|America's independent, non-partisan advocate for overburdened taxpayers.||Home | Donate | RSS | Log in|
The fix is in, my friends. Speculation on Capitol Hill runs rampant that House Leadership is actively undermining the prospects for passage of a Balanced Budget Amendment to our Constitution, effectively eliminating the most powerful tool we have to enforce budgeting discipline into the future. While all 47 Senate Republicans co-sponsored a strong BBA that included a spending limit and a supermajority threshold for tax increases, House Leadership has been either ambivalent or subtly hostile towards real structural budget reform. In interviews, House Speaker John Boehner (R-OH) has said he isn't interested in "gimmicks," which many regarded as a backhanded comment about a BBA or a statutory spending cap.
This bad-mouthing seems to be working. The National Journal surveyed Members of Congress about what they expected from a debt ceiling agreement and only 39% of Republicans thought a BBA would be a part of the deal. For some perspective a recent poll found that 81% of Republican voters support a BBA, so I think it's safe to say that elected Rs appear to not be reflecting the will of their constituents very well.
And now word is leaking that Republican House leaders seem to be rushing through a BBA not in order to actually pass it, but to give it a speedy euthanasia and get it out of their hair. Just this morning, I received an email from a House staffer who said "Leadership is planning on bringing H.J. Res. 1 to the floor for a vote sometime over the next two weeks to delegitimize the BBA and separate it from the debt ceiling vote."
H.J. Res. 1 is the version of a BBA that was sped through a House Judiciary Committee markup last Friday with little notice. NTU has been advocating for a BBA for 40 years and I was one of just three people invited to personally testify in its favor at a House Judiciary Subcommittee on the Constitution hearing last month, yet I heard NOTHING about the proposed markup until the morning it was occurring. That's not how a leadership team that's trying to build support for something operates, it's how you try to sneak something through quickly without a lot of scrutiny.
What's so peculiar about this turn of events is that a BBA is not some controversial too-conservative provision toxic to moderate Members' reelection prospects. This isn't, for example, Medicare reform, where dozens of Republican members had to swallow hard and cast the right vote in support knowing that Democrats would demagogue the issue mercilessly. Simply stated, NOBODY will have to "walk the plank" to vote for a BBA knowing that attack ads await them on the other side. It's a rare combination of good politics AND good policy, yet some Republicans are trying to kill it.
The next few weeks will tell you all you need to know about whether or not Republican leaders actually heard the message that was sent last November. Rushing a Balanced Budget Amendment through without allowing grassroots BBA supporters across the country to weigh in and build support would be a pretty clear indication of their true colors. If leaders in the House of Representatives schedule a vote on the Balanced Budget Amendment in the month of June, I'd consider it the equivalent of a big middle finger to the millions of fiscal conservatives who helped create the majority they now enjoy.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Where's the Growth? Weak First Quarter Numbers Show Continued Stagnation
President Obama loves to use the car metaphor when describing the economy. You’ve surely heard it by now. Republicans drove the car into the ditch, the President and Democrats have been trying to push it out, but Republicans have just sat in the back seat (or in an oddly detailed alternative version, stood around sipping on Slurpees) and refused to do any of the hard work.
Just as our economic car appeared to be out of the ditch and ready to hit the road, it appears our engine has stalled out (apparently Obama can’t drive a stick). Despite the Administration’s insistence that we are constantly on the verge of turning the corner, the recently released first quarter GDP numbers appear to tell a different story.
According to the Commerce Department the economy grew at a measly 1.8 percent rate through the first three months. That number is also a rather dramatic step back from the 3.1 percent rate of GDP growth in the last three months of 2010. More bad news came from the Department of Labor, which reported that 10,000 more Americans had filed for unemployment in the last week, raising the total number to 424,000.
A recent George Will column points to the utter lack of progress being made with President Obama behind the wheel.
June will be the 68th month since 1948 with the rate at 8 percent or higher -- the 29th such month under Obama. So 43 percent of the most severe unemployment in the last 63 years has occurred in the last 21/2 years. No postwar president has sought re-election with 8 percent unemployment.
In 1960, candidate John Kennedy's mantra was, "I think we can do better." In 2012, a Republican can win by re-casting that as a question: "Is this the best we can do?"
Congressional Republicans aren’t waiting around until 2012 to ask that question. Last week they issued a no-cost jobs plan that would enact some much-needed reforms to jumpstart our economy. Among them:
America certainly needs a President who can steer us back to prosperity, but until then Congress must free up job creators to put their foot on the gas.0 Comments | Post a Comment | Sign up for NTU Action Alerts
For your consideration, the Atlas Network -- an organization connecting and assisting free-market groups on an international scale -- has produced The Morality of Profit. The video features Executive Vice President Tom Palmer asking whether profits are stolen from other people or are created through value generation. Centering on Bill Gates, we are asked if the concept of “giving back” is accurate after making voluntary transactions that are beneficial to both parties. People paid a few hundred dollars for a product that greatly increased connectivity, accuracy, and efficiency.
Amidst a continuing recession (or at least continuing unemployment and problems with liquidity), the government continues to ask business leaders for more tax revenue and slices of economic freedom for status quo results. Most recently, CEOs from top oil companies were questioned by the Senate Finance Committee on their finances. Little was said about the 1.5 million people employed by the petroleum industry or how narrow the profit margin is in the oil business. Tax dollar-hungry Senators like Jay Rockefeller of West Virginia said the leaders and to a degree their companies are out of touch with regular Americans and, seemingly as a result, they ought to give more money to a system literally out of cash.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Liberal Plan for Deficit? How About a 40% Tax Hike
Unsurprisingly, it was that last line that caused the uproar. In response, Douthat did some math and found that if the CBO’s projections come true (revenues jump from 18 to 23 percent of GDP) an average family of four’s payroll and income tax burden would jump from 15 to 25 percent. The marginal tax rate on labor income would rise from 29 percent to 38 percent. “Such unprecedented levels of taxation,” Douthat argues, “would throw up hurdles to entrepreneurship, family formation and upward mobility.”
Drum didn’t wait long before punching back. In a post from yesterday, he pointed to the fact that “The federal tax take was around 20% of GDP during the Clinton era.” Using this as a reference point he argues that letting the Bush tax cuts expire and then raising tax rates by an additional four or five GDP points wouldn’t “be wildly oppressive.”
There are numerous problems with Drum’s latest attempt to pull himself out of the intellectual hole he has dug. Most prominent among them is his odd choice of reference point. Although it is true that tax revenue did rise to 20 percent of GDP under Clinton, it is not, as Drum would have us believe, a case where policymakers can snap their fingers and have revenues soar. Tax revenues are much more closely tied to the performance of the economy than with tax rates. As Megan McArdle pithily notes, “saying ‘all we have to do is go back to the tax rates under Clinton’ is effectively saying ‘all we need is another asset price bubble that funnels a huge amount of money into the pockets of the rich.’” McArdle points out that if we exclude the height of the stock market (or, if you prefer, the dot-com) bubble, the average tax revenue take under Clinton was around 18.5 percent.
We also have to dispute Drum’s notion that a tax hike of 5-6% of GDP isn’t “wildly oppressive,” an argument much akin to the initial flash-point of this debate, his assertion that tax levels of 25 percent “just isn’t that much.” While such throw-away editorializing may work on a blog, in reality, such tax hikes would dramatically increase tax burdens for the average American.
Since World War II, the traditional demarcation line given the emergence of the modern welfare state, government revenues have hovered just around 18 percent of GDP. Much to liberal’s chagrin, even with the continuation of the Bush-era tax cuts, the United States will collect about 18 percent of GDP as the economy recovers.
So the problem is not revenues have suddenly plummeted, it’s that government spending will dramatically spike. While NTU firmly believes that we mustn’t the burden of Washington’s largesse on the backs of taxpayers and should instead find ways to curb the growth in government spending, liberals like Drum believe we should raise taxes to 25 percent of GDP. They phrase their planned tax hike smartly, saying revenues need to go up by 7 percent of GDP. But this obfuscates the reality for the average taxpayer. Using an 18 percent baseline, a 7 percent GDP increase, would mean that everyone’s taxes would have to go up by around 40 percent. And that huge revenue grab doesn’t buy us anything new, it’s solely to maintain entitlements as they are presently structured!
This online debate may go on forever. Drum even admits that “a lot of our disagreement is simply irreconcilable.” But let’s hope our representatives in Washington are not so ideologically stubborn. Let’s hope they don’t believe a 40 percent across the board tax hike “just isn’t that much.” Because it is that much. It would mean a fundamentally different life for the average American.1 Comments | Post a Comment | Sign up for NTU Action Alerts
NTU Foundation’s weekly newsletter brings you a variety of bills this week with an environmental management plan bill for the Chesapeake Bay region, an act to establish a commission to study the nation’s justice system, a measure to create a domestic supply of medical isotopes, and a proposal to expand anti-hunger activities throughout the United States.
The bill to increase funding for community food initiatives and to expand some of the federal-to-state food stamp reimbursements is this week’s Most Expensive Bill of the Week. At $200 million in new federal spending for each of the next five years, HR 350 would direct tax dollars to nonprofit hunger groups within 20 designated geographic areas. The groups would present their plans and goals to receive operational grants and/or technical assistance grants. @NTUF will keep taxpayers informed about the different aspects of this bill, as well as the other three bills we detailed in Issue 7 of the Tab. Not much of a twitterer? No problem! Subscribing to the Tab is the best way to stay informed about all the exciting research coming out of NTU Foundation.
Newly scored bills highlighted in the latest Taxpayer’s Tab include:
Do you or anyone you know live in Congressmen Jose Serrano (NY-16) or Rob Wittman (VA-1), or Senators Jeff Bingaman (NM), Lisa Murkowski (AK), or Jim Webb’s (VA) states? Each of these legislators were mentioned in this week’s Tab. Check it out and keep a tab on your representatives!0 Comments | Post a Comment | Sign up for NTU Action Alerts
Reflections on CPAC
Today is the third and final day of the 2011 Conservative Political Action Conference (CPAC), the largest annual gathering of conservatives and libertarians in the nation. After three days of staffing a well-visited booth, meeting with dedicated activists, and listening to dynamic speakers, I’m looking forward to some rest and relaxation, but also to what the future holds for the conservative movement.
This year’s CPAC had the highest number of attendees (11,000) in the history of the conference. CPAC speakers ranged from Rep. Paul Ryan of Wisconsin, the House Budget Committee Chair, to Governor Mitch Daniels of Indiana, a potential presidential candidate who gave, in my view, an outstanding keynote address, which you can read here. Also, CPAC 2011 featured a number of new participating organizations that focus on both activism and policy related to social, economic, and political issues at the federal, state, and local levels.
While attending CPAC, I had the opportunity to participate in a number of discussions about important tax and fiscal policy issues facing the United States. NTUF hosted a discussion about entitlement reform that featured experts such as Rep. Devin Nunes, Maya MacGuineas, Douglas Holtz-Eakin, Steven Moore, and Dan Mitchell. The bottom line of their presentation was that we need to start tackling the problem of runaway entitlement spending before it’s too late.
But budget reform should not be restricted to social programs. CPAC also featured a panel on how the nation can reduce defense spending to a more manageable level without jeopardizing readiness. As a former military aide to a fiscally conservative Member of Congress, I was pleased to hear all of the views presented and the many ideas for maintaining an affordable defense posture. The passion the attendees displayed at the panels, and in conversations with me at the NTU table, was striking. It bodes well for conservatives if these activists carry their views home and remain outspoken and active in the political process.
For the last several weeks, there has been a lot of talk in the media about differences in the conservative movement over certain policies and suggestions that these differences spell certain doom the conservative movement. After three days of observing conservatives of all stripes from across the country, I can unequivocally say that reports of destructive differences among conservatives are greatly exaggerated. In fact, I would argue that the conservative movement has never been stronger and ready to bring real solutions to the many serious problems facing the nation.3 Comments | Post a Comment | Sign up for NTU Action Alerts
California Targets Amazon.com at the Expense of Local Businesses
Online companies have seen their sales surge despite a two year economic slump. Amazon.com alone saw worldwide sales jump nearly 30 percent in 2008 to $19 billion and to $24 billion in 2009. This upward trend only continued in 2010. Brick-and-mortar retailers did not fare as well. They, along with National Retail Federation and many state legislators have back lashed against this success claiming it is predicated on the fact that Amazon “skirts” state sales taxes. They claim Amazon under cuts in-state retailers and strips state coffers of revenue. In response, Legislatures across the country are trying to skirt Supreme Court rulings to levy taxes on companies operating outside their borders.
The most recent attempt comes from high-tax California. Assemblywoman Nancy Skinner recently re-introduced a bill (AB 153) that would require out-of-state companies with in-state advertizing affiliates to collect and remit sales taxes it supposedly owes the state. She estimates the state is being shortchanged between $250 and $500 million.
The kicker: Amazon is not doing anything wrong. According to the U.S Supreme Court ruling in Quill Corp. v. North Dakota, companies are only required to collect state sales taxes from their customers when they have a physical presence in the state (state-based factories, warehouses, employees, etc. conducting general operations). Amazon currently passes this “physical presence” nexus as it is headquartered in Seattle, Washington and has warehouses and facilities considered legal entities in Kansas, Kentucky, and North Dakota. Only residents in those states pay taxes on Amazon purchases.
Quill cited the commerce clause in its ruling, arguing that if enacted, retailers would need to track a myriad of state and local sales tax rates (about 8,000) which constantly change. Facing these new barriers to entry online companies simply end their in-state affiliate programs. For example, in July 2009 Rhode Island included an affiliate-nexus tax in its budget. Amazon.com severed formal ties with all Rhode Island businesses enrolled in the “Amazon Associates Program,” which refers buyers to Amazon.com, while giving business owners up to 15 percent of the profit. As a result, Rhode Island saw less tax revenue and less economic growth as local businesses dependent on advertizing revenue were forced to close up shop.
California will suffer the same fate if Skinner gets her way. Our colleagues at Americans for Tax Reform, Patrick Gleason and Kelly Cobb, spell out the disastrous effects this new tax will have on California’s budget, businesses, and taxpayers. They note that in 2009, 25,000 individuals and small businesses in California earned $1.6 billion from online advertising, paying $124 million in state income tax. The state will loose that money, not to mention revenue from lost payroll, business, property and sales taxes. Sacramento’s budget problems are sure to get worse.
While Amazon contests the unconstitutional imposition of state sales taxes on their customers the company does support the goal of making tax laws "simple and harmonized" and does not oppose "a constitutionally permissible national system applied even-handedly.” Similarly the retail federation and 24 other states have been seeking federal approval of a formal compact that would simplify and harmonize sales tax administration among the states to get around constitutional hurdles to taxing interstate vendors.
However, this tax collusion is an affront to American federalism and tax competition. States are attempting to abandon true federalism and jurisdictional tax competition in exchange for the power to potentially recoup a small amount of tax revenue. The federalism of the Founders fostered friction and tension between competing units of government –“laboratories of democracy” if you will. Proponents of so-called tax streamlining use colorful words like “cooperation” and “harmonization” as a guise to extend tax burdens.1 Comments | Post a Comment | Sign up for NTU Action Alerts
Tune into NTU's State of the Union Coverage tonight
Tonight at 9 p.m. EST, the National Taxpayers Union's crack government affairs and policy analysis teams will provide special online coverage of the President’s State of the Union Address, and we want you to be there and be a part of the discussion. We will be breaking down the President's proposals and what they will mean for taxpayers. Details on how you can join the conversation are below.
We look forward to seeing you online tonight at 9 p.m. EST!
We look forward to seeing you online tonight at 9 p.m. EST!
2011 Index of Economic Freedom
Our friends at the Heritage Foundation, in conjunction with the Wall Street Journal, recently published their Index of Economic Freedom. For those of you unfamiliar with the publication, the Index measures ten components of economic freedom, assigning each a score between 1 and 100. All scores are then combined to give an overall economic freedom grade to participating countries. The ten components include the following: business freedom, trade freedom, fiscal freedom, government spending, monetary freedom, investment freedom, financial freedom, property rights, freedom from corruption, and labor freedom. The recently-distributed Index reports on policy developments in the second half of 2009 in 183 countries.
Just a few of its key findings:
The top 5 countries in the Index of Economic Freedom are Hong Kong, Singapore, Australia, New Zealand, and Switzerland. The United States comes in 9th with a “Mostly Free” score of 77.8%.0 Comments | Post a Comment | Sign up for NTU Action Alerts
What's the Lame Duck Done So Far?
So, Congress was in a Lame Duck session last week. What did they accomplish? The following four bills passed Congress and were sent to the President for his signature, according to the Library of Congress.
Can't wait for the after-Thanksgiving break flurry of activity.0 Comments | Post a Comment | Sign up for NTU Action Alerts