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On Friday, NTU Foundation sent out the latest edition of The Taxpayer's Tab -- a weekly update of BillTally research -- and we got quite a few replies from Tab subscribers. Below is a selection of those responses and some further detail:
"[DC Statehood] looks like another money pit that should be avoided. If Congress does anything it should be the least expensive fix." – Stephen F
If D.C. was made a full-fledged state, federal spending could technically go down. How? The District government would be given the authority to levy taxes on residents and consumers, which would go towards city operating budgets and require less federal tax dollars. This, of course, assumes that the D.C. and federal governments would react to the new tax scheme by balancing spending in a revenue-neutral way.
In regards to the "least expensive fix" to the question of D.C. statehood vs. territorial rights, there are a couple of ways to look at it. NTUF's BillTally project only tracks proposed changes in federal spending, so, if D.C. was made a regular territory, like Puerto Rico or Guam, residents would not pay the full federal income tax. This would result in lower tax revenues. On the other hand, by making D.C. a state, the federal government would spend less direct money on the city and switch to transfer payments, like Medicaid matching funds. From our analysis, we assume that making D.C. a state would ultimately lead to more spending.
"The main reason for not granting statehood to Washington, D.C. is that our seat of national government would be subject to a single state, i.e. New Columbia, instead of retaining power over a small (10 square miles), exceedingly vocal population of 750,000 who continue to demonstrate their incapability to govern their own potholes, education system, and parking maze of signs. Anyone who has worked or lived there knows firsthand." – Larry K
We alluded to a situation in 1783 where unpaid soldiers besieged Congress in Philadelphia and the city did not prevent or break up the so-called Pennsylvania Mutiny. James Madison later argued that a national government would need a federalized city to have the authority to guarantee its own safety. However, when it comes to the District maintaining local infrastructure and education, it is a complicated issue. One argument is that the District should be able to exert more local control to spend money on targeted projects/improvements, either as a state or a city government with more autonomy. Others side with the Constitution, thinking that if Congress thinks it can help run a country, it ought to be able to properly operate a city.
"[DC Statehood] is extremely interesting from a Constitutional viewpoint and also a historical viewpoint ... BUT it would certainly bring about more Democratic Senators (2) and 2 more Democratic Congressmen. I say, let's move the capitol to northwestern Kansas (where it gets pretty chilly and snowy in the winter and subject to tornadoes in the warmer months). There is also the lingering question about Puerto Rico as well." – Red M
Looking at legislation introduced so far in the 113th Congress, I haven't seen any bill that would move the nation's capitol across the country. But a few things to consider if you’d want to do that. Rural Kansas does not have anywhere close to the infrastructure that could support all the government offices that would be required there (think Congress, the President, support personnel for them and cabinet agencies, and protection), not to mention the day-to-day private economy like food sellers, construction workers, and housing. To accomplish a move, you would have to have a massive government spending increase. One other point, by moving out to Kansas, are you anticipating any future D.C. Representative or Senator to lean Republican? If so, how do you justify such a move to those on the other side of the aisle?
"I'm opposed to them having Senators or statehood as such but I’m ok with them having a Representative based on their population." – John D
Depending on your exact intensions, John D, it still does not solve the current problem. Washington D.C. residents do not live in a state and so are not represented in Congress BUT, unless all of the U.S.'s territories and protectorates, those same residents are required to pay federal income taxes. This is where the "Taxation Without Representation" argument gains ground. So the possible solutions, at least highlighted in the latest Taxpayer's Tab, include expanding local D.C. autonomy, granting statehood or making D.C. apart of Maryland, or (as a quick technical fix) exempting D.C. residents from federal income taxes.
"I think Congress should retrocede the District back to Maryland." – Elsie G
An interesting idea, Elsie G. This would avoid granting D.C. statehood while giving local residents proper representation and taxation. However, as mentioned above, there remains the question of having Congress guarantee its own safety. If D.C. is retroceded back to Maryland, it is unclear whether or not Congress could do that. Now, there have been proposals to give all D.C. land back to Maryland except for the inner core, which Congress would still oversee. This alternative would help most residents gain representation by becoming Maryland citizens but what happens to those living right near Capitol Hill?
Thank you to everyone who replies to the Tab each week with what they think Congress should do, either in regards to a particular piece of legislation or how to resolve a challenge facing our nation.
Not in the inner circle of Tab subscribers? Go here and join in the discussion! Otherwise, if you have something you'd like for NTU Foundation researchers to know about (federal spending, budgets, & regulations), email us at email@example.com Comments | Post a Comment | Sign up for NTU Action Alerts
The Settlement Act of 1790 established the national capital of Washington, D.C. in its current location. Since then, two issues have continually sparked debate among legislators and District residents alike: namely, those of local control and "taxation without representation." In the latest edition of the Taxpayer's Tab, NTUF looks at some of the legislation designed to address these controversial policies.
The U.S. Constitution gives Congress total legislative control over Washington, D.C., but since 1973 the District has been allowed to pass local laws and set its own budget (subject to Congressional approval). Delegate Eleanor Holmes Norton (D-DC) has introduced a number of bills in the 113th Congress that would expand the District's autonomy in these respects, including:
Seven bills have been introduced in the current Congress that are designed to grant D.C. outright statehood, or some form of the voting and representational rights associated with that designation. They include:
For more information on these bills, their sponsors, and an in-depth look at the history of D.C.'s unique political status, check out the latest edition of the Taxpayer's Tab online here. We've already seen a variety of responses to this edition, as Dan Barrett explores in his latest blog post.
Be sure to sign up for future updates by clicking here.0 Comments | Post a Comment | Sign up for NTU Action Alerts
With a net worth estimated at $55 million, and having earned nearly $125 million (mostly from speaking engagements) since leaving office in 2001, it's no secret that Bill Clinton is one of the wealthiest former Presidents in history. Each of the 3 other living ex-Presidents, including both Bushes and Jimmy Carter, are all estimated to have holdings of at least $7 million as well. However, all are still entitled to a number of taxpayer-funded benefits that total in the millions of dollars.
Under the Former Presidents Act (FPA), which was enacted into law in 1958, ex-Chief Executives are provided pensions, support staff, mail & office expense funds, and travel reimbursement, in addition to Secret Service protection. Prior to the law's enactment, former Presidents received no pension or other type of benefits. The legislation was originally intended to ease the transition into post-presidential life, during which Presidents are expected to brief the incoming administration and generally wind down the affairs of their own.
Currently, former Presidents are entitled to a pension equal to the salary of the head of an executive department -- in 2013, that is equal to $199,700 per year. According to a 2013 Congressional Research Service (CRS) report, former Presidents are also authorized to spend:
The use of taxpayer funds to subsidize former Presidents' private activities has been well documented over the years. Additionally, CRS has compiled extensive data comparing the extent to which former Presidents have utilized these benefits:
The U.S. General Services Administration (GSA), which is in charge of carrying out the provisions of the Act, requested over $3.5 million for FPA expenses in Fiscal Year 2014.
Some in Congress and the news media have expressed concern over how former Presidents are using the public resources the law affords them. The New York Times reported earlier this month that President Clinton's non-profit foundation has been experiencing financial and legal instability (to which Mr. Clinton personally responded). In the 112th Congress, Representative Jason Chaffetz (R-UT) introduced H.R. 4093, the Presidential Allowance Modernization Act. That bill would have capped pension benefits for former Presidents at $200,000; repeal the travel, office, and staff expense privileges; and reduced annual benefits by $1 for every dollar earned above $400,000 in any fiscal year. The bill was referred to committee, but no further action was taken.
Former Presidents, especially, hold a unique position in the public sphere even after they leave the White House. While some have historically been less financially secure in their private lives than others, as the costs to provide post-service benefits consistently reaches into the millions of dollars, a re-examination of the benefits (in particular, those not related to security) provided to former Presidents would certainly be in the interest of all taxpayers.1 Comments | Post a Comment | Sign up for NTU Action Alerts
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Pete & Doug discuss NTUF's "10 Most Mind-Boggling Taxes" list with author Austin Peters, NTU VP Brandon Arnold stops by to talk about his Washington Times op-ed advising the GOP to protect spending caps, and the Outrage of the Week!
Today’s Taxpayer News!
U.S. Representative Doug Lamborn (R-CO) penned this op-ed for the Colorado Springs-Gazette, remarking on recent efforts by the Colorado Legislature to grow spending and expand the size of government.
President Obama is pushing for a new “fee” on cell phone users through the Federal Communications Commission. The fee (which supposedly would start around $5 per year) would be used to expand and improve Internet connections in America’s public schools.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Today’s Taxpayer News!
The Washington Times published this exposé earlier this week, bringing to light the Obama administration’s practice of using taxpayer dollars to fund campaign emails. NTU’s Pete Sepp comments on the ethics and legality of the issue.
The president once again hits the road next week, embarking on his first bus tour of his second term next week, in the hopes of garnering support for his new “middle-class” agenda. As NTUF reported in a recent study, Obama is on track to become one of the most traveled presidents in American history.
If you lived abroad, would piles of tax paperwork cause you to renounce your citizenship? NTU’s Pete Sepp weighs in, pointing out that high taxes and an excessively complex code could cause such a trend.0 Comments | Post a Comment | Sign up for NTU Action Alerts
In early June the Supreme Court issued a unanimous decision allowing a Constitutional challenge to a New Deal agriculture law go forward. The Washington Post tells the story of embattled raisin farmer, Marvin Horne, who is fighting for the right to keep what he grows:
Horne, a raisin farmer, has been breaking the law for 11 solid years. He now owes the U.S. government at least $650,000 in unpaid fines. And 1.2 million pounds of unpaid raisins, roughly equal to his entire harvest for four years.
His crime? Horne defied one of the strangest arms of the federal bureaucracy — a farm program created to solve a problem during the Truman administration, and never turned off.
He said no to the national raisin reserve.
The whole article is well worth your read.
What could compel growers to hand over the goods they have produced for little or no compensation?
The Raisin Marketing Order.
One of 27 Marketing Orders enshrined in the Agricultural Marketing Agreement of 1937, this Depression-era law created a government-sponsored cartel that authorizes the “Raisin Administrative Committee” to seize a portion of the annual raisin crop in order to collectively influence supply, demand, and ultimately price. The Post goes on to offer a sanitized explanation:
It works like this: In a given year, the government may decide that farmers are growing more raisins than Americans will want to eat. That would cause supply to outstrip demand. Raisin prices would drop. And raisin farmers might go out of business.
To prevent that, the government does something drastic. It takes away a percentage of every farmer’s raisins. Often, without paying for them.
These seized raisins are put into a government-controlled “reserve” and kept off U.S. markets. In theory, that lowers the available supply of raisins and thereby increases the price for farmers’ raisin crops. Or, at least, the part of their crops that the government didn’t just take.
Where do those raisins go? The Raisin Administrative Committee stores them until such a time as it deems it permissible to let more raisins go on the market. Some are distributed for free to the School Lunch and other government programs, others are auctioned off. Profits are used to pay for storage and “raisin promotion.” Farmers, who have been forced to turn over up to 47 percent of their crop in the past, get nothing or next to nothing in return. Nothing, that is, except the “privilege” to pursue their chosen vocation.
Adding insult to injury, because the Raisin Administrative Committee is enforced by the Department of Agriculture, ultimately taxpayers are paying for a program that increases prices for consumers and robs farmers.
Raisins are only one of many products that must adhere to the government’s price-fixing schemes. Marketing Orders are also in place for almonds, apricots, avocados, cherries, citrus fruits, cranberries, dates, grapes, hazelnuts, kiwifruit, nectarines, olives, onions, peaches, pears, pistachios, plums, potatoes, spearmint oil, tomatoes, and walnuts. And, lest we soon forget, dairy has its very own onerous marketing order that restricts supply and hikes prices for consumers.
While Mr. Horne’s case still has a long way to go as it once again wends its way through the lower courts, in the eyes of most taxpayers the outdated Marketing Orders should be a clear violation of the Takings Clause (the Fifth Amendment of the Bill of Rights). Rather than wait for the courts to unravel the red tape, Representative Trey Radel (R-FL) has introduced H.R. 2840, the Raisin Farmer Freedom Act, a bill that would exempt raisins from Agricultural Marketing Orders.
This is a good first step for raisin farmers eager to get out from under the oppressive Raisin Marketing Order. However, the bill falls short of what the agriculture industry needs to thrive in the 21st century. Instead of exempting only one crop, Congress should be working hard to dismantle the entire regime of Marketing Orders, a relic of outdated agriculture policies more akin to the U.S.S. R.’s top-down central planning.
The “invisible hand” described by Adam Smith is no less present in agriculture than it is in any other sector of the economy. Simply put, the government doesn’t have and never will have the information necessary to efficiently manage a market from on high. The fact that a “national raisin reserve” exists is proof positive of that fact.
Exempting raisin farmers from Marketing Orders would help Mr. Horne and his friends today. But Congress should go farther and level the playing field by completely eliminating these types of “admission fees” to the marketplace. Doing so would be a boon to both producers and consumers alike.4 Comments | Post a Comment | Sign up for NTU Action Alerts
Is there anything more confounding than someone who doesn’t think we are over taxed? While it may initially seem impossible for an individual to be so oblivious, the world does not have tax ‘price tags’ posted on everything to remind you.
Demonstrating the breakdown of who pays the burden of income taxes, for example, is clearly important – yet, sometimes it’s better to focus on the smaller, widespread, tax burdens we all face. After all, nobody is able to avoid the burden of government.
To that aim, we put together this collection of the “Top 10 Most Mind-Boggling Taxes,” perhaps your city or state has made the list!
10. Fountain Soda (Chicago)
In Chicago there is big difference if you are drinking out of a can or a fountain; if it’s the former, the additional tax is 3 percent while the latter is taxed at 9 percent. Around for over a decade, this tax aims to curb obesity by making the usually larger fountain sodas more expensive to purchase.
9. Blueberries (Maine)
Maine produces 99 percent of the blueberries picked wildly in the nation. They also slap a one-and-a-half cent tax per pound on anyone growing, handling, processing, selling or purchasing blueberries. For what it’s worth, this tax is one of the oldest on our list: blueberry harvesters have been paying this tax since 1945.
8. Tan Tax (United States)
This infamous piece of “Obamacare” is a 10 percent federal tax on tanning bed services. Arguably attempting to discourage the using of these bed services, the tax does not apply to spray on services. For those who were hoping the “temporary” tax would be removed, the tax was made permanent in 2010.
7. Tattoos (Arkansas)
While this tax seems like it should be a relic of a different era, Arkansas implemented this 6 percent tax on permanent body art in 2005. If this incentivizes you to opt for that piercing you have been eyeing instead, you’re out of luck there too; body piercings and electrolysis are included .
6. A New Kind of Death Tax (Seattle)
Starting in 2011, it began to cost more for handling a death in Seattle. In addition to any estate tax you may face, it costs $50.00 to report a death to the Medical Examiner’s Office. If you don’t pay up, you won’t receive the necessary paper work for burial or cremation.
5. “Bagel” Tax (New York)
Was that bagel you’re eating sliced when you received it? If so, New York considers it a prepared food and adds an eight-cent tax to the bill. On the books for quite a while, New York took the step to start enforcing the tax in 2010, enraging New Yorkers and bagel store owners in particular. While eight pennies may not seem like a huge increase, one store owner is reporting he owes thousands of dollars in back taxes as a result!
4. Tethered Hot Air Balloon Rides (Kansas)
Going hot air balloon riding in Kansas? Well, if you’re scared to be blown away to OZ and opt to have your balloon tethered to the ground, then you are subject to local amusement park ride taxes. However, if you take a ride on the wild side and your hot air balloon ride is determined to be “untethered, piloted, and travels for some distance downwind of the launching point”, then you are considered to be partaking in air commerce and consequently your ride not subject to the tax.
3. Playing Card Tax (Alabama)
Beginning in 2004, Alabama imposes a 10-cent tax on each deck of cards that contains up to 54 cards. In addition, if you wish to sell a deck of cards, make sure you purchase your playing card privilege license before you do so.
2. “Luxury” Coffee Lids (Colorado)
In March 2010 Colorado eliminated a tax protection for “non-essential” packaging for food and drinks bought at restaurants and convenience stores. The move led to several interesting classifications including coffee cups being deemed essential while coffee lids were determined to not be. As a consequence, coffee shops are subject to (and, therefore, coffee drinkers must pay) a 2.9 percent luxury item tax on sleeves and lids.
1. The Non-Governmental “Jock Tax” (Tennessee)
This $2,500 per-game tax (max 3 games) tops the list despite not being quite as obviously strange as the other taxes. That’s because despite many states having so-called “jock taxes,” this is the only tax on the list where the money does not even go to the government – rather it heads to stadium owners who likely already benefitted from taxpayer-backed deals and own the team. If you thought government getting one more cent of your money was frustrating, this odd tax situation manages to add insult to injury.
This list should settle it once and for all, if you make it or do it, they will tax it.
Today’s Taxpayer News!
Subscribe to NTU's podcast "Speaking of Taxpayers" via iTunes!
Author of NTUF's new study, "Tobacco Taxes: Problems, Not Solutions, for Taxpayers and Budgets", Diana Oprinescu joins the podcast to talk about her startling findings. An update on the winners of the Milton Friedman Day tax reform contest; and the Outrage of the Week!