Mario Cuomo

Got it just about right earlier this week in USA Today.
If you missed it, here it is.

House votes itself "not a pay raise" of $3,100 a year

In a time of war, in a time of deficits and red ink as far as the eye can see, with the future of Social Security and Medicaid up for debate, the United States House of Representatives has increased it's own salary.

That brings the sum up to $165,200 per year. To say nothing of benefits and vacation days.

So said Tom Delay: "It's not a pay raise. It's an adjustment so that they're not losing their purchasing power."

Thanks for clearing that up, Tom. It's not a pay raise, it's a supply-side economic stimulus package to benefit local businesses in Washington, DC.

If only everyone's salary worked like that.

In case you spent the weekend doing something besides reading OpEds

I really, really, really recommend reading Nick Kristof's latest.

Fiscal responsibility is not some abstract thing. And deficits do matter, Dick Cheney.

Private Accounts+Blowing Up The Deficit (even more) =

[drumroll]

A really, really bad idea.

But, as I mentioned a few days go, that is exactly what Republicans want to do. With the coaching of Steve Moore, Bill Thomas (R-CA) and Jim McCrery (R-LA) are getting ready to try and use the social security trust fund to create private accounts.

On a positive note, their proposal will highlight the fact that the trust fund has been shamelessly raided in recent years.

When Will Steve King (R-Iowa) Apologize?

US Congressman Steve King called union organizers "weapons of mass destruction" while advocating for new legislation that would make it substantially harder of unions to organize new workers.

Symbols matter.

Steve King should apologize for trivializing the specific threat of unconventional weaponry and also to every American worker who hopes for a fair deal from their employer.

Come on, Steve. Does that mean that for you, health care and retirement benefits signify a mushroom cloud? Get real. What pathetic, despicable rhetoric.

Sirota on the Estate Tax

Often the biggest factor in winning fights over tax fairness is making sure the people know the basic facts. The right-wing does its best to obfuscate and make policies that help only the most elite few appear populist.

Often the most brief, pithy examples are the best way to puncture the fog bubble.

Here's David Sirota on the estate tax. His post is short, so follow the link. It's about George Bush vs. The Facts on the Estate Tax and Family Farms.

California Poll Track

We don't generally focus too much on political horse races at this blog, but since Schwarzenegger's popularity problems stem largely from his flailing budget policy and his rather clumsy confrontation with the interests of working people (which in this case is a pretty accurate description of who he has attacked, thankfully he has basically given up on his disastrous pension "reform" plan), it seems appropriate to point out what the people of California think of him.

The San Francisco Chronicle reports that his approval rating is among the lowest of all time for California Governors.

Less than a third -- 31 percent -- of the state's adults approve of the job the governor is doing in Sacramento, down from 54 percent in February. The numbers are only slightly better among registered voters, 37 percent of whom are happy with Schwarzenegger's performance and 53 percent dissatisfied.

According to the survey, only 66% of Republicans approve of the job he is doing and his overall numbers are lower than they ever were for Jerry Brown or that other famous actor-turned-politician Ronald Reagan.

Mr. Smith Goes To Washington, and gets shaken down. Or, loop-hole incorporated.

The Washington Post, today, outlines one of the biggest, farthest reaching, problems in politics today, the lobbying boom.
It reports that over the last five years, the number of registered lobbyists in town has doubled to more than 34,750, or over 64 lobbyists for every single member of the House and Senate.

That's what good government activists and progressive reformers are up against. The more this grows, the more plain the incentive is for your Representative in Congress to listen to the corporations and influence peddlers in Washington, DC and not to the constituents back home that they are supposed to serve.

Kansas School Funding: Round #3 (okay, really this is just the pre-game)

A Mason-Dixon poll shows that a slight majority of Kansans believe that the court overstepped its bounds in the ruling to hike school funding. However, the same poll shows that a substantially larger majority of Kansans want the legislature to increase school funding. In other words, the message is clear to the far-right culture warriors: chill with the rhetoric and get down to business. The most favored method for raising the cash is by introducing a new gambling bill.

The Special Session will start on Wednesday.

Incidentally, with headlines like this one, does anyone else think people are trying to gin up controversy? I mean, folks are questioning the role of the court, but at the same time fundamentally agreeing with its ruling. Also, come on, with the State House as a back drop, 100 or so people doesn't make a very formidable "rally."

Jim DeMint's Really Bad Idea

The Wall Street Journal reports that Jim DeMint (R-SC) has decided to "introduce legislation, with support from third-ranking Senate leader Rick Santorum of Pennsylvania and House Majority Leader Tom DeLay of Texas, that shuns the solvency goal in favor of creating small private accounts from Social Security's current surpluses." (Emphasis mine)

Ok, can we finally, at long last, stop pretending that Republican leadership wants to "save" social security? This is about diverting money from the trust fund and decreasing the long-term solvency of the program.

This "plan" is coming from the man who campaigned on replacing the federal income tax with a 30% sales tax.

Kinsley on Energy Taxes

Michael Kinsley wonders out loud in today's Post what ever happened to the idea of exerting market forces on the international oil industry to drive prices down. He remembers John Anderson's 50 cent gas tax idea from his 1980 Indy Presidential bid.

He thinks through the fact that gas prices have risen by $30 a barrel in recent years, and this applies to gas both foreign and domestic. However, he notes, it seems that the actual domestic costs of extraction have not increased this much. He declares this a "subsidy" and than wonders why, on this green earth, Congress and the Bush White House wants to give these people even more tax breaks and subsidies.

He argues that in the long run, implementing a heightened gas tax might be just what we need to do to shake up the Middle Eastern oil cartels, and over time actually reduce the at-the-pump cost of gasoline.

Kansas School Funding: Round #2

Kansas AP-filing political writer John Hanna is on the school funding beat again (this time via the Guardian Unlimited). Some Republican lawmakers are starting to make noise about just straight up doing nothing. For example:

"I think it's high time we confronted the court,'' said Rep. Frank Miller. "One thing we could do is just refuse to obey.''

But cooler heads may yet prevail:

The Kansas court has not said what it would do if lawmakers defied the order.
"I would just as soon not learn the answer to that question,'' said Senate Majority Leader Derek Schmidt, a Republican.

Lets hope.

In the meantime, Governor Sebelius says it won't take a new tax, but instead the money can come from gambling revenue and newly fudged up two-year revenue estimates. There are a couple of gambling proposals already on the table. Sebelius is trying to avoid dipping into the state's rainy day fund by trying to keep a PAYGO-type mentality alive in the special session that will begin next week.

Deadline Extension

The President's Tax Panel is going to wait until September 30 to make its formal proposals.

Responsibility Reigns in VA

For those outside the MD-DC-VA area, Virginia had their primary elections yesterday. Simply put, anti-tax advocates got handed a resounding defeat. From a Washington Post article:

Five of the six Republicans in the Virginia House of Delegates who were targeted for ouster by anti-tax organizers survived their primary challenges yesterday, leaving the conservative movement's threat of ballot box retribution largely unfulfilled.

Anti-tax groups such as Americans for Tax Reform, Virginia Conservative Action PAC and Virginia Club for Growth attempted to oust Republicans that voted for a responsible tax package back in 2004. The tax package was needed to secure the state's budget without crippling its ability to provide needed public services. The public voted and chose to support fiscal responsibility over haphazard, empty anti-tax rhetoric. The results of the VA primary are heartening to anyone who still believes responsible governance matters.

Jodi Rell To Kids: Sit Still and Drink Coke!

Well, in not so many words.

A governor from the party of No Child Left Behind has, this week, found religion on local control of schools. Only, she found it mostly with regards to junk food companies selling their wares on campus.

I'm curious about the lobbying that took place on both sides of this issue.

Also, is it really in anyone's best interest to have soda and sugary snacks readily available and not let kids run around outside for at least 100 minutes a week?

Taxing Internet Sales

The US Supreme Court has determined that under the Constitution, in order for an internet sales transaction to be taxed by a state - just like a normal sales tax - a business must have a physical presence in the state. For example, when someone in California purchases a CD or book from Washington based Amazon.com, California can't make Amazon.com pay its state sales tax because it doesn't have a physical presence in California. As you can imagine, the determination of "physical presence" can be a contentious point. With this, it's worth taking note of a recent decision by California's 1st District Court of Appeal in San Francisco about internet book retailer Borders:

An appellate court ruling against Borders Group Inc. sets a precedent that could enable California to force some major Internet retailers to start paying state sales tax for books, music and other goods sold online to state residents.

In more detail:

California's 1st District Court of Appeal in San Francisco rejected that argument, ruling on May 31 that the Borders' Web site and retail stores have been too intertwined to call themselves separate companies. The three-judge panel cited in-store advertising for the Web site, receipts that said "Visit us online at www.borders.com" and the ability of customers to return online merchandise at retail stores.

The judges also noted that the companies had board members in common and shared a similar logo.

This decision appears to broaden the "physical presence" definition and could have major implications for California's tax code. For more information on taxing internet sales and its tax policy implications, be sure to read ITEP's Policy Brief "Should States Be Allowed to Tax Internet Sales?"

Taxing Services

Growing up, my parents used to grumble that the more things change, the more things stay the same — this even holds true for sales taxes. The Federation of Tax Administrators recently updated its data about states and sales taxes on services. The FTA data reveals that despite the economy incorporating more service based consumption, states’ sales tax bases pretty much remain the same:

Since the 1996 survey, most states made only minor changes adding or removing a few selected services from the sales tax base. However, in 2002, Nebraska policymakers enacted legislation eliminating exemptions for certain services taxable in neighboring states.

This news is especially troublesome for low- and middle-income families. The smaller the tax base (caused by exempting certain items such as services) the higher the tax rate will have to be in order to sustain a given amount of revenue. This is a major equity concern because sales taxes are the most regressive taxes levied. Ignoring the increasing role that services play in overall consumption, states are making a regressive tax even more regressive. Alternatively, if states don’t raise their rates to offset the negative revenue impact of a shrinking sales tax base, they won’t be able to provide the services that taxpayers expect.

Simply put, the economy is changing and local tax policy needs to reflect this. Ignoring increased consumption of services will result in higher sales tax rates which will make tax systems more regressive. Or absent any sales tax rate increases (or increases of any taxes in lieu of), vital services will have to be cut due to declining sales tax revenues.

History Lesson

I'm not one who believes just because something was, so it must always remain, but Richard Leone of The Century Foundation has done a good job of briefly putting the Social Security debate in context.

Taxes & Migration

There’s an argument anti-tax advocates like to make - when people move from one to state to another, taxes are a main cause. However, the data just doesn't prove it. In fact, the data shows taxes are pretty much not a factor.

The most notable study anti-tax advocates point to is one by Dr. Richard Vedder, Taxation and Migration. Dr. Vedder, a Distinguished Professor of Economics at Ohio University, claims to show, through a statistical method known as regression analysis, that people move in part because of taxes. Dr. Vedder’s math and methodology is highly questionable and misleading. For example, Dr. Vedder’s own analysis shows that as a state’s economy grows, people move away. Dr. Vedder’s response to this particular finding is "mystifying" further stating that it "... in no way detracts from the basic finding of the analysis, namely that people avoid high tax areas". Actually, yeah, it does detract from the basic finding - it doesn’t make sense. Instead of exploring why his math shows that economic growth drives people away, he takes what he wants from the analysis to prove his argument and excuses what doesn’t prove his point as "mystifying". Furthermore, other than sunshine, union involvement and "mystifying" economic growth, Dr. Vedder fails to take into consideration a vast array of other measurable reasons people might move - overall cost of living, housing prices, amounts spent on public education, crime, access to the beach, access to an airport, access to a college, access to public transportation, etc ... Thankfully, two recent studies shine sound mathematical light on this issue.

The Iowa Legislative Services Agency recently published an Issue Review on taxpayer migration using IRS data and concluded that:

Internal Revenue Service state-to-state migration data indicate that differences in state income tax policy do not explain Iowa’s out-migration to those states, as both higher and lower income tax states around Iowa have similar or even greater relative losses than Iowa.

Additionally, a group out of Ohio, Policy Matters Ohio, just published a well thought out report on the subject and concluded that:

There is not a strong relationship between income taxes and migration in Ohio. Cutting or raising taxes has not had a direct impact on the number of filers entering or leaving Ohio. Ohioans go to states with a variety of income tax structures, and the same states that attract Ohioans tend to send people to this state.

The argument by anti-tax advocates that taxes cause migration, however significant, is just not supported by the data. Like forcing a square peg into a round hole, Dr. Vedder and other anti-tax advocates are just trying to force an argument that doesn’t fit the data.

Property Tax Boiling Point

Politicians at all levels of government are beginning to learn that over-reliance on property taxes can lead to problems.
The Christian Science Monitor has a good overview. The problem is the result, partly, of the fact that property taxes grow in two ways. First, the legislature can set the rate. Second, the value of your house can increase. The first method might be called "intentional" and second "accidental."

The problem with that sort of revenue source is that it does not take into account a taxpayer's ability to pay. A common situation is for a family to buy a house and over the years watch as it's value rises several fold. Now, eventually they retire so they're living on fixed income. Only their property tax bill has shot through the roof. The tax bill has increased while the family's income has leveled off. Some states have tried creative solutions to this problem such as homestead exceptions or circuit-breakers. Each is an attempt to find a way to acknowledge a taxpayer's income level on their property tax bill. This is an important factor in creating a fair tax system. Income-acknowledging property tax adjustments are a good start, but legislators need to learn the broader lesson when considering further tax reform.

Kansas School Funding: Round #1

Kansas political writer John Hanna delivers the early verdict on the recent court decision on education funding (they need more of it) in that state.

He writes:

People aren't literally smelling burnt toast around the Statehouse, but Republican legislative leaders and Attorney General Phill Kline were scorched nonetheless by the Kansas Supreme Court's decision on education funding

....

The court's ruling was the judicial equivalent of whacking Kline and the Legislature upside the head with a large stick. It was unanimous, unsigned, strongly worded - and clear in conveying the justices' impatience

....

Kline, his attorneys and Republican legislators had their rear ends handed to them, pure and simple.

The high court ruled that the legislature must call a special session to find a way to come up with an additional $142 million and that to do that, they cannot rely on local property taxes. Not surprisingly, several Republican State Senators are flipping out.

I need to catch a train, so I can't write much now, but here is the Court's opinion. And here are some of the immediate responses.

Here are my two questions (follow the reactions link and you'll understand):

1. Does Tim Huelskamp understand the nature of constitutions?
2. Does Alan Cobb understand the nature of money (or math)?

Legislative Update

NH State Senate voted down that proposed 28 cent cigarette tax increase.

Here's more coverage from the Concord Monitor's Meg Heckman.

The vote went 10-14 down party lines, with Republicans temporarily stalling the tax increase. Temporarily, because the increase is still in the budget proposal that they will vote on soon. Also, if the articles linked to above are any indication, the Senators can't seem to think of any other way to raise the necessary revenue. This should inspire a lot of confidence:

"Someone tell me please how we're going to balance the budget if we don't raise the cigarette tax?," said Sen. Dick Green, a Rochester Republican. "I don't want to vote for the cigarette tax. Someone please give me another way."

Man, you can almost smell the perspiration coming out of the Senate cloak room up in Concord. Legislating can be hard work, but the good people of Rochester probably thought Mr. Green was up to the task of, you know, figuring out the answers to questions like these before he voted on them.

Tax Cuts and Tuition Hikes

I always try to connect both sides of the budget. With that in mind, I was really disheartened by the news in the New York Times today about the major reductions in federal financial aid for college tuition.

I know it's difficult, but imagine for a second that these scholarship cuts came from the same budget included these tax cuts (plus added debt burden, or "birth tax").

College is often viewed as a gateway for economic mobility. With these adjustments, for many families, that gateway is moving further out of reach. In many cases, the article reports, the required contribution to qualify for scholarships such as Pell Grants will increase by over a few thousand dollars. The article leads with a case in which a California family must come up with an additional $6,000 to cover their son's tuition to UNLV. That's serious money.

Since tuition has been rising pretty steadily in recent years, this is a big problem. Combined with local property taxes that are on the rise nationwide, you've got a pretty clear picture of the administration shifting budgetary costs off of the wealthy (and away from the present) and squarely onto the middle class.

So what's on Congress's agenda? Surely there is wide bipartisan support to deal with this issue. Actually, no. Instead, there is serious movement to repeal the AMT. Now, the AMT is in need to serious reform, but a complete repeal will offer yet another major, unaffordable, reckless tax cut to the wealthiest citizens of our country.

Hitting Back

This morning, Bob Herbert issues an incisive accounting of what he sees as a fading American Dream.

If his language sounds harsh, it's still got nothing on the narrowly focused economic agenda that the Bush White House and Republican Congress have wrought upon this country for the past four years. Herbert takes the wide view and shows how they made taxes much less progressive even while economic mobility is on the decline and wealth is becoming ever increasingly concentrated among the richest Americans. He mentions our low national minimum wage. You could add to that the deficits that have been racked up year after year and the way this Congress is giving them lip service by cutting food stamps, Medicaid and veterans benefits, while serving up even more tax cuts aimed mostly at the wealthy (or entirely, as per the estate tax).

If critics will accuse Bob Herbert of class warfare, it's obvious that he didn't throw the first punch. We need, so badly, to get back to an economic agenda that helps everybody. Politicians need to stop imagining this as a zero-sum game.

Update 6:57 PM: Mickey Kaus takes issue with this NYTimes Article that is part of the basis for Herbert's OpEd. Of the super-rich, Kaus contends the article only "shows (a) they've gotten richer and (b) they've gotten big tax cuts." But skims on "the important question on the relationship between (a) and (b), namely how much richer would they have gotten if they hadn't gotten the tax cuts?"

But I think Kaus is missing the point. He seems to be asking 'well, if the rich are doing well anyway, why be concerned about their cuts?' This, however, implies that the sole purpose of taxes is to redistribute wealth. Clearly, that is not the case. The key purpose of taxes is to adequately fund public services. The question Kaus shoud be asking is: since the wealthiest Americans have done so well over the last decade and a half (and he argues, would have done just fine with or without Reagan- and Bush-era high-income tax cuts), why has it become a national priority to disproportionally lower their taxes? Presumably, tax cuts could have been better targeted towards those wage-earners towards the lower end of the income spectrum. Also, Kaus implicitly argues that cutting taxes for the wealthiest has no necessary impact on the economy, so they get thousands and thousands of dollars in tax cuts, while lower- and middle-income Americans get less services and higher local property taxes as a result of the federal government shifting revenue burden onto the states, and then on down onto counties and cities and towns.

Cox: Another Look

For a kinder, if relatively apolitical, appraisal of Chris Cox, look here.

He's got all the pretensions of a libertarian, but in the end is at his core, an extremely pro-corporate Republican.

What's curious is the way that he has lashed out against the rights of investors. Cox was at the center of legislation during the 90s that loosened corporate oversight and perhaps led the way to the recent Enron and Worldcom scandals and collapses.

The social security debate, as well as the fight over pension reform in California, have brought investment and retirement issues front and center. Is Cox, a legislator who clearly believes in less regulation and transperancy, the right man to restore investor confidence or does this pick reveal the true nature of these various types of "reform"?

Chris Cox Dossier

Think Progress (in several separate posts) has the goods on Bush's nominee to head the SEC. It's worth a look.

If consumer confidence and shareholder support are important, this choice seems strained.

Bush Budget Cuts Out 9/11 Rescue Workers' Comp

The New York Times has the story. Workers who were injured as a result of participating in rescue and clean-up efforts at The World Trade Center in New York are apparently finding it 10 times more difficult to receive compensation than the average injured worker.

Not only that, in the 2006 Budget proposed by the Bush White House, the remaining $125 million of aid earmarked for treatment would be taken back.

Not Taking The Gamble In PA

Today's New York Times reports that Pennsylvania Governor Edward Rendell's plan for providing property tax relief with state sponsored gambling revenue is pretty much dead in the water. This is great news for progressive tax policy advocates.

Yes, Pennsylvania residents could use relief from their property taxes. But no, property tax relief should not be provided for by using a regressive and socially questionable revenue scheme - such as state sponsored gambling:

1. Even if gambling boosts state revenues, competition from other states would diminish the returns in the long-run and Pennsylvania will be right back where it started. This is a serious consideration given that neighboring state Maryland is also considering slots.
2. Instead of increasing overall state revenue, gambling may simply shift money from one tax source to another with no net gain. When consumers spend more money on one activity, such as gambling, they'll spend less on another activity, such as clothes shopping - which contributes to sales tax revenue. This would mean an increase in gambling revenue could result in a decrease in sales tax revenue.
3. State sponsored gambling requires states to encourage gambling and all the negative social implications that can occur such as increased crime, decreased private savings and exploitation of those who suffer from compulsive gambling.
4. Low-income and poorly-educated taxpayers are more likely to use slot machines that wealthier, better educate taxpayers which makes this form of state revenue generation regressive.

If Governor Rendell and other Pennsylvania lawmakers are interested in providing property tax relief, there are more progressive and socially less-questionable methods.

For more on the policy implications of state sponsored gambling, be sure to read ITEP's Policy Brief, "Uncertain Benefits, Hidden Costs: The Perils of State-Sponsored Gambling".