Tag: tax policy

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education and schooling initiative, referendum, and recall tax policy

Taxing Panicsville

Earl G. Jaques

There is a big problem with Delaware school districts asking voters for additional tax money via ballot referendums. You see, sometimes the people don’t vote the way school officials and politicians want.

Have no fear: Rep. Earl Jaques (D‑Glasgow) has authored House Bill 129 to solve this thorny problem. 

“This bill creates a mechanism,” its official summary reads, “by which school boards may increase funds for a school district both with and without a referendum.” 

Meaning, of course, without a referendum … since current law requires a public vote. 

“That way, [school districts] know the money is there if they need it, and they don’t abuse it because they know it’s there,” explained Jaques. “The problem with the referendum system is that they have to ask for more than they actually need, because they know it’s going to be a long time before they can come back.”

“Despite his assurances that the system would not be abused,” the Dover Post reports, “technically, school districts could raise taxes by 2 percent each year.” Or by any increase in the Consumer Price Index, whichever is higher.

Inexplicably, three stories — in the Dover Post, Newark Post and Delmarva Now — told readers it was the “lower” of the two. The bill clearly says the “higher.” Odd that media outlets would not grasp the ever-​so-​subtle difference between the words “higher” and “lower.”

“Everybody’s in ‘Panicsville,’ but it’s really not that way at all,” offered Jaques. “We, my colleagues in the legislature and I, could raise your income tax right now, and what’s your recourse? Vote us out at the next election.”

Excellent advice.

This is Common Sense. I’m Paul Jacob.

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Earl G. Jaques

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ideological culture initiative, referendum, and recall

Who Rules the French?

yellow vests, jackets, France, protests, taxes, nationalism

The petition that Priscillia Ludosky posted on Change​.org many weeks ago was labeled “For a Drop in Fuel Prices at the Pump!” Now more than a million people have signed it. 

“Taxation as a whole represents about two-​thirds of the price of fuel,” the French activist informed.

Sparked by the tax hike, working people have joined massive weekend protests in Paris and throughout France — five weeks running— against the Macron government.

The Gilets Jaunes or “Yellow Vest” movement has already forced the removal of the fuel levies. While French President Emmanuel Macron’s approval rating has plummeted down into the low 20s, polls show support for the protesters by two out of three French citizens.

“[E]lected officials take advantage of power to become aristocrats of public money,” Ms. Ludosky told protesters via bullhorn last weekend.

This movement is about a lot more than the price of fuel. 

“The citizens’ initiative referendum,” noted France 24, an English language news channel, “now one of the main demands of Yellow Vest protesters in France. The RIC [Référendum Initiative Citoyenne] would in theory allow the people to propose a law, get rid of one, change the constitution or demand the resignation of an elected official.”

For the last ten years, France has had a national initiative and referendum process, but citizens are dependent on the support of legislators, none of whom have taken the initiative — pun intended.

“The idea is that once 700K people ask for it,” the report continued, “there would have to be a national referendum on the issue.”

An essential democratic check on power that the French — and all people — must have. 

This is Common Sense. I’m Paul Jacob.

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yellow vests, jackets, France, protests, taxes, nationalism

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insider corruption tax policy

There You Go Again, IRS

IRS, free speech, taxes, censorship, corruption, surveillance

The old keywords were “Constitution,” “Patriot” and “Tea Party.”

The new ones? “Marijuana,” “oxycodone,” and “legalization.”

Paul Caron, the TaxProf blogger, calls attention to another IRS scandal — again about denying tax-​exempt status to organizations because of their political views. He had barely finished blogging about the scandal that came to light in 2013 when a new one burst into view.

You almost certainly remember the older scandal, in which the Internal Revenue Service had been caught intrusively scrutinizing and delaying the applications of conservative non-​profits picked on because of their conservatism.

To cover that mess, Professor Caron published a blog series called “The IRS Scandal, Day _​_​.” He added a post daily.

Every day.

For years.

The last installment, Day 1921, published on August 14, 2018, reported a settlement: meager taxpayer-​funded payouts to over a hundred victimized organizations. The IRS never admitted wrongdoing. No one was ever punished. According to the Washington Times, the agency said that it had “made changes so that political targeting can’t occur in the future.”

These changes don’t seem to include prohibiting political targeting by the IRS, however.

Now we have another case.

Caron points us to a Wall Street Journal op-​ed by David Rivkin and Randal Meyer, lawyers, who have discovered a dirty little secret in Revenue Procedure 2018 – 5. One provision authorizes IRS to withhold tax-​exempt status from applicants seeking to improve “business conditions … relating to an activity involving controlled substances,” including marijuana and oxycodone. Advocating legalization of marijuana would count as trying to improve such conditions.

Apparently, the IRS thinks its mandate entails enforcing the status quo by stifling dissent — instead of just doing its congressionally mandated (if all-​in-​all irksome) job.

This is Common Sense. I’m Paul Jacob.

 

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Categories
free trade & free markets too much government

Retreat to Atlanta

California, Yamaha, brain drain, business, escape, taxes

“California is the place you oughta be” — or so sang Jerry Scoggins for The Beverly Hillbillies. That may still hold true, if you are an oil millionaire retiring to a pleasant climate.

But if you are trying to make your fortune, the direction is outbound.

Take, for example, the case of Yamaha Motor USA.

The company’s big bike sales — motorcycles 500cc and up — went way down during the last dozen months, 19 percent. And since Yamaha’s operations are in California, hits to revenue like that intersect alarmingly with ongoing hits to the cost of doing business. 

Which explains the decision to move the company to “just outside of Atlanta, Georgia,” as reported by Jensen Beeler in Asphalt & Rubber.

“It should be an obvious statement that California is an expensive place to operate a business,” Beeler explains. “The state isn’t known as being a tax haven for corporations, the property values are high, which means buildings are expensive, and the standard of living for Los Angeles is one of the highest in America, which means that employees have to be paid a premium as well.”

And Beeler’s report does not even mention the state’s regulatory burden.

Problem? Southern California is “where the bulk of the motorcycle industry resides,” and Yamaha will face some difficulty being so distant from its industry’s major talent pool.* But there are a few automotive and motorcycle companies in Georgia, so Yamaha is not alone.

Indeed, if politicians continue to wreak havoc on their business sector, the Golden State bike industry will lose more than just Yamaha.

This is Common Sense. I’m Paul Jacob.

 

* The company will keep “a small cadre of Yamaha employees” behind in Cypress, California, focusing on testing and racing.

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Illustration by JGill (running silhouette from Max Pixel)

 

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Accountability crime and punishment folly free trade & free markets general freedom local leaders nannyism national politics & policies responsibility too much government

Kick the Addiction, Save Money

marijuana, tax revenue, taxes, spending, war on drugs, opioid epidemic

The political case for the War on Drugs has always been intuitive. “Drugs are bad” has trumped practical concerns. But the actual, responsible case for the political crusade has depended upon some concept of “social cost.” 

Now that marijuana is being legalized state by state, the case against the greater War on Drugs is being taken seriously — enough to rethink all varieties of costs. Indeed, many now see the opioid epidemic as being driven, in part, by the War on Drugs, and not just as an excuse for a stronger crackdown.

Nevertheless, coming to some accounting — especially “social cost” accounting — remains difficult. This is especially true so long as its effects on freedom and the rule of law do not get figured in.

Somewhat surprisingly, even the budgetary effects of legalization have proven a bit tricky.

So it is welcome to read Harvard economist Jeffrey Miron’s study of marijuana legalization as it has occurred in the states of Washington, Oregon, and Colorado. He compares results of legalization with the predictions he had made eight years ago, in a previous Cato Institute study. It turns out that while tax revenues are far greater than expected, law enforcement costs have not gone down. 

“Early experience suggests that governments will reallocate rather than reduce those expenditures,” Miron writes. “That reallocation may be beneficial, but it does not have a direct effect on the budget deficit.”

On a federal level, though, we might expect greater savings. How? We could shut down whole bureaus.

Yet, achieving such savings would require progress on Washington’s biggest addiction: spending.

This is Common Sense. I’m Paul Jacob.

 

Studies cited:

Jeffrey Miron, “The Budgetary Effects of Ending Drug Prohibition,” Cato Tax & Budget Bulletin, Number 83, July 23, 2018.

Jeffrey A. Miron and Katherine Waldock, “The Budgetary Impact of Ending Drug Prohibition,” Cato Institute white paper, September 27, 2010.

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Categories
Accountability local leaders moral hazard porkbarrel politics responsibility tax policy too much government

Panic in the Prairie State

Illinois, pensions, politicians, taxes, tax, theft, shake down

When your state has the lowest credit rating in the union, the highest population decline rate, and spends nearly a quarter of its annual budget on an out-​of-​control government-​employee pension system, what do you do?

Raise taxes, of course!

That’s the advice of experts in Illinois, anyway.

You can see why they panic: The unfunded portion of Illinois’s public employee pension system amounts to $11,000 per person in the state. Something extraordinary must be done.

Yet, as Pat Hughes at the Illinois Opportunity Project insists, taxpayers need relief — not a statewide 1 percent property tax increase.

Besides, it is not as if tax hikes could solve the problem. “It was just last year that politicians raised the state income tax by 32 percent in a desperate attempt to balance the budget,” Hughes explains. “Despite over $5 billion in new taxes, the state was back in deficit spending in less than a year.” 

Hughes mentions a number of tax limitation measures in the works. More power to them. 

But what’s needed even more? Spending limitation measures.

No government can be trusted to offer anything but defined-​contribution pensions — and no government, at any level, should ever manage a pension system. Politicians can’t help themselves. They just cannot resist the temptation to buy off the government-​worker constituency by promising more in the future than financially feasible (or just plain old politically possible) to pay for now. 

Other people’s money is theirs to spend. And a future financial bind? Some other politician’s problem. 

This is Common Sense. I’m Paul Jacob.

 

N.B. Congratulations to the Illinois Policy Institute for its Liberty Center, which won its case against forced unionization, Janus v. American Federation, on June 27. Commentary about this Supreme Court case appeared on this site in early May, “Post Blindfold.”

 

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