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April 30, 2015

The Nearly Empty Green ART Buses & Taxpayer Subsidies

According to the written report attached to the 1st Quarter FY 2015 performance report, posted at Arlington County's ART transit bus system webpage, "The purpose of ART is to provide fixed route cross-County transit service, connecting neighborhoods with Metrorail stations and major activity centers, complementing existing Metrobus transit service."

A frequent complaint heard by your humble scribe involves how often the little green buses are seen with very few passengers. So, let's go to the proverbial scorecard.

Indeed, the numbers in the latest performance report seem to bear out the complaints heard by the Watchdog. The performance report identifies 14 routes. Ridership information, according to the report, is:

"For first quarter Fiscal Year 2015, 745,099 passengers were transported on ART – a decrease of 0.44 percent in ridership from first quarter Fiscal Year 2014 (748,363). ART 41 remains the strongest route with 35% of average ridership followed by ART 42 with 11%, ART 87 (10%), ART 45 (9%), and ART 77 with 8%. The average number of weekday, Saturday and Sunday passengers respectively was 10,227, 4,139 and 2,450."

Since there are 13 weeks in a quarter, the 745,099 rides should work out to 57,513 riders per week. However, the report shows a weekly average of 16,816 (10,227 + 4,139 + 2,450). We've asked staff to clarify this apparent discrepancy, and will add the information in an update to this post.

Let's delve further into the complaint the little green ART buses frequently seem to run "empty." That 1st Quarter performance report has a column showing passengers per revenue hour. For example, route 41, which covers "Columbia Pike/Ballston/Court House Metro," carries nearly 35% of ART riders, and is considered the system's strongest route. This works out to 42.64 passengers per revenue hour. Assuming that a majority of those riders use an ART 41 bus during rush hour, it's understandable that ridership dwindles down to near-empty during non-rush hour operation.

Route 41 is followed by ART 42 (11%), AFT 87 (10%), ART 45 (9%), and AFT 77 (8%). More specifically, ART 77 had 60,130 riders in the 1st  quarter of FY 2015. According to the route information brochure, ART 77 runs every 30 minutes from 6:00 AM until 11:00 PM between Shirlington and Court House. Further, ART 77's workload works out to only 21.89 riders per revenue hour. So other than rush-hour passengers, is it any wonder the ART 77 buses look to be running empty much of the time?

So who is paying for the operation of tho mostly empty ART buses running around the county? Unfortunately, taxpayers heftily subsidize the county's ART transit system. Fortunately, the performance report shows just which routes are the most heavily subsidized.

Even though the 41 bus carries 35% of the system's passengers, it's "cost recovery percentage" was only 58.13% from July through September of 2014. The three least and three most subsidized ART routes, according to the "% of cost recovery," during the quarter were:

  • Route 41 -- 58.13%
  • Route 45 -- 41.30%
  • Route 42 -- 40.39%
  • Route 61 -- 13.55%
  • Route 53-- 10.81%
  • Route 74 -- 10.72%

The cost recovery percentage for the entire ART system during the first quarter of FY 2015 was 33.64% while there were 20.26 passengers per revenue hour of operation. In other words, every time an ART rider plops $1.75 into the farebox, county taxpayers plop in an additional $3.45 or more. (emphasis added) Sounds like another example of Arlington County's style of income redistribution.

The good news for county taxpayers, if such a thing is possible, is that ART's base fare increased from $1.50 to $1.75 effective July 1, 2014, the beginning of FY 2015. Fares are discounted for seniors, students, and perople with disabilities.

Finally, let's look at the total amount of the subsidies for the ART transit system. In FY 2012, the ART system received $3.09 million from the General Fund while two years later, in FY 2014, ART received $3.67 million from the General Fund, an increase of 18.7%, or 9.4% annually. On the other hand, total county general government expenditures over the same two-year period increased from $1.097 billion to $1.186 billion, an increase of 8.1%, or 4.1% annually. (the latter numbers are from the statistical section of the FY2014 Comprehensive Annual Financial Report, or CAFR).

The subsidies could be significantly worse, however. In FY 2014, ART transit revenues included almost $2.2 million in state transit aid, about equal to farebox revenues.

Unfortunately, things will likely get worse for county taxpayers. The local subsidy is expected to increase to $10.4 million by FY 2020, an increase of almost 30% annually from FY 2012. Can anyone in the Arlington County Board Office know how to set priorities?

Fortunately, for residential taxpayers, the County Board tapped the Transportation Capital Fund to achieve some of its urges to tax-and-spend for ART "enhancements," as shown in note 9 of the "guidance and notes" that accompanied the Board's adoption of the FY 2016 budget:

"Transportation–ART Service Enhancements and Supplemental proposal: Change funding source from General Fund to HB2313 local funds for the $155,638 in ART Service Enhancements in the Manager’s base budget. Fund the additional $425,000 in supplemental ART Service Enhancements that were presented to the Board with HB2313 local funds."

An audit of the ART transit system should be Job #1 for the new county auditor, if he or she is ever hired. Growls readers can express their thoughts about these ART system subsidies to members of the Arlington County Board, not to mention the subsidies received by the Artisphere's "patrons of the arts" which amounted to $41 each. So take a few minutes to tell Board members they need to learn how to prioritize county spending. If they had, county taxpayers could have seen a cut in the real estate tax rate. Just click-on the link below:

  • Call the County Board office at (703) 228-3130.

And tell them ACTA sent you.

April 29, 2015

Economic Growth? Not!

When we growled about economic growth on Saturday, little did we know that growth would be "grinding nearly to a halt," as the Washington Post is expected to report in tomorrow's print edition.

The Washington Post's Chico Harlan begins his reporting by writing:

"The U.S. economy ground nearly to a halt in the first three months of the year, according to government data released Wednesday morning, as exports plunged and severe winter weather helped keep consumers indoors.

"The gross domestic product grew between January and March at an annualized rate of 0.2 percent, the U.S. Commerce Department said, adding to the picture of an economy braking sharply after accelerating for much of last year. The pace fell well shy of the 1 percent mark anticipated by analysts and marked the weakest quarter in a year.

"The economy had expanded at a rate of 2.2 percent in the final three months of 2014 and at a rate of 2.4 percent for the year.

"Economists, employers and policymakers now face the challenge of determining whether the slowdown is temporary — stemming mostly from an unusually snowy winter in the Northeast — or a sign of broader problems."

At the Wall Street Journal's Real Time Economics blog this morning, Jeffrey Sparshott asks "What gives?" with the series of weak first quarters for GDP?" His introduction:

"The reasons are sometimes different, but the results frustratingly similar.

"Since 2010, first-quarter gross domestic product growth has averaged a seasonally adjusted annual rate of 0.6%. For all other quarters, it’s 2.9%. That’s worked out to slow but steady growth and a bit of a puzzle for some economists."

He includes the following chart, which shows the quarterly GDP numbers:

The Journal's Kate Davidson provides a "quick look" at the GDP report here. At the same Real Time Economics blog, Sarah Portlock describes how economists responded to the first quarter GDP report.

A number of our Growls over the past year have touched on the issue of economic growth, but our February 8, 2014 Growls put "the economic and jobs recoveries perspective."

Growls readers are urged to contact their members of Congress to voice their concerns about the factors burdening the American economy. Scroll down the page to yesterday's post since we provided links to the websites of Arlington County's Congressional representatives.

When you write, tell them ACTA sent you.

April 28, 2015

Clean Energy Loans = Taxpayers in $2.2 Billion Hole

On the front page of today's Washington Times, we learn, "Taxpayers are on the hook for more than $2.2 billion in expected costs from the federal government’s energy loan guarantee programs, according to a new audit Monday that suggests the controversial projects may not pay for themselves, as officials had promised."

The Times story continues:

"Nearly $1 billion in loans have already defaulted under the Energy Department program, which included the infamous Solyndra stimulus project and dozens of other green technology programs the Obama administration has approved, totaling nearly about $30 billion in taxpayer backing, the Government Accountability Office reported in its audit.

"The hefty $2.2 billion price tag is actually an improvement over initial estimates, which found the government was poised to face $4 billion in losses from the loan guarantees. But as the projects have come to fruition, they’ve performed better, leaving taxpayers with a shrinking — though still sizable — liability.

“As of November 2014, DOE estimates the credit subsidy cost of the loans and loan guarantees in its portfolio — that is, the total expected net cost over the life of the loans — to be $2.21 billion, including $807 million for loans that have defaulted,” the GAO said in its report to Congress.

"The green program loan guarantees were created in a 2005 law and boosted by the 2009 stimulus. The first applications were approved in 2009, and through 2014 the Obama administration had issued some 38 loans and guarantees, covering 34 projects ranging from nuclear power plants to fuel-efficient vehicles to solar panels and wind-generation technology.

"The Energy Department said it considers the loan program a success.

The General Accountability Office (GAO) report, which is the basis for this report, is numbered GAO-15-438 (both the highlights page and the full 49-page report is available here).

What are members of Congress doing to reduce waste in the federal government? Have they done anything to eliminate these energy loans? After all, if there is money to be made on these loans, one would expect private banks to make these loans. We urge Growls readers to contact their members of Congress to ask what they are doing to eliminate these so-called clean energy loans. Contact information is available at Thomas (use left-hand column). Taxpayers living in Virginia's Arlington County, can contact:

  • Senator Mark Warner (D) -  write to him or call (202) 224-2023
  • Senator Tim Kaine (D) -- write to him or call (202) 224-4024
  • Representative Don Beyer (D) -- write to him or call (202) 225-4376.

Ask for a written response. And, tell them ACTA sent you.

April 25, 2015

A Thought on Economic Growth

"How bad is the Obama recovery? Compared with the average postwar recovery, the economy in the past six years has created 12.1 million fewer jobs and $6,175 less income on average for every man, woman and child in the country. Had this recovery been as strong as previous postwar recoveries, some 1.6 million more Americans would have been lifted out of poverty and middle-income families would have a stunning $11,629 more annual income. At the present rate of growth in per capita GDP, it will take another 31 years for this recovery to match the per capita income growth already achieved at this point in previous postwar recoveries.

< . . . >

"Despite the largest fiscal stimulus program in history and the most expansive monetary policy in more than 150 years, the U.S. economy is underperforming today because we have bad economic policies. America succeeded in the Reagan and post-Reagan era because of good economic policies. Economic policies have consequences.

"With better economic policies America was like the fabled farmer with the goose that laid golden eggs. He kept the pond clean and full, he erected a nice coop, threw out corn for the goose and every day the goose laid a golden egg. Mr. Obama has drained the pond, burned down the coop and let the dogs loose to chase the goose around the barnyard. Now that the goose has stopped laying golden eggs, the administration’s apologists—arguing that we are now in “secular stagnation”—add insult to injury by suggesting that something is wrong with the goose."

~ Phil Gramm, former U.S. senator from Texas (R) and currently a visiting scholar at the American Enterprise Institute

Source: His April 21, 2015 column, posted at the Wall Street Journal (behind WS's paywall)

April 24, 2015

A Thought About Freedom and Free People

"The irony is that free people usually create far more wealth than the coerced, which makes the lower echelons better off, a fact that reminds “equality” is usually about empowering progressive elites rather than materially helping the poor. Moreover, in a free society, there are all sorts of forces — religion, constantly improving and ever cheaper technology, family pressures, honor, shame, philanthropy — that redistribute wealth either naturally or through the consent of the giver, and far more effectively than creating a huge government equalocracy that seeks power to bully others and exempt itself.

~ Victor Davis Hanson

Source: from his January 14, 2014 column posted at National Review Online.

April 23, 2015

This is Income Inequality? Family Incomes Continue Falling.

In his column today at CNS News, Dan Mitchell writes that he doesn't "understand the left’s myopic fixation on income inequality. If they genuinely care about the less fortunate, they should be focused on policies that produce higher incomes . . . instead, they agitate for class warfare and redistribution, which leads me to believe that many of them hate the rich more than they love the poor."

Meanwhile, at Investor's Business Daily this evening, John Merline points out that not only did family income fall in March, but is "now 5% below pre-recession level." According to Merline:

". . . Real median family income fell in March, to $54,203, back to where it was in September 2009.

"Sentier Research — which uses Census data to compile monthly income statistics — found that family incomes plummeted more after the recession than during the recession itself, bottoming out in mid-2011.

"After that, family incomes started to make a painfully slow climb. But even now, nearly six years after the recession ended, they are still 5% below where they stood at the previous peak in early 2008, just as the recession was starting. At the current pace, it will take several more years for family incomes to reach that peak again.

"Another way to look at it. Under President George W. Bush, this income measure averaged $56,081 — despite his presiding over two recessions. That's 6% higher than the average under Obama and 3.5% above the latest March figure.

"If this constitutes a "breakthrough year" for this administration, that isn't saying much for how it measures success."

In concluding his column, Mitchell says "the goal should be to make the pie bigger," adding that his "main point (is) that the focus should be growth rather than inequality."

If members of Congress are not talking about economic growth, what are they talking about? We urge Growls readers to contact their members of Congress to ask what they are doing in support of economic growth. Contact information is available at Thomas (use left-hand column). Taxpayers living in Virginia's Arlington County, should contact:

  • Senator Mark Warner (D) -  write to him or call (202) 224-2023
  • Senator Tim Kaine (D) -- write to him or call (202) 224-4024
  • Representative Don Beyer (D) -- write to him or call (202) 225-4376.

Ask for a written response. And, tell them ACTA sent you.

April 22, 2015

Arlington County Budget Includes 'Web' of State Money

When the Arlington County Board voted to adopt the $1.499 billion FY 2016 budget last night, total revenues included $72.3 million of state revenues. (agenda item 38.A. on the County Board's 4/21/15 agenda).

Although the $72.3 million in state revenues represents less than 5% of the FY 2016 Arlington County budget, a story in yesterday's Newport News Daily Press (be aware, there is a paywall), Travis Fain reminds us, "State money flows to localities through a complicated collection of funding streams." The story, by Travis Fain, certainly explains why state lawmakers are forever wrangling over the state budget.

Here's the beginning of Fain's report:

"Highway maintenance money comes from the state. So does pay for constitutional officers, such as commonwealth's attorneys and treasurers.

"The state pays part of the tab for E-911 services, which also get broken down into different streams. The state pays per diems for inmates in jails, though that doesn't always cover actual costs. It also picks up a percentage of new jail construction.

"It pays sheriff's deputies, and in this year's budget boosted starting salaries high enough that families of the lowest-paid deputies won't qualify for food-stamps anymore.

"There's 599 money for city police forces, named for the legislation that created this funding stream in 1979, as part of a package deal meant to slow down annexations.

"There's library aid, airport subsidies and transit money to buy new buses. Foster care and adoptive services funding comes through from the state, as does workforce training money.

"Lisa J. Cipriano, budget director for Newport News, figures that out of 260 or so revenue line items in her city's budget, probably 60 come from the state. And that doesn't include school funding.

"The same thing is happening in a different way to schools," Cipriano said."

Fain also writes, "Aside from the regular streams of funding, there are all sorts of small-time particulars to the state-and-local financial marriage. Hampton, for example, gets about $984,000 a year for Fort Monroe, the former Army post the state now owns and is redeveloping." The remainder of his interesting report is here.

The tangled web of state revenues suggest the need to reform the state budget process. But given the importance of state revenues to many of Virginia's town, cities, and counties, according to the Comparative Report of Virginia's local governments, prepared by the Virginia Auditor of Public Accounts, some of those local jurisdictions may be reluctant to reform the state budget process.

April 21, 2015

A Though About Tax Systems

"Tax systems can have multiple goals. For example, in addition to the common goal of raising revenue for the government, goals can also include redistributing income, stabilizing the economy, and achieving various other social and economic objectives through the use of preferences. Generally speaking, the greater the number of goals, the more complex is the tax system."

~ General Accounting Office

Source: page 68, "As Certain as Death: Quotations About Taxes," 2010, compiled by Jeffrey L. Yablon, TaxAnalysts.com.

April 20, 2015

VA Secretary is April's Porker of the Month

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.

Citizens Against Government Waste (CAGW) named Veterans Affairs (VA) Secretary Robert McDonald its April Porker of the Month for his further bungling of a massively mismanaged agency, according to this press release from CAGW. Following is CAGW's justification for awarding this month's Porker of the Month:

"It is not easy to turn around a department in as much disarray as the VA.  However, that effort should start by adopting commonsense business practices that are used in every company.  Secretary McDonald appears to have run Proctor & Gamble (P&G) well enough that consumers can still brush their teeth with Crest rather than just Colgate and wash their dishes with Joy instead of just Palmolive.  But the secretary has so far done a poor job of managing the VA within the very limited confines of competency for a government agency, let alone a private-sector company.

"Secretary McDonald should be front and center with a response to every report of mismanagement at the VA.  He should present Congress, taxpayers, and most of all veterans, with a clear, concise, and comprehensive plan to cut the waste, fraud, and abuse and improve the efficiency and effectiveness of the VA.  Instead, he has not exactly elicited the kind of empathy on Capitol Hill that would help him acquire the necessary tools to fix the agency’s problems.

"During a February 11, 2015 House Veterans Affairs Committee hearing on the VA’s fiscal year 2016 budget request, Rep. Mike Coffman (R-Colo.) charged Sec. McDonald with “glossing over the extraordinary problems confronted by your department.”  The secretary lashed back indignantly bragging, “I ran a company, sir, what have you done?”  He shifted blame from the VA to Congress by telling Rep. Coffman, “You’ve been here longer than I have… If there’s a problem in Denver, you own it more than I do.”  One would imagine that a response such as that to the P&G board when Mr. McDonald was CEO could have led to a vote on whether he should be fired for insubordination.

"The “Denver” reference was to the medical complex in suburban Aurora, which has been a black eye for the VA for the past decade.  The cost was originally slated to be $328 million in 2005. It ballooned to $621 million by 2006, and was estimated in March 2015 to cost $1.73 billion. The project was dubbed the “biggest construction failure” in the history of the VA.  Despite his apparent abdication of responsibility for the project, it was on Sec. McDonald’s watch that the VA begged Congress to lift the $880 million spending cap imposed on the project.  One rationale for the need to throw more good money after bad was to avoid another construction shutdown (the first of which happened on his watch in December).  Indeed, Sec. McDonald forced one top official to take the fall for the VA’s continued financial negligence.

"Sec. McDonald should also not escape blame for the failure to fix problems at the infamous Phoenix VA hospital, where the denial of benefits to veterans due to a combination of negligence and a flawed claims system has continued unabated.  An October 2014 investigation found that a VA facility in Shreveport, Louisiana lacked “toothbrushes, toothpaste, pajamas, sheets and blankets” for veterans as the facility bought solar panels, new televisions, and new furniture.  There so much mismanagement that the VA Committee could hold a hearing every week; indeed, there is another one on April 22, “Philadelphia and Oakland: Systemic Failures and Mismanagement.”  The toxic culture at the VA has even fostered a chilling effect on employees who blow the whistle on this waste, fraud, and abuse.

"CAGW President Tom Schatz said, “After decades of mismanagement, abuse, and waste, Sec. McDonald should at least show a little contrition.  In his short time as secretary, he has failed to demonstrate sufficient willingness to reform the bureaucracy; instead, he has been arrogant.  It is time for the secretary to take charge and give veterans confidence that he will provide them with the services they need, without delay and without excuses.”

Kudos to Citizens Against Government Waste (CAGW) for their continuing efforts to fight waste, fraud, and abuse in the federal government.

April 19, 2015

A Thought About Freedom and the Statue of Liberty

"In 1982, when he was in his 85th year, (Frank) Capra was awarded the American Film Institute’s Life Achievement Award. In his acceptance speech, he touched on the things that had been most important in his life. He spoke of celebrating his sixth birthday in steerage on a 13-day voyage across the Atlantic. He recalled the lack of privacy and ventilation, and the terrible smell. But he also remembered the ship’s arrival in New York Harbor, when his father brought him on deck and showed him the Statue of Liberty: “Cicco look!” his illiterate peasant father had said. “Look at that! That’s the greatest light since the star of Bethlehem! That’s the light of freedom! Remember that. Freedom.” Capra remembered. In his speech to the Hollywood elite so many years later, he revealed his formula for moviemaking. He said: “The art of Frank Capra is very, very simple. It’s the love of people. Add two simple ideals to this love of people—the freedom of each individual and the equal importance of each individual—and you have the principle upon which I based all my films.”

~ John Marini, Professor of Political Science, University of Nevada

Source: From a speech at Hillsdale College, March 3, 2015, during a conference on the films of Frank Capra, posted at Imprimis, a publication of Hillsdale College.

April 18, 2015

Green Energy and its Rich Subsidies

There is so much low-hanging fruit on the federal government's tree of waste. Within the past 1 1/2 months, we've growled about $125 billion of "improper payments on March 8. Then this month, on April 11, we growled about 601 ways to cut $639 billion in wasteful spending, and then yesterday, we growled about the massive waste in our massive federal government.

Consequently, it was depressing to read John Merline's report in the weekend Investor's Business Daily (IBD) that "even with subsidies, green energy's future is dim." Here's how Merline begins his reporting:

"It's a lot easier to throw money at wind and solar projects than it is to get energy out of them. That, at least, is the conclusion one could draw from the Energy Information Administration's latest Annual Energy Outlook, released this week.

"President Obama has made it his mission to push the country toward renewable "green" energy. He's certainly put the taxpayers' money where his mouth is.

"The EIA — part of the Energy Department — reported last month that the federal government spent roughly $45 billion just from 2010 to 2013 on renewable energy subsidies, mostly for wind and solar. Obama's budget calls for a 13% hike in current subsidy levels.

"In a speech this year, Obama said this "investment" has paid off, claiming that "we've doubled the production of clean energy."

"What he didn't say is that even with that doubling, solar and wind still account for less than 3% of the total energy supply, according to the new Outlook report.

"Nor did Obama mention that, even with billions upon billions in subsidies, solar and wind will still account for a mere 4% of the nation's energy supply by 2040 — a quarter-century from now."

Read Merline's entire report for IBD here. Note especially the graphic showing "renewables' dim future.

Was the $45 billion, mentioned above, that was flushed down the proverbial rathole from 2010 to 2013 part of GAO's already reported wasteful spending? A question worth asking members of Congress, it seems. Growls readers are urged to contact their members of Congress to ask this, or another question about government waste. Only when they see a sufficient number of their pitchfork-carrying constituents will they act to reduce waste and duplication in the federal government. Contact information is available at Thomas (use left-hand column). Taxpayers living in Virginia's Arlington County, should contact:

  • Senator Mark Warner (D) -  write to him or call (202) 224-2023
  • Senator Tim Kaine (D) -- write to him or call (202) 224-4024
  • Representative Don Beyer (D) -- write to him or call (202) 225-4376.

Ask for a written response. And, tell them ACTA sent you.

April 17, 2015

Massive Federal Government = Massive Waste?

One of our friends at the National Taxpayers Union, Brandon Arnold, reminds us at NTU's blog, Government Bytes yesterday, of the General Accountability Office's (GAO) latest annual report on duplication and waste in the federal government.

According to Arnold, NTU's executive VP:

"The House Oversight and Government Reform Committee is once again focusing its attention on waste in the federal government. In a hearing earlier this week, the Committee welcomed Gene Dodaro, Comptroller General of the United States. He discussed the findings of the annual report on duplication and overlap in the federal government issued by his agency, the Government Accountability Office (GAO).

"As taxpayers know all too well, the government is rife with waste. Since it began releasing its report in 2011, the GAO has identified approximately 440 specific steps that Congress and the executive branch could take to address overlap and duplication. The good news is that 348 of these actions have been addressed fully or in part, with a total projected savings of $100 billion through 2023. The bad news is that a tremendous amount of work remains to be done. In addition to the unaddressed actions from previous reports, the 2015 iteration found 66 new actions that should be taken.

"Needless to say, as long as we have a massive federal government, a great deal of waste will exist. The Oversight and Government Reform Committee should be commended for repeatedly shining a spotlight on this problem. It held a hearing on the subject last year, at which I was fortunate enough to serve as a witness."

Here are the key links to the important information items referenced by Arnold:

  • GAO's 2015 Annual Report on federal government fragmentation, overlap and duplication (GAO-15-404SP) -- summary and complete 240-page report.
  • House Committee on Oversight & Government Reform website where you can view the witness list, their testimony, and links to parts 1 and 2 of the committee hearing. A link to Arnold's testimony is available here.

Here's a short summary of what GAO found:

"In its 2015 report, GAO presents 66 actions that the executive branch or Congress could take to improve efficiency and effectiveness across 24 areas that span a broad range of government missions and functions.

  • GAO suggests 20 actions to address evidence of fragmentation, overlap, or duplication in 12 new areas across the government missions of defense, health, income security, information technology, and international affairs.
  • GAO also presents 46 opportunities for executive branch agencies or Congress to take actions to reduce the cost of government operations or enhance revenue collections for the Treasury across 12 areas of government."

Congratulations to NTU, Citizens Against Government Waste (CAGW), and the Cato Institute for having representatives testify on behalf of American taxpayers, and congratulations to the House Committee on Oversight, and its chairman, Rep. Jason Chaffetz (R-Utah) for holding the hearing.

A small quibble on one point made by Brandon Arnold. In his testimony, he writes, "Needless to say, as long as we have a massive federal government, a great deal of waste will exist." As we growled on March 8, 2015, the GAO already identified $125 billion of federal government waste in 2014. Now all this fragmentation, overlap and duplication. Until mankind reaches perfection, there will always be some waste and duplication. But, how much more must be plundered from the paychecks of American taxpayers? And what are our representatives in Congress doing to whittle down waste and duplication to no more than what occurs in the private sector? Isn't oversight part of their responsibility?

Consequently, we call on Growls readers to contact their members of Congress. Only when they see a sufficient number of their pitchfork-carrying constituents will they act to reduce waste and duplication in the federal government. Contact information is available at Thomas (use left-hand column). Taxpayers living in Virginia's Arlington County, should contact:

  • Senator Mark Warner (D) -  write to him or call (202) 224-2023
  • Senator Tim Kaine (D) -- write to him or call (202) 224-4024
  • Representative Don Beyer (D) -- write to him or call (202) 225-4376.

Ask for a written response. And, tell them ACTA sent you.

Kudos to the National Taxpayers Union (NTU), Citizens Against Government Waste, and the Cato Institute, and especially their project on Downsizing the Federal Government for their continued efforts to communicate the massive size of the federal government to the American people.

April 16, 2015

Civic Federation Speaks, County Board Listens?

This afternoon, the Arlington County Board held its "final budget decisions" meeting of the FY 2016 budget season, and "indicated it will not raise property tax rates for Calendar Year 2015 when it adopts the Fiscal Year 2016 Budget on Tuesday, April 21. All five Board members indicated during the final budget work session that they will vote for no tax rate increase," according to this county press release.

The press release contained the following bullets:

  • Board marks-up FY 2016 Budget, final vote April 21
  • Collaborated with APS to fully fund Schools
  • Increasing public safety funding
  • Increasing economic development funding
  • Funding internal auditor
  • Maintaining social safety net, bike-pedestrian programs

We can understand increasing funding for public safety; after all, along with K-12 education and public health, public safety is the third of the three core functions of local government.

We growled on March 13, 2013 about the economic development challenges for Arlington county on March 13, 2013, saying, "Arlington's economic development department should develop a plan that involves ways of reducing the tax and regulatory burden for the Arlington County business community, including recommendations by which the Virginia General Assembly can partner with the County Board in those reductions." Consequently, taxpayer money spent to provide "investment dollars" for the new director's "Way Forward" plan will do little to fill-up Arlington's commercial office space.

We don't question the spending for basic safety net programs, but spending for the bike-pedestrian programs is little more than catering to another special interest.

The Board is to be congratulated, however, for supporting the County Manager's decision to close the Artisphere, a past Board vanity project that has been sucking-down taxpayer dollars for several years now.

As usual, the Board chairman took credit for approving the budget "without an increase in the (real estate) tax rate," but added that Arlington homeowners will still be burdened by increased real estate taxes, noting:

"the average Arlington homeowner will see their property taxes rise due to an increase in assessments and a 1.8 percent increase in the water-sewer rate. The average homeowner will see their tax and fee burden rise from $7,286 to $7,567 – a four percent increase. That translates to about $23 a month or $281 a year." (emphasis added)

For all growls readers who responded to our request that taxpayers write or call the Arlington County Board, we thank you. The county's press release took note of your diligence, noting:

"The Board responded to more than 1,000 comments made by the public in two public hearings, letters, emails, phone calls and comments submitted through the County website."

For all Growls readers who took the time to write or call the Board, we offer a special thank you.

April 15, 2015

Federal Tax Comlexity by the Numbers

Our friends at the National Taxpayers Union Foundation (NTUF) is out with their annual analysis measuring the complexity of federal taxes. Here's the report's summary of findings in two paragraphs -- A Complex Problem: The Compliance Burdens of the Tax Code (Policy Paper No. 176):

"National Taxpayers Union Foundation’s (NTUF’s) annual analysis of tax complexity in the United States reveals yet another year of unconscionable burdens on America’s taxpayers and businesses, finding that compliance with the federal income tax cost the economy $233.8 billion in productivity last year.

"Out-of-pocket expenses like software and other tax preparation assistance tallied $31.7 billion, combined with an estimated $202.1 billion cost due to 6.1 billion hours in lost labor spent complying with the Tax Code this past year."

There's more, however. In their press release, NTUF adds:

"Additionally, a new analysis of the Affordable Care Act’s (ACA’s) impact on complexity found 3,322 pages of legal guidance related to the ACA added to IRS.gov - this overlaps partially with 1,865 pages of new ACA regulations.

"Americans face a rising tax complexity burden that essentially prevents anyone from being able to comply without assistance,” Study author and NTUF Policy Analyst Michael Tasselmyer said. “This year’s study gives an indication of future challenges, revealing the additional complications the Affordable Care Act will add to the Tax Code and filing.”

"NTUF’s report also highlights complexity issues related to the Foreign Account Tax Compliance Act (FATCA), heavier paperwork burdens, taxpayer service challenges, and identity theft."

Two numbers are worth keeping in mind. In 1935, IRS Form 1040 considered of only 34 lines. By 2014, the number of lines on Form 1040 has grown to 79 lines. The second number to keep in mind is the number of pages in the Form 1040 Instruction Booklet. The number has grown from two pages in 1935 to 209 pages in 2014, but it's not that simple since NTUF had to add these asterisks:

"*Excludes one extra page in the IRS’s online PDF version regarding donations for Philippines typhoon relief.

"**The IRS did not include instructions for Form 1040 schedules in this edition of the instruction booklet. The 2014 For 1040 instructions amounted to 104 pages. Instructions for Form 8949 and Schedules A, C, D, E, F, R, and SE (which were included in the 2013 Form 1040 instructions) totaled 105 pages."

Finally, here are the key findings from the report:

  • According to the IRS National Taxpayer Advocate, the total time burden of tax compliance totals an astounding 6.1 billion hours this year.
That is the equivalent of 152.5 million 40-hour workweeks. It would take 59,580 American workers working every week with no days off from age 18 until reaching the full Social Security retirement age of 67 to account for that much time. (emphasis added)
  • The total compliance cost is $233.813 billion a year, including $31.72 billion spent on tax software and other out-of-pocket costs along with $202.093 billion in labor costs.
  • Taxpayers or professionals looking for legal guidance on the Affordable Care Act will have to wade through 3,322 pages of legal guidance posted on IRS.gov – including regulations (1,077), Treasury decisions (1,377), notices (669), revenue procedures (100), and revenue rulings (12).
  • The Treasury’s paperwork burden (most of it due to taxes) imposed on the public has grown from 6.4 billion hours to 7 billion hours over the period from fiscal year 2005 to 2013, never making up less than 74 percent of the burden imposed by all government agencies combined.
  • Paid preparers and tax preparation software account for 94 percent of returns. Meanwhile, the average retail fee per return for H&R Block has nearly tripled since 1980.
  • Last year, the IRS responded to over 50 percent of its correspondence outside of established timeframes. Nearly 4 out of every 10 taxpayers calling for assistance were unable to get through to an agent.

Growls readers fully understand the complexity of the federal tax system, and know that it must be reformed -- both for simplicity's sake as well as to facilitate economic growth. Consequently, readers are encouraged to tell their Congressional representatives to take action to simplify the federal tax system, preferably with a flat tax that can be prepared on a 3X5 postcard. Contact information is available at Thomas (use left-hand column). Taxpayers living in Virginia's Arlington County, should contact:

  • Senator Mark Warner (D) -  write to him or call (202) 224-2023
  • Senator Tim Kaine (D) -- write to him or call (202) 224-4024
  • Representative Don Beyer (D) -- write to him or call (202) 225-4376.

Ask for a written response. And, tell them ACTA sent you.

Kudos to the National Taxpayers Union (NTU) and the National Taxpayers Union Foundation (NTUF) for their continued efforts at pointing out the complexity of our tax system.

April 14, 2015

First a $1M Bus Stop. Now $1 million for 4.3 Miles of Bike Lanes

Can Arlington County staff provide a complete response?

Over the weekend, we started a project of growling about individual follow-up responses to questions about the budget by Arlington County Board members. You can can find them here, sorted by department.

Earlier today, staff posted a response (labelled K-5) to a question by Board member Walter Tejada about the cost of bike lanes on Columbia Pike. Here is the staff response:

"The County’s Columbia Pike Bike Boulevards project, which creates 4.3 mile bike routes on streets parallel and adjacent to Columbia Pike, is well underway. The project website is noted below:

http://projects.arlingtonva.us/projects/bike-boulevards/

"All of the planning, design, right-of-way acquisition and construction in the Columbia Pike corridor is intended to be consistent with the recommendations of the Columbia Pike Streetscape Taskforce and the form based code for both the commercial nodes and neighborhood frontages. Revising the approach to the design of Columbia Pike would entail revisiting and revising these plans. It would also require street redesign work and additional new acquisition. This would delay the implementation of the remaining segments of Columbia Pike, and also increase project costs."

Since the staff response made no mention of the cost of the Columbia Pike Bike Lanes project, I asked the Board and Manager to clarify the response, asking:

"I'm looking at the staff response to this question by Mr. Tejada, but although the subject on the top line asks for the cost of the bike lanes, there is no mention of cost in the staff's response. It's rather interesting, though, that the bottom line on the Columbia Pike Bike Boulevards webpage estimates the project cost at $1 million.

"So, is the estimated project cost still $1 million. Or was the $1 million the estimate when staff met with adjacent civic associations in 2012? What is the current cost estimate? How does the $1 million for the 4.3 miles of bike lanes on Columbia Pike compare with the estimated cost of all other bike lane projects on a per bike lane mile basis at a comparable point in time?

"What is the review process to ensure these staff responses are responsive to the Board member's question?"

Growls readers who have not yet told members of the Arlington County Board that taxpayers in Arlington County are overtaxed and under-served are urged to take a few minutes to tell Board members to cut the real estate tax rate. Just click-on the link below:

  • Call the County Board office at (703) 228-3130

And tell them ACTA sent you.

April 13, 2015

Arlington School Board Adopts a 'Lean Budget'

Scott McCaffrey of the Arlington Sun Gazette posted an online story this morning in which he reported, "Per-student spending to decline in adopted Arlington school budget."

Here's how McCaffrey begins his report:

"Overall spending would rise to $556 million but per-student spending would drop 3.6 percent under the preliminary fiscal 2016 budget plan adopted by School Board members April 9.

"The spending package is less than that proposed by Superintendent Patrick Murphy at the start of budget season, reflecting a tightening fiscal environment.

"Although per-student spending is likely to remain highest among Washington-area jurisdictions, School Board Chairman James Lander called the adopted package a “very lean” budget.

"School officials now will have to wait until April 21 to see if the County Board will fully fund their budget request for the coming year. The budget adopted by the School Board seeks $6.2 million more than proposed in County Manager Barbara Donnellan’s draft budget.

"Per-student costs will decline even if the full funding is provided; under the School Board budget, the per-student cost of $18,558 for fiscal 2016 will be down from $19,244 in the current year."

You can read the remainder of McCaffrey's report here, which notes "step" pay raises, the addition of three positions in facility operations where construction projects are handled, and the "creation of a new family- and community-engagement specialist."

Sure doesn't sound like a lean or austere budget for taxpayers.

Growls readers who have not yet told members of the Arlington County Board that taxpayers in Arlington County are overtaxed and under-served are urged to take a few minutes to tell Board members to cut the real estate tax rate. Just click-on the link below:

  • Call the County Board office at (703) 228-3130

And tell them ACTA sent you.

April 12, 2015

Arlington County Has a Dog License Tax. Who Knew?

During each year's Arlington County Board budget work sessions, many questions are raised about the Manager's proposed budget. This year is no different. Those questions and the staff responses are posted as follow-up to County Board work sessions. Over the next several weeks, your humble scribe will growl about some of them.

Material is updated as the Board proceeds through its work session schedule. Consequently, it's important to check back for updates.

At the budget work session on March 18, 2015, Board member John Vihstadt asked about the dog licenses tax. Here is staff's April 6, 2015 response.

"The County Board sets the dog license tax by ordinance (Arlington County Code § 2-12.B), subject to a maximum rate of $10.00 per year prescribed by state law (Virginia Code § 3.2-6528). Arlington’s current license tax is $10.00 per year and $25.00 for a three-year license. The current rates were established in 1986. In FY 2014, revenues from the dog license tax totaled $59,664."

Perhaps it's because the county's total take from the dog license tax isn't that large -- $59,664 -- that the County Board hasn't asked the General Assembly to update the maximum allowable dog license tax since the current rates were established. However, if the tax had kept pace with inflation, it would now be $21.42, based upon the Department of Labor's CPI Inflation Calculator. While we take a hard look at taxes in general, this tax seems to look more like a fee, and given the county's penchant to build dog parks, it seems like the time has arrived to increase the dog license tax.

Growls readers who have not yet told members of the Arlington County Board that taxpayers in Arlington County are overtaxed and under-served are urged to take a few minutes to tell Board members to cut the real estate tax rate. Just click-on the link below:

  • Call the County Board office at (703) 228-3130.

And tell them ACTA sent you.

UPDATE (4/17/15): HT to "a little dog" for the information that: "DPR (Xxxxxxxxxxx) at one point estimated there were 20,000 dogs in the County, as justification for dog parks.  Maybe a more nuanced solution is to require a dog park fee (with appropriate tag and associated fine) for those choosing to use them, particularly as the County has literally spent millions on dog parks, and even more money for annual maintenance.  Maybe leave the registration fee at $10, $25 p.a. to use the dog parks, and a 'get-your-attention' fine for non-compliance.  AWLA can do the compliance...we pay them a hefty amount each year for other services, and some of the new fees could be used to pay them."

April 11, 2015

601 Ways to Cut $639 Billion in Wasteful Gummint Spending

In a story for the Washington Examiner last Sunday, April 5, Eathan Barton reported,"Federal officials could eliminate $639 billion in wasteful spending annually — more than last year's deficit — by adopting more than 600 measures proposed by a nonprofit advocacy group."

Here's a portion of Barton's reporting:

"The savings — which would add up to $2.6 trillion over five years — are found in 601 recommendations included in Citizens Against Government Waste's 2015 Prime Cuts report.

"The November 2014 elections gave the Republican Party control of the Senate and a larger majority in the House. Congress now has a clear mandate to reduce spending by eliminating waste, fraud, abuse, and mismanagement," the group said.

"Hanging over Capitol Hill during this shift in power is the nation's record $18.2 trillion national debt, which is a constant reminder of profligate spending in Washington. By following the blueprint provided by CAGW's Prime Cuts 2015, wasteful government spending can be cut and the nation can start on a path toward fiscal sanity," the report said.

"The biggest savings from a single Prime Cuts recommendation was eliminating the Rural Utilities Service, which provides broadband access to communities with populations of less than 20,000 people. Doing so would save $9.6 billion the first year and $48.1 billion over five years.

"Among the wasteful federal spending projects identified by the report was a $667,000 grant awarded to Buford Communications of LaGrange, Ark., in 2009 to build a high-speed internet network. With the town's population of 122, the project cost $5,468 per resident."

You can read the remainder of Barton's report here.

Citizens Against Government Waste (CAGW) introduces their 2015 Prime Cuts here, including this concluding statement:

"By following the blueprint provided by CAGW’s Prime Cuts 2015, wasteful government spending can be cut and the nation can start on a path toward fiscal sanity. Prime Cuts 2015 is essential reading for taxpayers, the media, and legislators."

In addition, the complete 26-page Prime Cuts is here while the accompanying 2015 Database is here.

Growls readers know that only by concerted action by the two houses of Congress will needed action occur to reduce waste, fraud and abuse in federal government programs. Consequently, readers are encouraged to tell their Congressional representatives to take action to reduce government waste. Contact information is available at Thomas (use left-hand column). Taxpayers living in Virginia's Arlington County, should contact:

  • Senator Mark Warner (D) -  write to him or call (202) 224-2023
  • Senator Tim Kaine (D) -- write to him or call (202) 224-4024
  • Representative Don Beyer (D) -- write to him or call (202) 225-4376.

Ask for a written response. And, tell them ACTA sent you.

Kudos to Citizens Against Government Waste for their continued efforts to reduce government waste.

April 10, 2015

Time Ticking Away for the Artisphere Boondoggle?

Scott McCaffrey reports at Arlington Sun Gazette this morning that after an April 7, 2015 Arlington County Board budget work session,  "It ain’t over until it’s over. But when it comes to the Artisphere arts center, it looks like . . . it’s over."

Here's how McCaffrey begins his reporting:

"County Board members appear ready to follow the advice of County Manager Barbara Donnellan and pull the plug on the four-year-old Rosslyn center, a facility even supporters acknowledge was conceived without much thought to what it would be and how it would attract patronage.

"At an April 7 budget work session, board members split 4-1 in favor of closing the center, which occupies space lent to the county government by a developer in return for higher density on another Rosslyn project. The site formerly housed the Newseum, which decamped a decade ago to the District of Columbia.

"County Board Vice Chairman Walter Tejada was the only board member to voice a desire to keep the arts center afloat.

"Donnellan late last year proposed keeping the center going until the end of the county government’s budget year this June, then closing the doors.

"The county government will still be on the hook for operating expenses related to the space, and could work to either sublet it or attempt to get the developer to take it back before the end of the lease term."

You can read the remainder of His report here. In case you ever get to thinking the Arlington County Board doesn't have enough money, note McCaffrey's discussion of taxpayer subsidies going to the Artisphere vanity project:

"And subsidies there were: In its first full year of operation after opening, it cost the county government – and taxpayers – $41 for every person who came into the facility, according to county figures."

Growls readers who have not yet told members of the Arlington County Board that Arlington County taxpayers are overtaxed and under-served, not to mention subsidizing the Artisphere's "patrons of the arts" to the tune of $41 each, are urged to take a few minutes to tell Board members to cut the real estate tax rate. Just click-on the link below:

  • Call the County Board office at (703) 228-3130.

And tell them ACTA sent you.

April 09, 2015

An Orwellian Survey + 1 Chart to Keep

The Arlington Way apparently still means asking questions so you get the answers you can use to promote more spending.  The County Government is conducting its fourth resident survey, “2015 Arlington County, Virginia DirectionFinder® Survey,” a process of gathering information to direct/justify future spending.   
 
“This survey will help us find out how we’re doing across many different service areas – and also pinpoint where we need to improve,” said County Manager Barbara Donnellan.  “The results will provide information to guide future decision-making, long-range priorities, and strategic planning,” according to the March 2015 release announcing the effort.
 
The last survey, done in 2012, helped the County bureaucracy pat itself on its back.  This unfortunately didn’t give some County Board candidates any idea which way the wind was blowing.  Though the 2012 survey said, “Overall satisfaction with quality of services improved from 87 percent in 2008 to 89 percent in 2012,”  one County Board candidate got hammered at the polls by running on tweaking the status quo. And there is even a 45-minute video presentation to the County Board about the 2012 survey.
 
The County also used the 2012 survey to justify upping spending in areas such as affordable housing. “The survey also indicated opportunities for improvement in several areas, including: efforts to preserve affordable housing; efforts to preserve nature areas, and enforcement of local traffic laws,” according to the release.

Taking the new survey might cause some heartburn for anyone interested in reducing or even slowing the growth of Arlington County spending.  (You can find and take it by going here.)
 
The first question provides a list of the usual services, asking the respondent to say whether they satisfied or not with each of them:

  • Q1. Major categories of services provided by Arlington County are listed below. Please rate each item on a scale of 1 to 5 where 5 means “very satisfied” and 1 means “very dissatisfied.”

A. Quality of police services
B. Quality of fire and emergency medical and ambulance services
C. Quality of the County's emergency preparedness services
D. Quality of County parks/recreation/sports programs and facilities
E. Quality of County arts/cultural programs
*          *          *
L. Effectiveness of the County’s Smart Growth practices that promote transit-oriented development
*          *          *
P. Quality of County's human services (vulnerable low-income, children, homeless, persons with mental illness/intellectual disabilities/substance abuse, and seniors)

The follow-up question is:

  • Q2. Which FOUR of the areas listed above do you think are most important to improve over the next TWO Years? [Select the letters below using the letters from Question 1 above].

If you say you’re “very unsatisfied” with any of these items, there’s no way to explain that ever-increasing spending in these areas isn’t the response you want.  If you’re unsatisfied, then the County Government, at its discretion, will “improve” it, i.e., increase spending in that area, if the past is a predictor of future actions.

The closest the survey gets to allowing citizens to vent in a way that doesn’t seem likely to prompt more spending is here:

  • Q5. TRUST OF LOCAL GOVERNMENT. Please rate your level of agreement with each of the following statements on a scale of 1 to 5 where 5 means “strongly agree” and 1 means “strongly disagree.”

Guess which answer I selected.

There are more questions asking generally about satisfaction, or lack of it, but the County has left it to itself to decide what this means. Nowhere is there a question about whether the County Government is too large, taxes are too high, or whether the Arlington bureaucracy should reduce the scale/scope of what it’s doing.

One warning: The County is interested in how much you make, your gender and race, so don’t forget to answer any of those questions. Also, the County Government wants to know exactly who is responding:

*To validate your input we need your street address and ZIP code so that we can verify only one person per household has taken the survey.

I put in my real address, so probably those pot holes near my house are going to be there a while.

While neither the County Board or the County Manager saw fit to ask residents whether taxes are too high, thanks to Jeff Clabaugh of the Washington Business Journal in a story today, we learn that Arlington County ranks #2 on total tax burden among the 100 largest U.S. cities. The numbers come courtesy of an analysis by the financial website NerdWallet. The table below is from the Washington Business Journal story, but you numbers for all 100 cities is available at the NerdWallet website.

And if the County asks, tell them ACTA sent you.

April 08, 2015

Civic Federation to County Board: NO Increase in Tax Rate

At yesterday evening's monthly meeting of the Arlington County Civic Federation, the Arlington Sun Gazette's Scott McCaffrey reports that delegates voted 22-15 to urge the County Board to balance the FY 2016 budget with no increase in the real estate tax rate. The first few paragraphs of McCaffrey's report follows:

"It didn’t come without a healthy dose of wrangling over parliamentary procedure, but the Arlington County Civic Federation on April 7 backed County Manager Barbara Donnellan’s $1.15 billion budget proposal, and called on County Board members not to raise the real estate tax rate to pay for projects not included in the manager’s spending plan.

"The 22-15 vote was a victory of the federation’s conservative revenues and expenditures committee, which had unanimously recommended keeping the tax rate at 99.6 cents per $100 assessed valuation. That’s lower than the $1.011-per-$100 rate advertised earlier in the budget season by County Board members.

"The committee recommendation, adopted by the full body, asks County Board members to lower the tax rate if possible, but gives no guidance on how to go about doing it.

"The County Board is set to vote on the government’s fiscal 2016 budget, and set tax rates, on April 18.

"Burt Bostick, acting chairman of the committee, said that when County Board members in 2014 ignored a Civic Federation resolution calling for lowering the tax rate, the county government ended up with a “huge” surplus borne on the backs of residents who are still facing lingering effects of the recession."

Read the remainder of Scott McCaffrey's report here. It includes comments by several delegates and wranglings involving Robert's Rules. There are also several astute comments by members of the Federation's Revenues & Expenditures Committee, which submitted the resolution. Your humble scribe even offered this observation:

"Tim Wise, president of the Arlington County Taxpayers Association and a member of the revenues and expenditures committee, said the county government needs to dig deep and evaluate why it spends what it does.

"A top-to-bottom review could benefit both the government and taxpayers, he said.

“Arlington County by and large – not every case, but by and large – is a high-cost provider of services,” Wise said. “Only when you get down in the weeds . . . will you find the information you’re looking for.”

The Arlington County Civic Federation's website is here.

Growls readers who have not yet told members of the Arlington County Board that Arlington County taxpayers are overtaxed and under-served are urged to take a few minutes to tell Board members to cut the real estate tax rate. Just click-on the link below:

  • Call the County Board office at (703) 228-3130.

And tell them ACTA sent you.

April 07, 2015

A Thought on Tax Competition

"Indeed, to the extent tax competition between jurisdictions holds down the increase in the growth of governments, citizens of all countries experience more job opportunities and higher standards of living.

~ Richard W. Rahn

Source: page 101, "As Certain as Death: Quotations About Taxes," 2010, compiled by Jeffrey L. Yablon, TaxAnalysts.com.

April 06, 2015

A Thought on the Destruction of Great Civilitizations

"A great civilization is not conquered from without until it has destroyed itself from within. The essential cause of Rome’s decline lay in her people, her morals, her class struggle, her failing trade, her bureaucratic despotism, her stifling taxes, her consuming wars.

~ William Durant

Source: page 96, "As Certain as Death: Quotations About Taxes," 2010, compiled by Jeffrey L. Yablon, TaxAnalysts.com.

April 05, 2015

Comparing Income Mobility and Income Inequality

"Income inequality and economic immobility are often lumped together, but they shouldn’t be.

"Consider the two concepts positively: Income equality is about bridging the gap between the rich and the poor, while economic mobility is about elevating the poor as rapidly as possible. Finding ways to increase economic mobility should be our greater concern.

"For instance, while we have talked incessantly about the disproportionate gains of the top 1 percent, the wage slowdown in the United States in recent decades is a bigger problem for most people. Since 1973, for workers as a whole, wages have stagnated largely because of a severe productivity slowdown.

"The consequences have been startling. Data from the Economic Report of the President suggests that if productivity growth had maintained its pre-1973 pace, the median or typical household would now earn about $30,000 more today. Those higher earnings would constitute a form of upward mobility. For purposes of comparison, if income inequality had maintained its pre-1973 trend, the gain for the median household would be about $9,000 in income this year, a much smaller figure.

"Those changes in productivity and inequality trends aren’t entirely separate, but accelerating the growth of productivity has the potential to do more for upward economic mobility than redistributing money from the top 1 percent."

~ Tyler Cowen, Professor of Economics, George Mason University

Source: His April 5, 2015 New York Times column, HT His Marginal Revolution blog.

April 04, 2015

The Federal Taxes We Pay in 1 Chart

The following chart showing the composition of federal revenues is from the Peter G. Peterson Foundation. The Peterson Foundation adds the following observation:

"CBO projects that, as the economy recovers, revenues under current law will increase over the next couple of years, reaching about 18 percent of GDP in 2025. Individual income taxes and social insurance taxes (largely Social Security payroll taxes) account for most of federal government revenue."

The Peter G. Peterson Foundation sees their mission as increasing "public awareness of the nature and urgency of key fiscal challenges threatening America's future and to accelerate action on them."

April 03, 2015

A Thought on Constrained and Unconstrained Visions

"Just as the unconstrained vision urges judicial activism on judges, it urges "social responsibility" upon businessmen -- that they should hire, invest, donate, and otherwise conduct their businesses with an eye to producing specific benefits to society at large. The socially responsible businessman should, for example, hire the disadvantaged, invest in things that seem most needed by society rather than those most profitable to his firm, and turn part of the proceeds over to charitable and cultural activities, rather than pay all the proceeds out to the stockholders or plow them back into the business.

"The constrained vision sees such things as outside the competence of businessmen, given the wider ramifications of such decisions in a complex systematic process. According to the constrained vision of human knowledge, what is within the businessman's competence is the running of his particular firm so as to promote its prosperity, within the law. It is the systematic effect of competition, rather than the individual intentions of businessmen, which this vision relies on to produce social benefit. According to Adam Smith, it is when the businessman "intends only his own gain" that he contributes -- via the process of  competition -- to promote the social good "more effectually than when he really intends to promote it." Smith added: "I have never known much good done by those who affected to trade for the public good."

"The writings of those with the constrained vision abound with examples of counterproductive consequences of well-intentioned policies. But to those with the unconstrained vision, this is simply seizing upon isolated mistakes that are correctable, in order to resist tendencies that are socially beneficial on the whole. However, to those with the constrained vision, these mistakes are not happenstances, but symptoms of what to expect when the inherent limitations of individuals are ignored and systemic processes for coping with these limitations are deranged by specific tinkering."

~ Thomas Sowell, pages 56-57, "A Conflict of Visions: Ideological Origins of Political Struggles," Revised Edition

Source: Available at Barnes & Noble.

April 02, 2015

It's April 2, and You're Still Working for the Government

And, according to the Tax Foundation, you'll continue working for the government until April 24, 2015. So, let's see what's going on. On Monday, March 30, the Tax Foundation announced that Tax Freedom Day® 2015 occurs on April 24,or "114 days into the year." It is also one day later than last year.

So what is Tax Freedom Day? The Tax Foundation defines it as:

"Tax Freedom Day is the day when the nation as a whole has earned enough money to pay its total tax bill for the year. Tax Freedom Day takes all federal, state, and local taxes and divides them by the nation’s income. In 2015, Americans will pay $3.28 trillion in federal taxes and $1.57 trillion in state and local taxes, for a total tax bill of $4.85 trillion, or 31 percent of national income. This year, Tax Freedom Day falls on April 24, or 114 days into the year."

We didn't growl about Tax Freedom Day last year, but we growled about it in 2013 as well as in 2012, when it occurred on April 17, which itself was four days later than in 2011. In 2009, the first year of President Obama's first term, Tax Freedom Day occurred on April 13 -- nationally -- or April 16 here in Virginia. Incidentally, that's eight days earlier than it was in 2008, the last year of President Bush's second term.

The report, prepared by Tax Foundation economist Kyle Pomerleau includes the following key findings:

  • "Americans will pay $3.3 trillion in federal taxes and $1.5 trillion in state and local taxes, for a total bill of more than $4.8 trillion, or 31 percent of the nation’s income.
  • "Tax Freedom Day is one day later than last year due mainly to the country’s continued steady economic growth, which is expected to boost tax revenue especially from the corporate, payroll, and individual income tax.
  • "Americans will collectively spend more on taxes in 2015 than they will on food, clothing, and housing combined. (emphasis added)
  • "If you include annual federal borrowing, which represents future taxes owed, Tax Freedom Day would occur 14 days later on May 8.
  • "Tax Freedom Day is a significant date for taxpayers and lawmakers because it represents how long Americans as a whole have to work in order to pay the nation’s tax burden."

Tax Freedom Day has changed over time. One hundred fifteen years ago -- in 1900 -- it came on January 22. The following graph from the Tax Foundation charges these changes:


Whether you think you are paying too little in taxes or too much, readers of Growls are encouraged to voice their concerns about the taxes they pay to their members of Congress since only they can change America's tax laws. Ask them for their thoughts on tax policy, and how their tax policy will affect economic growth. Contact information is available at Thomas (use left-hand column). Taxpayers living in Virginia's Arlington County, should contact:
  • Senator Mark Warner (D) -  write to him or call (202) 224-2023
  • Senator Tim Kaine (D) -- write to him or call (202) 224-4024
  • Representative Don Beyer (D) -- write to him or call (202) 225-4376.

Ask for a written response. And, tell them ACTA sent you.

Kudos to the Tax Foundation for their continued principled research and analysis of tax policy.

April 01, 2015

A Thought on Freedom and Tyranny

"The secret of freedom lies in educating people, whereas the secret of tyranny is in keeping them ignorant."

~ Maximilien Robespierre

Source: BrainyQuote.com.