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The Rising Tide of Red Tape
Posted By: Michael Tasselmyer - 07/31/14

Just a few weeks ago Washington, D.C. required tour guides to pay $200, pass an exam, and obtain licensure before giving tours around our nation's capital. However, this regulatory measure was recently overturned in favor of DC-area small-business owners, Bill Main and Tonia Edwards. The owners of the tour guide company, "Segs In The City," originally sued in 2010 to have the licensing system abolished on the basis of free speech. The recent decision is a major victory for Main and Edwards, but offers a glimpse into the much larger issue of economically challenging regulation.

Federal and state governments are constantly producing more "red-tape," and its creation often goes unnoticed until the regulation has taken a stranglehold on individuals and small-businesses. Unlike taxes, which usually have a direct and immediately visible effect, regulation often creeps into our daily lives without receiving the same scrutiny that taxation receives. This is a serious problem since regulatory laws have massive costs, measured in both time and money.

Cass Sunstein, former head of the White House Office of Information and Regulatory Affairs, was quoted in 2011 as saying there is no "tsunami" of regulation to worry about. Three years later, there may not be a tsunami but there is no doubt a rising tide. According to research by the Competitive Enterprise Institute (CEI), it costs Americans $1.863 trillion to comply with federal regulations in 2013, making U.S. regulatory costs higher than the GDPs of countries like Canada and Australia.

Since 1994, the U.S. has issued an average of more than 3,500 regulations a year, or about nine per day. Also, in 2013 the Federal Register contained 79,311 pages, the fourth highest total ever. The Register's two largest volumes were in 2010 and 2011, including the 81 major rules -- those that have a $100 billion impact or greater -- that the President has issued annually since he took office. This all adds up to make regulation cost $14,974 per household, or 23% of the average household income of $65,596.

CEI's report also includes an "Unconstitutionality Index." This is a ratio of regulations by federal agencies compared to the legislation passed by Congress and signed into law. In 2013, the ratio was 51-1, which means that there were 72 new laws and 3,659 new regulatory rules, or a new regulation every 2½ hours. Six federal agencies, including the Departments of Commerce, Treasury, Interior, Health and Human Services, and Transportation and the Environmental Protection Agency, account for 49.3 percent of these regulations. Many of the regulations these agencies create hit small-businesses the hardest. Firms with 20 or fewer employees pay an average of $10,585 per employee in regulatory costs, while firms with 500 or more pay an average of $7,755 per employee.

At a time when state and local economies are in dire need of job growth, and government budgets are strained for every single dollar, cutting "red tape" is a cheap, politically savvy way of raising much needed funds. This is an especially prudent choice for local governments, since complex federal laws like Dodd-Frank and the Affordable Care Act impose significant costs for consumers and employers throughout the country. With this in mind, taxpayers should pay close attention to regulations proposed at every level of government, which can have far-reaching economic impacts.

Special thanks to NTUF Research Associate Alex Eblen for authoring this post.

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New Lois Lerner Emails Reveal Bias Against Conservatives; House Rep. Introduces National Soda Tax Bill– Late Edition, July 31
Posted By: Jihun Han - 07/31/14

Today's Taxpayers News! 

The House Ways and Means Committee released November 2012 emails belonging to Lois Lerner. Lerner used derogatory terms to describe Republicans and Conservatives in the emails. Fox News has the latest! 

Rep. Rosa DeLauro of Conn. introduced a national soda tax bill aimed at taxing sugary beverages. Similar measures at local levels will be brought up in November for the people to vote. Read here for more!

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Senate Passes Own Highway Trust Fund Bill; Forbes Challenges Obama’s Stance on “Tax Inversions”; Washington Times Editorial Examines BillTally Stats for Caucuses – Late Edition, July 30
Posted By: Jihun Han - 07/30/14

Today's Taxpayer News! 

With just days left before August recess, the Senate passed its own version of the Highway Trust Fund Bill with a couple of key House provisions cut out. Speaker John Boehner has insisted that the House will not pass the Senate version of the bill. Politico has the latest!

President Obama called companies practicing “tax inversions” as unpatriotic. Forbes released an op-ed that challenges the President’s claims.

The Washington Times has an editorial making good use of NTUF’s BillTally findings on the 113th Congress – what did they take from the report on caucus agendas?

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Celebrating Friedman Legacy Day
Posted By: Michael Tasselmyer - 07/29/14

Milton Friedman, one of the most influential economists of the 20th century, would have celebrated his 102nd birthday on Thursday. To honor his countless contributions to economics and public policy, NTUF is joining with the Tax Foundation and Liberty on the Rocks, D.C. to host an event in downtown Washington this evening, and you're invited!

If you can join us in person, we'll be meeting for happy hour at the Laughing Man Tavern, just blocks from the White House. You can mingle with policy experts and grassroots citizens alike to discuss Friedman's economic philosophy and the impact it still has on policy debates today. We'll also be playing Friedman-themed games, enjoying some celebratory drinks, and even hearing from those who studied alongside Friedman and knew him personally. Be sure to bring your spare pens, markers, and folders, too- there will be donation bins for school supplies in order to benefit Perry Street Prep School, a D.C. charter school that operates with the independence that Friedman advocated for throughout his life.

Not in the D.C. area? No problem. You can also participate with us online through our interactive #milton102 website, where we're asking folks from all over the country to vote for the tax reform proposal they'd most like to see become reality. Friedman had his own thoughts on the matter, but we want to hear from you -- would you prefer a flat tax? FairTax? Let us know, and you'll be entered to win a $50 Visa gift card!

We hope to see you tonight or get your input online. Happy birthday, Milton Friedman!

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Milton Friedman's Legacy
Posted By: Michael Tasselmyer - 07/28/14

As a Nobel laureate, winner of the Presidential Medal of Freedom, and founder of the Chicago school of economic theory, few would argue that Milton Friedman's economic philosophy hasn't been widely influential. However, his modern fame and recognition make it possible to forget that in the beginning of his career, he faced great opposition to his work and few would have predicted it would earn him the respect it has today.

A 2006 memoriam in The Economist offered some perspective:

"In the wake of the Great Depression and the second world war, with the Keynesian revolution still young, championing the free market was deeply unfashionable, even (or especially) among economists. Mr Friedman and kindred spirits -- such as Friedrich von Hayek, author of 'The Road to Serfdom' -- were seen as cranks. Surely the horrors of the Depression had shown that markets were not to be trusted? The state, it was plain, should be master of the market; and, equipped with John Maynard Keynes's 'General Theory', governments should spend and borrow to keep the economy topped up and unemployment at bay. That economists and policymakers think differently now is to a great degree Mr Friedman's achievement."

Friedman was a tireless advocate for smaller government, and took a staunch position when it came to tax reform: "I am in favor of reducing taxes under any circumstances, for any excuse, for any reason whatsoever." One of Friedman's major contentions with the U.S. tax system that he frequently lamented was its complexity. The tax system, he said, was an "unholy mess" that was so dominated by special interests and lobbying groups that he went so far as to claim reform was "impossible." Despite his pessimism regarding tax reform, he saw some of his ideas translated into reality after the Code was revised in 1986.

Had Friedman had his way, though, he likely would have supported one of two alternative tax systems.

  • He was known as a supporter of the "negative income tax," which would offer a stipend to those earning incomes below a certain threshold. He argued that doing so offered the poverty-reducing benefits of programs like food stamps and rent subsidies, but without the bureaucratic inefficiencies that usually accompany them. In other words, as the New York Times put it, "[i]f the main problem of the poor is that they have too little money, he reasoned, the simplest and cheapest solution is to give them some more."
  • Friedman also supported a flat tax system in his well-known 1962 work "Capitalism and Freedom." He told the Wall Street Journal in 1996 that "[a]ll things considered, the personal income tax structure that seems to me best is a flat-rate tax on income above an exemption."

July 31 would have been Milton Friedman's 102nd birthday. In celebration of his life and work, NTUF is hosting a happy hour event with Liberty on the Rocks D.C. and the Tax Foundation in downtown Washington, D.C. tomorrow evening (Tuesday, July 29). The event will feature discussion of Friedman's influence and a school supplies drive benefitting Perry Street Preparatory School, a local charter school whose independent status represents the education reforms Friedman spent so much time and energy advocating for.

If you can't make it in person, we're also hosting an online poll asking participants which tax reform proposal they'd like to see enacted. Friedman proposed a flat tax, but would you prefer a FairTax or Value Added Tax? Let us know, and you'll be entered to win a $50 Visa gift card!

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Senate to Vote on Highway Trust Fund Bill This Week; D.C. Metro Opens New Silver Line – Late Edition, July 28
Posted By: Jihun Han - 07/28/14

Today's Taxpayer News! 

The Senate is set to vote on the Highway Trust Fund Bill that the House passed a couple weeks ago. The Senate wants to pass the bill before the August recess. Read here for more!

The D.C. Metro opened up the new silver line over the weekend. Construction of the metro rail cost taxpayers more than $150 million. Virginia Gov. Terry McAuliffe is open to having Virginians pay more for phase two of the project. Washington Post has the breakdown!

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Milton Friedman: the Father of School Choice
Posted By: Michael Tasselmyer - 07/27/14

As NTUF gets ready to host our happy hour event in honor of Milton Friedman's 102nd birthday, many are gearing up to enjoy a fantastic opportunity to network, play Cards Against Liberty, and celebrate the legacy of the influential economist. However, one activity taking place at this event -- a school supply drive for Perry Street Preparatory Public Charter School -- happens to be inspired by Friedman's strong, life-long advocacy for school choice.

His philosophy centered on the idea that, while education is an incredibly valuable commodity, no one type of school setting is ideal (or even adequate) for every child. The ability for families to actually choose the type of schooling that they desire for their children leads to the highest quality K-12 education. To satisfy this end, families may elect to have the money that would otherwise be spent on their children's public education transferred to them so that they can select a school more tailored to their child's needs. Many areas around the country support such a model incorporating a variety of systems to transfer this money including: vouchers, educational savings accounts, tax-credit scholarships, and individual tax credits/deductions.

Perry Street Prep (PSP) is one such school that operates on this principle. Driven by a mission of empowering "students to be college-ready and to thrive in a global society," PSP strives to build relationships with families from a community of diverse learners. Founded in 1999 as the Hyde Leadership Public Charter School by Joseph W. Gauld, the school currently serves 953 students and supports an average class size of 15 students to every teacher. In addition, the school boasts a faculty that is certified as 100 percent HQT (Highly Qualified Teacher).

If you're in the Washington, D.C. area this week, come out on Tuesday, July 29 to the Laughing Man Tavern and celebrate one of the most influential economists of our time, and while you're at it, bring school supplies to help support this fantastic school.

Can't make it in person? Join NTUF online at our special #Milton102 page, where you can vote for your favorite tax reform proposal and be entered into a drawing for a $50 Visa gift card. Last year, we received input from taxpayers all over the country and we expect even more participation this time around. Whether you'd prefer a Flat Tax, a FairTax, or a modified version of our current system, let us know and be part of the nation-wide discussion among policy experts and grassroots members alike on this important issue!

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Red Wings Announce Glorious New Arena. But Is It Good For Fans?
Posted By: Jihun Han - 07/25/14

The Detroit Red Wings announced that their new arena is slated to be opened in 2017, and it will be partially paid for by taxpayers.

Well, “partially” is a rather soft term in this particular case, “mostly” would be more fitting. Taxpayers in Detroit will pay 58% of the overall $450 million new arena, making them responsible for a $261.5 million tab (as of now).

The Red Wings (and Tigers) owners, the Ilitch Family ($3.6 billion net worth), will only pay $188.4 million, or 42% of total costs.

The arena project is also part of a larger $650 million plan that would build retail stores and office buildings among others near the venue.

Mike Ilitch, Chairman of the Red Wings, claims that the new arena will generate more than one billion dollars in revenue and will bring thousands of jobs to Detroit. However, according to the arena deal, Detroit will not receive any share in revenue from money made from the arena.

Olympia Development of Michigan, which is in charge of the entire project, will get all the profits from naming rights.

In the Red Wings current venue, Joe Louis Arena, the city gets a share of $7 million in revenue that includes ticket sales and concession sales.

Were taxpayers considered at all in this deal? Especially given the sorry fiscal state Detroit is in?

To make matters worse, according to National Taxpayers Union Foundation (NTUF), new stadiums don’t actually increase employment or income. Rather, new stadiums monopolize venue competition and bring all the spending and employment to just one venue.

The Detroit Deal uses municipal bonds, a familiar tactic for stadium financing, to put that taxpayer cash to work.

This is similar to the Dallas Cowboys, who built a whopping $1.2 billion stadium in Arlington, Texas that opened in 2009. Arlington used municipal bonds, snagging about $325 million from taxpayers for that behemoth. That allowed the Cowboys’ ownership at a lower rate than normal, increasing revenues for the team.

The new Red Wings arena will also be paid in a similar fashion through 30-year bonds.

The stadium financing problem might exemplify government’s willingness to shell out taxpayer dollars to connected interests better than anything else, simply because the purpose is for a game, and those benefitting (the owners) are always going to be of enough means that there is no sob story cover.

And it adds up for taxpayers when we look at the big picture…

21 out of 32 NFL Stadiums were “partly” financed by the public. 64 other major league teams that include baseball, hockey, and basketball use municipal bonds to finance stadiums/arenas.

In a must-read blog post last year, NTUF examined how taxpayer-funded stadiums cost more than privately funded ones. According to the blog post, when taxpayers contribute more than 50% for total construction costs, stadiums will be $65 million more expensive on average.

If that statistic applies to Detroit, it will be catastrophic to taxpayers in the Motor City. Detroit filed for bankruptcy around this time last year and definitely cannot afford to have taxpayers pay for a sports arena that a private citizen is well capable of paying for on his own. The city has an unemployment rate above 14% as of April 2014 that is higher than the national average.

Furthermore, Detroit has a debt that is roughly $18 billion. With so much debt in a city, should citizens shoulder even more just to upgrade a hockey team’s arena?

Especially when history shows the promises of economic boom are likely to bust, and the cost estimates always seem to leave the ballpark?

So next time you go to a major sporting event and look around at the majestic stadium you’re in, remember: You’re probably paying a lot more than the price of your ticket!

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Honoring Milton Friedman in D.C. and Online
Posted By: Michael Tasselmyer - 07/25/14

Are you in the DC area this Tuesday? Do you enjoy happy hours, economics, and complementary drinks? Then come on down to the Laughing Man Tavern for a happy hour event hosted by the National Taxpayers Union Foundation, the Tax Foundation, and the DC Chapter of Liberty on the Rocks to celebrate the life and legacy of economist Milton Friedman.

The event is this Tuesday, July 29th at 1306 G Street NW, Washington, DC. We will be playing Friedman-themed games and collecting school supplies for the Perry Street Preparatory School.

If you are unable to attend, we are also hosting a special online poll: vote for your ideal tax reform proposal, and you could win a $50 Visa gift card.

Be sure to follow NTUF on Twitter (@ntuf), on Facebook, and by subscribing to The Taxpayer's Tab to keep up with all the latest news!

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