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One of the best parts about this year's Milton Friedman Legacy Day was reading all of the comments that taxpayers left on our special online voting page. Along with asking folks to vote on which fundamental tax reform they want, NTU Foundation provided a space for respondents to talk about why Milton Friedman's teachings are still vital and what specifics he brought to the world that they liked. Here are a few:
"The videos he created to teach even the most complex issues of economics and the economy in ways that everybody could understand." –JJ, Ohio
"... His contention that free enterprise will allocate resources better than any central planners. One's self interest is not an evil thing, but the natural motivator of man." –Roger B, Michigan
"His glasses." – Daniel M, Texas
"His PBS series Free to Choose changed the way I think about economics and freedom." – Robert S, Indiana
"Friedman pushed for school choice and vouchers so that you can send your children to the best school and the school of your choice rather than the public school you are assigned. The money goes with the child and not to the school. Giving parents the choice to select the best schools for their children would improve education and provide competition among schools. Educational freedom is a win-win for everyone." –Mary A, Florida
"His emphasis on free-enterprise: 'The only way that has ever been discovered to have a lot of people cooperate together voluntarily is through the free market. And that's why it's so essential to preserving individual freedom.' Milton Friedman" –Ted B, Washington
"Mr. Friedman was a deep thinker, whose thinking produced positive, logical, meaningful results." –Charles R, Oklahoma
"[His] open discussions on variants of taxing systems has opened the eyes of millions of previously uninformed people. So many have only believed that what we currently have is all there is in the world when it is relatively new in our Country's history. We CAN change an unfair system into a workable & sustainable modern system that ensures ALL have some vested interest in our future as a Country." –Jeff M, Florida
"Wherever practical, people should be free to choose for themselves." –John R, California
Thanks to everyone who send us their votes and thoughts on Friedman! The winners of the $50 iTunes gift cards will be announced shortly.1 Comments | Post a Comment | Sign up for NTU Action Alerts
Today’s Taxpayer News!
This U.S. News and World Report piece, penned by NTU’s Pete Sepp, offers some insight into economic “game-changers” (policies that could grow jobs and increase innovation) for the energy sector.
The 113th Congress is making history in a perhaps inauspicious way: if current trends continue, this legislative session could have the lowest record of productivity in history.
Senators Max Baucus (D-MT) and Dave Camp (R-Mich) are still on the road promoting tax reform.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Latest Network Blackout Proves Congress Has Work To Do
CBS and Time Warner Cable are embroiled in a fight over retransmission fees that has left millions of cable subscribers in major metropolitan areas like New York, Los Angeles, Chicago and Dallas without access to the popular network. While this may seem like a typical conflict between two large corporations, it is more complicated than one might think. Because the federal government has created a complex system of laws and regulations dictating the rules of the game, the playing field is strewn with obstacles that increase the likelihood that providers of content and service will end up in a stalemate. NTU has weighed in previously on the need for Congress to update and simplify communications laws. Conflicts like this current one likely won’t be made less onerous for the parties involved by overbearing government. Consumers would benefit from a more thoughtful policy approach that respects the private sector’s capacity to build prosperous markets for video content and service and minimizes the role of the federal government.1 Comments | Post a Comment | Sign up for NTU Action Alerts
Today the Environmental Protection Agency (EPA) released its final rule for 2013 renewable fuel percentage standards. That’s an awkward way of saying that under the Renewable Fuel Standard (RFS), enacted in 2007, the EPA sets annual amounts for how many gallons of biofuel refiners are required to blend with our gasoline. While the law sets out ever-increasing amounts each year, the EPA does have discretionary authority to reduce these levels. Different levels are set for various kinds of biofuels including corn ethanol, cellulosic, and biomass.
The ruling today underscored two things:
Despite the drop in one form of biofuel, the overall mandate is still far higher than consumers and affected businesses would like to see. By not lowering the overall mandate in tandem with the cellulosic reduction, refiners will have to either blend even higher amounts of imported sugarcane ethanol or more expensive biodiesel into the fuel supply, or purchase increasingly pricey biofuel credits called Renewable Identification Numbers or RINs to fill the gap.
The fact that the EPA didn’t see fit to rein in the RFS mandate, even though it is within its power to do so, means that the threat of the dreaded “blend wall” is closer than ever. When first instituted, the RFS mandated that obligated parties blend ever increasing volumes of biofuels into gasoline and diesel. The RFS also assumed that fuel demand would continue to grow over the coming decades.
Since 2007, however, a number of things have thrown a wrench into that plan. The economy has tanked, purchasing power has dropped, and fuel efficiency has increased – just to name a few variables. The bottom line is that Americans are consuming less gasoline than anticipated. The latest numbers indicate a practically flat line in gasoline consumption from last year to this, yet the EPA is insisting we somehow burn through about 1.3 BILLION more gallons of ethanol than the year prior. The divide between growing volumetric mandates and shrinking gasoline demand will continue to grow in the coming years, forcing the onset of the blend wall, or the practical limit on the amount of ethanol that can be safely used in current vehicles and infrastructure.
The blend wall is one reason why some have been pushing for E15 – gasoline with a 15 percent ethanol content, not 10 - in order to make room in the gasoline supply for more and more government-mandated ethanol. This is a terrible idea for a number of reasons. The higher ethanol content is bad for older cars and small engines. Gas pumps aren’t designed to dispense it. Ethanol costs consumers more to go the same distance as gasoline. And it means diverting even more of already tight corn supply from the food chain to the gas tank.
While today’s ruling didn’t bring any relief to consumers, the EPA did acknowledge:
EPA does not currently foresee a scenario in which the market could consume enough ethanol sold in blends greater than E10, and/or produce sufficient volumes of non-ethanol biofuels to meet the volumes of total renewable fuel and advanced biofuel as required by statute for 2014.
Therefore, EPA anticipates that in the 2014 proposed rule we will propose adjustments to the 2014 volume requirements, including the advanced biofuel and total renewable fuel categories
The fact that the EPA is beginning to understand the problem that people have been predicting for years is cold comfort for the consumers, livestock producers, and many others who have been decrying the damaging effects of the RFS for years.
Taxpayers can’t wait for the EPA to “propose adjustments.” Today’s ruling, so out of touch with the market realities of the RFS, is one more indicator that the RFS is broken. Instead of hoping the bureaucrats at the EPA do the right thing, we need to urge our legislators to move forward with real reforms like S. 1195 in the Senate and H.R. 1462 in the House – both are robust bipartisan plans that would level the playing field and inject some much-needed commonsense to an out-of-control mandate.
In the long run, the EPA’s repeated energy fumbles only underscore the need for Washington to stop picking winners and losers and get out of the energy market. Until then, as the biofuel mandate keeps going up, perhaps we should just be happy the EPA has not set a minimum gas consumption standard … yet.1 Comments | Post a Comment | Sign up for NTU Action Alerts
All too many federal agencies can be cited for having budgetary skeletons in their closet, and U.S. Customs and Border Protection (CBP) is no exception. From poorly managing a drone fleet purchase, to making questionable demands for more employees, CBP has raised fears for the security of taxpayers’ wallets in the past. Yet, Congress has an opportunity to ease future fears, over a controversial new CBP project, before it can cause a fiscal fright.
Two years ago, the U.S. Department of Homeland Security (DHS) concluded a letter of intent with the United Arab Emirates to build a “pre-clearance” facility at Abu Dhabi airport which would allow travelers to the U.S. to clear customs before arriving on American soil. So far, so good: pre-clearance can not only save time and reduce congestion at U.S. points of entry, it can also help ease the way for tourists who contribute to economic activity while visiting here.
Now for the not-so-good:
All these drawbacks lead to one long question: Given CBP’s service challenges at existing airports, is it really a good idea to plow ahead with a facility whose use will be comparatively scarce in the near term, and give another leg-up to an airline backed by its own government as well as ours, at the expense of an already overtaxed flying public?
And “overtaxed” is an understatement. As NTU has often noted, the typical overall government tax and fee burden of 20 percent on a $300 domestic airfare is higher than the average effective rate a middle-class American is likely to pay on his or her 1040 income tax return. International air travelers can have it even worse, with impositions such as separate departure and arrival taxes along with a passenger agricultural inspection fee (which the Obama Administration ill-advisedly considered raising in 2009) and a customs fee.
Proponents of the CBP station at Abu Dhabi argue that the investment of U.S. tax dollars will be minimal since UAE will pick up 85 percent of the project’s expense under the current agreement. But that’s little comfort to tax-weary travelers in America (see above), who remain worried that whatever share they will be forced to commit could escalate if construction or operating costs are not contained. Meanwhile, there’s that pesky matter of how best to apply CBP’s fee collections as well as appropriations from general funds – should they be used to expedite higher-priority passenger and cargo entry-exit services?
Many Members of Congress seem to think so. In June, the House of Representatives passed an amended FY 2014 DHS Appropriations Bill specifically blocking the Abu Dhabi pre-clearance scheme. In May, a bi-partisan group of 11 Senators echoed the sentiment of their House colleagues in a separate letter to DHS Secretary Janet Napolitano, questioning whether the agency’s “decision was made as a result of a risk based analysis.”
Alas, earlier this month DHS announced it was moving forward with a data-sharing agreement that could pave the way for the facility’s activation, even as it faces a concerted petition effort from interested industry groups with considerable clout.
Regardless of the politics involved, the taxpayer aspects of the issue deserve further exploration – that goes not only for the Abu Dhabi pact but also the ever-troubling direction of the Ex-Im Bank. Allowing the free market and fiscal responsibility to sort out needs from niceties would provide some badly-needed bone-rattling for those accustomed to budgetary business as usual in Washington.1 Comments | Post a Comment | Sign up for NTU Action Alerts
Today’s Taxpayer News!
The Daily Caller published this piece on tobacco and other “sin” taxes, employing NTUF’s recent study, which found such taxes to be largely incapable of producing expected revenue…
… And the DC writes NTU has signed onto a letter opposing the Internet Fairness Radio Act, which would forcibly lower the royalty rates Internet radio companies like Pandora pay for the ability to play each song.
Could Sen. Mike Enzi (R-WY) come under attack on taxes as he runs for a fourth term? Republican hopeful Liz Cheney seems to think so.1 Comments | Post a Comment | Sign up for NTU Action Alerts
Subscribe to NTU's podcast "Speaking of Taxpayers" via iTunes!
Rep. Jeb Hensarling of Texas talks the PATH act and housing finance reform, latest updates from the fight to protect taxpayers, and the Outrage of the Week!0 Comments | Post a Comment | Sign up for NTU Action Alerts
Senate Republicans, led by Senate Minority Leader Mitch McConnell (R-KY), held off a bloated Fiscal Year 2014 Transportation, Housing and Urban Development (THUD) appropriations bill yesterday with a 54-43 cloture vote. The defeat of the Senate THUD appropriations bill comes only a day after the House version was unceremoniously yanked from the floor as support for the spending measure dwindled.
Taxpayers everywhere should be much relieved to see the THUD bill grind to a halt. Operating under the strange (and false) impression that the Budget Control Act (BCA) isn’t the law of the land, Senate Appropriations Committee Chairwoman Barbara Mikulski (D-MD) has been blithely appropriating far above the $967 billion discretionary spending limits imposed by the sequester, as reported in the TheHill.com:
The Senate Appropriations Committee will write fiscal 2014 bills according to the top-line discretionary spending level in the Senate and White House budgets, ignoring the sequester cuts in current law.
By crafting bills at the $1.058 trillion level set by the Obama and Senate budgets, Senate Appropriations Committee Chairwoman Barbara Mikulski (D-Md.) is setting the stage for a showdown with the House, which intends to use the $966 billion level set by sequestration.
National Taxpayers Union issued a strongly-worded vote alert urging Senators to oppose the bill early last week, explaining:
Weighing in at a staggering $54 billion, S. 1243 is $2.4 billion more than the President’s request, $10 billion beyond the House version of the bill, and $2.3 billion over FY13 pre-sequester spending levels. Taxpayers are the ultimate victims when the Senate persists in ignoring the realities of sequestration and the limits imposed by the Budget Control Act. By funding 302(b) allocation levels for discretionary spending at $1.058 trillion, the Senate makes it that much harder for appropriation bills to ever move through normal order.
We also went on to point out one missed opportunity for taxpayer savings after another:
Only a day before the Senate’s THUD bill went belly-up due to its out-of-control, unrealistic spending, TheHill.com reported that House Appropriations Committee Chairman Hal Rogers (R-KY), “hinted that a vote on the [House THUD bill] was scrapped because leaders didn’t have the votes to support the deep cuts he was directed to write.”
Given the fact that earlier this spring House Republicans supported the $967 billion discretionary spending cap enshrined in the House budget in accordance with the BCA, and a Senate THUD bill that spent far more couldn’t garner the 60 votes needed for cloture, this seems to be more a matter of misappropriated priorities than a case of too many “deep cuts.” Instead of adhering to the separate defense and non-defense discretionary spending caps imposed by the BCA - and sticking with across the board spending restraint – House appropriators shuffled the deck chairs in other areas to pay for significant plus-ups on the defense side to keep all the appropriations bills under the total cap.
When viewed in light of the profound fiscal challenges we face, legislators should be looking for savings everywhere and favored projects shouldn’t escape scrutiny, especially when there is plenty of room to save across the budget on both the defense and non-defense sides.
Sadly, for taxpayers, legislators might be forgetting that the Budget Control Act and sequestration are about slowing the growth of spending, not the “draconian” spending cuts we hear about from big government proponents. Legislators in both houses are starting to look for a way out from under the law that is reining in their profligate tendencies.
House Appropriations Chairman Rogers went on:
“With this action, the House has declined to proceed on the implementation of the very budget it adopted just three months ago,” Rogers said. “Thus, I believe that the House has made its choice: sequestration — and its unrealistic and ill-conceived discretionary cuts — must be brought to an end. And, it is also clear that the higher funding levels advocated by the Senate are also simply not achievable in this Congress.”
Across the Capitol in the Senate, it looks more and more likely Majority Leader Reid will push for a sequester replacement bill as soon as September.
For supporters of less spending and less government, the dual defeat of two major spending bills draws a clear outline of the next big battle and highlights what our priority should be moving forward: hold the line on BCA caps and sequester-level funding, hold the line on spending overall.
Luckily for taxpayers, Senator McConnell has proven that he can. As taxpayers look ahead, we shouldn’t just hope the Senator can do it again, we need to work hard to help make sure all our legislators remain focused on these vital tasks.
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Detroit recently followed in the shoes of several other US cities in filing for bankruptcy. Theories abound as to the root of the problem: an overbearing public-pension burden? The devastating loss of auto-industry jobs? Rising crime, and the flight of the middle-class it precipitated? Even all these problems, though, can be traced back to one overarching cause: taxes.
Detroit boasts some of the highest tax rates in the nation, and its residents already face the highest income tax rates allowable by Michigan law. Overall, those in Detroit struggle under the highest per-capita tax burden in the state, despite an unusually high percentage living below the poverty line.
Property taxes make up a huge portion of this tax burden for property owners in Detroit. In 2011, the city ranked first in a study of property tax rates in the 50 largest U.S. cities, and assessments of the properties themselves tend to run high.
The Detroit News released a series showing that many houses are assessed at ten times their actual value, and appeals can sit in limbo for an extended period of time before being resolved. To add insult to injury, many Detroit residents don’t feel they’re getting their money’s worth. A number of corrupt government officials (including former mayor Kwame Kilpatrick) and soaring government costs took their toll on city services, eventually becoming evident in rising crime and failing schools. The housing crash and the loss of most of the city’s manufacturing jobs (the crime rate and poor business climate having driven the automotive industry largely out) were the final straw for many Detroit natives, and the upper-and middle-classes began to leave the city in droves.
Naturally, this only made the tax revenue situation worse. As the population sank, so did the amount of money coming into the city coffers. Recovery for Detroit might have happened, if the business climate could have supported recovery. However, mismanagement again took over, and regulation and taxes increased, if anything. The real estate market could not properly bounce back, as city law requires all the back taxes be paid on every property bought at foreclosure - the only exception is for a select few pieces of real estate auctioned once a year by the city. So, when the housing market plummeted and Detroiters began to flee the city in the wake of lost jobs and exponential increases in crime, no incentives existed for speculators to purchase foreclosed properties for investment. As a result, the real estate simply sat in the hands of banks and the city, and eventually became derelict.
Those who did own or buy properties found themselves with an entirely new set of problems. As Detroit’s finances began to collapse, the tax-collecting infrastructure fell through with it. The city eventually began forcing employees to take an unpaid day of leave every two weeks, adding still another complication to the process. One business attempted to pay $25,000 worth of property taxes, only to find that the collection office was closed and no one would be there to receive payment. That scenario also assumes residents are receiving tax bills at all - which many are not. With this sort of bureaucracy in place, is it any wonder only 50% of property taxes in 2011 ended up in the city coffers?
High taxes certainly aren’t the only thing that drove Detroit to bankruptcy. However, the lesson Motown’s crash has to offer other cities cannot be ignored. The crippling effect of taxes can’t go on forever, even in a healthy economy - and other governments across the nation would do well to take note of that fact.2 Comments | Post a Comment | Sign up for NTU Action Alerts
The Senate Finance Committee received some negative attention last week when it solicited comments on tax reform from Senators with the odd stipulation that any such submissions would be kept confidential for 50 years. A clandestine submission process certainly runs counter to the notion of a transparent, open government. And this is particularly true given the complicated and burdensome nature of our tax code, many provisions of which are carve-outs and exemptions designed specifically by and for special interest groups.
The Committee should open up this process, not only by making all comments publicly available, but also by soliciting opinions from all Americans. Its counterpart in the House, the Ways & Means Committee, did exactly this and received a multitude of comments from various individuals and groups. The Joint Committee on Taxation summarized these comments in a report that can be found here.
But there are even bigger challenges than secrecy. Before it continues to pursue fundamental tax reform, the Senate Finance Committee should commit to an end product that is revenue neutral. Politically speaking, this is the only way tax reform has a chance to proceed in the divided Congress. But more importantly, committing to revenue neutrality effectively removes the possibility that the tax code overhaul would result in a system that causes even more economic drag than the current code. In short, the goals of tax reform should be fairness, simplicity and economic growth – not an expansion of the size of government. Fourteen Republican Senators made this same point in a letter they sent last week to Finance Chairman Max Baucus (D-MT) and Ranking Member Orrin Hatch (R-UT). The letter also wisely noted that there was bipartisan agreement on the principle of revenue neutrality before the successful tax reform efforts of 1986 – a fact that should surprise no one.
Partisan tensions are high right now on Capitol Hill and passing even the simplest bill can be difficult. If a major legislative initiative like comprehensive tax reform is going to gain traction, it’s important to set fair and appropriate ground rules now. That means committing to a transparent reform process with a goal of revenue neutrality.0 Comments | Post a Comment | Sign up for NTU Action Alerts