Marking the five year anniversary of the 2003 Bush tax cuts, the White House put out a "fact sheet" today warning "The Largest Tax Increase In History Is Looming." From the White House:
"By the end of last year, Americans would have paid an additional $1.3 trillion in taxes had it not been for the President's tax relief. If the President's tax relief is allowed to expire at the end of 2010, Americans will pay about $280 billion more in taxes each year . . .
If the President's tax relief is allowed to expire, every income taxpayer will see an increase. Taxes will increase for 116 million income taxpayers who will see their taxes go up by an average of $1,800. It will force many families to accept a nearly 200 percent tax increase. In addition:
48 million married couples will face a $3,007 increase on average. Part of the increase is due to the fact that many married couples will once again be forced to pay more taxes as a married couple than if each were treated as a single.
12 million single women with dependents will face a tax increase averaging $1,091.
18 million seniors will face a $2,181 average tax increase.
27 million small business owners will face a $4,066 tax increase on average.
These pending tax increases will be devastating for average American families. A typical family will pay $500 more per child in taxes, and 43 million families with children will face an average tax increase of $2,323. American families are facing higher costs in the grocery line and at the gas pump. Americans deserve to keep more of their income. If Congress allows the President's tax relief to expire:
A single parent with two children earning $30,000 would see an increase of over $1,600 in taxes.
A family of four earning $40,000 would see an increase of over $2,300 in taxes.
A family of four earning $50,000 would see an increase of over $2,100 in taxes – an increase 191 percent
A family of four earning $60,000 would see a tax increase of approximately $1,901 in taxes – an increase of 70 percent.
A family of four earning $80,000 would see a tax increase of about $2,000 in taxes."
So will Congress allow the 2003 tax cuts to expire? What about the spending side of the equation? Until Congress makes up its mind taxpayers will be left wondering what fate awaits them.
"Conservative grassroots group Grassfire.org wants people to waste as much energy as possible on June 12 by 'hosting a barbecue, going for a drive, watching television, leaving a few lights on, or even smoking a few cigars.' " - Information Week
Can someone te!
ll me how "the other side is doing something stupid so we will do something even dumber" helps? Individuals with freedom making informed choices improve efficiency, reduce environmental impacts and increase prosperity. I'm not sure how reducing efficiency and wasting wealth helps build support for that concept.
The cost of government is going up this year. During the 2008 Legislative Session, lawmakers proposed over $200 billion in fee and tax increases. Of that, they imposed $768 million in increases over a ten-year period.
State senators proposed 46 bills (including companion bills) that would increase state taxes or fees. The initial versions of these proposals sought to raise $215.4 billion in revenue over a ten-year period. Of these proposals, the legislature adopted five, raising $13 million in fees or taxes.
State representatives proposed 36 bills (including companion bills) that initially sought to raise $98.8 billion in fees or taxes over a ten-year period. The legislature ultimately adopted nine of these bills, raising $755 million in fees or taxes. In total the legislature enacted 14 bills raising fees and taxes by $768 million over a ten-year period.
For a list of the tax and fee increases proposed and enacted in 2008, click here.
The Department of Revenue has released a report summarizing all the 2008 legislation impacting tax collections. From DOR's website:
"The Department of Revenue has posted online a summary of tax-related legislation enacted during the 2008 and late 2007 legislative sessions. It also has published an annual update of tax exemptions with expiration dates and reporting requirements.
The Department generates the tax summaries annually to help make businesses aware of changes to the state tax system. See the 2008 summary, which covers 38 bills that will reduce state revenues by $2.2 million in Fiscal Year 2009, and see the summary of the two property tax measures enacted during the 2007 special session.
Carl Gipson noted below that, in response to higher gas prices, drivers are purchasing smaller cars and manufacturers are building more efficient cars. In the medium- and long-term, this will increase efficiency, driving down demand.
In the short-term, drivers are also responding by finding ways to conserve. The chart to the right compares the number of gallons sold in Washington for January, February and March for each of the last three years. In every case the number of gallons sold is lower in 2008 than in 2006.
In January 2006, a gallon of gas cost $2.25. In January 2008 the cost had risen to $3.13 a gallon. The total number of gallons sold fell by 1.5%. Note that this is not the per capita usage, but total gallons sold. So, the reduction occurred even as the number of drivers in Washington increased.
The same trends are evident for February and March. The cost of a gallon of gas rose 85 cents from February 2006 to February 2008 and total demand fell 1 percent. For March, the cost rose by $1.03 and demand fell 2.2 percent.
The simple lesson is that people, responding to prices, are finding big and small ways to conserve and become more efficient. They do this more effectively than government because only they know what is possible and the easiest ways to conserve. Economics is often described as the system of allocating scarce resources. Environmentalism is borne of a concern about scarce resources. The response of drivers to increasing scarcity of oil, reflected in prices, shows how effective this system is.
This is not an argument for $5 gas. Prices should be set by the supply and demand for scarce resources, not by think tank wonks or politicians. Millions of people, responding to market signals and incentives, make decisions that reduce fuel use and associated carbon emissions. It is a system that not only preserves individual freedom and choice, but does so in a way that promotes prosperity and environmental stewardship.
Ford Motor Company today announced that it would cut back production of SUVs and pickup trucks. According to the CNN article, Ford company president (and past president of Boeing's commercial airline division) Alan Mulally attributes much of the change to higher gas prices and "changing consumer demand.
Interestingly enough, it isn't until the 3rd-to-last paragraph that the
CNN article mentions that Ford is also ramping up production of its smaller cars such as the Ford Focus, Fusion, Edge and Escape. These are smaller cars that get much better gas mileage and usually cost less.
This decision from Ford to produce more gas-friendly vehicles did not come from some government mandate. They made the move because if they hadn't, they might very well have to make even more drastic cuts once their dealers started experiencing alarmingly high inventories of unsold SUVs.
On a similar note, Honda announced yesterday that it is planning on rolling out more hybrids, including a low-cost model, over the next several years. Honda also said they are closer to producing a hydrogen fuel-cell-powered vehicle. Why are they so focused on this market? Because Toyota is kicking their tail in hybrid sales and making a ton of money doing it. Honda simply sees a fast-growing and profitable market and is making a course correction to tap into it.
Lest you think that the people are sovereign and that government is instituted to serve the people, Mayor Nickels is here to set you straight.
In announcing his effort to get people out of their cars, the Mayor announced today that "Seattleites are aware of the perils of climate pollution, and they want to do their part."
Not enough apparently.
Since Seattleites aren't doing their part enough, even though they want to, the Mayor announced today that he will be closing some roads this summer for use by bikes and pedestrians only, to increase gridlock on remaining roads and the pain of driving your car.
People of Seattle...get with it! You are getting in the way of the Mayor's agenda.
The Washington Research Council released a policy brief yesterday highlighting Washington's tax burden ranking. According to the Research Council:
Washington’s $3,948 per capita in state and local taxes for FY 2005–06 ranked 18th highest among the 50 states. New York had the highest per capita tax burden, $6,413; Alabama had the lowest, $2,782. The nation-wide average was $4,001. Washington’s per capita ranking has not changed much over the last three years. For FY 2004–05 Washington ranked 21st; for FY 2003–04 it ranked 18th.
For FY 2005–06 Washington’s $111.99 in state and local taxes per $1,000 in personal income ranked 28th highest among the states. Wyoming collected the most state and local tax revenue per $1,000 of personal income; South Dakota collected the least, $91.03. T!
he nation-wide average was $116.22.
We've been sounding the alarm (along with others) about the serious spending problems facing the nation and the lack of attention our elected officials are paying to this growing fiscal disaster. Now come projections out of the Congressional Budget Office (CBO) on what further delay means to taxpayers and the economy. The following is from a CBO letter dated yesterday to Rep. Paul Ryan (R-WI):
"Under current law, rising costs for health care and the aging of the population will cause federal spending on Medicare, Medicaid, and Social Security to rise substantially as a share of the economy. If tax revenues as a share of gross domestic product (GDP) remain at current levels, that additional spending will eventually cause future budget deficits to become unsustainable. To prevent those deficits from growing to levels that could impose substantial costs o!
n the economy, the choices are limited: Revenues must rise as a share of GDP, projected spending must fall, or both."
Let's assume that tax increases are the preferred solution for the powers that be to resolve this self-inflicted spending problem. How large of a tax increase are we talking about?
"With no economic feedbacks taken into account and under an assumption that raising marginal tax rates was the only mechanism used to balance the budget, tax rates would have to more than double. The tax rate for the lowest tax bracket would have to be increased from 10 percent to 25 percent; the tax rate on incomes in the current 25 percent bracket would have to be increased to 63 percent; and the tax rate of the highest bracket would have to be raised from 35 percent to 88percent. The top corporate income tax rate would also increase from 35 percent to 88 percent. Such ta!
x rates would significantly reduce economic activity and would!
create serious problems with tax avoidance and tax evasion. Revenues would probably fall significantly short of the amount needed to finance the growth of spending; therefore, tax rates at such levels would probably not be economically feasible . . .
The United States faces serious long-run budgetary challenges. If action is not taken to curb the projected growth of budget deficits in coming decades, the economy will eventually suffer serious damage. The issue facing policymakers is not whether to address rising deficits, but when and how to address them. At some point, policymakers will have to increase taxes, reduce spending, or both. Much of the pressure on the budget stems from the fast growth of federal costs on health care. So constraining that growth seems a key component of reducing deficits over the next several decades. A variety of evidence suggests that opportunities exist to constrain health care costs both in the public programs and in the health care system overall without adverse health consequences, although capturing those opportunities involves many challenges."
So what do the current presidential candidates plan to do about this? As noted by former U.S. Comptroller!
General David M. Walker, they aren't saying. Voters should demand an answer before it is too late.
I just finished reading Alan Greenspan's biography, The Age of Turbulence. It is excellent and covers a great many interesting issues.
As a free-market environmentalist, I found this particularly interesting:
If you compare the dollar value of the gross domestic product -- that is the market value of all goods and services produced -- of 2006 with the GDP of 1946, after adjusting for inflation, the GDP of the country over which George W. Bush presides is seven times larger than Harry Truman's. The weight of the inputs of material required to produce the 2006 output, however, is only modestly greater than was required to produce the 1946 output. This means that almost all of the real-value-added increases in our output reflect the embodiment of ideas.
Frequently we hear that if growth and wealth continue to increase we will rapidly deplete the Earth's resources. Year after year, we hear projections that catastrophe is just around the corner. It never seems to come because human ingenuity adjusts and innovates at an amazing rate. Market forces encour!
age that ingenuity, increasing prosperity and lifespan while taking care to economize on the use of scarce resources. It turns sand into semiconductors. Who knows what transformations will occur in the future?
The State Auditor today officially released a performance audit on government compliance with the Public Records Act. So what does public records compliance have to do with government spending and efficiency? Consider some of the recent taxpayer payouts for government violations of the law:
"In recent years, court cases in which state agencies and local governments have been assessed fines and penalties have been specifically related to the entities’ improperly withholding public records and/or delaying release of the records. We did not identify litigation that was based on entities’ practices other than improper denials or excessive delays. In addition to penalties, attorneys’ fees, and costs awarded by the court, the entity also bears it own legal costs of the litigation. Accordingly, minor court awards can be expensive if the legal costs associated with the !
litigation are considered as well. Examples of recent lawsuits include:
• The Department of Corrections settled a lawsuit for $65,000 in late 2007. A Tacoma man made public records requests at 10 government agencies for information about employee health insurance coverage. The Department said it could not electronically redact the requested records and offered to provide paper copies at a cost of $8,900. A Thurston County judge ruled in this case that the Public Records Act does not require agencies to provide records in an electronic format. However, the agency ultimately provided the records electronically to the requestor.
• The Department of Corrections settled another public records lawsuit earlier in 2007 for $541,000. Prison Legal News, a watchdog newspaper, requested records in 2000 and disagreed with DOC regarding the documents withheld and the time it took to provide the records requested. The Thurston Co!
unty Superior Court order supported the position of the Depart!
ment and, on appeal, that decision was supported by the Washington Court of Appeals. After a favorable decision from the two lower courts, the Supreme Court reversed their decisions and ordered the documents to be released. DOC was ordered to pay statutory penalties, attorney fees and costs incurred over the 7 years it took for the case to pass through the appellate process. The case involved issues over exemptions in the Public Records Act.
• In 2006, the City of Spokane settled a case for $299,000 involving its refusal to release public records regarding financing of a parking garage. At the time, it was thought to be the largest public records-related settlement in the history of the 1972 Public Records Act.
• A state Court of Appeals judge in 2007 fined the King County Executive $123,000 for failing to comply with the state’s Public Disclosure Act. A Seattle businessman took a case to court in 2000 after the !
Executive’s office failed to respond to a 1997 public records request for documents regarding the public financing of Qwest Field. A King County Superior Court judge originally fined the Executive $5 per day for each day it failed to produce the requested records. The Act allows up to $100 per day. The case was still being resolved at the time of the audit.
In addition to the financial expense of being involved in a legal dispute involving public records, failing to respond properly to public records requests can erode the public’s overall trust and regard for the entity and government in general."
To view the full audit and recommendations for improvements, click here.
reason is that Houston is the largest city in the country that does not
regulate land-use through zoning. This means the free-market dictates where
commercial and residential activities occur.
are areas of the city where a large high rise shares a city block with a single
family home. While this may sound
unthinkable, consider that it does not happen in all places and where it does,
prices adjust to the situation. So a home near a commercial property would cost
less than a similar home in a traditional neighborhood.
is not without regulation, however. Typically, the use of a property is defined
through deed restrictions. So each property contains individual restrictions
that limit what the owner can do with the property. These restrictions are
similar to HOA agreements and they can range from landscaping to building
height requirements. The deed restrictions can expire (usually within about 50
years) and can be renewed (or left to expire).
property owners will allow their deed restrictions to expire in order to sell
the property for commercial purposes with no land use limitations. This is how
large multi-use activities become intermixed. They are usually highly controversial and opposed by the local
restrictions can also influence the value of a property. Most residents enjoy
predictability with land use so tight restrictions that last a long time are
more desirable. Likewise, unrestricted properties are an invitation for
While mixing residential and commercial development might be undesirable to some people, the majority of Houston residents seem to prefer it. There
have been several attempts to move Houston toward zoning but the public has consistently
rejected the idea. Thus, preserving the free-market system.
Tomorrow, presidential candidate Sen. John McCain will be in Seattle to discuss his cap-and-trade proposal to reduce greenhouse gases and fight climate change. Some, however, aren't happy and will be protesting.
The State Democratic Party will be attacking McCain's effort to "boost his faux 'maverick bona fides,'." (By the way, the letters from "faux maverick bona fides" can be rearranged to spell "Scuba Rove Affixed A Mink" which can only be some secret code.) How they will be doing it, however, is interesting.
According to the Tacoma News Tribune, "The plan is to hire an airplane that will carry a special message to Republican John McCain, and everybody else who is paying attention." Maybe the banner will say "McCain: Faux Maverick Bona Fides."
So the way they are going to attack John McCain for his climate change plan is to hire an airplane to fly around in circles burning fuel. If that doesn't demonstrate a contrast, I don't know what does.
Adam Wilson of The Olympian wrote an interesting article this weekend about a state computer project that some legislators thought they eliminated this year. According to the article:
"The state Health Care Authority plans to spend an additional $9 million on a computer project that the Legislature tried to cancel this year.
State officials say the move will preserve work done so far and buy another chance at continuing the project. But a key lawmaker said it contradicts what the Legislature intended.
After $5 million had been spent on early development of the computer project, lawmakers approved spending $25 million more on the BAIAS system in 2007. The computer would replace the 30-year-old system that handles public employee health insurance.
The state spent $2 million last year on the project, but Democratic lawmakers, looking to save money, pulled $14 million from the project in March.
The cut effectively ended the effort to develop the system after $7 million in taxpayer money had been spent because there wasn't enough money left to finish it. But $9 million from the original budget was still available. The agency plans to spend that money on the system in the next year . . . A lawmaker on the board, Rep. Ross Hunter, D-Bellevue, warned against the proposal. He said he opposed canceling the project, but had no doubt that is what the Legislature wanted to do.
State spending is expected to outstrip revenue by $2.4 billion in the next two-year budget. Hunter said it's unlikely more funding will be given to the project next year, making spending more now questionable . . . As for concerns about reversing the decision of the Legislature, run by the Democratic majority, Swecker said it was fair play.
'My theory is if they were trying to terminate the project, they should have cut all the money,' he said."
So is the Health Care Authority an agency run amok blatantly disregarding the law and the intent of lawmakers?
Well, not exactly. Perhaps in their haste to rush through the $306 million 2008 supplemental budget increase, lawmakers left the original language in the budget concerning the project even though they reduced the funds:
"Sec. 214(7) $784,000 of the health services account--state appropriation for fiscal year 2008, $1,676,000 of the health service account—state appropriation for fiscal year 2009, $540,000 of the general fund--federal appropriation, and (($22,480,000)) $8,200,000 of the state health care authority administrative account--state appropriation are provided for the development of a new benefits administration and insurance accounting system"
We're all for reducing unnecessary spending and saving money, but lawmakers need to be more diligent in how they write the budget so they !
can clearly convey their intent. Perhaps if they had adopted a 72-hour budget review reform, this oversight would have been caught.
A good insider article from Peter Lewis over at Crosscut recaps the city of Seattle's desire to play internet service provider. Even though the city wants to partner with a private sector business to help run the service, let's just say that my confidence in such an endeavor is weak at best. We've seen this scenario play out in many municipalities around the nation and the results are less than staggering. I will say that at least the city is not interested, at this particular junction, in providing free (meaning ad-supported) WiFi service -- a catchy fad that is thankfully fading into obscurity. Turns out people are willing to pay for good service rather than suffer through poor, yet free, Wi-Fi service.
The city is relying on a couple of feasibility studies and surveys that shows, guess what?, people care about the price of the service they purchase. But my concern isn't so much that the city is able to provide less expensive broadband service. It's this: what happens when the city realizes it is running over budget and the system is under performing? When Verizon rolled out its FiOS (fiber optic to the home) plan a couple of years back and said they would spend billions nationwide in infrastructure development, I thought it was fantastic that this private company would risk a rather large amount of capital to serve its customers. If Verizon goes over budget they can't clean up their shortfall by taking tax dollars from those who do not use the service. But what happens when, and if, the city needs more capital to invest in the very expensive investment of upgrading fiber optic lines? That makes me nervous.
Secondly, before the city decides to jump on the technology provider bandwagon, it should take a look at the emerging technologies that private enterprises are rolling out. Free Wi-Fi failed for a number of reasons, among them the fact that Wi-Fi signals only reach about 150-300 feet and covering a city with thousands of nodes (stations that broadcast the signal) is cost-prohibitive. On the other hand, news came down yesterday of a deal between Kirkland's Clearwire, Sprint, Google, Intel, Comcast, Time Warner Cable, and Trilogy Partners to invest over $3 billion in developing a Wi-Max system. Wi-Max covers a far larger area (up to 20 square km) with one antenna. Thankfully, unlike Philly, San Francisco, Spokane and other cities, Seattle resisted the urge to spend millions on what is already a fairly outdated technology. The risk of developing these networks belongs with the private companies with!
private funding -- not when our tax dollars are at risk.
The point is that the City of Seattle is seeing itself as some altruistic provider of an essential service; a service so essential apparently, that a government-run entity is the best, and therefore, most logical choice in the marketplace. But from the numerous examples of failed or budget-busting projects around the nation, I'm not holding my breath.