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April 24, 2014

A Thought on Higher Tax Rates

"One oddity of the current economic debate is that the more Barack Obama's incompetent income-redistribution policies have failed, the more the left calls for more government-intervention policies to correct for the deficiencies of the earlier rounds. American middle-income families have lost nearly $3,000 in purchasing power since 2007, and the left's only solution to get us out of the rut is more debt, more social-welfare spending, more income redistribution and higher taxes on the rich and big business.

"That's the conclusion of French economist Thomas Piketty, whose new book called "Capitalism in the 21st Century" is suddenly the new rallying cry of the redistributionists. One reason the book is garnering so much attention is that the slow economy of late has meant that everyone is fighting over a smaller share of a smaller pie. The New York Times piled on this week, moaning that the middle class in the U.S. has fallen behind the middle class in Canada. The Times never mentions that Canada has cut tax rates, balanced its budget, and tamed government spending.

"In any case, the theme of the Piketty book is much like what George W. Bush famously declared during the 2008 financial meltdown: We need to suspend capitalism in order to save it.

"Piketty's primary advice is that America adopt much higher tax rates — as high as 80% on millionaires — as a way to prevent hoarding of wealth and funding a more supersized social-welfare state."

~ Stephen Moore

SOURCE: His April 24, 2014 column, posted at Investor's Business Daily. At the time of this growling, there were 57 reader comments to Moore's op-ed, and many are worth reading.

El Growler Grande will not be blogging for the next several days; I hope to return by April 30.

April 23, 2014

FY 2015 Arlington County Budget Adopted; Voters Get Dividend

At their recessed meeting last night, the Arlington County Board formally adopted the Fiscal Year 2015 budget, which totaled $1.489 billion (items 37 a-n on the County Board agenda). To get to $1.489 billion, one needs to sum the components from item 37a, containing the budget and appropriations resolutions. The major components:

  • General Fund -- $683.9 million
  • Other Operating Funds -- $257.0 million
  • School and Other Funds -- $532.1
  • Community Activities Fund -- $15.7 million

Sliced somewhat differently, the total general fund budget was $1.147.7, representing "a 5.1% increase over the FY 2014 budget," according to the Manager's report at 37a.

At the Arlington Sun Gazette, a portion of Scott McCaffrey's reporting of the budget's adoption included:

"County Board members on April 22 voted unanimously to approve a record fiscal 2015 spending package that will see a small cut in the real estate tax rate but a higher tax-and-fee burden for most homeowners.

"The vote ratified board action a week before to drop the real estate tax rate for homeowners from $1.006 per $100 assessed valuation to 99.6 cents. But because of rising assessments, most homeowners will pay more in 2014 than they did in 2013.

"The average local-tax-and-fee burden for Arlington homeowners, which already was more than $7,000 last year, will rise an additional $324 this year, up 4.6 percent, county officials said."

We will provide readers of Growls with additional analyses of the FY 2015 budget during the remainder of the year.

In addition, at the Arlington Sun Gazette, Mr. McCaffrey reported on two other items that may be of interest to readers of Growls:

  • First, he reported there may be "a slight change in tone on Arlington streetcar debate," which he suggested results from the fallout from the April 8 special election included this:

"While the pro-streetcar faction on the County Board retains a 3-2 majority, it appeared that they were handling Garvey and fellow anti-streetcar board member John Vihstadt a little less harshly than when it had been Garvey as the lone opponent on the dais.

"Fisette and Garvey even agreed to what they called a truce – perhaps just a cease-fire – on the use of the phrase “bus-rapid-transit” in describing the alternate system preferred by anti-streetcar backers. Garvey said she wanted to use the phrase “streetcar-like bus,” and Fisette agreed that the new-generation bus systems indeed have some of the functionality of streetcars.

"(The diplomacy only went so far: County Board Vice Chairman Mary Hynes put out another peace feeler to Garvey, suggesting that everyone agree that both streetcars and buses could potentially have merit on Columbia Pike, but Garvey rejected that out of hand.)"

  • The second item reported by Scott McCaffrey also involved fallout from the special election since it was largely fought over the proposed construction of the Columbia Pike Streetcar. According to McCaffrey, "The meeting could cap months of behind-the-scenes discussions over the fate of Garvey, who has split with many Democrats over the Columbia Pike streetcar and opted to support anti-streetcar candidate Vihstadt over Democratic nominee Alan Howze in the special election." Read the news report since it contains many details. Eathan Rothstein reports this story for ARLnow.com here.
See also our April 16, 2014 Growls where we quoted a letter from Wayne Kubicki to the editor of the Arlington Sun Gazette, who suggested the idea for a Vihstadt Divident.

April 22, 2014

A Thought on Class Warfare

" . . . History and common sense show that there is nothing to be gained from tearing down the wealthy. To the contrary, societies have always lifted themselves into prosperity, not by attacking the wealthy, but by creating a better environment for the wealthy to invest in new enterprises.

"We should put the issue (of income inequality), not in the language of envy and guilt, but in the language of freedom, opportunity, and personal responsibility. This is about knocking down artificial barriers created by government, making it easier for the poor to lift themselves up through their own effort. Which also turns out to be a widely popular political theme everywhere, cutting across economic lines.

"The (political) party that can convincingly take up that theme and connect it to specific reforms will not only win elections. It will do a vast service in uniting the country culturally and politically by defusing class warfare. And not least of all, it will improve the opportunities and future prospects for all Americans."

~ Robert Trancinski

SOURCE: His April 21, 2014 Essay, "Why Democrats are the Party of Inequality," posted at The Federalist.

April 21, 2014

A Thought on Living in a World Envisioned by Liberals

"Liberals advocate many wonderful things. In fact, I suspect that most conservatives would prefer to live in the kind of world envisioned by liberals rather than in the kind of world envisioned by conservatives.

"Unfortunately, the only kind of world that any of us can live in is the world that actually exists. Trying to live in the kind of world that liberals envision has costs that will not go away just because these costs are often ignored by liberals."

~ Thomas Sowell

SOURCE: His April 21, 2014 Column, posted at Investor's Business Daily.

April 20, 2014

36 Hours in the Life of Arlington County's FY 2015 Budget

On Wednesday evening, April 16, we growled, positively of course, that Arlington County voters would see a dividend from the previous week's special election since the Arlington County Board decided during the afternoon budget work session to provide Arlington County taxpayers a measure of tax relief by cutting the real estate tax rate by 1-cent. Although we continue to think that a 3-cent cut was the appropriate reduction in the tax burden, the County Board at least listened to Arlington voters.

At the budget work session. the Board was supposed to make "final budget decisions" before adopting the FY 2015 budget and setting tax rates on April 22, 2014. Consequently, some may have been surprised to see the April 18, 2014 press release with a statement from the chairman of the Arlington County Board. The three bullets in the press release were:

  • Maintains one-cent real estate tax reduction
  • Funded largely by hiring slowdown and elimination of proposed positions
  • Reflects concern over higher employee expenses for health care

The press release contains this especially curious excerpt:

"Over the lst 36 hours, with the support of all County Board Members, I have worked with the County Manager to identify budget adjustments that will allow inclusion of merit step increases on Tuesday, April 22, when the FY 2015 Budget is adopted. We were able to do this -- while maintaining the one-cent reduction in the tax rate -- primarily through a hiring slowdown and the elimination of several new proposed positions.

"County Board members have a better understanding of employees' concerns about projected increases in employee expenses for health care, as well as frustration with the lack of notice that compensation charges were under consideration by the Board."

In explaining the Board's action, ARLnow.com reported on Friday:

"County Board Chair Jay Fisette told ARLnow.com Friday afternoon that, after the Board met with representatives from the police and firefighter unions this morning, it decided to cut from other areas to make up the $6.6 million gap in the budget the tax cut will create.

"The Arlington County Police Union, the Arlington Police Beneficiary Association and the Arlington Professional Firefighters and Paramedics Association (Local 2800) each released statements denouncing the Board’s decision to go against County Manager Barbara Donnellan’s recommendation to keep the property tax rate at 2014′s level of $1.006 per $100 in assessed value — and to pay for it by eliminating pay raises in favor of a “modest” 1 percent Cost of Living Adjustment and a one-time $500 employee bonus.

"The decision was made in the days leading up to Wednesday’s budget mark-up, leading the police and firefighters to question the process and transparency of the Board’s budget process."

The Washington Post's Rachel Weiner also reported on Friday on the County Board's compensation change under the headline, "Arlington proposal to halt merit pay for county employees is quickly dropped amid outrage." The lede in her reporting was:

"A proposal by the Arlington County Board to end merit pay increases for county employees was withdrawn on Friday in the face of anger from labor unions and police, firefighters and other workers.

"The raises, usually about 3.5 percent for employees who have met performance standards and have not reached hit their position’s maximum salary level, were included in the budget proposed by County Manager Barbara Donnellan in February."

"But the board announced Wednesday that, as part of a plan to cut real estate taxes, merit pay steps would be replaced with a 1 percent annual cost-of-living increase and a one-time $500 bonus for county employees. Board members trimmed the real estate tax rate from $1.006 per $100 of assessed value to $0.996 per $100, to limit the growth of tax bills in the face of a 5.3 percent jump in home values, assistant county manager Diana Sun said.

"Merit pay increases cost the county $5.5 million last year, Sun said."

Readers may want to refer to the linked reporting of the Washington Post and ARLnow.com for their full reporting.

April 19, 2014

A Thought on Political Ignorance

"Voters cannot hold officials responsible if they do not know what government is doing, or which parts of government are doing what. Given that 20 percent thinks the sun revolves around the Earth, it is unsurprising that a majority is unable to locate major states such as New York on a map. Usually only 30 percent of Americans can name their two senators. The average American expends more time becoming informed about choosing a car than choosing a candidate. But, then, the consequences of the former choice are immediate and discernible."

~ George Will

SOURCE: His January 1, 2014 "Price of Political Ignorance" Column in which he reviews Ilya Somin's book, "Democracy and Political Ignorance: Why Smaller Government is Smarter"

P.S. Your humble scribe will not be growling for the next several days. Have a Happy Easter. El Growler Grande, 4/20/14.

April 18, 2014

A Picture of the Federal Income Tax's Progressivity

Yesterday we growled about tax confusion, based upon a report by Ross Kaminsky in the American Spectator.  In the "thought," which we excerpted, Kaminsky pointed to a Gallup Survey, noting "61 percent of Americans continue to believe that their upper-income friends pay too little."

In an effort to clear up that tax confusion, we point to George Mason University's Mercatus Center's website where Veronique de Rugy has posted a chart, which clearly shows the average effective federal tax rates by income quintile, a statistical measure of five equal proportions. Here's the chart:


You can read Ms. de Rugy's complete explanation of the above chart, but she makes this important point:

"Whether one thinks that the current system is fair, unfair, or just right, there can be little debate that federal income taxes are indeed progressive." (emphasis added)

If you want to see just how much income has been redistributed by the administration of President Obama, compare the above chart to the comparable 2009 chart (here). You will note that four of the income quintiles have seen lower average effective federal tax rates, e.g., a 6% decrease for the middle income quitile, while those in the top quintle have seen their average effective rates increase 7%. According to State of the USA, the income cutoff (in 2009 dollars) for the  20th percentile, or lowest quintile is $20,000; 50th percentile is $50,000; and 80th percentile, or top percentile, is $100,000.

So the next time a liberal and/or progressive politician starts spouting their class warfare rhetoric about the rich not paying their "fair share," you'll be armed with the facts. Kudos to Ms. de Rugy for adding to taxpayers' knowledge about who pays income taxes, and at what rate. She posted two other informative charts the same day -- 1) trends in EITC spending and number of beneficiiaries (here), and 2) trends in after-tax income by household position in income distribution, 2000-2010 (here).

April 17, 2014

A Thought on America's Tax Confusion

"According to a Gallup poll released on April 14, 10 percent more Americans now think their taxes are too high than think their taxes are about right. That level has only been matched once, and only briefly, since the Bush tax cuts of 2003 that Democrats hate with such a passion.

"Not surprisingly, a majority of Democrats think their taxes are “about right,” whereas only 38 percent of Republicans share that view. Independents seem to be even more concerned about excessive tax rates (for their own taxes) than Republicans are — which should scare the bejesus out of Democrats going into the 2014 elections, as if they don’t have enough to worry about.

"But beyond the expected partisan differences in satisfaction with taxes, this week’s polling also shows a remarkable cluelessness among the American population when it comes to “who pays what” in federal income tax. It proves, sadly, that class warfare rhetoric, as spouted by President Obama and the great unwashed of Occupy Wall Street and many others, is having an impact (because the well-off are apparently too ashamed of success to mount a credible defense of economic liberty).

"Forty-nine percent of Americans, according to another Gallup poll, believe that the middle class pays too much in taxes. It is by far the highest number on this question since Gallup started asking it 15 years ago. A stunning 41 percent believe that lower-income Americans pay too much in taxes, this despite the fact that most of them are net receivers of tax dollars.

"Yet 61 percent of Americans continue to believe that their upper-income friends pay too little.

"A Rasmussen Reports survey released last year, offers an explanation: “68% believe middle-class Americans pay a larger share of their income in taxes than wealthy Americans do” and “only 24% think the wealthy pay their fair share.”

~ Ross Kaminsky

HT His April 16, 2014 "special report," posted at The American Spectator. Kaminsky's fact-rich report is well-worth reading in its entirety.

April 16, 2014

Arlington County Voters Get a Dividend

At 10:33 PM, an e-mail from Arlington County's press release office floated-in over the proverbial transom bearing the news that the Arlington County Board reduced the real estate tax rate by one-cent in its so-called FY 2015 budget mark-up. Here are the four bullet-points from the press release:

  • One-cent cut in real estate tax rate
  • County budget increase limited to 3%
  • 4.7% increase in Arlington Public Schools funding
  • Modest 1% COLA for County employees

And here's the introduction from the county's press release:

"The Arlington County Board today directed the County Manager to reduce the real estate tax rate by one cent in the Fiscal Year 2015 Budget. The Board's action came during the mark-up for the budget, which the Board is set to adopt during its April 22 meeting.

"The Board had to make some tough decisions," said Arlington County Board Chair Jay Fisette. "In order to give some break to homeowners who have seen their assessments rise, we limited the growth of the County budget, launched no new major initiatives and focused on funding schools and maintaining our core services and existing infrastructure."

"The budget mark-up includes a real estate tax rate of $0.996 per $100 of assessed value, a one-cent decrease from the $1.006 rate in Calendar Year 2013 (including the sanitary district tax). This represents a $6.6 million reduction from the budget proposed by the County Manager."

Virtually almost all of the remainder of the press release expounds on the four bullet points listed above.

Could the County Board have given Arlington County taxpayers a larger "Vihstadt dividend," which is how Wayne Kubicki, Arlington's fiscal guardian extraordinaire termed it (see yesterday's Growls)? Could it have been as large as the 3-cents recommended by an Arlington County Civic Federation resolution passed two weeks ago by a 23-11 vote (see our April 2 Growls here)? The answers are yes and definitely yes, respectively.

Your humble Growler would merely point to the remainder of the press release for the answers. First, note that even by cutting the real estate tax rate by 1-cent, "The Board’s action means the overall tax and fee burden for the average Arlington homeowner will be 4.6% higher than in 2014, or about $27 a month."

Unfortunately, the Board and their press release writers repeat their mantra about having the region's lowest real estate tax rate. Obviously, no one bothered reading our Arpil 2 Growls where we pointed to the Washington Post graphic, which demolished that tired rubric.

Read the remainder of the press release, noting all the spending that will still be occurring after the one-cent cut. Those plus a thorough scrubbing of the budget would probably make even the 3-cent recommendation of the Arlington County Civic Federation seem small. While we won't question the additional spending of $52,000 for the sexual assault hotline or the $72,606 for the mental health coordinator to train first responders, other items on the list seem questionable at best, e.g, $300,000 to plow snow from bike trails.

Once again, congratulations to John Vihstadt for his victory in last week's special election, and kudos to Wayne Kubicki for providing a framework for the Arlington County Board to cut the real estate tax rate.

April 15, 2014

A Framework to Cut Arlington County's Real Estate Tax Rate

In a letter to the editor (LTE), posted today at the online Arlington Sun Gazette (now a part of InsideNoVa), Wayne Kubicki, Arlington's inestimable fiscal guardian, suggests the Arlington County Board return a part of their real estate tax windfall to its rightful owners, Arlington County taxpayers.

Kubicki points out the Arlington County Manager has now provided County Board members, and citizens, with both the mid-year and third quarter reviews of the FY 2014 budget (available here as items A-1 and A-9). These are among the final pieces before the Board adopts the FY 2015 budget on April 22. Here is Kubicki's analysis from his LTE:

"What did these two FY14 updates show? More available money – lots of it!

"While there are lots of numbers in those two reports – nothing unusual about that – they show a whopping net of $37.1 million of “extra money.” Major factors were real estate revenues being over budget due to the unexpected assessment increases ($25M) and releasing a prior reserve of $8M that had been previously set aside for “stabilization.”

"By agreement between the County Board and School Boards, $9.6 million is transferred to the Schools, leaving $27.5 million of additional funds on the county side.

"Given this news, a major part of the budget finalization deliberations will be what to do with this $27.5 million.

"As expected, Ms. Donnellan has already put forth her additional spending “wish list” totaling $13.4 million, for such spending areas as affordable housing, street paving and maintenance capital. For the purposes of this letter, let’s assume this entire list is funded.

"That still leaves $14.1 million left over.

"To recap, the county manager’s proposed budget, plus nearly $10 million more to the schools, plus another $13.4 million of County spending, is now all covered – and $14.1 million is still on the table."

Mr. Kubicki even proposes a name for his 1.5-cent real estate tax rate reduction -- a Vihstadt Dividend. Having elected the independent John Vihstadt to the Arlington County Board last week, Arlington's taxpayers would get a timely dividend for their vote. Although my "wish list" would be to give back that "additional spending" to Arlington County taxpayers, I'm confident the "old" County Board wouldn't pay a dividend.

April 14, 2014

Biking at the Expense of Cars and Taxpayers?

Earlier this year, Kenric Ward of Watchdog.org's Virginia Bureau wrote that Arlington County "wants to get people out of their cars and onto bicycles, but the swap is costing millions of dollars — and making traffic more dangerous." Here's the remainder of his lede:

"Via a “Complete Streets” initiative, local planners are instituting “sharrows” for cyclists to share roads with motorists. (note, the link is 'broken")

“The county sees itself as a model for ‘livability and sustainability. In reality, it’s creating unsafe situations,” said Joe Warren, a member of Arlington’s Transit Advisory Committee.

"He charges that the county is pressing ahead without proper traffic studies.

"For the greater good?

"Arlington’s Master Transportation Plan states: “Our thoroughfares will bring people and communities together, rather than separating them. They will not be designed to speed traffic through the county.”

"The goal? Enable Arlington togrow without having to increase road capacity.”

"The county’s plan envisions benefiting “the greatest number of people and to maximize return on investment.”

"Neither of those objectives is being reached by bike.

"The county has dedicated more than $12 million in capital spending for bicycle projects through 2019. It’s earmarking millions more for the Capital Bikeshare program that rents out bicycles.

"But Warren, a cyclist himself, said bike ridership on Arlington’s major roads and streets remains “infinitesimally small.”

Ward also reported that Capital "Bikeshare's Arlington branch forecasts that its $304,356 operating deficit in 2013 will more than double to $687,230 by 2018."

Talk about the need for the Arlington County Board to learn about budget prioritization and to get back in touch with the core needs of all Arlington County citizens rather than just special interests, not to mention improving transparency on just how taxpayers dollars are spent.

The following picture showing so-called "so-called "sharrows" is from Kenric Ward's footnoted story. Ward has written three other stories about Arlington's traffic troubles, which you can find here.


April 13, 2014

Virginia Ranks 30th on Latest State-Local Tax Burden List

Liz Malm and Gerald Prante have prepared the latest, FY 2011 annual state-local tax burden rankings for the Tax Foundation. Their five key findings:

  • "During the 2011 fiscal year, state-local tax burdens as a share of state incomes decreased on average. This trend was largely driven by the growth of income in all states.
  • "In 2011, the residents of New York, New Jersey, and Connecticut had the highest state-local tax burdens as a share of income in the nation. In these states, residents have forgone over 11.9 percent of income due to state and local taxes.
  • "Residents of Wyoming paid the lowest percentage of income in 2011 at just 6.9 percent. They replaced Alaska, which had previously been the least-taxed for multiple decades, as the lowest-burdened state in the nation. After Wyoming and Alaska, the next lowest-taxed states were South Dakota, Texas, and Louisiana.
  • "State-local tax burdens are very close to one another and slight changes in taxes or income can translate to seemingly dramatic shifts in rank. For example, the twenty mid-ranked states, ranging from Oregon (16th) to Georgia (35th), only differ in burden by just over one percentage point.
  • "On average, taxpayers pay more to their own state and local governments (73 percent of total burden). Taxes paid within states of residence decreased on average in 2011, while taxes paid to other states increased, leading to a slight decrease in total burden. Some states deviated from these national trends, however."

Per Table 1, the U.S. average state-local tax burden is 9.6% (as a share of state income). Two states have rates in the 12% range (New York and New Jersey). Three states are in the 11% range (Connecticut, California, and Wisconsin). Eleven states are in the 10% range. The two lowest tax burden states are Alaska (7.0% and Wyoming (6.9%). The District's tax burden is just above the national average -- at 9.7%. Virginia ranks #30 with a burden of 9.2%. It is closely bunched there, which means its ranking could change measurably if the General Assembly goes the least bit wild on taxes. (emphasis added)

An interesting point made by Malm and Prante is:

"An interesting observation is that many of the least-burdened states do without a major tax. For example, Alaska (49th), Nevada (43rd), South Dakota (48th), Texas (47th), and Wyoming (50th) all do without a tax on wage income. Similarly, Nevada, South Dakota, and Wyoming all lack a corporate income tax, and Alaska has no state-level sales tax (though it does allow local governments to levy sales taxes).[7] While this is an interesting correlation, it does not answer the question of whether levying fewer types of taxes leads to lower tax burdens or whether a political demand for lower taxes leads to fewer types of taxes being levied. Also worth considering is the possibility that opting to not levy a personal income tax causes a state to rely more on other forms of taxation that might be more exportable."

Meanwhile at Virginia's leading policy blog, Bacon's Rebellion, yesterday, Jim Bacon commented on Virginia's ranking, saying:

"Hopefully, we can dispense with the nonsense that Virginia is a “low tax” state that starves its public sector. We’re not out of control like the aforementioned big tax-and-spenders but we’re well within the middle of the pack, with very small percentages differentiating us from those immediately above and below."

Once again, we thank the Tax Foundation for shining the light of transparency on the taxes we pay.

April 12, 2014

Every Worker's Share of the Federal Debt is $106,000

The Washington Examiner's Paul Bedard, Washington Secrets columnist, reported on Wednesday that according to a Harvard study, all "American workers would have to cough up a one-time “debt reduction fee” of $106,000 to pay off the nation's debt that has grown 58 percent under President Obama." Bedard described the report this way (emphasis added):

"The 91-page report provided to Secrets pegged the nation’s debt at $16.7 trillion, up from the $10.6 trillion inherited by Obama. “The debt has grown so quickly because of large and repeated annual deficits in federal spending,” said the report.

"What's more, the Annual Report of the USA, from the student(s) at the Harvard Political Review and done in partnership with the American Education Foundation, found that food stamp usage has surged 77 percent during the recession and that Social Security benefits will be slashed 23 percent starting in 2033 unless Congress and the White House institute sweeping reforms."

Bedard notes it "is considered one of the nation’s authoritative independent (analyses) of federal spending. One of the best benefits of the report is that the authors try to put huge numbers like the debt in perspective." He also includes a 3-minute long video prepared by the students who prepared ARUSA. In addition, he reports other facts from the report.

At Harvard University's Institute of Politics' blog, these two paragraphs appear to come from the report:

"Fiscal year 2013 was a disappointing year in federal budget policy, with only small signs of hope in the compromises made since last fall’s government shutdown – and starkly reflected our elected leaders’ preference for inaction,” said Daniel Backman ’15, ARUSA student Executive Editor.

"By presenting essential budgetary information in an easy-to-understand format, the writers of ARUSA hope to help Americans keep their politicians accountable on the issues that matter.”

You c- See more at: http://www.iop.harvard.edu/blog/students-produce-fy-2013-annual-report-usa-debt-revenues-and-spending#sthash.slpTctVp.dpuf

The "Annual Report of the United States of America: What Every Citizen Should Know About the REAL State of the Nation," cover below, is available at Amazon.com.

April 11, 2014

Taxes Going Up in Arlington, U.S.A., and Almost Everywhere

At the Tax Foundation's Tax Policy blog today, we learn from Andrew Lundeen that personal income taxes haves have gone up in 25 of the 34 OECD countries (the U.S. is one of the 34). One of Lundeen's key points is:

"Since 2005, the U.S. has seen its average tax burden on employment income increase from 29.8 percent to 31.3 percent, largely due to the expiration of the lower rate on payroll taxes at the start of 2013."

A second important point, which Lundeen makes is:

"The U.S. taxes average wages at a lower rate than many OECD countries partly because the U.S. relies on high income earners more than any other country in the OECD."

As shown in the Tax Foundation graph below, Lunden points out: "In the U.S., the top 10 percent of taxpayers earn 33.5 percent of the income, but pay 45.1 percent of the taxes. Compare this with France, where high income earners make 25.5 percent of the income, but only pay 28 percent of the taxes, or the United Kingdom where the top decile earns 32.3 percent of the income, but pays 38.6 percent of the taxes."

Kudos for another example of providing taxpayers with transparency to the taxes they pay.

April 10, 2014

A Thought on the Poor, the Middle Class, and the Safety Net

"Liberals are shocked (shocked!) that Rep. Paul Ryan (R-Wis.) and his co-partisans would consider cutting Medicaid, food stamps, Pell grants and other programs that serve the neediest Americans. They have accused Ryan of trying to balance the budget on the backs of the poor.

"But long before Ryan unveiled his “Path to Prosperity,” politicians of both parties had been redistributing government spending away from the truly destitute and toward everyone else.

"In the past few decades, the federal social safety net has gotten lusher and, on its face, more generous. Spending on the major safety-net programs nearly quadrupled between 1970 and 2010, and that’s after adjusting for inflation and population growth, according to calculations by Robert A. Moffitt, an economics professor at Johns Hopkins University. He included both “means-tested” programs that are explicitly intended to combat poverty (such as food stamps, Medicaid, housing aid, Head Start, Temporary Assistance for Needy Families and the earned-income tax credit) and social insurance programs (Medicare, Social Security, disability insurance, workers’ compensation and unemployment insurance).

"There have been, however, winners and losers during that massive expansion.

"Since the mid-1990s, the biggest increases in spending have gone to those who were middle class or hovering around the poverty line. Meanwhile, Americans in deep poverty — that is, with household earnings of less than 50 percent of the official poverty line — saw no change in their benefits in the decade leading up to the housing bubble. In fact . . . ."

~ Catherine Rampell, Opinion Columnist at The Washington Post

HT Her column, published April 7, 2014. Growls readers are encouraged to read Ms. Rampell's entire column, which addresses the question of whether we are "robbing the poor to pay the middle class (and rich)." Kudos to Catherine Rampell!

April 09, 2014

New Era of Fiscal Sanity for Arlington County Board?

After winning yesterday's special election with 57% of the vote, independent John Vihstadt deserves many kudos for his well-run campaign. A campaign that focused on issues that we have frequently growled about.

At the Arlington Sun Gazette's new InsideNoVa website today, Scott McCaffrey's began his "day after" reporting this way:

"All sides in the Arlington political spectrum may be waking up with hangovers today, but for different reasons: Supporters of independent John Vihstadt celebrated the night away, while the Arlington Democratic establishment finds itself itself punch-drunk after losing its first County Board race since 1999.

"Riding an apparent wave of voter discontent, Vihstadt on Tuesday easily defeated Alan Howze to win the County Board seat vacated in February by Chris Zimmerman."

Meanwhile, at ARLnow.com. the lede in Ethan Rothstein's reporting was:

"As the dust settles from Republican-backed independent John Vihstadt’s victory in the Arlington County Board special election last night, those in and around Arlington politics are surveying what could be a new political landscape.

"Vihstadt won by a significant margin — 57 percent to Democrat Alan Howze’s 41 percent — in a special election that saw an unofficial tally of 22,209 votes. Democrats saw the result partly as a result of not enough voter turnout, while Vihstadt’s supporters — Republicans, Democrats, Greens and independents among them — viewed the election as a referendum of County Board policy.

“John’s overwhelming victory tonight is a testament to the growing number of Arlingtonians who are tired of a County Board that dictates its own priorities instead of listening to the voices and concerns of the community,” the Arlington County Republican Committee, said in a press release.

“Despite attempts to nationalize the issues in this race, the principles of fiscal responsibility and local project prioritization won out — and with a 15-point lead,” Arlington-Falls Church Young Republicans President Matt Hurtt said in a press release. “John is perfect for the job, and will bring balance to an overwhelmingly Democrat-controlled county government.”

Rothstein also reported:

"One local political observer, who preferred to remain anonymous, said Vihstadt’s victory was attributable to strong fundraising efforts, his experience and his liberal position on social issues, among other factors. The observer also said Democrats may have been distracted by the June primary in the 8th District congressional race.

“I think the thing to watch will be the CIP, due out soon,” the observer said. “Will there be a financing plan finally put forth for the Pike streetcar? What will be proposed . . . for the Aquatics Center? Garvey and Vihstadt have common ground here — what will the other three do?”

The Washington Post's Patricia Sullivan and Rohan Nadkarni provide a comprehensive overview of yesterday's special election, and astutely observe:

"The wide margin of victory surprised Vihstadt, a real estate lawyer at a D.C. firm, who noted that most of Virginia’s Democratic establishment lined up for Howze and offered him campaign appearances, phone calls and financial support.

"Vihstadt countered the party’s overwhelming strength in Arlington by telling voters that the board would benefit from fresh thinking and a more skeptical approach to spending tax dollars on costly projects such as streetcars and high-end swimming pools.

“They threw everything they could at us,” Vihstadt said Tuesday evening from a neighbor’s home, where he was celebrating. “We forged a true coalition of Democrats, Republicans, Greens, Libertarians and independents who yearn for accountability, transparency, fiscal responsibility and balance rather than a continuation of the echo chamber and status quo.”

The Washington Post pair also observed:

"The last time a non-Democrat was elected to the Arlington County Board was in 1999. Republican Mike Lane won a special election and was defeated in the next general election. Except for Vihstadt, all of Arlington’s elected officials are Democrats.

"Tuesday’s election may have focused on local issues more than ideology, however. Vihstadt hit the County Board hard over its support of the Columbia Pike streetcar, a $1 million bus stop, the over-budget Long Bridge Aquatics Center and other capital projects."

Finally, at the very far left blog, Blue Virginia, lowkell opines on the "winners and losers" from yesterday's special election. Some of the entries are to be expected. Others, however, are surprising even to this 26-year county resident. His choice for Loser #1 was former Board Member Chris Zimmerman. He also links to some interesting observations at the political blog, Not Larry Sabato.

It will be interesting to watch the next several meetings of the Arlington County Board. We trust he will carry forward with his focus on fiscal responsibility, and not just on the two most prominent of the current Board's vanity projects, i.e., Columbia Pike trolly folly and the Aquaticsphere. Also important will be seeing where the full Board follows his call for an independent internal audit function to evaluate programs' efficiency and economy. Another area where Vihstadt can focus is to support greater disclosure of county spending and reviewing just how real estate assessments relate to sales prices, including getting to the bottom of the skyrocketing assessments at Clarendon's restaurants, which was reported by ARLnow.com on February 26, 2014.

April 08, 2014

And the April 2014 Porker of the Month Is? Drumroll, Please!

"Porker of the Month is a dubious honor given to lawmakers, government officials, and political candidates who have shown a blatant disregard for the interests of taxpayers."

Last Friday, April 4, 2014, "Citizens Against Government Waste honored Rep. Jim Moran (D-Va.) as its April Porker of the Month for his gob smacking statement on April 3, 2014 that members of Congress are 'underpaid.'" Here's a portion of CAGW's justification:

"Had the statement been made earlier in the week, CAGW would have assumed that it was an April Fool’s joke.  Instead, it appears that Rep. Moran is just behaving like the fool he has become, in April.  If there is an upside to the statement, it is that it perfectly encapsulates the attitude of a significant number of members of Congress, a group characterized by their tone-deaf elitism, grinding sense of entitlement, and frightening disconnection from the realities of everyday American citizens.  In the April 3, 2014 interview with CQ Roll Call, Rep. Moran, who is thankfully retiring at the end of his current term, intoned that he and his colleagues are not adequately compensated for their public service.  “I think the American people should know that the members of Congress are underpaid,” Moran said.  “I understand that it’s widely felt that they underperform, but the fact is that this is the board of directors for the largest economic entity in the world.”  Since 2009, rank-and-file members of Congress have earned an annual salary of $174,000.

"Count CAGW among those who believe that Congress has underperformed, in exactly the same way that Bernie Madoff ultimately underperformed as the architect of his Ponzi scheme.  In fact, Rep., Moran is lucky that this legislative underperformance has not occurred in a private-sector boardroom.  Given its abysmal track record of wasteful spending and the overwhelming rise in the national debt to $17.6 trillion, such abject fiduciary failure and rampant duplicity would surely have resulted in the bankruptcy of the company, summary termination of the board’s employment by the company’s shareholders, and perhaps even a term in a federal security facility where orange is the new pinstripe.

Read the remainder of CAGW's press release for their entire justification, which includes this:

"In the real world, private-sector employees, including chief executive officers, are awarded raises based on success and measurable results; members of Congress should remain no different.  In an economic environment where only the top five percent of  U.S. wage earners make the base pay of members of Congress, median incomes have fallen to 1970s levels, the unemployment rate is stuck at 6.7 percent, and 10.5 million people are without jobs, Rep. Moran’s remarks are reprehensible."

Meanwhile, at the American Enterprise Institute's blog, Carpe Diem, yesterday, Mark Perry, tells us, "The average US CEO last year made only $178,400 (about the same as a dentist), and got a raise of less than 1%." Perry based his report on the 2013 Bureau of Labor Statistics report that included the category "chief executive" rather than a recent USA Today news article that featured only 200 of the nation's largest corporation. Perry includes a table that includes a range of annual wages for 2013 that is worth bookmarking.

Kudos to economics professor Mark Perry for his inimitable Carpe Diem blog.

April 07, 2014

Just Two More Weeks to Tax Freedom Day®

At the Tax Foundation's Tax Policy blog today, we learn Americans will be able to start working for themselves in two weeks, according to their annual Tax Freedom Day report. The report shows that Tax Freedom Day "will come on April 21st this year, which is three days later than last year. The calendar measure represents how long Americans as a whole need to work in order to pay the nation’s tax burden."

The blog post also says:

"The report estimates that Americans will pay about $4.5 trillion dollars in taxes of all kinds in 2014, with $3 trillion going to the federal government and $1.5 trillion dollars going to state and local governments. This is approximately 30.2 percent of the nation’s income paid in taxes.

"In total, Americans will pay more in taxes in 2014 than on food, clothing, and shelter combined."

Below is the graphic that accompanied the announcement at their Tax Policy blog:

Read the entire study, and weep. Kudos to the Tax Foundation, however, for their ever helpful tax policy information.

April 06, 2014

A Thought on a Free Society

"A truly free society is based on a vision of respect for people and what they value. In a truly free society, any business that disrespects its customers will fail, and deserves to do so. The same should be true of any government that disrespects its citizens. The central belief and fatal conceit of the current administration is that you are incapable of running your own life, but those in power are capable of running it for you. This is the essence of big government and collectivism."

~ Charles G. Koch, Chairman and CEO, Koch Industries

HT His April 2, 2014, "I'm Fighting to Restore a Free Society," Op-Ed, Wall Street Journal.

April 05, 2014

Arlington School Board Hires Internal Auditor

At the online Arlington Sun Gazette this morning, Scott McCaffrey reports that "Arlington School Board members on April 3 welcomed the school system’s first internal auditor." According to McCaffrey:

"School Board members funded the position as part of an effort to improve financial controls. The Arlington County Civic Federation has called on the County Board to create a similar position on the general-government side, but board members thus far have declined to do so."

We look forward to the Schools staffing-up a strong internal audit function since the new auditor's bio indicates he's started-up two internal audit departments. While the School Board may be spendthrifts -- having the highest cost per student in the region -- they deserve kudos for having the wisdom to hire an experienced internal auditor.

The Commonwealth's Auditor of Public Accounts released a report, dated March 2010, that analyzed the internal audit/inspector general resources in October 2009. The report reviewed the internal audit function at 23 state agencies and 14 institutions of higher education. Page 17 of the report contained a table of agencies actual expenditures. number of positions in the agency, and the staff size of the agency's or institution's internal audit function.

A quick, "back of the napkin" computation suggests that a collaborative internal audit function for Arlington county government and schools, combined, $1.1 billion operations would justify an internal audit staff of perhaps 10 auditors. From what we've read of the candidates campaign literature, only the independent candidate in Tuesday's special election (April 8, 2014), John Vihstadt, supports establishing an independent audit function.

April 04, 2014

$6 Billion Down the Drain at U.S. State Department

Brianna Ehley reports for the Fiscal Times today that "The State Department has no idea what happened to $6 billion used to pay its contractors." Here's the remainder of her lede:

"In a special “management alert” made public Thursday, the State Department’s Inspector General Steve Linick warned “significant financial risk and a lack of internal control at the department has led to billions of unaccounted dollars over the last six years.

"The alert was just the latest example of the federal government’s continued struggle with oversight over its outside contractors."

Ms. Ehley also noted, "Before Linick took office last fall, the State Department had been without an inspector general position for five years—the longest IG vacancy in the government’s history, as noted in The Washington Post."

Kiudos to Ms. Ehley for bringing the State Department's IG's "management alert" to the public's attention, and to Fiscal Times for using the iShutterstock.com graphic below. Gee, sounds like that graphic could be used with the Columbia Pike Streetcar and the Aquaticssphere projects in Arlington County, not to mention the Arisphere.

April 03, 2014

Arlington County Gets Push Back to Its Streetcar "Study"

Last week, an Arlington County press release touted a new study by HR&A Advisors, Inc., which showed "the Columbia Pike streetcar’s projected return on investment shows a multi-billion dollar benefit to Arlington and Fairfax Counties, far surpassing the project’s estimated capital cost. The economic return for streetcar also would greatly exceed the amount generated by enhanced bus service. The new analysis, released today, will be used by Arlington County as it updates its Capital Improvement Plan and streetcar project financial plan."

The economic study got the obligatory attention from the local media, e.g., see here for ARLnow's reporting.

A week later, opponents of the streetcar project have had a chance to study the consultant's report. Here's how the Arlington Sun Gazette's Scott McCaffrey begins his reporting of the push back (posted at InsideNoVa.com) by Arlingtonians for Sensible Transit (AST):

"Opponents of the proposed Columbia Pike streetcar struck back at county officials April 2, critiquing the recently issued economic-impact study on the transit line as having been rigged from the start and making a number of inappropriate and faulty assumptions.

“The consultant has collected its $100,000 fee by taking the county’s orders and doing the predicted whitewash of the County Board’s desired outcome,” said Peter Rousselot of Arlingtonians for Sensible Transit, which supports enhanced, modern bus service for the Pike corridor.

“The losers are the county’s taxpayers,” who “paid for another worthless study,” Rousselot said in a statement."

And here's one key point in the competing issues between the streetcar supporters and opponents:

"The economic analysis, released in late March, concluded that a streetcar would prove a far better economic boost than either the current Metrobus network trundling up and down the Pike or enhanced “bus-rapid transit” service proposed by some.

"Arlingtonians for Sensible Transit countered that the survey reports – but streetcar boosters fail to highlight – that rental rates will increase along the corridor if a streetcar arrives. HR&A Advisors, which did the study, reported that a 10-percent “rent premium” was likely in the corridor, on top of normal increases.

"“Shifting money from tenants to landlords is not an economic benefit to the community,” said Rousselot, a former Arlington County Democratic Committee chairman."

Arlingtonians for Sensible Transit (AST), which supports an attractive, but far less expensive bus rapid transit alternative has produced a five-page response to Arlington County's return on investment "study" that lists 15 reasons to disregard the county's so-called study. The "bottom line," according to AST:

"The consultant has collected its $100,000 fee by doing a shameless whitewash of the County Board's desired outcome. The losers are the County's taxpayers who not only paid for another worthless study, but may have to pay $310 million for a slow, uncomfortable, disruptive, hazardous, unattractive and inflexible system."

Finally, Virginia's inestimable, apolitical policy wonk, Jim Bacon has two long posts -- one post apparently written in response to the county's press release and the HR&A study, and a second post that takes into account AST's analysis. In the second post, Bacon first writes, "This is exactly what we need in the debate over Arlington’s proposed $284 million streetcar system for Columbia Pike: close scrutiny from local citizens." Bacon then goes on to explain:

"The paper is a rejoinder to a report issued by HR&A Advisors last week that concluded a $284 million investment (in 2014 dollars, $310 million in future dollars) in a Columbia Pike streetcar system would generate significantly higher economic benefit than a far less expensive investment in an upgraded bus system. My quick-and-dirty analysis found the main conclusions to be supportable, although I suggested that if the benefits were as great as HR&A says they are, perhaps the city should finance the project by means of setting up a tax district to pay off the bonds. For property owners, the increase in leases and rents would more than offset the higher taxes.

"Arlingtonians for Sensible Transit raises a number of issues that I had not considered. Some are unpersuasive but several of them give me pause. They bear a closer look."

Bacon's second post is worth reading in its entirety as is AST's analysis of the HR&A "study. Kudos to both Jim Bacon and the AST organization.

April 02, 2014

Civic Federation Sends 'Tax Cut' Resolution to County Board

At their monthly meeting last night, Arlington County Civic Federation delegates adopted a resolution proposed by a member of the Revenues & Expenditures Committee calling on the Arlington County Board to cut the real estate tax rate by 3-cents or more when the Board adopts the FY 2015 budget on April 22, 2014.

The Arlington Sun Gazette's Scott McCaffrey reports on the give-and-take at  the Civic Federation meeting in a report this morning at InsideNova.com, the Sun Gazette's new website. Here are the first few paragraph:

"Saying the county government has enough cash on hand to absorb it without impacting services, delegates to the Arlington County Civic Federation on April 1 voted to recommend a 3-cent-or-more cut in the real estate tax rate for 2014.

"The 23-11 vote called for reducing last year’s tax rate of $1.006 per $100 assessed valuation to 97.6 cents or lower.

"Even if the lower rate is adopted by the County Board, which appears unlikely, a typical household would see its real estate tax bill rise nearly $90 from a year before; if there is no change to the tax rate, it would rise more than $280.

"Supporters of the cut say the county government is accumulating cash that it doesn’t need, and can fully fund its billion-dollar budget while still giving tax relief to property owners.

“We just have to convey a message [to the government]: ‘Rein it in a little bit,’” said Larry Mayer, a former Civic Federation president whose Lyon Park neighborhood has seen double-digit assessment increases, which even with a cut in the tax rate will result in higher tax bills."

McCaffrey also reported this interesting exchange:

"The average real estate tax bill for Arlington homeowners is already the highest in the region, and if costs continue to rise, “we’re all going to be moving somewhere,” Bostwick said.

"Pish-posh, countered delegate Kathryn Scruggs of the Alliance for Housing Solutions. She said the county’s location has made it a sought-after address, and residents are not fretting over a few extra tax dollars.

“There’s plenty of people who want to come here and pay the taxes,” she said."

The R&E committee's report on the resolution was concise and authoritative (read it here). Attachment 1 was a graphic from a Washington Post March 12, 2014 Metro section article by Antonio Olivo and Patricia Sullivan. Labelled "Tax bills climb with home values," (see larger version of graphic here) and powerfully refutes the mantra Arlington County taxpayers constantly hear from County Board members about Arlington County having the region's lowest real estate tax rate. Attachment 2 of R&E's report is here.

Kudos to Washington Post reporters Patricia Sulliivan and Antonio Olivo for including the graphic with their reporting on Northern Virginia property values and tax bills.

April 01, 2014

A Thought on Political Agendas

"Liberals rely on bait-and-switch tactics because they fear the results of describing their agenda clearly and candidly to voters, who can’t handle the truth. Even an elementary truth, such as the proposition that improving health care will cost money rather than save money, must be denied over and over, lest don’t-tread-on-me rubes start asking awkward questions about how much improving health care is going to cost and where the money will come from. Once a policy such as Obamacare is enacted and implemented, making the switch means admitting the obvious, and then claiming it’s so obvious — “everyone always knew” it would cost money and disrupt existing health-care arrangements — that it doesn’t really qualify as a switch. The villains in this story are not the liberals who spoke incontestable untruths when political circumstances called for telling people what they wanted to hear. The villains are conservatives who complain about the deceits by commission and omission."

~ William Voegeli, Senior Editor, Claremont Review of Books

HT His March 8, 2014, Column, "Bait-and-Switch Liberalism" posted at National Review Online.