americans for tax reform

Special Election Set For 91st District House Seat

Governor Bob McDonnell today set March 8 as the date for the special election to fill the 91st district House of Delegates seat suddenly vacated last week when Delegate Tom Gear (R-Hampton) resigned for health reasons. Delegate Gear's multiple sclerosis is worsening and his wife and sister both have cancer (see Rosalind Helderman at the Washington Post's Virginia Politics blog). That date ensures that 91st district voters will not be represented in the House of Delegates this 46-day session. The earliest the election could have been set, by law, was 45 days after Delegate Gear's resignation.  We will miss Delegate Gear. Quick witted and always genial, his great sense of humor frequently was on display, especially in the small chat world of General Assembly Building elevators and waiting areas, and often timely to relieve certain stress over upcoming committee votes those elevators were taking us to. An unwavering conservative, he is a public servant committed to principle. We wish him and his loved ones well and the restoration of their health.

Of course,  just because he resigned doesn't mean he's gone inactive. There are three Republicans running to succeed him in a largely GOP district (no word on whether the Democrats will field a candidate) and he's already thrown his endorsement to Teresa Vanasse Schmidt, a day-care assistant director from Hampton, calling her "a rock-solid conservative. She's pro-life. She's big on the Second Amendment. And she doesn't believe in raising taxes" (see the Post). 

Also running are Hampton City Councilman Chris Stuart, who owns a security company, and attorney Chad Green, the second vice-chairman of the York County Republican Committee. Stuart today released a statement announcing that he is the first of the three to sign the Americans for Tax Reform "Taxpayer Protection Pledge" which states that a candidate will never vote for a tax increase.

A Little More Sunshine In The Forecast

I know everyone is tired of the snow, the rain, the overcast skies. But there will be a little more sunshine in Virginia before too long. This isn't a weather forecast. But thanks to SB 431, the books in Richmond will be easier to inspect. Monday morning, the House Appropriations Sub-committee on Technology Oversight and Government Activities, amended, then passed unanimously SB 431. Later that day, it passed the full committee 22-0 and is on its way to the House floor.

The bill, patroned by Senator Mark Herring (D-33, Leesburg) builds on the landmark spending transparency bills last year by Delegate Ben Cline (R-24, Amherst) and then-Senator Ken Cuccinelli. Although it was more detailed in its original incarnation — it was stripped down due to the ever-present and dreaded “Fiscal Impact Statement” — it adds yet more sunshine to the current law. It will require each state agency to put their check and credit card purchases online, including a description of the good or service and the date of purchase. It also makes finding this information easier for citizen budget hawks — each agency must place an icon on its home page that links directly to a page that details its spending. Believe it or not, this simple procedure has been lacking and will make navigating the often confusing state spending trail much easier for concerned citizens, watchdog groups and grassroots organizations who care where or hard-earned tax dollars go.

Perhaps most important, it will save the Commonwealth money because the more people looking, the more waste and duplication is caught. This has been the case in every state that has opened itself up, and even with the federal government. After all, private citizens looking over the federal budget online detected the infamous “Bridge To Nowhere.”

Along with Senator Herring, thanks go to the sub-committee chairman, Delegate John O’Bannon (R-73, Henrico), who arranged the committee meeting late in session to guarantee the bill’s fair hearing. The Virginia Coalition For Open Government and Americans For Tax Reform joined us in supporting SB 431. Once passed by the full House, it will go back to the Senate to work out differences but is expected to maintain the features outlined above.

You never know during the General Assembly where a bill is going to come from that will give an unexpected lift for good policy and constitutional government. Sometimes, less publicized bills pop up on your radar screen and other times high profile bills crash and burn. Better the former than the latter when it actually accomplishes something.

Virginia News Stand: April 17, 2009

Welcome to the end of the week. But the news is only beginning. Leading off, we have a Virginia-based pro-life organization, Life & Liberty Ministries, which says it's been put on a domestic terrorist watch list by the Virginia State Police. Very curious, to say the least. Also of note, Americans For Tax Reform took notice of the work we did on spending transparency and this blog's comment on how it all played out, especially with Governor Tim Kaine's nice veto session surprise (making the bill better). We're honored such a prestigious national organization took notice and we thank them for the help it provided in the long road it took to get transparency passed and signed into law. When you read in the Fredericksburg Free Lance-Star how the state paid a company $40,000 just to sit by and wait, you understand why spending transparency is important.

It's not yet time for the Colonial Downs season, but the horse race known as the gubernatorial campaign is well underway and Republican Bob McDonnell is ahead by a couple of lengths and pulling further ahead — as of now. We have the poll info directly from the pollster, Rasmussen. Enjoy your reading.

News:

Virginia pro-lifers labeled 'potential terrorists' (OneNewsNow.com)

Election 2009: Virginia Governor Election — GOP's McDonnell Pulls Further Ahead in Virginia Governor's Race (RasmussenReports.com)

Poll gives McDonnell lead in hypothetical governor matchups (Richmond Times-Dispatch)

Bill Clinton, Trump among McAuliffe's donors (Richmond Times-Dispatch)

McAuliffe won't take Dominion cash, but donations from executives OK(Richmond Times-Dispatch)

Candidates in governor's race casting wide nets (Norfolk Virginian-Pilot)

Moran Campaign Contributors Have Business Before Brother (Washington Post)

State paid $40,000 in fees for towing firms to stand by (Fredericksburg Free Lance-Star)

VA Transparency Gets Unexpected Veto Session Boost(FiscalAccountability.org Blog)

Del. Shannon Valentine tops in campaign funds (Lynchburg News & Advance)

Concert to benefit Blue Ridge Pregnancy Center in Lynchburg (Lynchburg News & Advance)

Delegates Defend Internet Use on the Floor (Washington Post Virginia Politics Blog)

National News:

Senate Republicans Reply to DHS 'Rightwing Extremists' Scaremongering(RedState.com)

ACLU demands schools allow access to gay Websites (Nashville Tennessean)

Economics Even The Chinese Communists Understand

There is a lot of talk about the economy these days by candidates, commentators, journalists, financial professionals and anyone else with a camera, microphone or Web page. These issues are important for families who are stressed with providing for their children and even their older parents. One complaint people have is that many types of jobs once prevalent in America now are done overseas. This is true and it makes the corporations that move those jobs overseas easy targets for demagogues who do not understand economics or the purpose of a business enterprise, which is to make a profit (creating jobs is byproduct of profit, not the other way around). The big target lends to the easy caricature of certain companies as villains, and demagogues always look for villains to prey upon the fears of people who are uncertain about their futures. So, how to slay the villain? In a political/economic sense, it's to hit them with higher taxes — that'll teach'em. Besides, "paying taxes" is the new "patriotism," according to Joe Biden, and you better learn that now (See YouTube video here). Nothing could be more misguided and nothing could be a more serious threat to the economic well being of the country and American families looking to improve their lives. Understanding why it's misguided is something we all understand at heart, though it gets lost in the anxiety of troubled times and easy to strike out at undeserved blame and believe in false solutions.

Everyone knows (or should remember) that corporations don't pay taxes — they simply pass the costs they incur through taxes to the price of their goods and services — which we pay at the pump, the store, the restaurant (see this short list of prices affected by taxes). It's that simple. So companies look at taxes as an expense, just as they look at energy, machinery, maintenance, supplies, etc., as expenses. If it can lower expenses  by moving a factory near a supplier, companies do it. We see it all the time. So doesn't it make sense that if their tax expenses are greater here, than say in Ireland which has a low, flat tax, they will move where they can cut costs? Raise the corporate tax all you want to get even with those evil businesses and not only will you lose more jobs, you create more inflation by jacking up the prices they inevitably will charge. So we get hit from both sides.

How to solve the conundrum? Simply lower the corporate tax rate. You know the U.S. corporate tax rate must be high if it is more profitable for some companies to move operations overseas rather than have the convenience of domestic operations and transportation, etc. Exactly how high is the U.S. corporate tax rate? It is the second highest of the 30-member Organization for Economic Cooperation and Development at 39.3 percent (see list here). Only Japan is higher. Communist China, which is not an OECD member, has a 25 percent rate (see here). Furthermore, see how our individual states stack up against the OECD. It's none too pretty.

This is basic economics and it is a direct reflection on the travesty of public education that more people do not understand these simple, basic concepts, which leaves them open to persuasion by the play to emotional demagougery by liberal politicians. In 1972, George McGovern ran on a similar platform to Barack Obama's: Raise taxes on the rich and corporations and give everyone else a paltry redistributionist check of a few hundred dollars. He lost 49 states to Richard Nixon. Just losing to Richard Nixon was an accomplishment. To get comprehensively dismantled by Nixon shows how out of touch McGovern was (and there was an unpopular war, then, too, that people wanted over). That Obama's almost cloned economic plan has not made him a laughing stock is remarkable. Has America's economic IQ disintegrated that fast? (See short, but instructive blog post from the Cato Institute, here.)

Obama showed his utter lack of economic IQ in the second debate when he responded to John McCain's (see here) charge that his plan to tax people who make more than $250,000 would kill small businesses by saying, "there are only a few small businesses" that make that much. Really? Many small businesses are incorporated so that the owner's income is the business' gross income. That's why expensing deductions and low taxes are essential for this sector of the economy which produces 70 percent of American jobs. Obama's retort was one of a man who's never worked in the for-profit world. If a small business isn't grossing $250,000, it's not in business at all — at least, not in the hiring/job creation part of business (i.e., it's a self-employed, individual contractor or consultant). 

In fact, according to Americans for Tax Reform, three out of every four businesses in the top 5 percent tax bracket is a small business. There are 26 million small businesses that employ 116 million Americans and hundreds of thousands of those businesses — sole proprietorships, partnerships, S-corporations and family farms — who pay taxes at the individual or joint-filing rates would get hammered under his "tax the richest  5 percent" plan. Forget their employees. The families of the family-owned businesses, who are paying for college, a car payment, a mortgage, etc., would face real devastation. (National Review adds more light to the conversation, here.)

We've all heard the expression we get the government we deserve. When it comes to the economy — and therefore opportunity and financial security for families — it comes down to this: When the Chinese communists undertand tax policy better than Americans, we deserve the economy we get.

The Unreported Cause Of Inflation

Everyone is concerned about inflation and well they should. It's a debilitating monetary disease that cripples the value of money: One can earn more money in a given period but still have less purchasing power when inflation infects the economy. It hurts working families and endangers what parents can provide for their children. Inflation comes in many forms, such as commodity-based inflation (such as what we are experiencing now with oil prices affecting almost everything type of product). Economists are good at tracking the causes of inflation and how much those causes tack on to the prices we eventually pay at the cash register. Then there are the demagogue politicians who scream for windfall profit taxes to punish companies that charge to keep up with demand for their products while ignorantly using the phrase "windfall profits." (Hint: it doesn't mean "large profits.")

However, in all the media circus, what never gets reported is the biggest cause of price increases: Taxes. That's correct. The largest percentage cost of most items is the added cost created by excessive taxes. Unfortunately, economists never factor taxes into inflation rates.

Into that breech steps Americans for Tax Reform. Here are some shocking examples, courtesy of ATR and FiscalAccountability.org, of how much taxes increase some very basic products and services:

Cable Television Service: 46.3%

Cell Phones: 46.4%

Hotel Rooms: 50%

Car Rentals: 60.6%

Soft Drinks: 37.6%

Restaurant Meals: 44.8%

Gasoline: 51.2%

Landline Phones: 51.8%

Domestic Air Fare: 55%

The figures include the cost of sales taxes, corporate income taxes, payroll taxes, property taxes, capital gains taxes, unemployment insurance taxes, workmen's compensation taxes and other payments to federal, state and local governments. Not that taxes aren't necessary to pay for necessary and proper functions of government, but is there any excuse for government to punish its citizens by limiting their ability to save, invest and spend their hard-earned money for what they want and for how they want to provide for their families with such excessive ad-ons to the actual production and service costs of a product?

So with all the speechifying about making "corporations pay their fair share" be aware of how much that fair share is inflation in the form of high taxes. Let's call that government-inflicted tax inflation.