of greater income equality.

Brooks offers the "70 percent majority" hope, however, saying, “Today there is a very real threat that the 30 percent coalition may transform our great nation forever. I hope this threat will clear our thinking enough to bring forth leaders -- regardless of political party -- with our principles at heart and the ideas to match. If free enterprise triumphs over the quest for political power, America will be the stronger for it.”

P.S. The Q&A from a live forum the Post held with Mr. Brooks on Monday, May 24, 2010, is also worth reading. As one reader said, "I hope everyone in America reads" Brooks' essay.

UPDATE (6/2/10): Noemi Emery writes about "entreneurship and happiness" and cites from Brooks' book in her column today. She writes that in his new book, "The Battle," Brooks:"

"has statistics to prove that lottery winners (after the first thrill subsides) are not happy, that welfare recipients are very unhappy, and that trust fund babies are often the least well-balanced and happy of children. People living in social democracies are less happy at work and in general than are Americans, and the happiest Americans are entrepreneurs and creators."

May 28, 2010

Uncertainty and the Expiring Tax Cuts

In a report that is part of a “series on the expiring Bush tax cuts,” the Tax Foundation “has calculated what 10 typical tax returns will look like in 2011 under three scenarios: if all the Bush and Obama tax cuts expire completely at the end of this year, if all the Bush tax cuts are extended to 2011 or made permanent and if President Obama's budget is adopted, which includes a combination of expirations and extensions.”

Written by Tax Foundation economist Mark Robyn, the Tax Foundation wrote in the press release that accompanied the study (Fiscal Fact 227; March 26, 2010):

“The 13-part series outlines how the three tax scenarios would affect key tax parameters such as tax rates and brackets, the standard deduction, the estate tax and other provisions. It also addresses questions such as "How much did the Bush tax cuts cost the Treasury in foregone revenue?" and "Who received the biggest tax savings from the tax cuts?" among others.

“If all the Bush tax cuts are allowed to expire at the end of 2010, a single parent who earns $25,000 a year with one child would receive $928 from the federal government in 2011 in refundable tax credits. If all the Bush tax cuts are extended, the parent would receive $1,881 in refundable credits. Finally, under Obama's policies, the parent would receive $2,281 in refundable credits.”

In the report, Robyn opines, “(t)he personal income tax has always been Congress’s vehicle of choice to raise or cut taxes,” and then adds:

“Generally speaking, President Obama has proposed extending or making permanent most of the Bush-era tax cuts, that is, all those that benefit families making less than $250,000 ($200,000 for a single filer). He proposes letting expire all those that benefit taxpayers over those thresholds. He has also proposed a few new tax policies.”

Robyn also notes that polls show many Americans anxious about their taxes. Add the recent talk about adopting a European-style VAT tax, it’ no wonder productive Americans are anxious about their taxes. Consequently, productive taxpayers are urged to take more than a cursory look at this Tax Foundation study comparing various tax scenarios.

May 27, 2010

On the Way to becoming Greece

On Tuesday, we learned from USA Today that “private pay shrinks to historic lows as government payouts rise.” More specifically, USA Today reported:

“Paychecks from private business shrank to their smallest share of personal income in U.S. history during the first quarter of this year, a USA TODAY analysis of government data finds.

“At the same time, government-provided benefits — from Social Security, unemployment insurance, food stamps and other programs — rose to a record high during the first three months of 2010.

“Those records reflect a long-term trend accelerated by the recession and the federal stimulus program to counteract the downturn. The result is a major shift in the source of personal income from private wages to government programs.

The trend is not sustainable, says University of Michigan economist Donald Grimes. Reason: The federal government depends on private wages to generate income taxes to pay for its ever-more-expensive programs. Government-generated income is taxed at lower rates or not at all, he says. "This is really important," Grimes says.” (emphasis added)

The newspaper concluded the story with the following quotes:

“Economist Veronique de Rugy of the free-market Mercatus Center at George Mason University says the riots in Greece over cutting benefits to close a huge budget deficit are a warning about unsustainable income programs. (emphasis added)

“Economist David Henderson of the conservative Hoover Institution says a shift from private wages to government benefits saps the economy of dynamism. "People are paid for being rather than for producing," he says.” (emphasis added)

Update (5/26/10): Ross Kaminsky, blogging at the National Taxpayers Union's blog, Government Bytes, wrote today, "And this brings us to the political ramifications of the trend: When a majority of people are net receivers of money and/or services from the government, and in the unfortunate circumstance in which we live now in which people who don't pay income taxes are nevertheless allowed to vote themselves money from people who do, we reach a tipping point where a majority of voters have incentive to vote for maximum redistribution."

May 26, 2010

72% Don’t Think Much of Congress on Economics

Rasmussen Reports™ released the results of a telephone survey on Saturday that said 72% of 1,000 “likely voters” “are not confident Congress knows what it’s doing when it comes to the economy." More specifically, Rasmussen reported:

“Even as Congress puts the finishing touches on legislation asserting more government control over the U.S. financial industry, most U.S. voters continue to believe the legislators have little idea what they're doing when it comes to the economy.
“The latest national telephone survey of Likely Voters finds that just 27% are at least somewhat confident that Congress knows what it’s doing when it comes to addressing current economic problems.  An overwhelming majority (72%) are not confident in Congress to address these problems.  These figures include six percent (6%) who are Very Confident and 43% who are Not at All Confident.
“These findings show little change from surveys dating back to late September 2008, just after the Wall Street meltdown that included the collapse of the Lehman Brothers financial firm. Supporters of the new bill say it is intended to prevent another such meltdown.”
As the report pointed out, “Voters consistently for months have said they trust their own economic judgment more than the president’s and that of the average member of Congress.” Something to remember the next time Arlington taxpayers hear Senators Webb and Warner or Representative Moran sound-off on economic issues.

May 25, 2010

States Vary in Tax Filers Owing No Income Taxes

A hot topic a month ago in the mainstream media last month, according to Scott Hodge of the Tax Foundation, in the latest study (Fiscal Fact, May 24, 2010) “was the record number of Americans who filed an income tax return but had no income tax liability after taking their credits and deductions.” Hodge writes  that new IRS data allows the calculation of “the number of nonpayers in each state who filed a tax return,” and continues by saying:

“According to the latest IRS figures for 2008, a record 52 million filers—36 percent of the 143 million who filed a tax return—had no tax liability because their credits and deductions reduced their liability to zero. Indeed, tax credits such as the child tax credit and earned income tax credit have become so generous that a family of four earning up to about $52,000 can expect to have their income tax liability erased entirely.”

Hodge then writes:

“Generally speaking, the most populated states have the most nonpayers. More than 6 million tax-filing Californians paid nothing to Uncle Sam for the 2008 tax year. That was 37 percent of the 16.4 million tax filers in California.

[ . . . .]

“All of the top 10 ranking states have among the lowest median family incomes in the country. Of this group, Georgia has the highest median family income at $60,268. Mississippi has the lowest at $46,668.

“By contrast, the states with the lowest percentage of nonpayers are not as geographically concentrated. What they tend to have in common is higher incomes. Half of the 10 with the lowest percentage of nonpayers are in the Northeast and half are in the West and Northern Plains states. Alaska has the lowest percentage of nonpayers, 21 percent of filers. Massachusetts has the second lowest at 27 percent, followed by Connecticut (27 percent), New Hampshire (28 percent), and Wyoming (28 percent) to round out the bottom five.

The study includes a table with all the numerical data as well as the map below.


May 24, 2010

No More Bailouts

The National Taxpayers Union has a convenient petition for taxpayers to tell their representatives on Capital Hill, “Enough is enough! No More Bailouts!” NTU explains:

“America's economic success is largely due to our free-market system, in which risk is a fundamental element. Some businesses succeed tremendously, some fail spectacularly. But they should do so on their own, not with the backing of millions of reluctant citizens' paychecks.

“Bailouts that keep mismanaged organizations afloat delay natural corrections to unsound business practices. In the long run, bailouts do not "rescue" anyone because they stall the adoption of necessary reforms that would prevent future repeats of bad choices.

“Enough is enough. No more bailouts.”

Sign the petition, and NTU will forward the petition to Arlington County’s decision-makers on Capital Hill -- Senators Webb and Warner and Congressman Moran. Demand an end to the public bailouts of government-sponsored enterprises and private institutions.

May 23, 2010

Arlogance Rears Its Ugly Head

On Friday, Scott McCaffrey of the Arlington Sun Gazette posted an online story saying that “federal funding increasingly appears (the) key to (a) Columbia Pike streetcar plan.” McCaffrey went on to write:

“While county government officials plan to use plenty of local revenue to fund their estimated $138 million share of a trolley line, the current funding package also relies on $50 million in federal transit funds to spur the proposal from concept to reality.

“Whether those funds are forthcoming remains to be seen, with a determination expected by 2011. Local officials are hoping that the Obama administration will be more amenable to rail projects than was the Bush administration, which shunted them to the side in favor of high-frequency bus alternatives in urban areas.”

The cost to Arlington County taxpayers? McCaffrey writes:

“The current price tag for the project is an estimated $160 million. Because most of the line would be in Arlington, the county would be required to shoulder the lion’s share of the tab.

“The direct cost to Arlington taxpayers - perhaps $60 million or more - likely would be funded through revenue bonds, paid off in coming years using funds generated by a tax surcharge on commercial property.

[ . . . . ]

“Wayne Kubicki, one of the most respected fiscal watchdogs in the county, voiced a more specific concern: What would happen if the General Assembly eliminated the ability of Northern Virginia jurisdictions to collect the real estate surtax on commercial property?

“If the tax was revoked, debt service [for the project] would have to come out of the general fund, no?” he asked. “But then, how do you do that, since there was no bond referendum?”

“County officials say there is plenty of time to work through all the concerns that have been raised.”

“(P)lenty of time to work through all the concerns.” Oh where oh where have I heard that before? And Arlogance? It's "extravagant solutions in search of problems to solve," according to ACTA's president, Tim Wise

May 22, 2010

Health Care Reform, An Entitlement for Slackers

According to CNSNews.com, on Friday, May 14, 2010, House Speaker Nancy Pelosi (D-Calif) recently told “aspiring musicians” they could quite their jobs since taxpayers will cover their health care. Video reporter Nicholas Ballasy said “Pelosi made the remarks while speaking at the Capitol on Wednesday to the Asian American and Pacific Islanders Summit.”

Ballasy’s full report said:

“House Speaker Nancy Pelosi said this week that thanks to the new health-care reform law, musicians and other creative types could quit their jobs and focus on developing their talents because taxpayers would fund their health care coverage. “

““We see it as an entrepreneurial bill,” Pelosi said, “a bill that says to someone, if you want to be creative and be a musician or whatever, you can leave your work, focus on your talent, your skill, your passion, your aspirations because you will have health care.”

To view the video from Ballasy’s report click here.

UPDATE (5/22/10): Big Government notes (+ HT) this editorial yesterday from the Las Vegas Review-Journal, which editorialized about Speaker Pelosi's "new defense of her party's unpopular health care reforms: They guarantee coverage for the next generation of dropout hippies and starving artists."  The paper concludes its editorial by writing:

"It was bad enough that Rep. Pelosi, President Obama and Senate Majority Leader Harry Reid saw fit to raise taxes on businesses and increase medical costs on families as part of their health care takeover. Now we get confirmation that it's an entitlement for slackers, too.

Which raises an important question: If everyone decides to quit their jobs and "focus on their passions," who'll pay for their health care then?"

May 21, 2010

Thought for the Day

"“With the exception only of the period of the gold standard, practically all governments of history have used their exclusive power to issue money to defraud and plunder the people.”"

    ~ Friedrich Hayek

HT OnPower.org

May 20, 2010

Another Month, Another Porker

Citizens Against Government Waste (CAGW) announced a few days ago that it has “named Federal Communications Commission (FCC) Chairman Julius Genachowski May Porker of the Month for his recent decision to push forward with an ill-conceived and possibly extra-legal plan to impose federal regulations on the Internet."

In naming Genachowski May’s Porker of the Month, CAGW said:

“Chairman Julius Genachowski is leading the FCC into uncharted waters, straight into a legal headwind.  In April, the U.S. Court of Appeals for the District of Columbia laid down an unambiguous marker:  the FCC has no authority to force Internet service providers (ISPs) to give equal treatment to all Internet content flowing through their networks, nor can it regulate ISPs under Title II without Congress’s express authority.  The agency is out of its depth and will end up sinking time and the taxpayers’ money into harassing an industry that is functioning very well without ham-fisted government regulations,” said CAGW President Tom Schatz.

“Chairman Genachowski is attempting to circumvent the court’s decision by seeking what he calls a ‘third way’ to insinuate the federal government into the workings of the Internet,” continued Schatz.  “This mystical proposition belies the manifest reality:  the taxpayers will be footing the bill for a giant new regulatory and enforcement bureaucracy to address an Internet crisis that does not exist.  Chairman Genachowski’s third way is the wrong way.”

Another good choice for Porker of the Month by Citizens Against Government Waste.

May 19, 2010

Health Plans, Insurers, Doctors and Patient Choice

In his book, “That’s Not What We Meant To Do,” published in 2000, Steven Gillon discussed how major governmental reforms such as the federal welfare reform policy of 1935, the community mental health act of 1963, and the immigration act of 1965, among  many others, “all fell victim to one of the most immutable rules of nature, the law of unintended consequences, which states that you cannot always predict the results of purposeful action,” as Gillon writes in the introduction.

That sure appears to be what is happening to the recently passed health reform legislation, the Patient Protection and Affordable Care Act (Public Laws 111-148 and 111-152), that was jammed through Congress. Guess that’s what Speaker Nancy Pelosi meant when she said Congress needed to pass the bill so the people could find out what was in it.

Gillon can now add ObamaCare to the list of 20th Century reforms, which met the law of unintended consequences that Gillon writes about in his book. A "must read" op-ed by Scott Gottlieb in yesterday’s Wall Street Journal describes how, “Insurers and doctors are already reshaping their businesses as a result of Mr. Obama’s plan.” Gottlieb, a fellow at the American Enterprise Institute, explains:

“The health-reform law caps how much insurers can spend on expenses and take for profits. Starting next year, health plans will have a regulated "floor" on their medical-loss ratios, which is the amount of revenue they spend on medical claims. Insurers can only spend 20% of their premiums on running their plans if they offer policies directly to consumers or to small employers. The spending cap is 15% for policies sold to large employers.”

Gottlieb explains these restrictions this way:

“Restrictions on how insurers can spend money are compounded by simultaneous constraints on how they can manage their costs. Beginning in 2014, a new federal agency will standardize insurance benefits, placing minimum actuarial values on medical policies. There are also mandates forcing insurers to cover a lot of expensive primary-care services in full. At the same time, insurers are being blocked from raising premiums—for now by political jawboning, but the threat of legislative restrictions looms.

“One of the few remaining ways to manage expenses is to reduce the actual cost of the products. In health care, this means pushing providers to accept lower fees and reduce their use of costly services like radiology or other diagnostic testing.

"To implement this strategy, companies need to be able to exert more control over doctors. So insurers are trying to buy up medical clinics and doctor practices. Where they can't own providers outright, they'll maintain smaller "networks" of physicians that they will contract with so they can manage doctors more closely . . . .”

The effect, Gottlieb explains, is that “doctors owned more than two-thirds of all medical practices” in 2005, but by 2011, “more than 60% of physicians will be salaried employees.” Just another "unintended consequence" of the good intentiond of our political elite?

Below is the cover for Steven M. Gillon’s book, “That’s Not What We Meant to Do: Reform and its Unintended Consequences in Twentieth-century America,” which is available at Barnes & Noble. A good way to keep up-to-date on what is happening with health reform includes the Heritage Foundation's blog, The Foundry, whcih reported last week that repeal is proceeding.

May 18, 2010

Thought for the Day

"The government is mainly an expensive organization to regulate evildoers, and tax those who behave; government does little for fairly respectable people except annoy them."

   ~ Edgar W. Howe

HT "As Certain as Death . . . Quotations About Taxes (2010)," TaxAnalysts.com

May 14, 2010

Thought for the Day

"Taxing profits is  tantamount to taxing success."

   ~ Ludwig von Mises

HT "As Certain as Death -- Quotations about Taxes (2010)

May 13, 2010

Arlington County Board Set To Fast Track New Wakefield H.S.

Yesterday’s online Arlington Sun Gazette reported that “County Board members appear ready to support placing a referendum on the November ballot that includes funds for a new Wakefield High School.”

The cost reportedly will be “over $100 million, but earlier estimates were between $140 and $150 million. The Sun Gazette’s Scott McCaffrey also reported:

“Fisette said the board’s decision was swayed, in part, because school officials have proposed, besides Wakefield, a very modest capital-improvement program, which will require only small bond packages in 2012 and 2014. Smaller school bonds would allow the county government “to deal with a backlog of capital needs” on the county side, he said.”

There's a lively debate going on as readers post comments with Wayne Kubicki posting the most serious, writing the following:

"With this plan, the County Board is maxing out the collective municipal credit card. The new CIP also starts borrowing bond money for street repaving!"
For additional information beyond McCaffrey’s report, see the county’s Capital Improvement Plan (CIP) on the DM&F website. The Schools’ CIP is available at the School Board’s “Board Docs” webpage (beginning with agenda item E.1. May 6 Board meeting and May 6 work session).

May 12, 2010

Flying south? Use Southwest Air through Charleston.

Thanks to Norm Leahy, blogging at Tertium Quids, we learn of some good news for travelers via the Tax Foundation. According to the Tax Foundation blog:

“Southwest Airlines will soon be flying through Charleston, South Carolina. That's good news for travelers looking for cheap airfare. Even better news: Southwest has declined the incentives that were being offered by the Charleston County Council. The business incentives would have been funded by a new 5% excise tax on car rentals.

[. . . ]

“Basically the tax would have subsidized the airline industry at the expense of rental car customers. Some politicians like rental car taxes because they believe it allows them to tax out-of-towners who can't vote them out of office (even though many cars are rented by locals), a phenomenon known as tax exporting. Tax exporting should be avoided because it disconnects voters from the cost of government and leads them to demand more government services than they are willing to pay for. (Emphasis added)

“Likewise, business incentives are poor policy. Businesses should make decisions for fundamental economic reasons, and lawmakers should avoid using subsidies to lure business to a location that would otherwise be unprofitable. Southwest should be commended for declining such offers. There are reports, however, that there is another low-cost carrier being courted, and this car rental tax may resurface as a means of luring them.”

In an age of crony capitalism, it’s good to learn there are still companies that still believe in capitalism and free markets. Enjoy your stop in Charleston, South Carolina. The Tax Foundation blog provides links to several stories on car taxes.

May 11, 2010

Thought of the Day

 "In Britain, new "green taxes" do nothing to "save" the planet, but they are estimated to cost the average family about $6,000 a year. That's change you can believe in."

   ~ Mark Steyn

HT Orange County Register May 2008 column

May 10, 2010

Something to Think About

"Among the first things the Chinese inquired about on their recent visit to Washington was about healthcare, because they’re starting to see that their citizens are supposed to work 12 hours a day and accumulate cash to lend us at low interest and to expand the entitlements that they themselves don’t have and have no plan on extending for their own population.  Again, I cannot stress enough that’s untenable."

    ~ Victor Davis Hanson

HT From a recent speech posted at FrontPageMag

May 09, 2010

Taxes Live On; For At Least 33 Years

A story in last Friday’s Buffalo News featured an 80 year-old homeowner who received a bill earlier in the week for an “occupancy tax” that was repealed three decades ago after being imposed in 1976. It was repealed a year later “after a near-revolt by city residents.” According to the Buffalo News:

“Back in 1976, the occupancy tax was branded by some as "notorious." Thousands of people refused to pay what they believed was an illegal tax. Some Common Council members were defeated, and the furor was viewed as one reason why then-Mayor Stanley Makowski opted not to seek re-election.

“A lawsuit over the tax dragged on for years, culminating in a court upholding its legality.

“For three decades, the city opted not to send out collection notices, choosing instead to collect the tax as properties were sold to new owners or refinanced. The unpaid tax becomes a lien on properties that must be settled before a sale occurs or a new mortgage is approved.

“But city officials said Friday that the tax office has been converting to a new computer system. Transferring thousands of delinquent accounts to the new system would have taken a lot of time and money, officials said. A decision was made to send out notices.”

Notes the paper, “One option city officials are reviewing is whether some or all of the penalties and interest charges could be waived.”

Oh how right Benjamin Franklin was when he said, “but nothing in this world is certain but death and taxes.”

HT Betsy's Page

May 08, 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)"

May 07, 2010

Smoke, Flames, Greece, and the United States

Mona Charen has a column at National Review Online in which she says Greece’s “national meltdown” provides lessons for the United States. As the column’s sub-title puts it: “In Athens or in Washington, it’s the size of government that matters.” She writes that Greece is not just “a financial crisis,” but rather “a national meltdown.”

She points out it’s not just the differences in size between Greece and the U.S. Rather, there’s a tradition of tax avoidance and endemic corruption. However, there are similarities that are worrisome. Things like the amount of debt, and while the federal workforce in the U.S. isn’t as large as that in Greece, she does point out:

“President Obama’s new spending will result in a 14.5 percent increase in the number of federal employees in just two years. And he has looked after union interests with particular zeal — at General Motors and Chrysler, by funneling one-third of stimulus spending to state and local governments, and by repealing the rule that required unions to disclose their spending, to name three examples.”

Charen concludes by writing:

“It’s no coincidence that the states with the most powerful public-sector unions — New Jersey, California, and New York — are facing the most severe budget crises.

“Greece is in flames, but if you look around, you can smell the smoke here as well.”

Mohamed El-Erian, CEO of investment firm Pimco is quoted with a similar warning at CNBC:

"We are not Greece. We have more time. But what the Greek crisis tells you is debt and deficits matter . . . "The structure of your deficits matter and the US doesn't have much flexibility . . . Don't underestimate how quickly this can happen . . . There are structural headwinds out there and we better get our act together before those structural headwinds become overwhelming."

Other views at National Review Online include comments by James Capretta on Greece being a warning sign for the rest of Europe, Andrew Stuttaford on IMF, Rep. Cathy McMorris Rodgers (R-Wash) asking why American taxpayers should bailout Greece, and Marco Rubio who also suggests Americans should see Greece as a wake-up call. In addition, an article in the Financial Times (requires free registration) on Tuesday includes several useful charts.

May 06, 2010

Risking Arlington County’s AAA Bond Rating?

Scott McCaffrey reports at the online Arlington Sun Gazette this morning that tonight School Superintendent Patrick Murphy will likely “propose including funding for a new Wakefield High School on a 2010 county bond referendum, setting the stage for debate on whether the big-ticket project will push the county government’s debt levels too high.” According to McCaffrey’s report:

“A new Wakefield would be the major component of a $107.2 million bond referendum Murphy would like to see before voters in November. The package also would include funding for fiber-optic communications in school facilities, and upgrades to HVAC systems and roofs at local schools.

“Murphy plans to make the case that now is the time to act on a new Wakefield, rather than waiting two years, as had earlier been considered likely. School officials think they will be able to get better construction bids by moving forward sooner rather than later.”

However, the Sun Gazette report also notes:

“School Board members are expected to adopt a capital-spending plan in June. At the same time, County Board members will have to decide if putting the Wakefield project on the ballot in November could push Arlington’s debt levels to the point where they might imperil the county government’s AAA/AAA/Aaa bond ratings - ratings county officials have vowed to protect at all costs.

"Acting County Manager Barbara Donnellan voiced concern about rising debt levels when presenting her own six-year, billion-dollar capital-improvement plan to County Board members in late April. But she has not specifically voiced an opinion on the Wakefield project.”

Information about the School Board's meeting tonight, including Schools CIP and the CIP work session, is available at the School Board's webpage.

We’ve growled many times, including October 7, 2007, about the high cost of Arlington’s Washington-Lee High School relative to other high schools in Virginia, and will be looking more closely at the construction plans of the Arlington School Board.

May 05, 2010

Why The Capital Gains Rate Should Be Zero

Dan Mitchell, a senior fellow at the Cato Institute, explains in a video released on Monday by the Center for Freedom and Prosperity Foundation (CF&P) “why the capital gains tax is inconsistent with good tax policy and hurts the American economy.” The video, “Six Reasons Why the Capital Gains Tax Should Be Abolished,” lasts 6 minutes, 44 seconds.

According  to the CF&P press release, Mitchell says, “The capital gains is double taxation and has a harmful effect on competitiveness . . . "It is not even indexed for for inflation. And people wonder why Americans do not save and invest enough." The executive summary of the mini-documentary says:

“The correct capital gains tax rate is zero because there should be no double taxation of income that is saved and invested. This is why all pro-growth tax reform plans, such as the flat tax and national sales tax, eliminate the capital gains tax. Unfortunately, the President wants to boost the official capital gains tax rate to 20 percent, and that is in addition to the higher tax rate on capital gains included in the government-run healthcare legislation.”

Watch this fine video, and others from CF&P, on You Tube, Yahoo, or the Capitol Hub.

May 04, 2010

Thought for the Day

"Government can pay its bills with tax money, run up a budget deficit or print more cash, creating inflation. Inflation hurts the saver, deficits hurt the investor, taxes hurt the earner, and all three are usually the same person: you."

   ~ P.J. O'Rourke

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

May 03, 2010

Thought for the Day

"In the United States we like to believe we are a capitalist society based on individual responsibility. But we are what we do. Not what we say we are. Not what we wish to be. But what we do. And what we do in the United States is make it easy to gamble with other people’s money—particularly borrowed money—by making sure that almost everybody who makes bad loans gets his money back anyway. The financial crisis of 2008 was a natural result of these perverse incentives. We must return to the natural incentives of profit and loss if we want to prevent future crises."

   ~ Russ Roberts, Professor of Economics, George Mason Univesity

HT Mercatus Center

May 02, 2010

Latest "Federal Waste" From Dr. Coburn’s Pork Report

When you need to raise your blood pressure, visit the Pork Report/Washington Waste of the Day at the website of Senator Tom Coburn (R-Oklahoma), M.D. where his staff round-up the details of “how Washington politicians, bureaucrats, and lobbyists are spending your tax dollars.”

The report for April 27, 2010 “identifies at least $60,001,133,000 in wasteful Washington spending.” A few of the ones  that are sure to quickly raise your blood pressure are the following (visit his website for the links to read more):

  • Las Vegas will have two mob museums, one funded with federal dollars
  • Medicare funding the mob; Gangs, the Mafia, and other thugs defraud $60 billion from the federal health program every year
  • Tennis resort receives federal stimulus funds
  • New Mexico Lieutenant Governor charges $33,000 of the cost for her frequent use of state jets to federal stimulus funds
  • California may spend $7.5 million in stimulus funds to rebuild a fish ladder; “Fish ladders don’t work like the engineers have them work on paper,” noted one biological consultant who has spent years working on fish population recovery efforts
  • Success of $4 million federal stimulus program to populate a Florida river with oysters threatened by federal government’s decision to release millions of gallons of fresh water into the river which could kill the oysters

Is there any wonder CNNMoney.com reported last week on a survey of business economists:

“The recovery is picking up steam as employers boost payrolls, but economists think the government's stimulus package and jobs bill had little to do with the rebound, according to a survey released Monday.”

That sentiment “is shared for the recently passed $17.7 billion jobs bill,” which was recently passed, according to CNNMoney.com.

P.S.: The second item in the list above (Medicare fraud) does not involve “stimulus money.”

May 01, 2010

When You Feel Entitled to a Congressional Pay Raise

A story posted this morning by Scott McCaffrey at the online Arlington Sun-Gazette reports:

“U.S. Rep. Jim Moran (D-8th) was one of only a handful of House members who voted to increase congressional pay this year.

“Moran was on the losing end of a lopsided 405-15 vote to block an automatic pay raise for members, who currently earn $174,000 per year.”

Norm Leahy, using information from the National Taxpayers Union’s blog, Government Bytes (here and here), provides additional background at Tertium Quids on Thursday, writing:

“we learn that Congress managed to pass legislation stopping an automatic cost of living increase for itself in 2011. The bill, HR 5146, sailed through the House 402-15.

“So...did any of Virginia's worthies vote to keep the COLA?

“Yes: Rep. Jim Moran.

“Of note: among the 79 co-sponsors, one can find such names as Rick Boucher, Gerry Connolly, Randy Forbes and Bob Goodlatte. Eric Cantor? Not on the list. Nor were Bobby Scott, Glenn Nye, Tom Perriello, Rob Wittman or Frank Wolf.

Finally, here is the link to roll call vote 226 and issue information from the U.S. Congress’ THOMAS system. What a concept, voting for a pay raise during what some are calling the Great Recession, not to mention surveys showing Congress' popularity headed towards single digits.