America's independent, non-partisan advocate for overburdened taxpayers.

 

Blog Contributors

Brandon Arnold
Vice President of Government Affairs 

Dan Barrett
Research and Outreach Manager 

Demian Brady
Director of Research 

Christina DiSomma
Communications Intern 

Timothy Howland
Creative Content Manager 

Curtis Kalin
Communications Intern 

Ross Kaminsky
Blog Contributor 

David Keating
Blog Contributor 

Douglas Kellogg
Communications Manager 

Sharon Koss
Government Affairs Intern 

Richard Lipman
Director of Development 

Joe Michalowski
Government Affairs Intern 

Diana Oprinescu
Communications Intern 

Austin Peters
Communications Intern 

Kristina Rasmussen
Blog Contributor 

Lee Schalk
State Government Affairs Manager 

Pete Sepp
Executive Vice President  

Nan Swift
Federal Government Affairs Manager 

Transportation and Infrastructure

The Late Edition: September 20, 2013
Posted By: Curtis Kalin - 09/20/13


Today’s Taxpayer News!

Fisker fail: The Department of Energy announced that it will auction off its remaining loan to the now closed electric vehicle manufacturer Fisker Automotive.  The outstanding loan totals $168 million.  This is the second DOE backed company to go bust.  Read more in the Detroit News.

Metro malaise: The Washington DC metro system, which is already subsidized by the taxpayers, is in the process of building another line which will likely increase the per-trip cost for riders significantly, while “leaving riders and taxpayers around the region to pay the bill.” Read more in the Washington City Paper.

Food stamp fraud: A federal indictment was handed down against 10 Baltimore area business owners after they allegedly used food stamp debit cards to defraud the taxpayers.  The fraud totaled nearly $7 million. Read more details in The Baltimore Sun.

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Ac-“customed” to Waste?
Posted By: Pete Sepp - 08/05/13

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:

  • According to Airlines for America statistics, Abu Dhabi airport accounted for less than 600 passenger arrivals per day to the U.S. in 2012, ranking it #80 on the list of top origin points to our country.
  • Right now, no U.S.-based carriers even fly from the Abu Dhabi International Airport back to here.  All other CBP pre-clearance zones in Canada, Ireland, and the Caribbean serve many airlines, including U.S.-flagged ones.
  • The primary beneficiary of the deal would be Etihad Airways, the state-owned airline of UAE. Thanks to this status Etihad enjoys an advantage over private airlines around the world that are subject to corporate profit taxes of their home countries. Which brings us to …
  • Another advantage conferred by the United States under the auspices of the Export-Import Bank (Ex-Im), whose risk-taking and subsidization have long been a concern for taxpayer advocates such as NTU. Etihad snagged $593 million in loan guarantees from Ex-Im last year for aircraft purchases, and could qualify for preferential financing that our own airlines (by definition) can’t get through Ex-Im.
  • Meanwhile, The Wall Street Journal is reporting that over the preceding year (before overblown sequester scare tactics), the wait times for getting through customs at stateside airports have “increased dramatically.”

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.

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A Bus Stop For the Price of a Bus Terminal
Posted By: Dan Barrett - 03/22/13

I live in Arlington, Virginia, a tiny county that happens to be right next to our nation’s capitol. One of the many reasons I live there is that the state of Virginia seems to have a much better handle on spending and the size of government, especially when compared to neighboring Maryland and Washington DC. So much so that the state had a $220 million surplus back in July. There are other great benefits to living in Arlington including amazing food trucks, access to the Metro system, and Arlington Cemetery. BUT the county seems to want people to be impressed with a piece of nondescript concrete a mere 6 blocks from where I live. It’s a bus stop. It cost $1 million and I’m not the only one who paid for it. You did too.

According to Arlington Now, the county just completed the “Super Stop,” which is the first of 24 such advanced bus pickup points with a shelter for “some 15 passengers, lighting, an electronic display that shows when the next buses are coming, and a number of unbranded newspaper boxes.” It took a year and a half to construct. An Arlington County spokeswoman reported that $575,000 was spent for construction and $440,000 went towards management and inspections. First point: I am not read up on the intricacies of Arlington and Virginia building codes but if just a forth of the latter amount ($110,000) was spent on inspections then this is a serious case of overregulation.

Now to what all of this has to do with you taxpayers across the country. The county paid $200,000 for the glorified street corner and got the remaining $815,000 from the Virginia Department of Transportation, who in turn will get $996.9 million federal funds for road infrastructure projects in FY 2013. Second point: According to Reed Construction Data and their 2008 numbers, it costs an average $1.294 million to construct a basic 12,000 square foot single-story bus terminal using union labor. To clarify, it is conceivable that Arlington County could have built a terminal with the costs of this single bus stop. I estimate that the bus stop is around 180 square feet but, even if it was double that (360 sq ft), they spent $2,828 per square foot.

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Will Virginia Gov. McDonnell Veto His Own $6.1B Tax Plan?
Posted By: Lee Schalk - 03/12/13

"I’m going to be able to find other ways to fund transportation.” –Bob McDonnell, September 2009

Now, when asked about taxpayers’ backlash to his 5-year, $6.1 billion tax hike, Governor Bob McDonnell is all smiles.

“Listen, I’ve been looking all over the state for contractors who will build our roads for free,” McDonnell joked in a recent interview. “Haven’t found any of them yet!”

As a Virginia taxpayer, I’m not amused. McDonnell campaigned against transportation tax hikes. Now, he’s thrilled that the Virginia General Assembly approved his colossal tax increase.

Friday’s PolitiFact piece shows the full extent of the Governor’s flip-flop. In a 2009 campaign ad, he declared, "My plan: New money for transportation, while protecting education and not raising taxes.”

See for yourself:

McDonnell still hasn’t signed his $6.1 billion tax monster into law, but judging by his eagerness to defend this “historic accomplishment,” Virginia taxpayers should brace themselves.

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Pay-Per-Mile Tax Proposals
Posted By: Michael Tasselmyer - 01/14/13

As the push for more fuel efficient transportation intensifies, U.S. officials are warning of major future deficits for the Highway Trust Fund, established in 1956 to support the construction and maintenance of the Interstate Highway System.

The Highway Trust Fund is financed through transportation-related excise taxes, the most significant of which is the federal gasoline tax. However, as fuel efficiency standards become stricter and Americans head to the pump less often, gas tax collections are expected to decrease over the next decade, and federal transportation funds could face substantial long-term deficits. A May 2012 report from the Congressional Budget Office showed that at 2012 spending and taxation levels, the Highway Trust Fund is looking at a $147 billion shortfall by 2022. After factoring in a 21-percent reduction in gas tax receipts due to increased fuel efficiency standards, that deficit increases to $204 billion.

The CBO determined that the government has 3 options to address the looming problem:

  • Reduce transportation spending;
  • Transfer money from the Treasury's general fund; or
  • Levy additional taxes.

As part of the BillTally project, NTUF analyzed legislation introduced by Rep. Earl Blumenauer (D, OR) in the waning hours of the 112th Congress that opts for the third course of action. H.R. 6662 would authorize $154.5 million to study the impact and feasibility of a mileage-based user fee system. Such a system taxes drivers by the number of miles they travel rather than the gallons of gas they consume. A report conducted by the Government Accountability Office (GAO) in the same month examined some of the costs and benefits of three different types of mileage tax methods: GPS, "pay-at-the-pump," and prepaid systems.

GPS systems use satellite technology and cellular transponders to track the number of miles a registered vehicle travels over a given time, which is then processed at a central location and billed to the driver. Obvious concerns include the cost of implementing such technology in the over 200 million registered passenger vehicles across the country, as well as the perceived invasion of privacy a tracking system of that magnitude is likely to provoke. Germany currently uses a similar system to tax commercial trucking industries.

"Pay-at-the-pump" methods require a wireless transponder be installed in every vehicle, which transmits mileage information to a central database when drivers go to gas stations across the country. Based on that data, fees are automatically adjusted for each driver before billing at the pump. Again, cost and logistical challenges are a major impediment to making this system viable, and some high-efficiency electric vehicles do not require trips to the gas station, making it difficult to enforce the fee collection for some drivers.

Prepaid systems require drivers to purchase "mileage licenses," which allow travel over a certain number of miles before the license must be renewed. Such a system is already in place in New Zealand, where it applies to diesel-fueled vehicles (mostly commercial trucks, but some passenger cars as well). The GAO noted that this system is prone to equity issues, as drivers can tamper with odometers to avoid paying fees.

Any of the three proposed systems would generate additional revenue over the long run, but they pose major logistical and financial challenges (both in implementation and administration), create privacy concerns for many Americans, and would significantly increase transportation costs.

The GAO report modeled the effect of a 0.9 to 2.2 cent per mile tax on a typical American driver, and found that even at those levels, taxpayers could expect to pay $108 to $248 per year in fees. Currently, the average driver pays about $96 in gas taxes each year. That would mean an increase of at least 12.5% in annual transportation expenses for the typical driver if Congress decides to follow through on these proposals.

NTUF does not endorse any candidate or position. For more information on BillTally, please visit http://www.ntu.org/ntuf/.

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Why Virginia Gov. McDonnell’s Tax Hike Plan is a Bad Idea
Posted By: Lee Schalk - 01/10/13

This week, Virginia Governor Bob McDonnell unveiled his transportation funding plan that would eliminate the State’s 17.5 cents-per-gallon gas tax and impose significant hikes on the sales tax and vehicle registration fees.

Under the Governor’s proposal, the Virginia sales tax would jump from 5 to 5.8 percent, car registration fees would spike $15, and Virginians with cars that run on alternative fuels would be hit with a brand new $100 fee. In truth, these new “fees” are actually taxes because they wouldn’t be dedicated to road construction, but instead would fund mass transit projects, such as building passenger rail between Lynchburg and Roanoke and lengthening the Norfolk light rail service into Virginia Beach. An additional $300 million would be set aside for the Metro’s Silver Line, a costly project that began nearly four years ago.

If all goes according to McDonnell’s plan, weary taxpayers (who are already getting pummeled by a lousy fiscal cliff deal and rising health care costs) will be on the hook to help the Governor reach his goal of raising an additional $3.1 billion by 2018. Though, as the Tax Foundation pointed out, the Governor’s math is fuzzy to say the least. True, Virginia’s transportation financing is in desperate need of restructuring, but McDonnell’s plan is a burden-shifting tax hike at its core. Not to mention, it relies on Congressional passage of dangerous online sales tax legislation to reach even deeper into Virginia taxpayers’ wallets to the tune of $1.1 billion. Banking on the so-called Marketplace Equity Act would make Virginia part of a predatory tax collection scheme that will ultimately hurt small Internet-based businesses and, undermine the principles of tax competition that have benefitted the Commonwealth.

Also, can we really expect the Virginia Department of Transportation to be good stewards of billions in new revenue? In 2010, an audit of VDOT uncovered hundreds of millions in unspent funds.

Governor McDonnell’s plan thankfully avoided an income tax boost, but there are other positive approaches that could be taken instead of his burden-shifting sales tax hike. The way in which Virginia’s transportation funding is allocated should be given more attention, and lawmakers should look to strengthen public-private partnerships made possible through the Public Private Transportation Act (PPTA) of 1995. Thanks to the PPTA, the $1 billion I-95 Express Lanes project, which began in July 2012, required only $70 million in state funding. Policymakers should increase the number of these partnerships in the Commonwealth, which have saved the State billions of dollars and years of construction time.

Virginia should also look to states like Missouri for better ways to deliver transportation improvements under budget and on schedule. In 2006, the Missouri Department of Transportation saved taxpayers $91 million through “radical cost controls” such as keeping bids for construction jobs low, asking contractors to propose innovative solutions, and slashing administrative costs. For even more inspiration, VDOT should examine this Texas Department of Transportation report for 49 highway construction and maintenance cost control ideas.

It is likely that Virginia officials have considered some of these proposals, but until they have provided demonstrable evidence that these ideas have been considered and implemented to the maximum amount possible, overburdened taxpayers will continue to oppose schemes such as the one proposed by Governor McDonnell this week.

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Speaking of Taxpayers, July 20, 2012: NTU’s New State Affairs Manager, Post Office, & More
Posted By:  - 07/23/12

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

      
   
   
   
   
   

NTU's new State Affairs Manager Lee Schalk joins Doug & Manzanita (in Pete's absence) to discuss state taxpayer issues that are still popping up despite the summer heat. Also the 'Fiscal Five' & 'Outrage of the Week!'
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Big Brother Hitches a Ride
Posted By: Nan Swift - 05/23/12

For months, Congress has been engaged in a prolonged debate over the “Highway Bill.” Now in conference, it’s common knowledge that this massive bill is regarding federal funding for highway safety and construction projects. The noise coming out of Washington surrounding the bill has trended toward topics like jobs, spending, big price tags, and even the Keystone pipeline.  While more government spending is bad enough, what is worse in some ways are the things in the bill people aren’t talking about.

What aren’t your legislators talking about? They aren’t talking about a provision in S. 1813, section 31406 that requires all new cars sold in the U.S. starting in 2015 to contain event data recorders (EDRs) or “black boxes.”  This new black box mandate poses serious privacy threats and is an unnecessary power grab on the part of government.

Ahead of the first conference meeting on the highway bill, Sen. Boxer, the chairwoman of the Senate Environment  and Public Works Committee and lead sponsor of the Senate bill, stated:

“Now is the time to set aside our personal wish lists and focus on the issue at hand – the reauthorization of a bill that is absolutely essential to our economy. Controversy should not be part of the conference and we should come together for the good of the country.”

If that is the case, by Boxer’s own reasoning, the black box mandate should be the first to go from her own bill, both due to its controversy and to any ATM-like job-killing potential this electronic device might have.

Joking aside, TheTruthAboutCars.com has an insightful write-up on the issue. The article describes how parts of the mandate give the federal government new powers previously held by the states and opens a potential floodgate when it comes to government surveillance.

Theoretically the car owner or lessee would still own the data, but the bill carves out exceptions that could give the government broad access to your personal travel data.

In addition to creating a slippery slope for new government incursion into your everyday life, even the National Motorists Association points out that they are wholly unnecessary.  Unlike airplanes that experience problems thousands of feet in the air where the conventional “black box” is essential to discerning what went wrong and how to prevent future tragedies, the NMA explains that:

… from a research perspective, there is no rational or scientific need nor justification to equip tens of millions of vehicles on a perpetual basis with black boxes.

While denials abound there is good reason to believe that the promotion of universal black box installation in new vehicles has more to do with regulatory, enforcement, judicial, and corporate economic interests; all at the expense of vehicle owners who are forced to pay for and retain this form of self-surveillance.

Go here to sign the pledge urging members of Congress and President Obama to oppose any federal action to mandate the use of black box data recorders in personal vehicles.  The pledge sums up the problem:

  1. Is an infringement on personal privacy and freedoms.
  2. Would be a slippery slope for Government to track citizen's transportation habits and location.
  3. Is both an unnecessary expansion of government police power and an undue mandate on consumers and business.

Unfortunately, tracking its citizens seems to be a theme with government lately, at all levels. While the Supreme Court ruled earlier this year that warrants are required for law enforcement to affix GPS trackers to personal vehicles (over the disagreements of the Obama Administration), warrantless searches of cell phones (basically a personal GPS) are still permissible. And just this week, Reason.com posted a story about how the DEA is trying to convince legislators in Utah to let them scan and store license plates for future reference.

Libertyvoice.net is also following the story and offers a few scenarios about where all this surveillance could lead. Here’s one hypothetical, but not unrealistic scene:

A DEA risk-analysis system alerts the police in Utah that the same car is traveling between Salt Lake City and Nogales, Arizona on a monthly basis. The next night, a divorced father visiting his child in Arizona receives a knock on the door from federal agents to interrogate him about his travel. Perhaps, with the help of other, circumstantial evidence, they even get a warrant, execute a paramilitary raid, and shoot his dog dead, traumatizing his child.

We need to kick Big Brother to curb. Go here to sign the pledge.

 

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Tax Hikes Go Back to the Future
Posted By: Andrew Moylan - 02/07/12

Today, the Senate Finance Committee is marking up their transportation bill with an eye toward adding billions in tax increases to cover the overspending in the bill. More spending, more tax hikes to pay for it. Stop me if you've heard this before. But there are two proposals in particular that gave me a little bit of policy deja vu.

First, the so-called "Chairman's mark" includes a $3 billion retroactive tax increase targeting the "carrying forward" of credits claimed back in 2009. You might remember 2009 as the year before the year before this year. The halcyon days when we passed a "stimulus" bill that was going to help our economy boom by 2012. The optimistic times when we could totally afford a trillion-dollar government-run health care program and our debt was "only" $10-11 trillion (as opposed to $15 trillion and counting today). Some on the Senate Finance Committee apparently would like to relitigate tax policy from that wonderful era in American history and enact a retroactive tax hike.

Now, it should be noted that the two credits they're targeting (the alternative fuel mixture credit and the cellulosic biofuel producer credit) are not ideal tax policies by any stretch of the imagination. Particularly the alternative fuel credit, given that it's "refundable" and thus acts like government spending rather than simple tax reduction. A smart tax code wouldn't include either of these policies but would levy low, consistent taxes across the board for all types of fuels and producers. But enacting retroactive tax increases is a much more egregious violation of principles of sound tax policy than either of those dumb credits.

The second effort, a proposed amendment to the Chairman's mark from Senator Robert Menendez (D-NJ), would target the oil and gas industry for punitive tax treatment by eliminating provisions like the Section 199 manufacturer's deduction or the "dual capacity" credit for them alone. If we've written it once, we've written it a hundred times: singling out oil and gas companies for higher taxes is bad tax policy and it's bad energy policy. Thankfully, the Congress has thus far largely agreed with us as the dozens of attempts in recent years to impose Menendez-like tax increases have all failed at one point in the process or another.

The Senate Finance Committee will be taking up these issues this afternoon and we hope they focus their efforts on reducing wasteful spending and not on retroactive tax hikes or tired attempts to punish an unloved industry.

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FAA Conference Report: Positive Steps, Missed Opportunities
Posted By:  - 02/06/12

Later today the Senate will vote on the Conference Report on the Federal Aviation Administration (FAA) Reauthorization Act. Although the bill takes many positive steps forward, it ultimately missed several opportunities for savings and reforms that fiscal conservatives had sought.

Since 2007 the FAA has been lurching from short-term extension to short-term extension (23 in all), which has become a serious logistical impediment for the aviation sector’s attempt to modernize and grow. The Conference Report would reauthorize FAA operations and programs for four years, thus creating a more stable funding path for the agency and predictability for the aviation sector. Moreover, it does so without worsening the already onerous tax burden on air travel. Given that consumers can often face a higher effective tax rate on their airline tickets than they do on their 1040 tax returns, it’s too bad Congress couldn’t go one step further and actually provide relief from this heavy tax load.

The bill makes incremental (and in some cases solid) progress on a number of other issues. Although funding for the wasteful Essential Air Service has not been eliminated, the modest eligibility restrictions in the legislation could provide a starting point for deeper reforms. Language was also included to increase airports’ ability to hire private security screeners in place of Transportation Security Administration (TSA) workers. Furthermore, the package would make improvements to a National Mediation Board rule so as to better balance labor organizations’ attempts to unionize a workplace with the rights of workers to not participate in union activity.

Despite this progress, the Conference Report’s elevated authorization levels remain a major concern. NTU has previously expressed its support for the House-passed FAA Reauthorization Bill, which would have funded the FAA at 2008 levels. By contrast the Conference Report would extend FAA funding at inflated 2011 levels – a $3.8 billion increase. At a time when taxpayers are expecting government agencies to do more with less, the Conference Report could have been more aggressive at restraining expenditures and reinforcing a private sector-driven model that allows our aviation industry to more effectively innovate and evolve. Bottom line: even as lawmakers line up to vote for this compromise legislation, Congress could have done – and in the near future will need to do – more to ensure aviation policy is on a fiscally and economically desirable flight path.  

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