April 22, 2014

A Thought on Class Warfare

" . . . History and common sense show that there is nothing to be gained from tearing down the wealthy. To the contrary, societies have always lifted themselves into prosperity, not by attacking the wealthy, but by creating a better environment for the wealthy to invest in new enterprises.

"We should put the issue (of income inequality), not in the language of envy and guilt, but in the language of freedom, opportunity, and personal responsibility. This is about knocking down artificial barriers created by government, making it easier for the poor to lift themselves up through their own effort. Which also turns out to be a widely popular political theme everywhere, cutting across economic lines.

"The (political) party that can convincingly take up that theme and connect it to specific reforms will not only win elections. It will do a vast service in uniting the country culturally and politically by defusing class warfare. And not least of all, it will improve the opportunities and future prospects for all Americans."

~ Robert Trancinski

SOURCE: His April 21, 2014 Essay, "Why Democrats are the Party of Inequality," posted at The Federalist.

April 21, 2014

A Thought on Living in a World Envisioned by Liberals

"Liberals advocate many wonderful things. In fact, I suspect that most conservatives would prefer to live in the kind of world envisioned by liberals rather than in the kind of world envisioned by conservatives.

"Unfortunately, the only kind of world that any of us can live in is the world that actually exists. Trying to live in the kind of world that liberals envision has costs that will not go away just because these costs are often ignored by liberals."

~ Thomas Sowell

SOURCE: His April 21, 2014 Column, posted at Investor's Business Daily.

April 20, 2014

36 Hours in the Life of Arlington County's FY 2015 Budget

On Wednesday evening, April 16, we growled, positively of course, that Arlington County voters would see a dividend from the previous week's special election since the Arlington County Board decided during the afternoon budget work session to provide Arlington County taxpayers a measure of tax relief by cutting the real estate tax rate by 1-cent. Although we continue to think that a 3-cent cut was the appropriate reduction in the tax burden, the County Board at least listened to Arlington voters.

At the budget work session. the Board was supposed to make "final budget decisions" before adopting the FY 2015 budget and setting tax rates on April 22, 2014. Consequently, some may have been surprised to see the April 18, 2014 press release with a statement from the chairman of the Arlington County Board. The three bullets in the press release were:

  • Maintains one-cent real estate tax reduction
  • Funded largely by hiring slowdown and elimination of proposed positions
  • Reflects concern over higher employee expenses for health care

The press release contains this especially curious excerpt:

"Over the lst 36 hours, with the support of all County Board Members, I have worked with the County Manager to identify budget adjustments that will allow inclusion of merit step increases on Tuesday, April 22, when the FY 2015 Budget is adopted. We were able to do this -- while maintaining the one-cent reduction in the tax rate -- primarily through a hiring slowdown and the elimination of several new proposed positions.

"County Board members have a better understanding of employees' concerns about projected increases in employee expenses for health care, as well as frustration with the lack of notice that compensation charges were under consideration by the Board."

In explaining the Board's action, ARLnow.com reported on Friday:

"County Board Chair Jay Fisette told ARLnow.com Friday afternoon that, after the Board met with representatives from the police and firefighter unions this morning, it decided to cut from other areas to make up the $6.6 million gap in the budget the tax cut will create.

"The Arlington County Police Union, the Arlington Police Beneficiary Association and the Arlington Professional Firefighters and Paramedics Association (Local 2800) each released statements denouncing the Board’s decision to go against County Manager Barbara Donnellan’s recommendation to keep the property tax rate at 2014′s level of $1.006 per $100 in assessed value — and to pay for it by eliminating pay raises in favor of a “modest” 1 percent Cost of Living Adjustment and a one-time $500 employee bonus.

"The decision was made in the days leading up to Wednesday’s budget mark-up, leading the police and firefighters to question the process and transparency of the Board’s budget process."

The Washington Post's Rachel Weiner also reported on Friday on the County Board's compensation change under the headline, "Arlington proposal to halt merit pay for county employees is quickly dropped amid outrage." The lede in her reporting was:

"A proposal by the Arlington County Board to end merit pay increases for county employees was withdrawn on Friday in the face of anger from labor unions and police, firefighters and other workers.

"The raises, usually about 3.5 percent for employees who have met performance standards and have not reached hit their position’s maximum salary level, were included in the budget proposed by County Manager Barbara Donnellan in February."

"But the board announced Wednesday that, as part of a plan to cut real estate taxes, merit pay steps would be replaced with a 1 percent annual cost-of-living increase and a one-time $500 bonus for county employees. Board members trimmed the real estate tax rate from $1.006 per $100 of assessed value to $0.996 per $100, to limit the growth of tax bills in the face of a 5.3 percent jump in home values, assistant county manager Diana Sun said.

"Merit pay increases cost the county $5.5 million last year, Sun said."

Readers may want to refer to the linked reporting of the Washington Post and ARLnow.com for their full reporting.

April 19, 2014

A Thought on Political Ignorance

"Voters cannot hold officials responsible if they do not know what government is doing, or which parts of government are doing what. Given that 20 percent thinks the sun revolves around the Earth, it is unsurprising that a majority is unable to locate major states such as New York on a map. Usually only 30 percent of Americans can name their two senators. The average American expends more time becoming informed about choosing a car than choosing a candidate. But, then, the consequences of the former choice are immediate and discernible."

~ George Will

SOURCE: His January 1, 2014 "Price of Political Ignorance" Column in which he reviews Ilya Somin's book, "Democracy and Political Ignorance: Why Smaller Government is Smarter"

P.S. Your humble scribe will not be growling for the next several days. Have a Happy Easter. El Growler Grande, 4/20/14.

April 18, 2014

A Picture of the Federal Income Tax's Progressivity

Yesterday we growled about tax confusion, based upon a report by Ross Kaminsky in the American Spectator.  In the "thought," which we excerpted, Kaminsky pointed to a Gallup Survey, noting "61 percent of Americans continue to believe that their upper-income friends pay too little."

In an effort to clear up that tax confusion, we point to George Mason University's Mercatus Center's website where Veronique de Rugy has posted a chart, which clearly shows the average effective federal tax rates by income quintile, a statistical measure of five equal proportions. Here's the chart:


You can read Ms. de Rugy's complete explanation of the above chart, but she makes this important point:

"Whether one thinks that the current system is fair, unfair, or just right, there can be little debate that federal income taxes are indeed progressive." (emphasis added)

If you want to see just how much income has been redistributed by the administration of President Obama, compare the above chart to the comparable 2009 chart (here). You will note that four of the income quintiles have seen lower average effective federal tax rates, e.g., a 6% decrease for the middle income quitile, while those in the top quintle have seen their average effective rates increase 7%. According to State of the USA, the income cutoff (in 2009 dollars) for the  20th percentile, or lowest quintile is $20,000; 50th percentile is $50,000; and 80th percentile, or top percentile, is $100,000.

So the next time a liberal and/or progressive politician starts spouting their class warfare rhetoric about the rich not paying their "fair share," you'll be armed with the facts. Kudos to Ms. de Rugy for adding to taxpayers' knowledge about who pays income taxes, and at what rate. She posted two other informative charts the same day -- 1) trends in EITC spending and number of beneficiiaries (here), and 2) trends in after-tax income by household position in income distribution, 2000-2010 (here).

April 17, 2014

A Thought on America's Tax Confusion

"According to a Gallup poll released on April 14, 10 percent more Americans now think their taxes are too high than think their taxes are about right. That level has only been matched once, and only briefly, since the Bush tax cuts of 2003 that Democrats hate with such a passion.

"Not surprisingly, a majority of Democrats think their taxes are “about right,” whereas only 38 percent of Republicans share that view. Independents seem to be even more concerned about excessive tax rates (for their own taxes) than Republicans are — which should scare the bejesus out of Democrats going into the 2014 elections, as if they don’t have enough to worry about.

"But beyond the expected partisan differences in satisfaction with taxes, this week’s polling also shows a remarkable cluelessness among the American population when it comes to “who pays what” in federal income tax. It proves, sadly, that class warfare rhetoric, as spouted by President Obama and the great unwashed of Occupy Wall Street and many others, is having an impact (because the well-off are apparently too ashamed of success to mount a credible defense of economic liberty).

"Forty-nine percent of Americans, according to another Gallup poll, believe that the middle class pays too much in taxes. It is by far the highest number on this question since Gallup started asking it 15 years ago. A stunning 41 percent believe that lower-income Americans pay too much in taxes, this despite the fact that most of them are net receivers of tax dollars.

"Yet 61 percent of Americans continue to believe that their upper-income friends pay too little.

"A Rasmussen Reports survey released last year, offers an explanation: “68% believe middle-class Americans pay a larger share of their income in taxes than wealthy Americans do” and “only 24% think the wealthy pay their fair share.”

~ Ross Kaminsky

HT His April 16, 2014 "special report," posted at The American Spectator. Kaminsky's fact-rich report is well-worth reading in its entirety.

April 16, 2014

Arlington County Voters Get a Dividend

At 10:33 PM, an e-mail from Arlington County's press release office floated-in over the proverbial transom bearing the news that the Arlington County Board reduced the real estate tax rate by one-cent in its so-called FY 2015 budget mark-up. Here are the four bullet-points from the press release:

  • One-cent cut in real estate tax rate
  • County budget increase limited to 3%
  • 4.7% increase in Arlington Public Schools funding
  • Modest 1% COLA for County employees

And here's the introduction from the county's press release:

"The Arlington County Board today directed the County Manager to reduce the real estate tax rate by one cent in the Fiscal Year 2015 Budget. The Board's action came during the mark-up for the budget, which the Board is set to adopt during its April 22 meeting.

"The Board had to make some tough decisions," said Arlington County Board Chair Jay Fisette. "In order to give some break to homeowners who have seen their assessments rise, we limited the growth of the County budget, launched no new major initiatives and focused on funding schools and maintaining our core services and existing infrastructure."

"The budget mark-up includes a real estate tax rate of $0.996 per $100 of assessed value, a one-cent decrease from the $1.006 rate in Calendar Year 2013 (including the sanitary district tax). This represents a $6.6 million reduction from the budget proposed by the County Manager."

Virtually almost all of the remainder of the press release expounds on the four bullet points listed above.

Could the County Board have given Arlington County taxpayers a larger "Vihstadt dividend," which is how Wayne Kubicki, Arlington's fiscal guardian extraordinaire termed it (see yesterday's Growls)? Could it have been as large as the 3-cents recommended by an Arlington County Civic Federation resolution passed two weeks ago by a 23-11 vote (see our April 2 Growls here)? The answers are yes and definitely yes, respectively.

Your humble Growler would merely point to the remainder of the press release for the answers. First, note that even by cutting the real estate tax rate by 1-cent, "The Board’s action means the overall tax and fee burden for the average Arlington homeowner will be 4.6% higher than in 2014, or about $27 a month."

Unfortunately, the Board and their press release writers repeat their mantra about having the region's lowest real estate tax rate. Obviously, no one bothered reading our Arpil 2 Growls where we pointed to the Washington Post graphic, which demolished that tired rubric.

Read the remainder of the press release, noting all the spending that will still be occurring after the one-cent cut. Those plus a thorough scrubbing of the budget would probably make even the 3-cent recommendation of the Arlington County Civic Federation seem small. While we won't question the additional spending of $52,000 for the sexual assault hotline or the $72,606 for the mental health coordinator to train first responders, other items on the list seem questionable at best, e.g, $300,000 to plow snow from bike trails.

Once again, congratulations to John Vihstadt for his victory in last week's special election, and kudos to Wayne Kubicki for providing a framework for the Arlington County Board to cut the real estate tax rate.

April 2014
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Items in Growls are written by individual ACTA members and do not necessarily represent the views of the Arlington County Taxpayers Association, Inc. Please send comments about Growls to The Growl Meister