Chicago Tribune Editorial: No New Taxes!

The Chicago Tribune recently published an editorial that discusses ways that the state of Illinois should try to balance their budget without resorting to tax increases.

"Gov. Pat Quinn is 10 days away from a budget address in which he'll reassert that you should pay higher taxes. He'll say the State of Illinois cannot eliminate a $12.8 billion shortfall that's been years in the making without more of your money.

We haven't voted yes or no on this. For 13 months, though, we've published editorials such as "Before you raise taxes," "First, spend smarter" and "12 steps before a tax hike." Last week the Civic Federation of Chicago struck a similar chord in its state salvage plan: The Federation said that only if Illinois enacts changes to retirement benefits and rolls back much spending to 2007 levels, the group then would support raising income taxes on workers and employers. "Desperate times," says Federation President Laurence Msall, "demand reasonable approaches."

Clearly all that ills Illinois can be fixed with budget cuts.

Yes, there will be spending cuts for education (and rightfully so since state spending on education has grown 67% to $26b over the past 10 fat years), unionized state workers might lose some of their retirement benefits, etc.

In fact, there are so many places to look for savings that the entire budget "crisis" could and should be solved in a manner of days.

Nevada Looks at 6.9% Cut to Education Spending

In an interesting compromise that could see the state of Nevada reduce its spending on education by 6.9%, lawmakers continue to try to make progress in addressing a nearly $900m state budget deficit.

"On education, Gibbons had proposed a 10 percent cut in state spending on kindergarten through 12th grade and higher education for a potential savings of $250 million. Democrats were pushing for a 5 percent reduction."

Of course, the usual critics of decreased state spending will emerge with their typical alarmist hand-wringing about "the children".

It's laughable to think that educational results in the state of Nevada will be negatively affected with such a small reduction in spending. The Nevada Policy Research Institute already addressed that issue last year in an interesting report.

There is simply no correlation to spending money and results. If anything, they are most likely inversely related (i.e., if one goes up, the other goes down, etc.).

What would improve educational results is increased parental involvement in the lives of their kids - nothing more, nothing less.

Having the government tax and spend more and more of the hard-earned money of Nevada workers is not the solution to poor educational results. So the proposal here to reduce spending should be applauded.

The only remaining question is to ask why the state should stop at 6.9%?

Americans: We're not Keynesians Any More

A recent Rasmussen Reports poll shows that Americans believe that tax cuts, not government spending increases, is the way to improve job creation and fix the economy.

"As the economy continues to stumble along, 59% of voters believe cutting taxes is better than increasing government spending as a job-creation tool."

Unfortunately, most Americans believe (rightfully so) that government will use the latter approach.

"72% expect the nation’s elected politicians to increase spending instead."

What's refreshing is that the random Americans interviewed as part of this poll seem to have a better grasp on economics than the paid government economists who have been over-engineering the U.S. economy for the last 80 years.

"Eighty-three percent (83%) of Americans say the size of the federal budget deficit is due more to the unwillingness of politicians to cut government spending than to the reluctance of taxpayers to pay more in taxes."

Although there's not whole lot of reason to be optimistic in thinking that the government's excessive role in the economy will be reversed any time soon, this poll's results show that Americans are increasingly starting to "get it", and there's hope this will be reflected in election results later this year.

Coast Guard Budget To Be Trimmed

In an era where spending on precious few federal programs is cut or even slowed, the US Coast Guard finds itself in the middle of some unpleasant (but probably warranted) budget cuts.

"The U.S. Coast Guard is facing $155 million in cuts to its capital spending budget, according to federal documents.

The cuts, described in documents from U.S. Rep. John Mica's office, came as a shock to Mica of Florida.

Mica said the proposed federal budget for 2011 would:

• chop about 1,100 positions
• get rid of five helicopters, two of which would be from Florida
• reduce funds for port, waterway and coastal security by more than $100 million."

The proposed budget cuts are less than 2% of its total budget from its 2010 budget, so should be considered fairly modest.

Nonetheless, the leaders of the Coast Guard must be wondering who they have angered in Congress, because no other federal department's budget is seemingly being cut.

Black Caucus Opposes Recent Jobs Bill

The Congressional Black Caucus has come out in opposition to the Jobs Bill that recently passed the Senate.

"I'm offended that it's been called a jobs bill," CBC Vice Chairman Emanuel Cleaver (D-Mo.) told reporters. "I will not stand up in the district that I represent... and say we just did a jobs bill. I think people are smarter than that. This is a tax cut bill and a little piece of a transportation bill."

It is wonderful news that the Black Caucus is coming out forcibly against the Senate window dressing evidenced by this bill and is looking for real, tangible, concrete action from Congress on jobs.

Unfortunately for the Black Caucus, what would really create jobs at this point is a set of permanent, long-lasting economic policies that they would more than likely find to be unpalatable to their personal beliefs and to their primary benefactors:

1) Sharply reduced individual and corporate tax rates
2) Reduced government regulation
3) Elimination of minimum wage laws
4) Significant down-sizing of government bureaucracies

These are just a few of the measures that, if taken, would put all Americans back on the road to prosperity and create the jobs the Black Caucus talks about being in favor of.

Illinois Still Sorting Out Options on Deficit

Illinois politicians are still considering their options for the projected $12b deficit. For now, they seem to be leaning towards some combination of tax hikes and spending decreases.

"Mr. Quinn, a Democrat running for re-election in November, proposed cutting $2 billion in general-fund spending for the fiscal year, including $1.3 billion from education and $380 million from human services. The governor is also reviving his proposal to increase income-tax and corporate-tax rates to boost revenue. Last year, he pushed unsuccessfully to raise the individual income-tax rate to 4.5% from 3%."

A predictable but nonetheless interesting fallout of this debate is the fact that more than a thousand people rallied at the Capitol last week for tax increases at the state level!

Why do I have the sneaking suspicion that proponents of tax increases know that they themselves will have to pay more, but rather that others will have to do so.

As unpalatable as tax increases may seem to some, this type of discussion is being held exactly where it should be - at the state level. Any taxpayer in Illinois who is ultimately unhappy with seeing his (or her) taxes rise is then free to move to another state that is not so generous with other people's money.

Mayor Vows to Re-Open Union Contracts

In a sign that some government officials are starting to understand what their recent fiscal woes are attributable to, Mayor Linda Thompson of Harrisburg, PA has recently vowed to 're-open' overly-generous union contracts.

"What Mayor Thompson won't stand by is the amount of overtime for public safety eating away at taxpayers' money. When it comes to snowstorms, floods and other emergencies in the city, the mayor says overtime is acceptable, not on a day-to-day basis though.

"What I am going to do is put the unions on notice that those contracts are going to get re-opened," said Thompson."

Harrisburg faces a $160m projected deficit over the next 5 years, and recently had its bond rating severely downgraded by Moody's.

Although Mayor Thompson should expect major resistance from entrenched union interests opposed to her move, the proposal is exactly the first step the city of Harrisburg should be taking to get their finances back in order. Drop her a note to show your support for her efforts.

States Considering Drastic Tax Hikes?

The economic downturn that we are in the midst of is causing states to consider raising taxes on its citizens. This potential tax hike could be devastating in its size and scope. A recent WebCPA article discusses the situation:

"With no relief in sight and discretionary spending already cut to the bone, the pressure is mounting for state legislatures to stop the revenue drain with heavier taxes."

Although the article is simply trying to foreshadow tax hikes that may be on the horizon, the idea that states have already cut discretionary spending "to the bone" is utterly ridiculous.

One example of 'fiscal austerity' that the article discusses is that the state of Arizona "slashed wages to state employees by 5 percent".

5 percent is considered to be "slashing"?!? Come on. If Arizona had reduced state employee pay by 30% to 40%, then we can talk about "slashing".

How much has pay per state employee in Arizona risen over the past 5 or 10 years? How much are Arizona state employees making, when counting all the benefits (including pensions) they are entitled to? The article does not discuss this issue.

The bottom line is that states such as Arizona should be doing a whole heck of lot more belt-tightening before they head back to voters and ask for more money via increased taxes.

Article Supports Federalism

Ron Holland has an interesting article on LewRockwell.com this morning that calls for a wholesale revamping of our current political system, in effect modeling ourselves after the Swiss. The change he has in mind is to transfer most government functions back to the state level.

"The European Union and the United States should consider the successful freedom model of Swiss confederation government rather than the failed top down examples of other nations and empires. Few would question that Switzerland is the most secure, stable, and freedom-oriented nation in the world but it is time to ask what is so unique about the Swiss."

What is truly appealing about such a change is that states would be forced to compete with each other for people, resources, etc., thereby truly embracing a free market approach.

"In Switzerland the vast majority of taxes are collected at the canton (state) level while the federal income tax level is quite small and comparable to state tax rates in the United States. This allows different cantons and even localities in individual cantons to dramatically compete for residents, corporations, businesses and even retirees.

The tax difference can range over 20% of income from high-tax cantons like Zurich and Geneva to low-tax jurisdictions like Zug. Tax competition keeps the cantonal governments lean and productive and the politicians honest. Retirees from outside Switzerland can even create a type of low-bid competition for a set amount or percentage tax rate between cantons. This is the ultimate in tax competition."

Short of outright secession by states, the Swiss system of government is better suited for the 21st century, where some citizens increasingly demand more from the federal government, while others understandably resist being the ones who have to pay for these services. A Swiss system would allow those who wish to live under an over-arching local government that provides higher levels of services could choose to live under the auspices of that state, while those who prefer a much leaner approach could live under the auspices of another state.

Surely this approach is better than the current top-down approach, where everyone is required to pay in and be subject to a political system that some have lost all faith in.

Wyden-Gregg Bill in Senate is Promising

Senators Ron Wyden (D-OR) and Judd Gregg (R-NH) have introduced a bill that promises to simplify the tax code and eliminate certain preferences. At first glance, the bill looks promising.

"For far too long, our tax system has been overly complicated, burdensome and unfair to taxpayers and to small businesses that are the economic engines of our nation," Mr. Gregg said in a statement."

Amen to that.

Following are a few of the highlights of the bill:

1. The bill would see a single corporate income tax rate of 24% established (a substantial cut from the current 35%)
2. Allow small businesses with sales of up to $1 million to expense 100% of their equipment and inventory costs each year.
3. Triple the standard deduction.
4. The initial 35% of capital gains income would be exempt from tax.
5. Reduce the number of tax brackets for individuals from six to three (15% , 25% and 35%).
6. Best of all, the bill would eliminate the alternative minimum tax. .

So far, so good. It's not clear what the offsets are for some of the tax cuts, so we'll reserve judgment until that becomes more clear.

Senator Brown Already Compromised

The fair-haired golden boy of the Conservative movement, Senator Scott Brown (R-MA), has within a few weeks of taking office already been a key vote on a bill that once again sees the government giving favors to certain sectors of the population at the expense of others.

"Brown and four other Republicans broke with GOP leaders to advance the measure. Most other Republicans opposed the bill because Democratic Majority Leader Harry Reid of Nevada stripped out provisions they had sought and wouldn't allow them to try to restore them.

The bill featured four provisions that enjoyed sweeping bipartisan support, including a measure exempting businesses hiring the unemployed from Social Security payroll taxes through December and giving them another $1,000 credit if new workers stay on the job a full year."

Even if this bill creates the 250,000 jobs that its supporters claim it might (and that, by the way, is highly, highly dubious), it really represents continued efforts of Congress and the Presidency to essentially create winners and losers via the tax code.

The sooner Senator Brown realizes that Congress should be focused on spending cuts that are not offset under pay-go rules with tax hikes, that a principled reform of the tax code is absolutely necessary to reduce its annual take and that it's not the job of Congress to either "stimulate" the economy or to decide which constituent is currently worthy of largess, the faster America can recover from the damage its politicians have created.

Obama Proposes More Taxes

President Obama today announced his latest effort to slap more taxes on ordinary Americans.

"In the plan, Obama advocates new taxes for Medicare, the government health program for the elderly. He proposed a 2.9 percent assessment on income from interest, dividends, annuities, royalties and rents for individuals earning more than $200,000 or families making more than $250,000."

Yep, that's just what we need. More income transfers from producers to non-producers, from taxpayers to non-taxpayers.

Fortunately the President is administering the tax laws in a way that is fair for all Americans. Right? Uhhhhh, no.

"The president endorsed yet another change in the so-called Cadillac tax on high-end employer-provided plans, which has been one of the most contentious parts of the legislation. While some economists say the levy would discourage wasteful spending, labor unions say it would hurt too many workers, and they successfully negotiated to scale it back in January."

It's politics as usual in Washington, as special interests of all stripes scramble to get a bigger piece of the pie.

At some point Americans are going to wake up and insist that there government administer its laws in a fair and transparent way.

This will eventually involve no bail-outs for well-connected banks and no income transfers to those who choose not to work for their own benefit. Don't hold your breath waiting for it.

Illinois Ready to Explode

The state of Illinois is facing a $11b budget deficit as politicians on the left and right debate whether spending cuts or tax hikes, or some combination of the two, are the way to go.

"A powerful civic group in Chicago is calling for an increase in the state income tax and some budget cuts from Springfield.

The Civic Federation says there is no other way to fix the state's finances than to raise taxes. The business organization blames the state's fiscal mess on years, if not decades, of mismanagement by Springfield politicians."

Wow, "no other way"?!? Sorry, that seems like a lame attempt to take both sides of this issue.

At least some politicians realize that tax hikes are not the way this issue will be fixed.

"House Speaker Michael Madigan, who is trying to hold on to his party's majority in the fall election, now questions the need for a tax increase. And Republican leaders, including Senate minority leader Christine Radogno, are not impressed by the Civic Federation report.

"I most certainly don't subscribe to the notion that the first line of defense is to raise taxes. I think that's entirely counter-productive," said Radogno.

For the past year, Gov. Pat Quinn has advocated for an income tax increase. His likely Republican opponent in the fall, Senator Bill Brady said,"the state cannot afford to raise taxes. Every time you do it, you lose businesses and jobs. We need to lower taxes."

Raising taxes to continue to feed an over-stuffed governmental bureaucracy is not the way out of the budgetary mess. The state of Illinois needs to show that it is serious in reigning in its chronic overspending before they even think of approaching residents about a potential tax increase.

Let's open the books to have an honest look at state contracts, union salaries and benefits, and the results of the misguided overspending on 'education', before deciding that giving even more money to the government is the "only way".

CNN Poll: "System is Broken"

The results of a recent poll taken by CNN and Opinion Research Corp. show that 86% of Americans believe that the "system of government is broken".

At the time of this posting it was unclear how the actual question was worded that elicited this type of response.

However, it's fair to project that a significant portion of the poll responders believe that government is "broken" because gridlock exists in Washington and consequently their pet policy (health care reform, tax hikes, etc.) has not been implemented.

On the other hand, there assuredly is a healthy component of poll responders who believe that government is "broken" as a result of the seemingly endless deficits created by our representatives, and as a result of an outsized portion of their property being taken in the form of taxation.

My take is that that there is no question that the system is currently broken. It's broken because too many people try to use the democratic system of government as a way to line their own pockets, and it's broken because too many people attempt to use government as a means of plundering other people to pay for their own ideals and beliefs on other people.

It's time to reclaim the role of government from those that use it for nefarious means.

Federal Interest Payments to Soar

One very important detail that is often glossed over in the ongoing debate about the unsustainability of the current federal deficit and debt is the amount of interest payments paid by the federal government as compared to other periods. In short, the interest paid today has been favorably impacted by low interest rates, which obviously will not always been the case and likely will reverse in a negative way in the next few years. An excellent article, well worth reading in full, by Michael Pollaro explores this point:

"It’s not talked about much, at least by mainstream analysts, but make no mistake, it’s a time bomb, locked and loaded, and it’s set to blow the U.S. government’s budget sky high.

That time bomb? The interest cost on the government’s debt.

And what you ask will light the fuse? The end of the 30-year bull market in U.S. government debt, the end of record low interest rates."

Mr. Pollaro makes the compelling point that the cost of interest will likely soar in the coming years, making the federal debt and deficit that much more unmanageable.

Now is the time for politicians to get the spiraling budget mess under control before even more damage is done to the US economy.

Editorial is Opposed to Tax Hikes for the Wrong Reason

A Lawrence Journal-World editorial today expresses its opposition to a proposed sales tax increase because it would disproportionately affect lower-income people.

"It’s good that they are looking at eliminating some costly sales tax exemptions, but eliminating the exemption on residential water, electric and natural gas bills should be low on the list."

While it's true that raising sales taxes on these items would likely take a larger share of the take-home pay of lower-income than higher income people, the reason to oppose this measure is not for that reason.

The editorial veers further off course when it lists certain types of currently-exempt goods that lawmakers should consider subjecting to a sales tax.

"Raising taxes on optional purchases, like cigarettes or alcohol, makes some sense. Starting to collect sales tax on other optional purchases, like Girl Scout cookies, could be a valid strategy."

So now Girl Scout cookies are under-taxed? Good grief.

Governments should not be in the business of deciding winners and losers, but rather should apply tax law in an equal, principled and fair manner (which probably means no sales tax, a single-rate income tax, etc.). It's time to roll back sales tax on more goods, not add additional taxes on already over-taxed people.

Radical Anti-Tax Groups Growing as a Threat?

In a predictable knee-jerk reaction to the lone act of a crazed murderer who launched his airplane into an IRS building in Austin, all people who believe Americans are over-taxed are now in danger of being labeled as menaces to public safety.

"Experts are pointing to the incident as further evidence of what they say is a proliferation of anti-government militia groups.

There is a real rage out there, and this terrible attack may be a reflection of that," Mark Potok, the director of the Southern Poverty Law Center's Intelligence Project, said in a statement to FOXNews.com. The SPLC has been studying the resurgence in anti-government militias and groups, which it attributes to a perfect storm of economic, political and social factors."

I think we can all agree that what Joseph Stack did yesterday was a heinous and reprehensible crime. But the SPLC's jump to paint all anti-tax protesters with the same brush does a serious disservice to those anti-tax, anti-big government supporters of the non-violent persuasion.

Americans who desire to see our government scaled back to a size vastly smaller than it is today will remain strident and unbowed in their opposition to big government, and will not allow criminals who attempt to join the cause to dissuade them from their enthusiasm for the fight.

Bankruptcy the Future for Overextended Cities

US cities will increasingly have to consider bankruptcy as a way out of their current fiscal mess.

"Just days after becoming controller of financially strapped Harrisburg, Pa., in January, Daniel Miller began uttering an obscure term that baffled most people who had never heard it and chilled those who had: Chapter 9.

The seldom-used part of U.S. bankruptcy law gives municipalities protection from creditors while developing a plan to pay off debts. Created in the wake of the Great Depression, Chapter 9 is widely considered a last resort and filings under it are more taboo than other parts of bankruptcy code because of the resulting uncertainty for everyone from municipal employees to bondholders."

Out-of-control spending at the local level has led to this problem. Progressives certainly can't point their finger at the Bush tax cuts as the source of this issue.

One quote in particular is telling about the predicament these cities are in:

"We can't raise taxes; they're already very high," Mr. Miller says. "If we did, people would just leave. It's cheaper to move out to the suburbs."

Mr. Miller has it exactly right. Taxpayers are tapped out, tired of funding programs that they've never heard of and derive no benefit from, and are sick of paying exorbitant salaries and benefits to unionized state workers .

A Chapter 9 filing is probably the best and healthiest thing that could happen to a lot of cities right now.

Michael Moore on the Dole

Recent reports suggest that pro-government, pro-tax, anti-capitalist Michael Moore likes the a government hand-out and responds to economic incentives himself!

"Moore's production has qualified to receive a tax credit from Michigan, the film office told the Mackinac Center, once the state Treasury Department reviews and approves the application. It wasn't immediately clear how much money the film qualified for."

I generally have no quarter with anyone who takes advantage of what the law allows. Particularly in the area of taxes, where there's no rhyme or reason for half or more of the laws on the books.

It's hypocritical though for someone who is in favor of increasing taxes on the rest of us to so deftly try to reduce his own personal tax bill.

But that cuts to the heart of the pro-tax liberal movement, whose overriding message that opponents hear is "we're in favor of big government and tax increases, so long as it's paid for by the other guys".

Obama Commission Hints at Tax Hikes?

The Americans for Tax Reform says that President Obama's formation today of a bi-partisan commission to evaluate potential tax hikes and spending cuts will only do the former. What's really drawn their ire is in the inclusion of former Wyoming Senator Alan Simpson as the representative of the tax-cutting proponents.

"Taxpayers have every reason to be concerned. Alan Simpson has a history of walking into a room with the stated goal of reform – and in both cases he voted for higher taxes and higher spending, leaving taxpayers to foot the bill. There is no reason to believe that things would be different this time around – when you put everything on the table, including damaging tax hikes, taxpayers will more than likely be sold out."

It doesn't look like the new commission will be working that hard, since they're not expected to produce any reports for a looooonnnngg time.

"Under the guidance of Simpson and Bowles, the commission is expected to have a raft of recommendations for the president by December."

It will be interesting to hear what recommendations for spending cuts come back from this commission. Of course, if they work along the lines of this panel, we may never hear from them again.

Washington Governor Goes after Candy

In a non-serious attempt to make a very small $600m dent in a massive $2.8b budget deficit, Washington Democratic Governor Christine Gregoire has proposed a tax hike on various industries.

"Her package includes collecting sales taxes for candy, soda and bottled water and tripling the tax on cigarettes. She also proposed tripling a tax on hazardous substances, including oil and chemicals and adding taxes for out-of-state companies that do business in Washington."

How in the world does the Governor think that adding sales tax to the price of candy will fix the fiscal mess that the state of Washington is in?

This seems like another ridiculous idea from a politician too afraid of entrenched interests (read: unions) to do what she should be doing (read: slash spending).

Until this Governor grows up and obtains some political courage, expect the budget mess in Washington state to continue.

State Pension Shortfall Portends Tax Hikes or Spending Cuts

A new report issued by the Pew Center on the States indicates that US state pensions plans are collectively underfunded on a massive scale.

"U.S. states face a total shortfall of at least $1 trillion in their funds for employees' pensions and retirement benefits, and their financial problems are quickly mounting."

In a nutshell, US states have dramatically over promised benefits to their employees over the years, and this deficit provides that evidence.

In addition, the Pew report only analyzed data through the summer of 2008, so it's possible the deficit is worse at this point (although the stock market rally over the past 12 months potentially helped).

"Because the analysis did not encompass the final six months of calendar year 2008 -- most states' fiscal year's end during the summer -- it does not include the market downturn that devastated many funds' investment portfolios."

States are obviously at a crossroads with this issue. They know full well that the pension plans are not going to be able to invest their way out of this mess. The two logical, remaining choices are to either increase taxes on their residents as a means to compensate for the excessive benefits promised to state workers, or to re-write the defined benefit plans to provide for less future benefits to employees.

Considering that it is the rare private company that still offers pension benefits to its employees, states would be well advised to ratchet down promised future benefits as a means of correcting this deficit.

David Walker Back in the News

Former Comptroller General of the US David Walker was back in the news today, doing his best to remind people that the fiscal condition of this country is in sorry shape.

“Habitually spending more money than you make is irresponsible,” said Walker. “Irresponsibly spending someone else’s money when they’re too young to vote or not born yet is immoral.”

Mr. Walker is exactly right. The irresponsible spending by Congress over the last 5 decades is morally indefensible. Congress needs to slash federal spending, and get the country back on much more stable fiscal ground.

Every person in the US Congress needs to hear from their constituents on this issue.

Stimulus Turns One!

The $717b 2009 Stimulus Bill turns one year old today. Just under $300b of that amount has been spent to date with no discernible benefit. The rest is expected to be spent over the next 12 months or so.

Although President Obama is going to great pains to talk about just how much the stimulus spending has done for the country, the fact of the matter is that the nation's unemployment rate has increased from 7.6% to 9.7% over the last twelve months despite all of the "stimulus".

The stimulus money is money that has either been borrowed outright by the government or has been created out of thin air (by purchases from the Federal Reserve out of money they created themselves). Not that the federal government believes any of this information is relevant enough to adequately disclose this to the American people.

The fact is that the stimulus policy is not working, is lumping unconscionable amounts of debt on future generations, is putting the country at risk of significant amounts of inflation and needs to be canceled.

America must return to balanced budgets, low taxes and streamlined government spending in order to get its economy roaring again. Politicians owe it to the American people to do just that.

Nevada lawmakers lament "no win" budget situation

The Las Vegas Sun reports that state lawmakers are complaining about a "no-win" budget situation, in which tax hikes will have to balanced with targeted budget cuts.

The state of Nevada has a potential $1b budget deficit for 2010.

Nevada has a 13.1% unemployment rate.

This debate shouldn't be that difficult. Clearly the state needs to slash spending on non-critical functions, in particular by getting state employee contracts negotiated by their respective unions back in-line with economic reality.

Then and only then should the state of Nevada consider approaching their citizens to approve any additional tax increases.

People from Nevada should contact their representatives to make sure they are aware of their outrage at state spending, and demand that it be reigned in.

Washington State Voters Rally Against Tax Hikes

In a warning to their entrenched state lawmakers, thousands of Washington state taxpayers rallied yesterday to protest against any new state taxes.

"Thousands of taxpayers rallied in the state capital Monday, promising a reckoning in November if lawmakers and Gov. Chris Gregoire move ahead with proposals to raise taxes."

In an interesting plot twist, a counter-rally then occurred in which proponents of a tax increase gathered to send the opposite message.

"The anti-tax forces had hardly dispersed before an even bigger crowd of students, unionized workers and others gathered with the opposite message: The state should bring in more money so it can preserve vital services."

These competing rallies foreshadow the oncoming tax battles to be held at the state level throughout the country

First, taxpayers tired of giving up their hard-earned property rally to attempt to dissuade state government from taking even more of their property.

Then, beneficiaries of the state's theft rally to insist that yes, more goods should be stolen from taxpayers.

Those on the receiving end of the state's largess, particularly union members and students, need to start looking for alternative ways to support themselves since taxpayer's of all stripes are growing increasingly weary of their demands for more assistance.

2010 Tea Party Candidates

A Tea Party website maintains a list of libertarian-leaning candidates for office in 2010 that should be given strong consideration by voters of all political persuasions.

In reality, the list of 2 to 3 dozen libertarian candidates for various local, state and federal positions is far too small to make a significant change right away in America's broken political landscape.

However, these individuals once elected will encourage others with similar beliefs to follow them and in time will bring the true change (lower taxes, return to a true federal government, personal freedoms, etc.) this country desperately needs.

Ding! Ding! Ding!

You've got to hand it to Governor Tim Pawlenty of Minnesota, who in his last State of the State address discussed how tax cuts and spending cuts are the key to reducing the state's unemployment rate (which at 7.4% is still way under the US-wide unemployment rate of 9.7%).

Pawlenty’s plan includes the following:

• A 20 percent cut in the corporate tax rate.
• A 20 percent exclusion from taxes for small businesses.
• A tax credit for “angel investors” who provide money to startup companies.
• A supercharged research-and-development tax credit.
• A capital-gains exclusion for qualified investments.
• Incentives for companies to invest in Minnesota small businesses

Could any of these "giveaways" to businesses actually stimulate the Minnesota economy? You betcha!

US to Pakistan: Tax and Spend!

Apparently not content with attempting to over-tax its own constituents, the Obama Administration is now advising Pakistan to do the same thing:

"In comments published today in a Pakistani business paper, US Deputy Treasury Secretary Neal Wolin pressed for Pakistan to dramatically raise taxes, insisting that “Pakistanis pay less for their government than nearly any other country in the region.”

At what point will the US federal government stop interfering with other sovereign countries' internal political affairs? I'm sure no one in the US would appreciate an editorial by Pakistan's President (Asif Ali Zardari) in the New York Times or the Wall Street Journal that advocated one change or another in our fiscal posture.

What's truly ironic about the advice given to Pakistan to spend more money is that over-spending at the federal level is one of the more compelling reasons that the US itself is currently in such dire fiscal straights.

NJ Gov Christie Gets It

New Jersey Republican Governor Chris Christie has announced across-the-board spending cuts and budget freezes as his state attempts to deal with a massive budget deficit.

"Calling New Jersey's budget a "shambles," Gov. Chris Christie announced Thursday he is immediately freezing all state spending.

Saying New Jersey is on the verge of bankruptcy, Christie declared a fiscal emergency, announcing drastic cuts. Among them, aid to school districts that have excess surpluses."

Christie is right to attack the spending side. Salaries and benefits lavished on state-employed union members have been far too excessive. Budgets at all government levels have grown too big.

"Former Gov. Jon S. Corzine was too optimistic about tax collections in the weak economy, and based this year’s spending on that unfounded optimism. Now that tax collections have fallen behind projections, and some costs have risen, deep cuts are required."

Of course, some pro-spending observers might that raising taxes would cure the state's "temporary" fiscal woes. However, they would be wise to consider that residents of New Jersey are mobile, and can move to states that don't over-tax their residents, as this article highlights.

Pennsylvanians Get More Bad News

Luzerne County, Pennsylvania recently approved a 15% increase in property taxes.

"It's official. The Luzerne County property tax rate is going up 15 percent tax (sic) this year."

"The county tax rate this year is now 5.215 mills, up from the 2009 rate of 4.5347 mills. A mill is a $1 tax on every $1,000 in assessed property value, and the 15-percent tax increase will cost the owner of a property assessed at $100,000 an additional $68.03 this year."

It's unclear how much the property tax is supposed to raise in total each year.

However, deceitful politicians are blaming the tax increase on spending that occurred in prior years, despite increasing spending themselves in the current year.

What is simply astounding is that the county currently has over $460m of outstanding debt, which occurred while having an annual budget of just over $100m per year. It is clear that Luzerne County has been mismanaged for years, and that trend seems to be continuing.

Some hope can be gleaned from comments in the article from a county resident, who uses the word "mismanagement", "corruption" and "misspending".

Hopefully mistrust of local politicians starts to grow within Luzerne County, so that residents can begin the process of reclaiming their county from greedy unions, corrupt politicians and tax-hike favoring residents that want "something-for-nuthin".

Pennsylvania Considers Tax Hikes

An article by the AP on PhillyBurgs.com posits that, although no consensus has emerged just yet, the Pennsylvania legislature will have to consider tax hikes in the coming year.

"At that point, a newly elected governor and Legislature may be willing to raise taxes, since they'll have a longer lead time before the next election. They may have no choice, especially after draining reserves and cutting spending to wipe out a multibillion-dollar shortfall last year."

The current problem, however, seems to be that the state and Governor have spent taxpayer money (and federal grants) as if the good times would never end.

"...he proposed pooling money from several new sources to help meet a projected $5.6 billion gap in 2011 and 2012 resulting from spiraling public pension costs and the expiration of federal stimulus budget aid."

To fix the looming, self-created budget issues, of course the best an unimaginative politician, accustomed to dishing out favors at taxpayer expense, could to do is to attempt to raise taxes.

"Rendell would lower the rate to 4 percent from 6 percent, but would eliminate exemptions _ an idea that some call a tax increase _ on transactions on 74 different goods and services, including lawyers' fees, electric bills and personal hygiene products."

With Governor Rendell leaving office within the year, Pennsylvanians would do well to install a new governor that believes in scouring budget items to bring spending in-line with current economic reality, and one that opposes new taxes.

Oregon Gov Looks to End Automatic Tax Rebates

The Democratic Governor of Oregon wants to "reform" the state's Kicker rebate program, by putting more money that would otherwise be refunded into a reserve fund.

The Oregon tax rebate, commonly referred to as the kicker, is a rebate given to both individual and corporate taxpayers when a revenue surplus exists. The Oregon Constitution mandates that the rebate be issued when the calculated revenue for a given biennium exceeds the forecast revenue by at least two percent.

For now, it does not look this proposal has gained much momentum and likely will not garner significant attention from lawmakers during the current session.

Gov. Kulongoski is no different than most politicians that think that governments should take more and more of taxpayer's money, and spend it on what they think is important.

For people in Oregon concerned about the State taking even more of their hard-earned dollars, it pays to be vigilant and it makes sense to ensure lawmakers know what you think on this issue.

Tax Hike on the Table in the UK

Politicians in the UK are starting to give consideration to raising the VAT (sales tax) rate, from 17.5% to 20%.

"A rise in VAT is looming whichever party wins the general election, as Labour and the Conservatives draw up plans to balance Britain’s books.

Alistair Darling and George Osborne, the Shadow Chancellor, are both considering raising VAT to as high as 20 per cent — the European average — from the current rate of 17.5 per cent, The Times has learnt."

Why is it that politicians think that raising taxes (initial estimates are £13 billion in this case) is just what a faltering economy needs? And don't think this is something that won't or can't happen in the States - there are many proposals being considered that would do just that.

Instead of raising the VAT rate, cutting the VAT rate would allow citizens to keep more of their own hard-earned money, and enable them to either spend, save, or invest it, which in any case would enable it to be directed in a much more rational, moral, and economically efficient manner.

Colorado Considers Taxing Internet Sales

The State of Colorado is attempting a new tactic in collecting sales tax from out-of-state vendors. Those vendors (Amazon.com, etc.) which do not have a presence in Colorado are currently not required to collect sales tax on sales made to Colorado residents.

The state of Colorado is close to passing a bill that would require the out-of-state merchants to a) notify purchasers how much they owe in Colorado sales tax (hopefully prompting these purchasers to voluntarily pay), and b) a comprehensive report to the Colorado Department of Revenue at year end disclosing the identify of the Colorado purchasers and the relative amounts purchased.

Not all Colorado lawmakers are excited about this.

"This is a big deal. It really is. And it’s the broader question of whether or not it’s appropriate to tax Internet sales. And I got to tell you, the people of Colorado are going to be really mad when they find out the Department of Revenue is sending them a bill for things that they’ve purchased online," said Sen. Greg Brophy, R-Wray."

If this bill is passed, the main legal question appears to be whether the Colorado Department of Revenue can then successfully enforce a Colorado law and require the Amazon's of the world to comply.

For now, the US Supreme Court has already decided that out-of-state merchants are not required to collect sales tax in this situation; however, they were not asked to address whether filing an annual notice with the purchaser's state tax department would be a similar burden.

Captain America Declares War on the Tea Party

Well, perhaps not quite outright war, but a recent comic strip from Marvel Comics depicts the Tea Party movement in less than complimentary fashion.

"Issue 602 of the comic features Captain America investigating a right-wing anti-government militia group called "the Watchdogs". Hoping to infiltrate the group, Captain America and his African-American sidekick The Falcon observe an anti-tax protest from a rooftop. The protestors depicted are all white and carry signs adorned with slogans almost identical to those seen today in Tea Party rallies like "tea bag libs before they tea bag you" and "stop the socialists."

The comic strip has prompted shouts of outrage from Tea Party officials.

But really, who cares what the illustrator of Captain America thinks?

For one thing, keep in mind what PT Barnum supposedly said - "Any publicity is good publicity".

In complaining too loudly about this perceived slight, the Tea Party movement loses an opportunity to differentiate itself from the whiny, PC-oriented political left.

A better response would be to draw up a competing cartoon that shows Captain America being in the employ of a socialist, tyrannical, overarching central government and, in need of rescue himself, being saved by 2nd Amendment-loving private individuals. Or something like that.

CA Public Employees Get Set to Square off with CA Taxpayers

In what's likely to result in a nasty fiscal skirmish between California public employees and over-taxed California taxpayers, the California state controller's has pointed out that the sweetheart retirement benefits promised to state workers are currently being underfunded.

Controller John Chiang's office issued a report Tuesday showing the growing divide between what the state owes retirees for health and dental benefits and what it has saved so far.

The gap has grown to nearly $52 billion, about $3.6 billion over last year's estimate.

While promising outsized retirement benefits to state workers might have previously seemed like the politically expedient thing to do, it's clear now that such generosity is no longer feasible or possible.

The best course of action for state lawmakers to take, perhaps with a little urging from California taxpayers that, you know, actually care about whether their private property is stolen for the benefit of other people, is to drastically reduce the retirement benefits offered to California retirees.

In an era when it's the rare worker who receives a defined benefit pension from a private company, it's time for state workers to realize that the public can't afford the same for them.

Denver Man Picks Fight With TABOR

Colorado's TABOR (Taxpayer Bill of Rights) amendment requires that year-over-year increases in overall state tax revenue be tied to inflation and population increases unless larger increases are approved by referendum.

Herb Fenster, a Denver attorney and education gadfly, has announced plans to challenge the federal constitutionality of Colorado's TABOR amendment.

"TABOR, he argues, violates Article IV Section 4 of the U.S. Constitution, which says the federal government must guarantee that states have a republican form of government, which he interprets as "a tripartite government, a legislative, executive and judicial branch."

Under TABOR, the state legislature is unable to raise taxes. That power resides with the voters.

Fenster believes this constitutes a form of popular democracy, where the population decides everything, not a representative democracy, where the people are represented by a legislature that decides."

Fenster is another misinformed education establishment advocate, believing that throwing more taxpayer money at education will produce meaningful results. In fact, a 2008 Heritage Foundation study found no such correlation.

"Taxpayers have invested considerable resources in the nation's public schools. However, ever-increasing funding of education has not led to sim­ilarly improved student performance."

I have a better idea Herb. Let's dramatically skinny down the percentage of our state educational budget spent on administration and overhead, let's eliminate teacher tenure and bloated retirement benefits and then, and only then, come back to the Colorado taxpayers and tell us that we need to spend more on education.

In the meantime Herb, if all we need to do to improve education results in our public schools is to increase spending, please give us some insight into why the Washington DC school system has some of the worst educational results in the country, despite having some of the highest per-pupil spending.

Article Supporting Tea Party Movement

Mark Davis, a Dallas Morning News columnist and radio talk show host, had some favorable things to say about the Tea Party movement in a column today.

"The Tea Party movement is not driven by social conservatism. That doesn't mean you won't find plenty of tea partiers who are devout advocates of protecting the unborn and traditional marriage - it's just that the Tea Party engine is driven first and foremost by a desire to return government to its proper constitutional limits and run it with a lot less money. Anyone driven by that passion is welcome in any roomful of tea partiers, no matter what views they may hold about God and gays."

I think all Tea Partiers can agree with that. The federal government has expanded beyond all semblance of reality, and is now constantly looking for new and ingenious ways to insert itself into each citizen's everyday life.

Senate Looks at Payroll Tax Cut

A group of US Senators, including Senators Schumer (NY-D) and Hatch (UT-R), is looking to sponsor a bill to cut payroll taxes.

"A bipartisan measure has been introduced in the United States Senate to provide a payroll tax cut for business that hire individuals who have been unemployed for more than 60 days."

Although it would be much better if Congress did not try to pick and choose "winners" but rather expanded the cut to all businesses that currently workers (and not just those businesses that can be enticed into hiring new workers), it will be interesting to see what this law is able to do unemployment (assuming it passes)

The fact is, most businesses are not hiring right now because demand is slack. Making it slightly more cheap to hire workers does not fix that issue.

A broad-based tax cut, and more importantly, a broad-based spending cut, is in order. This, and this alone, would get America out of the recession it is currently mired in.

Read My Lips, Part II

President Obama, whom some might know as the Dear Reader, has indicated an openness to tax hikes on middle-class wage earners.

"President Barack Obama said he is “agnostic” about raising taxes on households making less than $250,000 as part of a broad effort to rein in the budget deficit."

In what could potentially be the fateful mistake of his presidency, the President risks alienating key swing voters in the upcoming midterm elections if he continues his present stance on this issue.

Americans are in no mood or financial position for a tax hike. After seeing our federal government hand out money like free hot cakes to Wall Street, the last thing people the average person wants to do is to send even more of their hard-earned to the snowed-under tax eaters in Washington DC.

Global bank tax?

Some non-US bureaucrats are starting to think that a global tax on bankers would be a dandy thing to enact!

"Gordon Brown said on Wednesday the world’s leading economies were close to agreeing a global bank tax, amid hopes in Downing Street that a deal can be concluded at the G20 summit in Canada in June.

Mr Brown believes that opinion has shifted decisively in favour of a globally co-ordinated tax after President Barack Obama’s move last month to raise $90bn (£57.7bn) from a US bank levy."

Sorry, but I'm going to have to call Mr. Brown's bluff and say that there is NO emerging international consensus that such a tax can be imposed any time soon.

In fact, I would presume that such a tax would fall largely on US banks. This entire issue is a non-starter until some serious Constitutional issues are resolved, chief among them is whether income that is earned strictly within the US can be subjected to a non-US income tax, even if our Dear Reader or Congress says "yeah, that's fine, we'll sign that deal".

To wit, let's take a look at the 16th Amendment:

"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."

It does not take a Constitutional scholar to notice that nowhere in the 16th Amendment does it authorize Congress to "lay and collect" a tax on behalf of a foreign power.

So while politicians of a particular stripe may really like the idea of enacting a new tax, the fact is that this particular one is going nowhere, at least here in the US.

Michigan attempts to put final nail in own coffin

In a move that should leave most sane observers shaking their collective heads, reports from Lansing, Michigan indicate that Governor Jennifer Granholm will propose a new tax on services.

"A sales tax on services or other revenue-raising measures to solve a projected $1.62 billion budget deficit could be included in the 2010-11 budget proposal".

Governor, let's get real. A new tax on services is not going to solve the problems created by an excess-spending, union-favoring, taxpayer-choking state budget.

In fact, one could make a solid argument that the last thing an economically-depressed state like Michigan needs is another level of taxation. This will only serve to further disincent people from working, and will likely send even more of the economy "underground" or, worse for the remaining citizens, out of state.

People in Michigan, it is in your own economic self-interest to contact your state representatives and tell them to do their part in helping to fix the state's ongoing economic problems by drastically reducing the overall cost of government, not increasing it with a new tax on services.

Senator Boxer to investigate stolen Swiss bank account information

Senator Barbara Boxer (CA-D) will surely have something to say about Germany's recent acquisition of information concerning stolen Swiss bank accounts.

"German government officials said the country will purchase information on secret Swiss bank accounts held by its citizens if it can do so legally, even if the move puts Berlin on a collision course with Switzerland."

I know this because just a few short weeks ago, Senator Boxer was outraged and threatened an investigation when reports emerged that emails written by British scientists had been obtained by "hackers".

"This is a crime," she said, entering into the record the section of criminal code that deals with fraud connected with accessing computers without authorization. "Part of our looking at this will be looking at a criminal activity which could have well been coordinated."

Because Babs places such a high priority on acting on principle and being consistent, I am certainly looking forward to hearing reports of her launching an investigation into just how that Swiss bank account information was stolen (eye roll).

Certain Haiti Contributions made in 2010 are Deductible in 2009

A recently enacted law enables taxpayers to deduct on their 2009 tax return certain contributions made in 2010 to a qualified charity towards relief efforts in Haiti.

"The Senate unanimously passed legislation Thursday that will allow taxpayers to deduct cash donations to Haiti earthquake relief on their 2009 tax returns instead of having to wait to file the claims next year. Leaders of the House Ways and Means Committee from both parties introduced a bill Tuesday that makes contributions made between Jan. 12 and Feb. 28 count toward an individual's or family's 2009 taxes."

This bill basically enables the civic-minded among us to deduct our contributions to this effort a year early.

Everyone who thinks the U.S. federal government plays far too large a role in our day-to-day lives should strongly consider supporting private charities, as a way to show the Socialists among us that private citizens can, when necessary, meet the needs of our fellow man, without any government intervention.

Hawaii attempts to increase its tax haul

Hawaii lawmakers are eyeing a new tax on oil as a back-door means to inflict a tax hike on its citizens.

"State lawmakers have advanced a bill that will hike the tax of every barrel of oil shipped into the state from 5 cents to $1.05 to start a special fund to promote energy independence and locally grown foods."

In fact, supporters indicate that it will "only" result in a cost of living increase to Hawaiian families of $100 per year. Detractors say the cost will be a lot higher.

You've got to hand it to these duplicitous politicians. They are afraid to hit their constituents with a tax hike in a straightforward and honest way, so instead they put the cost on "greedy" oil companies. But the oil companies in effect will merely shrug and simply pass those costs along to consumers.

Residents of the great state of Hawaii, contact your local representatives and insist they oppose this ridiculous measure.

IRS Agents Being Shipped out to Afghanistan

That must be the reason that the IRS feels the need better arm themselves, right?

"The Internal Revenue Service (IRS) intends to purchase sixty Remington Model 870 Police 12 gauge pump-action shotguns for the Criminal Investigation Division."

Now I'm the last guy to be concerned when someone exercises their 2nd Amendment rights, but why do our nation's tax collectors feel the need to arm themselves to the teeth?

Imagine the outcry if a private bill collection agency announced they were planning to pick up a few Uzis in order to "facilitate" collections.

So much for any romantic notion that the U.S. has a "voluntary" tax system.

Op-Ed Faults Low Taxes for Nevada's Problems

Michael Wixom, a higher-up in the Nevada state education system, has (shockingly) declared that taxes in the state of Nevada are far too low!

"(T)hese additional and extreme budget cuts exacerbate the problem — they are not the solution. We will be dismantling much of what we have built, primarily for the sake of keeping tax rates low — the low tax rates that have been an illusory promise of prosperity."

Michael, let's not confuse the total amount of money spent on educational spending with educational results. If spending vast amounts of money on education actually did lead to superior results, we'd have scores of Nobel Laureates emerging from the Washington DC public school system every year.

In fact, if you want the people of the state of Nevada to submit to higher taxes, you better be prepared to disclose salaries, benefits and perks provided to the leadership of the Nevada public educational system and be prepared to slash those amounts where appropriate.

I think we can all agree that far too much of the so-called educational spending is not actually being spent directly on children, but rather to pay outsized salaries, benefits and pensions to bureaucrats. Enough is enough.

Editorial makes an excellent point

An editorial in the Chattanooga Times Free Press this morning delivers a solid message that people, and capital, are mobile and will not standing idly by as lawmakers increase taxes.

"For five years leading up to 2004, New Jersey was a cash magnet. Some $98 billion flowed into New Jersey from out of state during that time.

Then, state lawmakers enacted a host of tax increases, including hikes in income, sales and property taxes and in the "millionaire tax."

Since then, households hit hard by the rising taxes have been bailing out of New Jersey faster than the state can replace them. Many have been going to lower-tax states, a new study from Boston College has found."

When will lawmakers at the state and federal level wise up, and realize that the levels of taxation that exist today are more than sufficient to meet the costs of society? In fact, remove the bloated salaries that exist in local government (Mish does a great job exploring this issue pretty much every day) and the general waste that exists, and a significant tax cut could be made right now, all while still enabling government to deliver on the "core" functions that people still expect.

Congress wants more tribute from Wall Street

Our friends in DC are (gasp!) engaging in a little political opportunism...

Commenting on the decision of Congress to provide $700b of bailout funds to Wall Street, Senator Barbara Boxer (CA-D) said "to avert a financial collapse, taxpayers saved ‘too big to fail’ companies. It is outrageous that these companies are now doling out millions of dollars in bonuses while the rest of America feels the pain of their reckless decisions."

For one thing, imposing a special "banker tax" on bonuses paid last year (in 2009) raises legal questions about ex-post-facto laws.

Secondly, what's really outrageous here Babs is that Congress provided the money to the financial firms at all, not the fact that Wall Street is (yawn) paying large bonuses.

I mean, let's face it, the bailout was undertaken with pretend money, created out of thin air by the Fed. Let's not act like federal spending was slashed to accommodate the bailout, or that anyones taxes were actually increased to facilitate the bailout.

Enough with the mock outrage from our fine Senators. Congress was even more guilty and complicit than Wall Street in creating the financial maelstrom we're still dealing with, and it's simply gamesmanship and a desperate attempt to create a fall-guy (or guys) for them to pretend otherwise.

Tax Prep Software Favorites

For those too busy to fully sort through their tax prep software models, here are some thoughts on some of the better available options:

1. TaxAct provides free software for filing an individual tax return. I've used it in years past and didn't run into many issues at all. They will charge you for the software necessary for preparing a state tax return however.
2. TurboTax is free for simple returns (1040-EZ), but will cost you around $50 for more difficult returns. Very good software. Pick it up at Wal Mart to save more than a few dollars over what Best Buy charges.
3. H&R Block software (formerly known as TaxCut) is also a good buy, and usually costs a little bit less than Turbo Tax.
   

There are other online tax prep software options available, that can be found by doing a simple search on Google. Of course, visiting the offices of a local CPA or H&R Block is an option too, but count on prices that are 3 to 4 times higher than just purchasing the software and pounding it out yourself.

IRS Debunks "Frivolous" Tax Arguments

With the tax filing deadline just a couple short months away, the IRS has come out with their annual reminder that certain tax positions are "frivolous" and should not be claimed by taxpayers. The "frivolous" list for 2010 includes the following positions:

1. Claiming Rep. Nancy Pelosi (CA-D) as a dependent on your individual tax return.
2. Claiming a charitable contribution for your share of the bailout provided to Wall Street.
3. Claiming a loss for the value of your soon-to-be-disavowed Social Security benefits shown on your annual Social Security Statement.
4. Refusing to pay any federal tax owed by demanding a "Goldman-style" government bailout.

Of course, who needs to file a return with a frivolous tax position when you can just not include income or pay your tax bill and chalk it all up to an honest "mistake" (yes, I'm referring to you Tim Geithner and yes, you too Tom Daschle).

Former Treasury Secretary Paulson reappears

Apparently feeling safe that public anger over his role in the $700b Wall Street bailout has subsided, former Treasury Secretary Hank Paulson made a rare public appearance Sunday to discuss the current fiscal climate.

"MR. PAULSON: Well, I've got to say, anything right now that is going to, that is going to, in effect, be a, a, a tax increase has got to be--has got to be questioned. And an expiring tax cut is a tax increase. But I'm going beyond that, because I really do believe that we are going to need a--to take a different approach to a number of things--taxes being one of them, housing policies being another."

Couple thoughts on Hank's performance:

1) A guy like Hank should have these talking points nailed down by now. Be specific, be clear and be brief. All this hemming and hawing just dilutes the point.

2) I welcome his support for extending the 2001 Bush tax cuts. There's been too much rhetoric coming from the Obama Administration about letting the tax cuts lapse. Folks, if the cuts aren't extended, what we'll have is tantamount to a massive tax increase in the middle of the biggest economic meltdown since the Great Depression. Even our Dear Reader would hopefully agree with that.

Phoenix to impose tax on food!

Upwards of 14 tax-hungry states charge sales tax on food.

The other states exempt food from sales tax, mainly because it's considered to be a regressive tax (disproportionately hitting the income of lower-income folks) and generally unfair to tax something so critical to life itself.

The City of Phoenix recently announced their intention to charge a 2% sales tax on food. Like all taxes, this one promises to start small and increase from there.

One of the leading proponents is in full-spin mode: "Councilman Michael Nowakowski, an early supporter of the tax: "We're investing in our kids, we're investing in our seniors, we're investing in our libraries and our parks. We're investing in our future."

Hey Michael, let's not kid yourself about doing any sort of investing, you're stealing money from residents and using that money to prop up your cronies in the local unions.

The people of Phoenix would be well-served to throw all of these tax-eaters out of office at their next opportunity, and vote to severely scale back benefits paid to city workers.

This is all the more reason for people of all cities and states to start their own backyard garden, and grow as much of their own food as possible.

Indecent Communications

The Commissioner of the IRS, one Doug Shulman, made a startling comment in a speech made to the NYS Bar Association recently:

"I have recently been reaching out to corporate board members to discuss the importance of appropriate oversight of tax compliance and I will continue to do outreach in this community."

What?!?!?

Board members are i) aware of their fiduciary and oversight responsibilities, ii) have much more consequential items to discuss with management and, consequently, iii) don't have time for dog and pony shows with the IRS.

Columnists' Weak Attempt to Justify a VAT

Shawn Tully, a senior editor at Fortune magazine, unhelpfully and unconvincingly inserts himself into the ongoing fiscal debate:

"The gigantic deficits the Administration is projecting are appalling, and they provide a chilling look at our future: America is hurtling towards a fiscal trap that is forcing us into the only option we'll have to restore budgetary sanity: A Value-Added Tax."

Seriously, a VAT is our only option at this point?!?

Shawn, here's what most Americans want to see you write about...a column on ways the government can reduce spending!

Let's face it: the day any non-Left Wing member of Congress (read: Pelosi and like-minded friends) sides with the VAT proponents and lends support to this tax-raising cause is the day they should start working diligently on their post-Congressional work plans. There's no way they would survive their next election challenge.