Posts tagged with: taxes

This is a really intriguing story about a small community beset by an unfriendly local tax environment, “Sand Lake civil war: Move to dissolve village comes down to taxes.”

The village government of Sand Lake, Michigan, is threatened with dissolution. As you might expect, those facing the chopping block are crying foul.

How’s this for overblown rhetoric? “This is domestic terrorism. It’s an attack on small town USA. I have a personal anger against these people. Their purpose is not the good of the village,” says village president Kirk Thielke.

Just imagine the carnage, the horror: “There are just so many things that aren’t being considered. No one would plow our parking lots. Who would do leaf pickup?”

What do the proponents of the ballot measure to “disincorporate” Sand Lake have to say?

“We used to shovel on our own. We could all put in and hire someone to do it. It would cost a lot less. And the same thing with the leaves,” contends Toni Bush, 60, an owner of a local bar and a 40-year resident of Sand Lake.

Self-sufficiency rather than dependence on bloated local government sounds pretty good to me. And I do hope that, as one commenter notes, this is a “harbinger” of things facing local governments across this nation.

Bruce Tinsley’s comic strip Mallard Fillmore has long been an excellent examination of conservative principles, current events, and problems associated with government interventionism. The strip appears in over 400 newspapers across the country. Yesterday featured a particularly simple and poignant strip humorously pointing out early attempts to crush the entrepreneurial spirit and the free market. The December 13 strip simply speaks for itself.

Right before I saw the strip yesterday I just finished reading a proposal in Michigan that has the support of Lt. Governor John Cherry for a new tax on bottled water.

“I vote for Democrats for one primary reason. They raise taxes on the rich.”

So says Michael Sean Winters at In All Things, the blog of the contributors to America Magazine. Of course, most Americans, perhaps even Mr. Winter, generally need excuses to raise taxes on the rich. The hottest reason at the moment is to pay for universal health care coverage. Winter likes this reason. If passed, he says that it will be the “first outstanding example of a policy that reflects Benedict’s call for a more just society,” a slight departure from his predictions at In All Things back on November 25, when he said that the now-accomplished bailouts of the Big Three automakers and the passage of an economic “stimulus” bill would help “strike a more just balance in society.”

But I digress.

Winter believes that the way to promote “social justice” includes taxing the super-rich, which he defines as “families making more than $350,000 per annum” in order to establish a new federally-controlled health care system. The good news for medical students is that you, too, can be super-rich. The bad news for Winter is that there are far more reasons to oppose universal health care and cranking up taxes on well-off Americans than just the need to “put off buying that bigger boat for a month, or doing the repairs on the Condo in the mountains” and the desire to “keep the abortion funding out of the (health care) bill.”

For example, Winter acknowledges that some on the Right will “rant that the proposal will stifle investment,” before he dismisses it as “an argument that only an academic can make.” Right he is. Only an academic would argue that Winter is wrong in saying that higher taxes could not possibly reduce investment because “whatever happens between you and the tax man, you will make investments that will earn you more income to begin with.” An academic, or someone with money in the stock market who has ever been forced to make choices after Tax Day. Regardless of their merit in any given case, higher taxes reduce investment. That is not some partisan talking point. It is the fact that people cannot put as much money in bank accounts or the stock market when the government takes money away from them. If Winter really wants to take up to $54,000 more in taxes out of the hands of as many as 6 million Americans, he better expect less investment. (more…)

In this week’s Acton Commentary, I argue for simplifying the tax code. It should also be evident that any sort of tax reform should coincide with reforming the way Washington currently operates when it comes to spending.

April 15th is of course tax day, and national protests will also be occurring across this nation under the historically significant title of “tea parties.” One of the points I made in my piece is that it is important that these protests are not just a partisan vessel for bomb throwing and another opportunity to just recite talking points. I think people of most political and ideological persuasions can agree that government spending is out of control. It’s hard for numbers to lie. Repackaging partisan characters who have a large hand in the spending crisis won’t be very effective. Fortunately I think some of the organizers understand this.

Back to the tax code, much of my thinking on this issue can be summed up by noting the tax code is only a very visible problem or symbol of the larger crisis, which is government spending and a never ending need for more revenue. In regards to the lobbyist and special interests, there is a great quote I didn’t include in my commentary that is worth mentioning. In an article written by Bill Theobald titled “Budget 101: easy to spend, tough to tax,” University of Cincinnati professor of Law Paul L. Caron says of tax reform:

Major tax reform is possible in our system, but only if it is truly so fundamental that it creates a constituency greater (in the politicians’ eyes) than the special interests that would be hurt.

“Power permits people to do enormous good,” Lord Acton once said, “and absolute power enables them to do even more.”

This wisdom from the nineteenth-century’s champion of state prerogative applies as well today. Politicians are crippled by the lack of the one thing they need to yank our hobbled economy out of the mire of recession: adequate power. It is our duty to grant it to them.

Yes, from time to time this commentary space has been critical of government meddling in economic affairs, surmising, for example, that trying to cure poverty by funneling more money through Washington would do less to assist the poor than to pad the salaries of middle-class bureaucrats. We have emphasized the effectiveness of private and faith-based charity, of its capacity at once to use resources efficiently and to respect the individual’s dignity. We have argued that persons, morally formed, acting freely, and operating within the context of a rule of law, will generate a bountiful and equitable economic environment without counterproductive interference by the state. We have posited that our current difficulties derive from a combination of moral turpitude and government bumbling.

We were mistaken. (more…)

The Wall Street Journal offers a welcomed reminder of the value of tax revolts titled, “The Spirit of 13.” Proposition 13 is a notable property tax revolt which was led by the late California citizen Howard Jarvis in 1978. There are several books about the famed revolt and many attribute the event to helping fuel the “Reagan Revolution.”

Proposition 13 passed with 65 percent voter support, and ever since has been part of the California Constitution. As a result, property taxes were slashed by 30 percent and annual increases were capped at no more than a 2 percent increase. Retirees with limited income benefited greatly from Proposition 13. Perhaps most important, taxpayers know exactly how much to budget for their property tax. The law continues to hold very popular support among Californian voters, a state where citizens are taxed heavily already.

Still there are tax and spenders who constantly decry the lack of tax revenue, and Proposition 13 always finds its way back in their crosshairs.

Blog author: kschmiesing
Friday, April 25, 2008
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My reaction to any politician claiming to offer “straight talk” is a knowing chuckle (“yeah, right”), and that includes John McCain. So I’ve got to give credit to the so-called Straight Talk Express for a recent campaign stop in Youngstown, Ohio, where the Republican presidential candidate offered some honest and accurate comments on a contentious subject in politically risky circumstances—straight talk, if you will.

The subject was trade, and McCain defended it in a region suffering from the real or perceived effects of the extension of free trade in recent decades. In the heart of labor union-friendly, manufacturing-dependent eastern Ohio, McCain said, among other things:

The biggest problem is not so much what’s happened with free trade, but our inability to adjust to a new world economy.

Protectionism and isolationism have never worked in American history.

I can’t look you in the eye and tell you that I believe those jobs are coming back. What we’ve got to do is provide [displaced workers] with education and training programs that work.

With pro-growth policies to create new jobs, and with honest and efficient government in Washington, we can turn things around in this city.

Pro-growth policies would include, one assumes, lowering the state’s state-local tax burden, calculated by the Tax Foundation as 12.4%, fifth-highest in the nation.

When I lived in Philadelphia, Pa. as young boy, I always wondered why they called it the city of “Brotherly Love,” especially since some of the neighbors seemed so mean. The name “Philadelphia” is mentioned in Revelation 3:7. William Penn gave the city that name so as to serve as a reminder of the importance of religious liberty, peace, and an optimistic spirit. “We must give the liberty we seek,” said Penn.

Some of my family roots hail from the city simply known as Philly. Crime has long been an epidemic, where even relatives of mine have been victims of violent crimes. Philadelphia elected a a new mayor named Michael Nutter, a former city councilman. Nutter was sworn on January 7 of this year. David Whelan writes about Philadelphia and its fiscal mess in an article titled A Philly Tax Cutter for City Journal. Whelan believes while crime receives most of the attention, lasting repair and reform for the city is dependent on economic improvement.

Whelan points out how Philadelphia, with its unpopular business-privilege tax, is not friendly to entrepreneurs. Nutter has long championed a reduction or outright repeal of the business-privilege tax. Whelan notes of Philadelphia’s tax burden:

Philadelphia continues to have the nation’s second-highest individual tax burden after New York City. Philadelphia Forward cites a study finding that a typical city resident’s total tax burden from state and local taxes is 14 percent, compared with 9 percent in the nearby suburbs. For businesses, it’s way worse—roughly nine times what businesses pay in other large American cities or nearby suburbs. Defenders say that Philadelphia has been a victim of the same deindustrializing forces facing other densely populated, older cities. Yet it has adapted poorly. Even the mild-mannered Federal Reserve has spoken out against Philly’s taxes, calling them “onerous” and an “incentive to leave.”

Philadelphia was of course the first capital of this nation. States and individuals, many of them merchants, came together to cast aside the tyranny and taxation of the English Crown. It will be interesting to see if “A Philly Tax Cutter” who campaigned as a reformer can help reform Philadelphia’s hostility towards business and entrepreneurs.

It’s the beginning of tax season. Since I’m still in school, I typically have to get my returns done early so that I can include them as part of financial aid applications. This year I used H&R Block’s TaxCut software so that I could get the returns done quickly and smoothly.

One of the options that the software gives you when you are done is the option to compare your return with the national average for your income bracket. Here are some interesting results of that comparison, drawn from the 2005 tax data (the latest for which they had numbers):

Average salary/wages for my bracket: $65,453
Charitable contributions: $2,835

That means that in that income bracket the average deduction for charitable donations was 4.35%.

For 2005, individual private giving to charitable causes reached almost $200 billion (PDF), and made up the vast majority of the total $260 billion in giving reported to the IRS. “Religion” has historically been the single highest sector for allocation, topping $93 billion in 2005.

Also in 2005, Barna reported some findings on charitable giving trends, noting that the average for American household giving was 3% and that 9% “born again” Christian adults tithed in 2004.

In one of this week’s Acton Commentaries, Ray Nothstine and I juxtapose a static, sedentary dependence on government subsidies with a dynamic, entrepreneurial spirit of innovation.

The impetus for this short piece was an article that originally appeared in the Grand Rapids Press (linked in the commentary). I have two things to say about these stories and then I want to add some further reflections on the world of agricultures subsidies.

First, I found the article’s “hook” to be quite shoddy and lame. The blatant attempt to “shock” the reader into a reaction of disgust that a billionaire like Dick DeVos, yes, “that Dick DeVos,” got a whopping “$6,000 in federal farm subsidies from 2003 to 2005.” That’s roughly $2k a year for three years.

Unsurprisingly, DeVos’ spokesperson didn’t know anything about it. It’s ludicrous to think that a guy with as much on his plate as Dick DeVos would have any time for what is essentially pocket change for a billionaire. Does the fact that DeVos got a subsidy even though he campaigned on eliminating government waste make him a hypocrite?

Judge for yourself, but I think these payments say more about the government’s inefficiency and waste than they do about DeVos’ integrity. People of all income brackets pay tax professionals to maximize their returns. For the very wealthy, it’s simply a process that’s on a bigger scale, that’s much more thorough, and with many more loopholes than when you or I go to H&R Block. The more diversified your holdings, the more likely there are a plethora of tax breaks for you to exploit. The breathless lede to this story was simply off-putting to me, especially given the rather clear political undertones of the insinuations.

“Simplify, man.”

What’s the real lesson? As a recycling hippie once told The Simpsons‘ Principal Skinner in a quite different context, “Simplify, man.” Simplify the tax code and eliminate all these special interest loopholes.

But the complaint about the story’s hook is really a minor quibble compared to my second point. In a companion piece, Lisa Rose Starner, executive director at Blandford Nature Center and Mixed Greens says that farm subsidies are essentially about “social justice.” That’s right, subsidies are about social justice. They’re about the social injustice of subsidizing a product so that people from poorer nations around the world, who would like to do more than simply engage in subsistence farming, can’t compete in a global marketplace because prices are artificially deflated. So, our subsidies are feeding the rich at the expense of the poor in more ways than one.

Of course, the pat response is that other nations are subsidizing too, so our subsidies are just leveling the playing field. To be sure, the world of agricultural business is a complex one, as many of the commenters on our piece point out. Direct farm subsidies are just one thin slice of the government’s intervention into agriculture. Perhaps they’re the most obvious, but they may also not be the most insidious. As one astute reader wrote to me, “The web of market interference in ag is broad and complex.”

Simplify, man.

Update: The Detroit News ran a version of the original piece here.