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Detroit Offers Powerful Lesson on Property Taxes
Posted By: Christina DiSomma - 08/02/13

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.

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Foundation Travel Study Cited on House Floor
Posted By: Dan Barrett - 07/18/13

"When the wheels of Air Force are up, the meter is on, and I'm talking about a heap of taxpayer dollars." – Rep Howard Coble

This morning, Congressman Howard Coble (R-NC) highlighted the travel time and costs of President Obama that were at the heart of NTUF's recent paper Up in the Air: A Study of Presidential Travel and its Uncertain Costs by Policy Analyst Michael Tasselmyer. Rep Coble tied the $179,000 per flight hour of Air Force One to changing the costliness of government in light of the mounting debt and billion-dollar federal deficit. He said "I simply ask the President and his wife to exercise more prudence and discipline regarding their aircraft activities. ... The plague of the soaring debt continues to bother us, and I respectfully request that President Obama and his wife direct more attention at our soaring debt and deficit and less time on Air Force One."

Watch the entire floor statement here (skip to 1:13):

For more information on NTUF's Presidential Travel Study:

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Budget Battle
Posted By: Brandon Arnold - 07/12/13

Congress is back from its Fourth of July recess and high on its “to-do” list are the annual appropriations bills, which are the legislative vehicles Congress uses to spend your money.  Back in 2011, taxpayers scored a small, but important victory when the Budget Control Act (BCA) was enacted. This law established spending caps for ten years and created an enforcement mechanism known as the “sequester” to try to impose budget discipline on recalcitrant lawmakers. Unfortunately, the victory could be short-lived as big-spenders are fighting back trying to eviscerate the BCA.

At the center of the budget battle is Senate Appropriations Committee Chair Barbara Mikulski (D-MD), who along with other big-government proponents on the Committee, recently approved an appropriations blueprint that would allow for $1.06 trillion in discretionary spending. This figure is a whopping 9.4 percent increase over the $967 billion cap established by the BCA. 

The House, meanwhile, has so far agreed to stick to the 2014 BCA cap, but this task will be much tougher because of Mikulski, who is actively recruiting Republicans to help her “find a solution to sequester.”  To some, it seems, modest fiscal restraint is a serious national problem.

Congress should embrace the reasonable caps set forth by BCA, not reject them. While doing so would not come close to fixing our serious fiscal problems, it would show a modicum of discipline on the part of Congress. Then, it can focus attention on mandatory spending, which is the primary cause of our long term debt.  Mandatory spending – mostly Social Security, Medicare and Medicaid – is projected to be approximately $2.21 trillion in 2014 and will increase rapidly in successive years unless reined in by Congress. 

Reforming entitlement programs will be no easy task, but before Congress can run it must first demonstrate it knows how to walk.  It should hold the line on the discretionary spending cap and then begin a serious conversation about the staggering impending debt associated with Social Security, Medicare and Medicaid.  If it can’t even stick to the discretionary budget caps already established by law, taxpayers ought to be very, very worried about the long-term fiscal health of the nation.

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New Study: If Trends Continue, Obama Will be Abroad for 190 Days as President
Posted By: Dan Barrett - 06/27/13

Michael Tasselmyer, NTU Foundation's Policy Analyst, authored a paper on the international travels of President Obama. Though the President spends fewer average days abroad per trip, he is still on pace to travel more overall than six of the last eight Presidents. He could be away for as many as 190 days on international trips, if his travel trends continue. To put this in context, if the President ends up traveling abroad for those 190 days, he will have spent just under nine percent of his tenure visiting other countries (FYI, he will be in office a total 2,191 days). That not only means that he will be spending more time away from the White House but the government will be spending new levels of tax dollars on security, personnel, and logistics associated with those trips.

One key fact Tasselmyer points out is the unknown total cost of each or all of the President's trips, which reach the tens of millions of public dollars. Just as Presidents Clinton and Bush, Obama has many hundreds of traveling companions and multiple aircraft to guarantee his security and travel but taxpayers are not purview to the top-line costs. Tasselmyer said:

"NTUF does not dispute the widely-held belief that a vital component of the President's duties is to represent our nation in foreign countries. [This study] is provided in the interest of fostering rational public discussions over the transparency as well as the costs and benefits of such activity."

Below is a travel breakdown of each year that President Obama has been in office:

President Obama's International Travel by Year
Year
Trips
Days
Total Countries
Unique Countries
2009
10
40
25
21
2010
6
20
9
8
2011
4
20
9
9
2012
5
15
7
7
2013
4
18
10
10
Note: Data for 2013 includes 4 trips, including his current trip to Africa.
Source: State Department data and media reports, compiled in Up in the Air: A Study of Presidential Travel and its Uncertain Costs, National Taxpayers Union Foundation

The study also includes an updated per-flight-hour cost for Air Force One, which slightly decreased from NTUF's 2010 study because of changes in fuel costs. Check out the report and stay tuned to NTUF's Twitter feed for other key findings (as well as reactions from taxpayers, lawmakers, and the Administration).

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Congressman Dingell's Career in BillTally Figures
Posted By: Dan Barrett - 06/07/13

With Congressman Dingell (D-MI) becoming the longest serving Member in the House of Representatives, I thought it would be interesting to put his career in context. He has served since 1955 and was elected to his 29th term in office this year. Through those 57 years, he supported a lot of legislation that would change how the government spends tax dollars. However, it's hard to put an overall career number of how much he would spend or save if his legislation was all enacted. As a Congressman for 57 years, he predates NTUF's BillTally project (and for that matter the National Taxpayers Union and Foundation) but I pulled together the totals that he has supported in the last 20 years. Note: NTUF has data from the 107th to the 112th Congresses online. 

Proposed Spending Agendas of Congressman John Dingell (D-MI)
(in millions of dollars)
Congress
Increase
Decrease
Net
102
$84,786
($1,589)
$83,197
103
$539,660
($95)
$539,565
104
$538,451
($66)
$538,385
105
$557,479
$0
$557,479
106
$606,877
($8)
$606,869
$626,931
($854)
$626,077
$647,529
($3)
$647,526
$651,110
($508)
$650,116
$607,283
($662)
$606,621
$937,076
($7,441)
$929,635
$77,810
($13,731)
$64,079
102-112 Average
$534,090
($2,269)
$531,777
Source: NTUF BillTally System
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Scandal-mania Runs Wild! - Speaking of Taxpayers, May 17, 2013
Posted By:  - 05/20/13

Subscribe to NTU's podcast "Speaking of Taxpayers" via iTunes!

      
   
   
   
   
   

Back from an unwelcome hiatus, and the Washington world has gone haywire! In an extended podcast, Pete & Doug discuss the IRS scandal, and NTUF's pros update on "Obamacare's" cost and the most and least expensive bills out there. And, the Outrage of the Week!

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The Budget: CBO's (Updated) Look Ahead
Posted By: Michael Tasselmyer - 05/15/13

On Tuesday, the Congressional Budget Office (CBO) released its updated baseline and budget projections for Fiscal Years 2013-2023. The report is an update of CBO's February projections, and provides a detailed forecast of where economists see tax and spending patterns heading over the next ten years.

You can read the full report by clicking the link above. Below are a few highlights that I thought were worth mentioning in the limited room that a blog post affords me.

The deficit in Fiscal Year 2013 will be lower than it has been in recent years.

CBO lowered its estimate for FY13 deficits to $642 billion, nearly $200 billion lower than its February estimate of $845 billion. This is certainly good news, and indicates a slight shift towards more sustainable deficit levels -- at least in the short term.

However, it represents the effects of certain "extraordinary" circumstances, namely:

  • Large dividend payments ($95 billion worth) from Fannie Mae and Freddie Mac to pay back amounts they borrowed from the government, which CBO counts as "negative outlays." These are one-time effects that don't really say much about long-term trends.
  • Major increases in tax revenues this past April, probably a result of high-income earners shifting much of their taxable income to 2012 in order to avoid looming higher rates in tax year 2013. Corporate tax receipts were also higher than expected. Again, this effect is much higher on 2013 deficits than in CBO's long-term averages.

By 2015, the deficit will fall to 2.1 percent of GDP. It'll rise again after that.

In 2023, CBO expects the deficit to get back to around 3.5 percent of GDP, higher than historical averages. Debt held by the public should hover in the 71-76 percent of GDP range over that time:

debt_cbo_514

Health care, Social Security, and interest payments will drive future spending.

By CBO's estimates, Medicaid, Medicare, and Social Security spending will be lower over the next 10 years than forecast in February. However, those costs will still be driving government spending in the coming decade even as other discretionary spending decreases as a percentage of GDP:

spending_cbo_514

Of course, with economic forecasts come a degree of uncertainty, so these projections may change as new laws are enacted. However, they offer a useful point of comparison against which various policy proposals can be measured when it comes to their effects on the budget.

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The Late Edition: May 9, 2013
Posted By:  - 05/09/13

Today’s Taxpayer News!

Pete Sepp weighs in on the future of the so-called “Marketplace Fairness Act” in this US News op-ed.  

Thanks to Governor Martin O'Malley and Lt. Governor Anthony Brown, Marylanders will endure 40 different tax and fee increases totaling an additional $20 billion from 2007 through 2018. Read the full story from the Potomac Patch.

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The Late Edition: May 8, 2013
Posted By:  - 05/08/13

Today’s Taxpayer News!

NTU’s Pete Sepp applauds Senator Rand Paul’s recent proposal to repeal the burdensome "Foreign Account Tax Compliance Act" (FATCA), which taxes Americans abroad. Read the full story from the Wall Street Journal.

This piece from cincinnati.com explains that not only does the President’s 2014 budget proposal raise taxes by $1.1 trillion over a decade and increase spending by $800 billion; it never balances.  

One of the drug manufacturers which originally supported and lobbied for “Obamacare” is now calling the law ‘catastrophic’, says the Daily Caller

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The Late Edition: May 7, 2013
Posted By:  - 05/07/13

Today’s Taxpayer News!

NTU’s Pete Sepp speaks about the negative effects of the “Marketplace Fairness Act”, which passed the Senate yesterday and is headed to the House to be voted on. Read more from the Christian Science Monitor.

The federal government has managed to run a $489 billion dollar deficit since the fiscal year began, according to the Congressional Budget Office.

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