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November 30, 2010

Your Tax Dollars at Work . . . National Portrait Gallery. Not!

The National Portrait Gallery (NPG) is one of the Smithsonian Institution’s (SI) museums. According to an extremely detailed article at CNSNews, yesterday, SI has an annual budget of $761 million with 65% if it coming from the federal government. For each of the past two fiscal years, the NPG received $5.8 million annually.

The article that CNSNews writes about concerns:

“an exhibition that features images of an ant-covered Jesus, male genitals, naked brothers kissing, men in chains, Ellen DeGeneres grabbing her breasts, and a painting the Smithsonian itself describes in the show's catalog as "homoerotic."

“The exhibit, “Hide/Seek: Difference and Desire in American Portraiture,” opened on Oct. 30 and will run throughout the Christmas Season, closing on Feb. 13.

“This is an exhibition that displays masterpieces of American portraiture and we wanted to illustrate how questions of biography and identity went into the making of images that are canonical,” David C. Ward, a National Portrait Gallery (NGP) historian who is also co-curator of the exhibit, told CNSNews.com.”

The CNSNews story provides the details of the so-called art in the “Hide/Seek” exhibit in case anyone wants to know more about any of the so-called artwork. However, in my humble opinion, it’s at least pornography if not worse. Furthermore, comments by NPG officials in the news article raise questions about their competency. For example:

“Co-curator David Ward told CNSNews.com the “Hide/Seek” exhibit is in keeping with the National Portrait Gallery’s mission.

“The NPG is a museum where history and biography intersect with art, specifically the art of portrayal,” Ward said in an e-mail. “In our permanent collection, we give primacy to the images of people who have made a significant impact on American history and culture.

[ . . . ]

“Hide/Seek evolved from the Portrait Gallery’s ongoing commitment to represent the diversity of our people in recognizing the contribution that gay and lesbian Americans made to American art and culture during the last century,” Ward said.

[ . . . ]

“When asked by CNSNews.com if “Hide/Seek” had a central message, Ward said it does not.”

With the President and Congress looking to cut the deficit, it seems the National Portrait Gallery is an excellent starting place, especially some of its staff.

November 29, 2010

Tax Revenues and Hauser’s Law

Last Monday, we growled about higher taxes, whiskey and car keys, largely basing it on the famous P.J. O’Rourke quotation, “Giving money and power to government is like giving whiskey and car keys to teenage boys” and a great essay by Stephen Moore and Richard Vedder that appeared in the Wall Street Journal.

Almost as a follow-up, the Wall Street Journal published an op-ed last Friday by Kurt Hauser, chairman emeritus of the Hoover Institution at Stanford University, last Friday titled, “There’s No Escaping Hauser’s Law. Specifically, he argues:

“Tax revenues as a share of GDP have averaged just under 19%, whether tax rates are cut or raised. Better to cut rates and get 19% of a larger pie.”

Briefly, Mr. Hauser explains Hauser’s Law this way:

"Over the past six decades, tax revenues as a percentage of GDP have averaged just under 19% regardless of the top marginal personal income tax rate. The top marginal rate has been as high as 92% (1952-53) and as low as 28% (1988-90). This observation was first reported in an op-ed I wrote for this newspaper in March 1993. A wit later dubbed this "Hauser's Law."

“Over this period there have been more than 30 major changes in the tax code including personal income tax rates, corporate tax rates, capital gains taxes, dividend taxes, investment tax credits, depreciation schedules, Social Security taxes, and the number of tax brackets among others. Yet during this period, federal government tax collections as a share of GDP have moved within a narrow band of just under 19% of GDP.

“Why? Higher taxes discourage the "animal spirits" (1)of entrepreneurship. When tax rates are raised, taxpayers are encouraged to shift, hide and underreport income. Taxpayers divert their effort from pro-growth productive investments to seeking tax shelters, tax havens and tax exempt investments. This behavior tends to dampen economic growth and job creation. Lower taxes increase the incentives to work, produce, save and invest, thereby encouraging capital formation and jobs. Taxpayers have less incentive to shelter and shift income.”

The importance of tax rates and tax revenues as a percentage of GDP is that the Co-Chairs’ Proposal (aka the Bowles-Simpson deficit reduction commission) “(c)aps revenue at or below 21% of GDP. Steve Manacek explains why this is a problem at Ricochet on November 10, 2010:

“The more important problem is on the revenue side. According to Office of Management and Budget figures, federal revenues have NEVER reached 21% of GDP. In fact, only in Bill Clinton’s final year in office – and during WW II – did revenues even exceed 20% of GDP. During the whole time from 1960 through 2008, federal tax revenues almost always fell between 17 and 19% of GDP, only occasionally rising above 19% (chiefly in Clinton’s second term) or below 17% (G. W. Bush’s first term). Even President Obama’s FY 11 Budget has federal revenues rising only to around 19% of GDP by 2015. So the 21% “cap” represents two full percentage points of GDP above what we have experienced even during historically “high” tax environments.”

So excuse me for thinking deficit should be reduced only by cutting government spending. 

HT Rush Limbaugh for the link to Ricochet and Frank Emerson for the column by Mr. Hauser.

(1) By the way, InvestorsWords says the term “animal spirits” was “coined by British economist John Maynard Keynes to describe consumer confidence and its impact on the economy. The term was first used in Keynes's "The General Theory of Employment."

November 28, 2010

Quote of the Day

"What really bugs the tax-takers is not that wealth is being redistributed but that it's not being redistributed to them. The tax-takers don't like us to have the choice about who will receive our wealth, to whom and for what it will be distributed and redistributed. You and I aren't good enough wealth redistributors, but they are."

   ~ Tibor Machan

HT Orange County Register

November 23, 2010

Comparing Arlington, Fairfax, and Loudoun Counties

It’s been several months since we growled about Arlington’s ‘lowest tax rate’ in Northern Virginia on July 10, 2010. So let’s take a look at how much Arlington, Fairfax, and Loudoun counties collect in revenues and spend on a per capita basis. Data is from Commonwealth Data Point, a website maintained by Virginia’s Auditor of Public Accounts. Data is for 2008, the latest available.

  • Population: Arlington -- 206,822; Fairfax -- 1,017,320; and Loudoun -- 287,687.
  • Total Revenue Per Capita: Arlington -- $4,642; Fairfax -- $4,242; and Loudoun -- $4,342.
  • Total Expenditure Per Capita: Arlington -- $4,238; Fairfax -- $3,868; and Loudoun -- $3,780.

Next time you get to talk to one of Arlington County’s grand poohbahs, ask them to justify why the County Board needed to spend $370 more per capita in 2008 than the Fairfax County supervisors or $458 more per capita in 2008 than the Loudoun County supervisors. I’ll be happy to publish any of their explanations.

November 22, 2010

Higher Taxes, Whiskey and Car Keys

Today’s Wall Street Journal has a great essay by Stephen Moore and Richard Vedder in which they argue that "higher taxes won’t reduce the deficit," specifically saying, “History shows that when Congress gets more revenue, the (politicians) spend it.” This essay arrives as several plans have been released setting out how to eliminate the federal deficit.

The question remains, however, is do you reduce the deficit by raising taxes or cutting spending. Moore and Vedder note that Erskine Bowles, one of the co-chairs of the president’s deficit reduction commission “suggested at a briefing several months ago that there will be $3 of spending cuts for every $1 of tax increases.” The authors write that if that sounds familiar, it is since President “Reagan used to complain that he waited his entire presidency for the $3 of spending cuts that Congress promised for every dollar of new taxes he agreed to in 1982.”

Now P.J. O’Rourke made much the same argument opposing higher taxes when he said:

“Giving money and power to government is like giving whiskey and car keys to teenage boys.”

We also growled on November 10 when news broke that the commission’s co-chairs released their proposal.

Moore and Vedder point out that recommendations in the proposal, e.g., closing popular tax deductions and raising tax gas taxes, among others, would “drive tax collections up to 21% of GDP from the historical norm of about 18,5%. Spending would also increase so how would the deficit be reduced? The authors also produce research papers supporting their contention that higher taxes would not reduce the deficit. Moore and Vedder conclude their essay saying:

“We suspect that voters intuitively understand this tax and spend connection, which is why there is such hostility to broad-based tax increases. "Polls consistently find that a majority of Americans believe any new taxes will be spent by the politicians," pollster Scott Rasmussen told us recently in an interview.

“The grand bargain so many in Washington yearn for—tax increases coupled with spending cuts—is a fool's errand. Our research confirms what the late economist Milton Friedman said of Congress many years ago: "Politicians will always spend every penny of tax raised and whatever else they can get away with."

So well said!

November 21, 2010

The 2011 Tax Time Bomb

We growled about the so-called expiring Bush tax cuts on November 1, and pointed out that in addition to increasing taxes, the increased taxes would adversely affect Virginia. For example, Virginia would lose, on average, over 18,000 jobs annually and lose over $8,000 per household in total disposable personal income. Individual income taxes would also increase by $14.6 billion.

In the weekend edition of Investor’s Business Daily, Alan Reynolds, senior fellow at the Cato Institute, writes that policy makers should “zero in on 2011’s tax time bomb and leave 10-year plans for later.” He specifically writes:

“President Obama will soon meet with the congressional leadership of both parties to reach some agreement about whether or not several critical tax rates will suddenly increase on Jan. 1. He says his "first priority is to make the middle-class tax cuts permanent." Those words conceal a well-crafted trap for Republicans.

“The president can't possibly make any tax change permanent, since his term of office ends in two years. The lame-duck Congress can't possibly bind even the next Congress, much less all future ones.”

Pointing out that taxpayers aren’t lambs, Reynolds goes on to say:

“If Republicans would simply shut up about permanent tax cuts and focus on next year, the president's 10-year ploy would be revealed as the irrelevant nonsense that it is. Nobody with any common sense will be trying to set tax policy for the next 10 years by the end of 2010. The last time some fools tried doing that, we ended up with the tax time bomb we currently face.

“In all the months since President Obama presented his tax proposals in the phantom 2011 budget on Feb. 1, the 111th Congress apparently never bothered to glance at those plans. The related Treasury Green Book estimated that the centerpiece of the plan — raising the top two tax rates — would raise just $14.5 billion in fiscal 2011.

“Even that paltry sum is pure illusion. It assumes that higher tax rates do literally no harm to the economy, even though the targets of Obama's tax crusade account for a fourth of consumer spending and a much larger share of investment, entrepreneurship and GDP.

“It also assumes that the intended victims are docile lambs waiting to be shorn. On the contrary, the evidence is overwhelming that high-income taxpayers easily find ways to earn or report less income when marginal tax rates turn punitive, and likewise readily report more income when tax rates are more reasonable.”

The essay is well worth reading in its entirety, including Reynolds’ concluding advice for Republicans: “Republicans, for their part, must beware the twin traps — the president's false promise of "permanent" tax cuts and his pretense of grappling with 10-year budget plans in a few weeks. The Republicans need to keep a firm grasp on the difference between making a compromise and becoming totally compromised.”

November 20, 2010

Money Well Spent?

If you’re a fan of Fox Business Network senior correspondent Charles Gasparino, you may have already read his latest book, “Bought and Paid For: The Unholy Alliance Between Barack Obama and Wall Street.” Nevertheless, you may still enjoy Shawn Macomber’s interview with Gasparino in yesterday’s American Spectator. Describing the book, Macomber says:

Bought and Paid For is, in short, required reading for anyone interested in the obscured behind the scenes machinations of the economic maelstrom we currently find ourselves mired in.”

The entire interview is not very long. The first question is what motivated Gasparino to write Bought and Paid For. Gasparino’s response:

“The notion of Big Government and Big Wall Street colluding to do bad things is something I've covered for a long time. I've always been interested in the conflicts between public policy and finance. What I've seen over the years is this seemingly bizarre anomaly of how Wall Street, which is allegedly the epicenter of capitalism, in reality thrived on something that is very anti-capitalist, which is Big Government. Crony capitalism. And these guys aren't doing it just to make money on fees selling government bonds to finance the deficit or government programs. The people at the top have political beliefs that are strongly aligned with progressivism.”

In the last question, Macomber notes the last chapter of Gasparino’s book is titled “Money Well Spent,” which results in the question: “Does the failure of recent government intervention . . . signal we're on the verge of this sort of alliance no longer being money well spent?” Here’s the short answer:

“Look, I think crony capitalism hurts the system. It basically allows a few privileged, wealthy, connected people to do well exploiting the spoils of government that the rest of us can't. It's getting worse, it ain't getting better . . . .”

November 19, 2010

Wealth Redistribution is the Goal of Global Warming

On Wednesday we growled about an overwrought editorial by the Washington Post opposing the efforts of Virginia Attorney General Ken Cuccinelli to obtain e-mails and other information from the University of Virginia. We also cited an article by Dr. Fred Singer who presented a more erudite commentary in response.

Now comes  the admission by one of the “working group” co-chairs of the United Nation’s Intergovernmental Panel on Climate Change that the U.N.’s goal all along was wealth redistribution. Marc Sheppard, environmental editor for American Thinker, wrote yesterday:

“One need read no further than the U.N. International Climate Accord . . . ultimately shot down at Copenhagen’s climate summit last year to understand the organization’s international wealth redistribution goals.  The failed treaty actually contained as many paragraphs outlining the payment of "climate debt" reparations by Western nations as it did emission reduction schemes.”

Sheppard went on to write:

“Now, a high-ranking member of the U.N’s Intergovernmental Panel on Climate Change (IPCC) has admitted that climate policy has little to do with environmental protection.

"On Sunday, Ottmar Edenhofer, a German economist and IPCC Co-chair of Working Group III on Mitigation of Climate Change, told the Neue Zürcher Zeitung (translated) that “climate policy is redistributing the world's wealth” and that “it's a big mistake to discuss climate policy separately from the major themes of globalization.”

“Edenhofer went on to explain that in Cancun, the redistribution of not only wealth but also natural resources will be negotiated, adding that:

The climate summit in Cancun at the end of the month is not a climate conference, but one of the largest economic conferences since the Second World War.”

Given Edenhofer’s frank admission, will the global warming alarmists in Congress and the federal bureaucracy drop their efforts to strap more debt on the back of America’s taxpayers? Let's hope so!

November 18, 2010

Quote of the Day

"I find it hard, as a libreral, to see any justification for graduated taxation solely to redistribute income. This seems a clear case of using coercion to take from some in order to give to others and thus to conflict head-on with individual freedomn."

    ~ Milton Friedman

HT Page 129, "As Certain As Death — Quotations About Taxes (2010 Edition)," TaxAnalysts.

November 17, 2010

Global Warming in Virginia Courts

Last month, the Washington Post opined in an editorial that Virginia Attorney General Ken Cuccinelli “seems determined to embarrass Virginia.” The editorial was filled with debris such as the AG’s subpoena was “demanding boatloads of documents from the University of Virginia” and that the AG has been “slapped down once by a Virginia judge.”

If you read the Post editorial, and thought it somewhat overwrought, you may welcome an authoritative discussion about the efforts of Mr. Cuccinellii posted a few days ago at American Thinker. It was written by atmospheric physicist S. Fred Singer who is Professor Emeritus of Environmental Sciences at the University of Virginia, founding director of the US Weather Satellite Service, and author of “Unstoppable Global Warming - Every 1500 Years” (Rowman & Littlefield, 2007).

Dr. Singer writes about Virginia Attorney General Cuccinelli’s efforts to obtain “the e-mails and other information of Dr. Michael Mann, who was an assistant professor of environmental sciences there from 1995 to 2005.” Dr. Singer notes that:

“The University of Virginia is fighting the demand for the data using outside lawyers and claiming "academic freedom" among other such excuses. I cannot comment on the legal implications of the AG's investigation. It should be noted, however, that UVA was quite willing to deliver up the e-mails of Professor Pat Michaels when Greenpeace asked for them in December 2009. It makes the UVA protestations sound rather hypocritical.”

Spend some time comparing the Post editorial and Dr. Singer’s rebuttal, and you may begin thinking the Post editorial staff are better suited to writing fiction.

Norm Leahy posted some additional relevant thoughts on this at Tertium Quits yesterday. He writes:

“Words alone fail to describe the depths of hypocrisy plumbed by UVA on this issue. That university spokepeople insist on using phrases like "academic freedom" and "scientific integrity" to deflect attention away from the clear double standard and campus-wide policy of CYA makes the whole situation that much more tragicomical.

“Real scientists should be outraged.”

November 16, 2010

Quote of the Day

"The natural progress of things is for liberty to yield and government to gain ground."

    ~ Thomas Jefferson, letter to E. Carrington, 1788

HT Patriots Post

November 15, 2010

Quote of the Day

"Nothing is more calculated to make a demagogue popular than a constantly reiterated demand for heavy taxes on the rich. Capital levies and high income taxes on the larger incomes are extraordinarily popular with the masses, who do not have to pay them."

    ~ Ludwig von Mises

HT Page 129, "As Certain As Death — Quotations About Taxes (2010 Edition)," from TaxAnalysts

November 14, 2010

Your Taxes at Work . . . Decking Out Executive Offices

Today’s Pittsburgh Tribune-Review reports the Veterans Administration has spent $1 million to “deck out” new executive office space. Specifically, the newspaper writes:

“Taxpayers paid nearly $1 million to customize upscale office space on the North Shore for top Veterans Affairs executives, records obtained by the Tribune-Review show.

“The VA's five-year lease for 10,000 square feet on the fourth floor of the Del Monte Building — plus another 1,000 square feet added last year for an expansion that included a shower room — charges upwards of 40 percent more than the average price for prime Pittsburgh office space.”

Other relevant details provided in the newspaper’s reporting include the following:

“The delivery in March of a Bowflex exercise bench at the VA facility in Aspinwall — intended for a gym at the new offices on the Allegheny riverfront — tipped off VA employees about what was happening on the North Shore and upset some.

[ . . . ]

“Advertisements for space in the Del Monte Building call it "Pittsburgh's highest quality Class A office space." Its developers described the building in a recent report to city planners as prime real estate where tenants can enjoy "the riverfront and stunning views."

“The initial five-year lease with Continental/North Shore LP, effective Oct. 1, 2008, shows the VA agreed to base monthly rent of $26,925, but in June 2009 the agreement was amended to include the additional 1,000 square feet, boosting the monthly tab to $29,617.50. That puts the annual cost per square foot at $32.31.

“By comparison, data compiled by Grubb & Ellis and Cushman & Wakefield, two of Pittsburgh's major office rental firms, show the average price for prime Pittsburgh office space is $22.52 to $25.24 per square foot.”

Perhaps the VA bureaucrats should have been thinking like Joseph Backers. According to the Tribune-Review:

"Joseph Backers, a volunteer at the VA's Highland Drive facility that is slated for closing, said the fitness room for executives was particularly galling because the agency recently closed a pool and athletic facilities that disabled veterans used.

"How do you justify shutting down a pool for veterans when you are providing athletic equipment for executives?" he asked."

Guess the VA bureaucrats earning those $150,000 salaries originally reported by USA Today and reported here by Federal Times thought they needed to improve their lifestyles.

November 13, 2010

GE & Crony Capitalism

In a January 13, 2010 column posted at Real Clear Politics. John Stossel describes crony capitalism this way:

“What is crony capitalism? It's the economic system in which the marketplace is substantially shaped by a cozy relationship among government, big business and big labor. Under crony capitalism, government bestows a variety of privileges that are simply unattainable in the free market, including import restrictions, bailouts, subsidies and loan guarantees.

“Crony capitalism is as old as the republic itself. Congress' first act in 1789 -- on July 4, no less! -- was a tariff on foreign goods to protect influential domestic business interests.

[ . . . ]

“If free-market capitalism is a private profit-and-loss system, crony capitalism is a private-profit and public-loss system. Companies keep their profits when they succeed but use government to stick the taxpayer with the losses when they fail. Nice work if you can get it.”

At Planet Gore, one of several National Review Online blogs, Henry Payne explains General Electric’s involvement in crony capitalism this way:

“Why are taxpayers giving money to a $156 billion corporate fat cat? To save the planet, of course. GE makes “smart grid technology” where the company — along with utilities — stands to gain from Obama’s market-socialist plans that advance the electrification of the automobile. One piece of that electrification model is the Chevy Volt, a key reason the feds bailed out Government Motors with $50 billion in 2009. Subsidized infrastructure, subsidized cars, and now . . . subsidized alliances.

“The Detroit News reports this week that “General Electric will convert half its 30,000 worldwide fleet of vehicles to electrics, including purchasing 12,000 cars from GM beginning with the 2011 Chevrolet Volt. In all, the Fairfield, Conn.–based company, which makes charging stations, will purchase 25,000 plug-in electric cars by 2015.”

“Yes, those charging stations — GE makes the GE Wattstation — are also subsidized by up to $2,000 of your tax money.

“It is . . . a vote of confidence in the Chevrolet Volt, which we will begin delivering to retail customers by the end of this year,” GM CEO Dan Akerson said of GE’s announcement. “We are pleased that the Volt will play a major role in this program, which will spur innovation and benefit our companies, our customers, and society as a whole.”

“Akerson’s cynical take on GE’s buy assumes ignorance of the Iron Triangle between federal green subsides, GE and GM. Greased by taxpayer dollars, the corporations benefit from this false market.

“GE’s purchase will drive sales to help GM offset the vast investment it made in pioneering technologies.” said Edmunds.com analyst Michelle Krebs.

“Um, yes, And it will also create a market for taxpayer-financed GE chargers. Small world, isn’t it?”

As Stossel pointed out, “crony capitalism is a private-profit and public-loss system!” Seems the first place the President’s deficit commission should start is eliminating corporate welfare.

An Idea Whose Time has Come

"It is also possible for reasonable people to argue that the ideals of democracy would be better served if, say, all the servants of government or all recipients of public charity were excluded from the vote."

Friedrick Hayek, The Constitution of Liberty

November 12, 2010

Efficiency Review of Arlington Schools Delayed

An item in this week’s Arlington Sun Gazette reports, “Arlington school officials will have to wait a bit to get an efficiency audit from the state government.” (online version). The item goes on to say:

“Budget cuts at the state level have caused delays in Arlington’s application for a financial and management review, Superintendent Patrick Murphy recently told School Board members.

“While school officials had hoped to have the review done in early 2011, it now looks like later in the year is the earliest such a review could be undertaken.

“Murphy said the delay was just a temporary setback. “We’re continuing to go down that path - we’re first in line,” he said.

“About one-third of Virginia’s school districts have received efficiency reviews since 2004. While some previous School Board members in Arlington were lukewarm to the idea of having local finances and management practices looked at, newer board members seem to have embraced the idea.”

The newspaper also says:

“The efficiency review has been pushed for several years by the Arlington County Taxpayers Association, which thinks any cost involved would be a small price to pay for a thorough evaluation of school system spending practices.”

You can find links to each completed Virginia school district’s efficiency review at this Virginia Department of Education webpage. In as much as the efficiency reviews follow a standard format, we would expect the APS Budget Advisory Council to be reviewing all the reviews completed to date in order to lessen the work of the consultants. By the way, the BAC meets on the second Wednesday of the month at 7:00 p.m. at the Arlington Public School Education Center, 1426 North Quincy Street. Take an opportunity to sit in on a BAC meeting. I'm sure you'll gain a better understanding of school finances than by attending a School Board meeting.

November 11, 2010

Quote for the Day

The Franklin D. Roosevelt tax quote cited below was used earlier this year in April. Unless Congress extends the so-called Bush tax cuts, on January 1, 2011, American taxpayers will be burdened with what is likely the largest tax increase in American history. Consequently, it seems appropriate to repeat it here.

"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 Page 29, "As Certain as Death - Quotations About Taxes" (2010).

November 10, 2010

Begin Stirring the Fiscal Pot

At their Tax Policy Blog today, the staff of the Tax Foundation briefly discuss the draft proposals of the President’s Deficit Commission. According to the staff, the proposals “certainly can’t be criticized for timidity." Rather, they say the proposals “are dramatic, as befits our alarming public debt crisis.” They continue by writing:

“No one should be surprised that the commission is calling on the federal government to tax more and spend less. On the spending side, hawks will wince at the defense cuts while defenders of entitlement spending will dislike the higher retirement age and lower cost-of-living adjustments. One line item calls for all earmarks to be eliminated. Federal employee unions will not like the idea of a 3-year federal pay freeze and a reduction in non-defense employment by 10 percent through attrition.

“On the tax side, there are certainly tax hikes for tax-haters to hate: gas taxes, dividend and capital gains taxes, and payroll taxes on high earners. Also, the revenue cap that the chairmen suggest, 21% of GDP, is higher than revenue has been in two generations. Caps do tend to become targets in Washington.

“On the other hand, advocates for fundamental tax reform will be gladdened by the commission's so-called Zero Plan. (The name will launch a thousand jokes). On personal income taxes, the plan suggests three brackets, with the highest tax rate at 28%, matching the top rate that prevailed from 1988-1990 after the last major tax reform.”

Tax Foundation staff conclude saying, ”Overall, the draft released has enough pain to attract numerous denunciations, although hopefully it can be seen as a catalyst.”

The draft of the Co-Chairs’ Proposal is available at the commission’s website (requires Adobe), in essence a 50-page PowerPoint document. Their “five basic recommendations” are:

  1. Enact tough discretionary spending caps and provide $200 billion in illustrative domestic and defense savings in 2015.
  2. Pass tax reform that dramatically reduces rates, simplifies the code, broadens the base, and reduces the deficit.
  3. Address the “Doc Fix” not through deficit spending but through savings from payment reforms, cost-sharing, and malpractice reform, and long-term measures to control health care cost growth.
  4. Achieve mandatory savings from farm subsidies, military and civil service retirement.
  5. Ensure Social Security solvency for the next 75 years while reducing poverty among seniors.

We growled last Friday, “Let the discussions get started. ” Everyone's views on the commission’s proposals will undoubtedly differ, but for the next several weeks, the commission’s proposals will certainly be sucking up most of the available oxygen. Read the proposals without their filtering by the mainstream media, and let's start stirring the fiscal pot.

November 09, 2010

The Book That Changed America?

Jeffrey Lord has a great profile of radio talk show host Mark Levin today at American Spectator. As readers of Growls know, this writer is one of the 5 million or so people who listen to Mark Levin each day. Lord introduces his profile of Mark Levin this way:

“It's the book that changed America.

“And it isn't often that a book -- any book, even a popular, bestselling book like Mark Levin's Liberty and Tyranny: A Conservative Manifesto -- can be said to have changed the course of American politics and history. The phenomenon is rare, extremely rare, usually taking both the country and even the author by surprise.

“Yet Levin's book has done just that, saluted by Minnesota Republican Congresswoman Michele Bachmann in an exclusive talk with The American Spectator as "providing [the] intellectual balance and foundation" of the Tea Party movement. A movement that stands triumphant this week in the wake of the conservative landslide that Levin himself believes can revitalize the conservative cause that Ronald Reagan once led to the White House.”

[ . . . ]

“Levin himself emerged as an unlikely rock star in the cause of the Constitution, the author literally besieged at book signings as thousands waited hours for a seconds-long meeting and signed copy. This video posted by a Levin fan of a book signing at Tysons Corner, Virginia, outside a rainy Washington, D.C., illustrates a fraction of the Liberty and Tyranny phenomenon that was sweeping the country.”

Below is the the cover of Levin’s book. You can visit his talk show website at the MarkLevinShow.com where you can download daily "audio rewinds" of the show, and there is no charge. In the Washington, D.C. area, you can listen at radio station WMAL 630. Some fans of Mark also maintain the Mark Levin Fan website.


November 08, 2010

Debunking Pro-Tax Propaganda

A new mini-documentary from the Center for Freedom & Prosperity Foundation (CF&P) features the Cato Institute’s Dan Mitchell provide a “point-by-point rebuttal of a recent White House pro-tax increase video." CF&P adds, “The full White House production, which is narrated by Council of Economic Advisers Chair Austan Goolsbee, is actually embedded in the CF&P video, allowing viewers to get both sides of the argument.”

CF&P’s press release describes the mini-documentary this way:

“In the CF&P video, entitled "Debunking White House Pro-Tax Increase Propaganda," Mitchell explains that the Administration's analysis is based on the notion, which is easily falsified, that the economy is a fixed pie. Moreover, he shows that changes in tax rates have a significant impact on taxpayer behavior, thus undermining another key premise of the Goolsbee video.

“The most fundamental flaw of the White House's video, however, is the philosophically corrupt assumption that government has the first claim on money earned by the American people. Goolsbee actually asserts, for instance, that it would be a mistake to "give" money to selected taxpayers.

"The White House's economic track record leaves much to be desired," said CF&P Foundation President Andrew Quinlan, "and the video asks why anybody should believe an Administration that claimed $800 billion of additional government spending would keep unemployment below 8 percent."

"Higher tax rates on investors, entrepreneurs, and small business owners will hurt growth and reduce competitiveness," said the video's narrator, Dan Mitchell of the Cato Institute, who added that, "It is a shame that the Obama Administration has doubled down on class warfare when - as shown in the video - President John F Kennedy understood lower tax rates for everyone are the way to improve prosperity."

The video is available at:

Spend about ten minutes to learn how to rebut the White House tax increase arguments.

November 07, 2010

Arlington County’s “Smart Growth” Isn’t Free

Members of the Arlington County Board take great pride in what they call “smart growth.” The evidence includes two vanity videos about “smart growth” -- a 52-minute long version and a shorter 11-minute version. For more evidence, search the county’s website for “smart growth,” or visit the County Manager’s webpage, which lists perhaps twenty “smart growth” and associated “sustainability” awards.

Unfortunately, there is never any mention of the cost of so-called “smart growth” to Arlington County taxpayers. Now, thanks to a new study by the international public policy consulting firm Demographia (requires Adobe), we learn the County Board’s enthrallment with “smart growth” adds almost “$75,000 to the price of a new entry level home thanks to government imposed land use regulations, according to Mike Thompson of the Thomas Jefferson Institute in an article post of how government policies increase housing prices that is posted at Bacon’s Rebellion.

Not surprisingly, such land use regulations can be an even larger burden in California where such regulations add more than $220,000 to a new house in San Diego.

Demogaphia introduces the report this way:

“For decades, tract house construction costs on the urban fringe in the United States have represented 80% or more of the advertised house price. The balance of 20% or less has been for land and regulation costs and will be referred to as the "land and regulation cost ratio." In metropolitan markets with less restrictive land use regulation, the historic 20% or less land price ratio remains in place.2 The Demographia Residential Land & Regulation Cost Index assumes a 20% expected land and regulation ratio.

“In some metropolitan markets, however, house prices have increased substantially more rapidly than in the rest of the nation. The greater increase in house prices and escalation of land costs above the historic 20% land and regulation cost ratio has occurred in metropolitan markets that have implemented more restrictive land use regulations. Urban growth boundaries, limits on the number of houses that can be
built, large lot zoning and excessive development impact fees are examples of land use regulation strategies that increase the cost of land for building houses. These land cost increases are not the result of more rapidly rising construction costs or underlying land costs factors.”

[ . . . . ]

“More restrictive land use land use regulation also creates obstacles to people buying houses, requiring them to devote more money to housing than necessary and increases their vulnerability to losses in the event of a financial downturn. This exposes mortgage lenders to increased risks of loan defaults. Finally, more restrictive land use regulation makes residential land development more political, with the potential for political contributions to make decisions more arbitrary.

“The first annual Demographia Residential Land & Regulation Cost Index estimates cost of land and regulation for new entry level houses compared to the historic norm in 11 metropolitan markets. Each of the metropolitan regions in which house prices have risen above normal have adopted more restrictive land use regulations. Conversely, in each of the metropolitan regions in which house prices have not risen above normal levels, there is less restrictive land use regulation. During much of the Post-World War II  era, all metropolitan markets had less restrictive land use regulations.”

Let’s see now. The mortgage payments would increase perhaps $375 each month due to the $75,000 increased cost of the new house from the more restrictive land use regulations, and there would be about $750 higher annual real estate property taxes due to the likely higher assessed value of the property.

While the County Board never ceases talking about affordable housing, their enthrallment with “smart growth” is making housing more unaffordable. Sounds like the Board can’t get their priorities straight! Here's how Mike Thompson describes the tradeoff in Bacon's Rebellion:

"Yet thanks to government policies, Northern Virginia is saddled with housing prices that are substantially higher than would otherwise be the case . . . That would mean more money available to buy shoes, go to a restaurant, take kids to the movies, etc.  But now that money isn’t available because it is tied up in the mortgage payments that are artificially high thanks to government regulation. Maybe the best affordable housing policy for the governments in Northern Virginia would include reducing government regulation on home construction.

"As Ronald Reagan used to say, “Government is not the answer, it is the problem.” His instincts are proven right once again."

November 06, 2010

Quote of the Day

“You cannot bring about prosperity by discouraging thrift. You cannot strengthen the weak by weakening the strong. You cannot help the wage earner by pulling down the wage payer. You cannot further the brotherhood of man encouraging class hatred. You cannot help the poor by destroying the rich. You cannot keep out of trouble by spending more than you earn. You cannot build character and courage by taking away man’s initiative and independence. You cannot help men permanently by doing for them what they could and should do for themselves.”

    ~ Abraham Lincoln

HT OnPower.org

November 05, 2010

Let the Budget Cutting Begin

Yesterday’s Wall Street Journal had an article by Dave Wessel that begins with a quote by “soon to be House speaker” John Boehner who “promised” Americans:

"a new approach that hasn't been tried before in Washington—by either party. It starts with cutting spending instead of increasing it."

Wessel then goes on to throw cold water on the promises of the campaign, writing:

“But as Republican spending cutters move from wooing voters to legislating, they confront two realities: Cutting government spending in general is popular; specific, substantial spending cuts are not. And bringing down the deficit by spending cuts alone, particularly cuts in annually appropriated domestic spending, is, well, arithmetically challenging.

“Republicans are not proposing British-style fiscal austerity. Republicans say they won't raise taxes now and will eliminate "the constant threat of new taxes." The new Conservative-led coalition in Britain is raising taxes by $1 for every $3 in spending cuts, including a 2.5-percentage-point increase in the value-added tax to 20% and higher capital-gains tax rates. The Brits are taking aim at government benefits for the middle class, an explosive notion Republicans avoided during the campaign.”

Wessel says that “Republicans, eager to earn the trust of those who voted for them, are likely to pursue spending cuts regardless of political and economic risks,” but adds that “cutting unpopular spending . . .  won't suffice if they're serious about the deficit.”

We growled last week that two unlikely allies -- the National Taxpayers Union and the U.S. Public Interest Research Group (U.S. PIRG) -- managed to identify over $600 billion of potential spending cuts. In addition, Chris Edwards of the Cato Institute includes a list of several groups that have identified potential spending cuts, and writes at their “Downsizing the Federal Government” project:

“We will not get federal spending under control unless we begin a national discussion about specific cuts. And we won’t get that discussion unless enough members of Congress start pushing for specific cuts. Ronald Reagan was able to make substantial cuts to state grants in the early 1980s because policymakers had discussed such reforms throughout the 1970s. Republicans in the mid-1990s were able to reform welfare because of the extended debate on the issue that preceded it.

“The electorate wants spending cuts, and they will support the policymakers who take the lead on cuts if they are pursued in a forthright and serious-minded manner.”

In today's “weekly wastebasket,” Taxpayers for Common Sense says the promises in the Republicans’ "Pledge to America" were “too limited.”  They close their weekly missive saying:

“The only way to get our budget back on track is to push and pull in every direction. It’s gut check time for the commission. And then it is time for the 112th Congress to put the budget where their mouth is.”

Let the discussions get started. and the pushing and pulling get begin! Perhaps Arlington taxpayers will also demand discussion about spending by the Arlington County Board and the Arlington Public Schools.

November 04, 2010

What Tuesday's Election Results Mean for Your Taxes

First, a HT to Paul Caron, tax law prof at the University of Cincinnati, and editor of Tax Prof Blog for pulling together more than a dozen articles on taxes and Tuesday’s election.

Carla Fried is the author of one of those articles, writing at CBSMoneyWatch.com an article entitled “What the Republican Mid-Term Win Means for Your Taxes.” She begins with the general statement:

“In all likelihood, the Republican party triumph in Tuesday’s mid-term elections means no American household — not even those with income above $250,000 — will see their federal income tax rates and investment tax rates change in 2011, and possibly not in 2012, either. With the shift in Washington’s balance of power, it’s expected that the current tax rates that are scheduled to expire at the end of this year will be extended for everyone, regardless of income, for at least a year. But getting the tax debate resolved could end up being a messy process that will give us all some tax headaches along the way.”

She then goes on to comment on several specific issues, which you can read at her blog, linked above:

  • The Obama administration will punt — for now — on its plan to raise taxes for the wealthy.
  • There could be a short-term hiccup of higher taxes for everyone in January.
  • The definition of “middle class” could change.
  • Taxes on investment gains likely aren’t going anywhere.
  • One change Congress will likely address is the estate tax.The short and long view for you and your taxes.

Included in that last point is this warning:

“Longer-term there is plenty to be worried about. While there seems to a growing consensus that the economy is too fragile to impose tax hikes at this juncture, what might be good for the patient over the next year or two could kill it 10 years down the line via gaping budget deficits.”

Now that’s something to get you screaming at night!

November 03, 2010

Your Tax Dollars at Work . . . Funding the Deceased

U.S. Senator Tom Coburn (R-Oklahoma) released a report last week (link is to the press release, but includes link to the report) showing American taxpayer dollars were going to the dead as well as prescriptions and medical supplies prescribed by dead physicians.

The report, entitled “Federal Programs To Die For – American tax dollars sent six feet under” “exposes more than $1 billion that has been sent to the deceased in the past decade. Washington paid for dead people’s prescriptions and wheelchairs, subsidized their farms, helped pay their rent, and even chipped in for their heating and air conditioning bills.” The report says:

“In the past decade, Washington sent over $1 billion of your tax dollars to dead people.  Washington paid for dead people’s prescriptions and wheelchairs, subsidized their farms, helped pay their rent, and even chipped in for their heating and air conditioning bills.

“In some cases, these payments quietly gather in a dormant bank account. In many others, however, they land in the pockets of still-living people, who are defrauding the system by collecting benefits meant for a now-deceased relative.

"Since 2000, the known cost of these payments to over 250,000 deceased individualshas topped $1 billion, according to a review of government audits and reports by the Government Accountability Office, inspectors general, and Congress itself. This islikely only a small picture opayments to the deceased:

  • The Social Security Administration sent $18 million in stimulus funds to 71,688 dead people and $40.3 million in questionable benefit payments to 1,760 dead people.
  • The Department of Health and Human Services sent 11,000 dead people $3.9 million in assistance to pay heating and cooling costs.
  • The Department of Agriculture sent $1.1 billion in farming subsidies to deceased farmers.
  • The Department of Housing and Urban Development overseeing local agencies knowingly distributed $15.2 million in housing subsidies to 3,995 households with at least one deceased person.
  • Medicaid paid over $700,000 in claims for prescriptions for controlled substances written for over 1,800 deceased patients and prescriptions for controlled substances written by 1,200 deceased doctors.
  • Medicare paid as much as $92 million in claims for medical supplies prescribed by dead doctors and $8.2 million for medical supplies prescribed for dead patients.
  • Congress has established HIV/AIDS funding distribution based on historic numbers of deceased HIV/AIDS patients, while many individuals living with AIDS desperately wait for medical care.

The report concludes saying, “The fault for these federal programs sending taxpayer funds to the deceased lies primarily with Congress.  It is Congress that created and designed these federal programs, and it is Congress that must ensure its programs are properly serving the individuals they are designed to aid and are not subject to abuse, fraud, and waste. At minimum, Congress must take steps to remedy these known programs flaws.” Those four steps are:

  • Accurate Collection of Death Information
  • Policing of Agency Program Rolls
  • Heightened Monitoring of Physician Identification Numberfs
  • Proper Distribution of Federal Funds

We growled on October 28, 2010 about two unlikely allies, NTU and U.S. PIRG, who got together to identify over $600 billion of spending cuts for the National Commission on Fiscal Responsibility. Well, Dr. Coburn’s report identifies more than $1 billion that can further reduce the federal deficit. Great work!

November 02, 2010

Quote of the Day

"Our tax system comes up short in a lot of areas. It doesn't foster economic growth. It isn't very simple. And it certainly isn't fair. The one place where it does excel is at redistributing income."

    ~ Ari Fleischer

HT As Certain As Death — Quotations About Taxes (2010 Edition), page 131.

November 01, 2010

“Obama Tax Hikes” + Their Effects on Virginia

The Heritage Foundation’s Center for Data Analysis completed an important report for America’s taxpayers, including those in Virginia ("Obama Tax Hikes: The Economic and Fiscal Effects," CDA 10-07, September 20, 2010). The report’s abstract summarizes the report this way:

“Since 1996, Congress after Congress has voted to lighten the tax burden on Americans. The current Congress will decide this fall whether to continue this policy or to significantly raise personal income taxes. President Obama has advanced a plan that reverses the long-standing successful policy: The President and his supporters are calling for tax increases, primarily on upper-income taxpayers and businesses— including small businesses, the primary job creators in the country. Those who will be most burdened if this plan becomes law are the millions of Americans just starting their economic lives and the millions more trying to find work after the worst recession in 60 years. The rest, whose lives are affected by the investments and business decisions of those taxpayers in the high-income classes, will share the burden. No income earner will be unscathed. Instead of extracting more income from the private economy, Congress should immediately reduce its spending and enact fundamental entitlement reform that supports strong economic growth. Heritage Foundation economists explain why employment and the economy cannot be made to grow through higher taxes—and how crucial it is for Congress to recognize this fact.”

An important part of the report is the focus of the tax hikes on the states (available at the same above link as the report). According to the report. between 2011 and 2020, “Virginia would:

  • Lose, on average, 18,422 jobs annually.
  • Lose, per household, $8,210 in total disposable personal income.
  • See total individual income taxes increase by $14.6 billion. – more than 14 and a half billion.

Learn what the Obama tax hikes are, how they will affect the U.S. economy, and their effects on Virginia, even by Congressional district.