Charlie Crist's Act of Desperation

Florida Senate candidate Charlie Crist has taken the unusual step of abandoning the GOP's nod for his bid for the U.S. in favor of a run as an independent.

The mainstream media seems to suggest this poses a potentially troubling sort of groundshift for Republicans.

" But Crist's move does pose some tougher long-term questions for today's GOP. Can Republican moderates withstand the pressure of similar challenges from activists on the insurgent tea-party right? And if that answer is "no," how will Republicans fare in general-election ballots, where centrists and independents often supply the margin of victory in hard-fought battles between the major parties?"

In reality, this is nothing more than an act of desperation by a big-government favoring candidate who knows he is in for a rude awakening in the general election come November, and potentially signals that the GOP is starting to truly embrace fiscally conservative candidates over their more traditional, 'mainstream' and 'electable' country club Republican challengers.

Tea Partiers from all states should celebrate this latest development in Florida, as it means we're that much closer to getting one of our own in the U.S. Senate.

Obama's Fiscal Commission Starts Their Journey

President Obama's Fiscal Commission, chaired by former Senator Alan Simpson (R-WY) and former Clinton Administration official Erskine Bowles recently met for the first time, and made the predictable statement that "every option is on the table".

"The panel is examining ways to cut costs and boost revenues to produce a maximum deficit of $550 billion by 2015, an amount equal to about 3 percent of the total U.S. economy. That would require deficit savings of at least $250 billion, the Associated Press reported.

The commission will hold its first meeting on Tuesday, and President Obama said there are no restrictions on its recommendations: “Everything has to be on the table,” Obama said on Tuesday. That means tax hikes and entitlement cuts are possible."

If the goal of the commission is reduce the deficit to "only" $550 billion in five years, that's a very modest goal indeed. The ability of the U.S. government to successfully finance its deficits for years to come should not be assumed away, and consequently a much more aggressive approach by the Fiscal Commission (say, to eliminate all deficits within 3 years) would be appropriate.

What seems to be in the cards at this point though is a recommendation from the Commission to "fix" the deficit by cutting spending and raising taxes.

"Solutions – as spelled out by (Ben) Bernanke, White House budget director Peter Orzsag and other experts – entail some combination of changes to Medicare, Social Security and other entitlement programs, cuts in other spending and higher tax revenue."

Regarding the approach to be taken by the Fiscal Commission, it's clear that the government is living well beyond its means, and the solution to correcting that is to slash spending and not to heap yet more taxes on the backs of our already-burdened taxpayers.

America was founded a couple hundred years ago as the land of the free, and we cannot be free as a people if more and more of the fruits of our labor is stolen in order to fund economically and socially worthless government programs.

NJ HS Students Protest Budget Cuts

Yesterday high school students in New Jersey expressed support with teachers and school administrators and showed their opposition to proposed budget cuts by walking out of classes.

"Students at Rancocas Valley High School in Burlington County left school just before 8 a.m. to show their support for teachers in light of Governor Chris Christie's proposed education cuts in the state budget.

Last week, a majority of voters in New Jersey rejected 59 percent of school budgets in the state's 537 school districts."

It's not often that voters in New Jersey seek to reign in the costs of local education.

"It was the first time in 34 years that the majority of budgets were defeated."

It's ironic that in walking out of school, these kids are basically protesting the decision made by their parents to reject the local budgets.

Of course, the state teacher's union is grateful for the show of support and as such is egging the students on by basically likening their cause to Ghandi, Martin Luther King, etc. by referring to their behaviour as 'engaging in civil disobedience'.

Fundamentally, the grandstanding that took place will prove to be an empty show of support by easily-manipulated kids who do not understand the economics of what they are protesting and who do not understand the anger of taxpayers who are fed up with shoveling increasing amounts of their money towards overpaid, overstaffed bureaucracies.

GM returns all of its bailout money? Not so fast...

General Motors has made the news recently with its much-hyped announcement that it has repaid $8.1 billion of "emergency" loans extended to it last year by the US and Canadian governments.

The hometown Detroit Free Press was front and center in their cheerleading:

"You have to wonder what those who opposed the GM bailout think about the loan repayment. Some had predicted that taxpayers would never see a dime of the money that was loaned to the struggling automaker. The alternative would have been to let the domestic auto industry crash and burn, taking along with it tens of thousands of jobs at a time when our economy is already reeling.

It’s way too early for those who favored government aid for GM to break out in loud chants of “I told you so,” but if the good news out of GM continues, they might want to start thinking about warming up their vocal cords."

Implicit in GM's aggressive announcements is that it basically is now free and clear of all messy financial entanglements with the federal government.

However, as the website SayEducate points out, nothing could be further from the truth.

"Some $52 billion in additional money was invested in GM by American and Canadian taxpayers who now own approximately 60 and 12 percent of the company respectively. Those monies can only be recovered if and when GM begins to sell stock, something that doesn’t look like will happen before 2011."

So two points can be gleaned from all this noise:

1) GM received over $60 billion in money over a year ago, and has managed to repay a measly $8 billion of that amount, probably with cash that it did not use but rather had parked in a bank account for the very purpose of making this type of PR splash.

2) Taxpayers hoping to reclaim the other $52 billion used to acquire GM shares have to wait for a public offering of GM shares, which should follow the period in which GM has executed a complete turn-around, repudiated its self-immolating contract with UAW, begins to produce cars at a profit that Americans wish to purchase and is valued at at least $52 billion. So in other words, we can kiss that money goodbye.

Americans Pay SEC Staffers to Watch Porn

In another obnoxious display of the government wasting taxpayer money, senior staffers at the SEC apparently have been whittling away their time downloading and viewing pornographic material from the internet.

"A report from SEC Inspector General David Kotz charges that 33 employees or contractors spent time looking at online pornography "using computer resources and official time," CNN reported.

The IG said the instances took place over the last five years, including a time period in the last two years when the U.S. economy was believed to be teetering near failure."

It's bad enough that money is forcibly removed from our pocket as taxes in order to be transferred to incompetent bureaucrats for them to perform who-knows-what with it.

But we now we learn that these nameless regulators haven't actually been doing any regulating at all, but rather have been entertaining themselves with illicit downloads.

Assuredly there would be a much bigger outrage emanating from the Left if the porn-viewers were employed by a private company that was the recipient of a government contract.

In either case, it should be sufficient to cease all funding of that organization.

Tax Gimmick Accounts for Strong Showing of New Home Sales

The Commerce Department yesterday indicated that sales of existing homes were up 27% in March, a marked improvement from a month earlier.

"The Commerce Department reported that new-home sales jumped to a seasonally adjusted annual rate of 411,000, reversing February's record low and far exceeding the expectations of many experts who track the industry.

"We needed a grand slam . . . and we got it," Patrick Newport, an economist at IHS Global Insight, wrote in a note to clients.

Sales are up nearly 24 percent from March 2009, although they remain far below the peak in mid-2005."

So with new home sales booming we must be back in business on the economy, right?!

Not exactly.

What you're seeing are home buyers acting rationally. With the $8,000 tax credit expiring shortly (to receive the credit, buyers have to sign a contract by April 30 and complete the purchase by July 30), buyers are expediting the purchase of homes that might otherwise have been deferred until later this year or next.

After the tax credit expires and similar to how auto sales fizzled out after the cash-for-clunkers program expired, expect to see new home sales plummet.

Politicians would have been better off reducing taxes (and spending) for everyone, rather than for a select few that chose to buy houses over the past year.

Pro-tax Marchers in Illinois

A crowd estimated at 15,000 descended on the capital of Illinois on Wednesday, demanding that lawmakers increase taxes.

"Thousands of teachers and other union workers descended on the state Capitol on Wednesday and chanted "raise my taxes" to try to pressure politicians to avoid major budget cuts.

The vibe was the exact opposite of what you'd find at a tea party rally. But the loud chants barely resonated inside the Capitol, where lawmakers are trying to exit Springfield in a couple of weeks without voting for a tax increase that could jeopardize their re-election chances in little more than six months.

"If you try to leave town without doing your job, we're going to chase you," warned union leader Henry Bayer at a rally that drew an estimated 15,000 people — the biggest at the Capitol since the era of the Equal Rights Amendment more than a quarter-century ago."

Frankly, Illinois lawmakers should accommodate the protesters. Any person demanding that their taxes be raised should immediately be sent a bill that allows them to pay much higher taxes than are being asked of them right now.

Of course, that's not what the protesters have in mind. These protesters were largely people already living off of public funds (state workers, unionized workers dependent on government contracts, etc.), so they in effect want lawmakers to raise taxes on everyone else in order to continue to fund their exorbitant salaries and benefits.

It's time for lawmakers in Springfield to finally show some backbone and say "no" to those who demand more and more from the already over-taxed people of Illinois.

If you live in Illinois, contact your representative and tell them to continue looking for ways to cuts costs, and inform them how any additional tax hikes will affect you personally.

VAT Still on the Table?

President Obama hasn't given up hope of massively increasing taxes on Americans.

President Barack Obama suggested Wednesday that a new value-added tax on Americans is still on the table, seeming to show more openness to the idea than his aides have expressed in recent days.

Before deciding what revenue options are best for dealing with the deficit and the economy, Obama said in an interview with CNBC, "I want to get a better picture of what our options are."

After Obama adviser Paul Volcker recently raised the prospect of a value-added tax, or VAT, the Senate voted 85-13 last week for a nonbinding "sense of the Senate" resolution that calls the such a tax "a massive tax increase that will cripple families on fixed income and only further push back America's economic recovery."

For days, White House spokesmen have said the president has not proposed and is not considering a VAT."

Any VAT would likely start out with a 15% to 20% rate (sure, it might initially start as a lower rate, but eventually we'd see it get up to 15% to 20% just like every other over-taxed Western country).

Even though the imposition of a VAT isn't that likely (Congress can't be that stupid, can they?!), smaller government advocates should not fear the national debate that likely will be forthcoming.

That debate will be an opportunity to highlight the stark difference between the politicians looking to tax Americans to death, and those who advocate for a much smaller central government.

Tea Party Guilty of Hurling Epithets?

Much has been made and said about the encounter that John Lewis and other Congressional Black Caucus members had with protestors as they walked to the Capitol in Washington DC last month to vote on the health-care bill.

"Demonstrators outside the U.S. Capitol , angry over the proposed health care bill, shouted "nigger" Saturday at U.S. Rep. John Lewis, a Georgia congressman and civil rights icon who was nearly beaten to death during an Alabama march in the 1960s.

The protesters also shouted obscenities at other members of the Congressional Black Caucus , lawmakers said."

Although no audio tape has emerged to confirm these allegations, accounts at the time and since then have largely accepted these charges as truth and have attributed them to the Tea Party.

Assuming that what has been alleged to have been said actually was said, let's be clear that the use of epithets of this sort are unnecessary, crude and disrespectful.

However, given recent reports that a fringe group is seeking to "infiltrate" the Tea Party movement in order to discredit it, why is no one from the media asking whether this group is actually responsible for shouting these words at Democratic lawmakers as they walked past the demonstrators?

"Opponents of the fiscally conservative tea party movement say they plan to infiltrate and dismantle the political group by trying to make its members appear to be racist, homophobic and moronic.

Jason Levin, creator of www.crashtheteaparty.org, said Monday the group has 65 leaders in major cities across the country who are trying to recruit members to infiltrate tea party events for April 15—tax filing day, when tea party groups across the country are planning to gather and protest high taxes.

"Every time we have someone on camera saying that Barack Obama isn't an American citizen, we want someone sitting next to him saying, 'That's right, he's an alien from outer space!'" Levin said."

The media should take much more care not to be complicit in the attempts of Mr. Levin and his group to discredit the Tea Party.

Tax Hikes Considered for Hedge Fund Managers

Congress is considering a bill that would see a "loophole" for hedge fund managers closed, and would result in those same managers having their income taxed at higher rates than they currently are.

"The U.S. Senate, seeking funds for jobs bills and other initiatives, will consider adopting a House proposal to more than double tax rates on executives at private- equity firms, said Senator Charles Schumer, a New York Democrat.

The proposal, projected to raise $24.6 billion over a decade, would affect venture capitalists, managers of real- estate partnerships, and hedge-fund managers who make long-term investments. Passed by the House three times, most recently in December as part of a jobs bill, it hasn’t come to a vote in the Senate, where some Democrats have signaled they would oppose it.

Managers of investment partnerships typically are paid 2 percent of fund assets as an annual management fee and 20 percent of the profit earned for investors above certain levels. While the management fee is taxed as income, the share of profit, known as carried interest, is treated at the capital- gains rate, currently 15 percent and slated to rise to 20 percent in 2011."

To be clear, the Tax Reckoning Blog much prefers that Congress spend its time looking for ways to slash taxes (and spending) at the federal level. In this case, however, a bill that would raise taxes actually might make some sense from an equity standpoint. The share of profits earned by fund managers looks a lot less like risk capital (which is deserving of reduced capital gain rates) and more like a return for services that should be taxed as ordinary income.

In effect, we can't and shouldn't expect salaried workers to pay a certain percentage of their wages as tax, and allow other workers' compensation to be taxed at a much lower rate.

In any event, since the management of capital is a truly a portable business that can be largely done from any country on earth, as a response to an enactment of this bill it would not be surprising at all to see hedge fund expatriate from the United States in order to avoid its effects.

If that were the case, once again a bill designed to raise taxes actually would have the opposite effect, demonstrating that human beings (for the most part) are not stupid and will actively organize their affairs in such a way that allows them to surrender as little of their wealth to the government as possible.

Original Tea Party not about Taxation?

Historian T.H. Breen recently penned an article attempting to dispel some myths about the original Tea Party members.

Among several questionable theories, Mr. Breen offered up the following:

"Second, the colonists did not protest taxation. To be clear: They protested against taxation without representation, an entirely different matter. During the summer of 1774, when Parliament punished the city of Boston for the destruction of the East India Company's tea, people throughout Massachusetts Bay continued to pay taxes to the colonial government. At this chaotic moment, rather than keep their money, colonists voted in town after town to no longer transfer tax revenue to Harrison Gray, a treasurer of loyalist sympathies, but instead to send "moneys which they then had, or in future might have in their hands, belonging to the Province" to one Henry Gardner. Anyone who misses this point risks missing the fact that ordinary American patriots accepted the legitimate burdens of supporting a government in which they enjoyed genuine representation."

Despite Mr. Breen's disingenuous protest that somehow an argument about "taxation without representation" has nothing to do with taxation in general, it's obvious to any observer that the original Tea Party protest was in fact about taxation in general, with no need for any qualifiers.

The reality is, the colonists were plenty annoyed with sending their personal treasure to a far-off government that spent it in ways that the colonists believed was improper.

There are plenty of parallels between the feelings of the colonists and many Americans today, what with the cash we send to Washington DC spent on unnecessary foreign wars, on bailouts of well-connected financial firms and industrial companies and on sustaining a welfare state that is beyond repair.

Attempts by Mr. Breen and others to cloak the original Tea Party in terms of other than an out-and-out tax protest betray a certain level of desperation and suggest that he and others are increasingly nervous that latter-day Tea Partiers are making significant inroads to attracting more and more Americans to their cause, at the expense of the established political parties.

Senator Takes Preemptive Stand Against VAT

In a sign that the discussion of a national VAT is increasing behind the scenes, Iowa Republican Senator Chuck Grassley has written an editorial announcing his opposition to such a tax.

"Let’s not mistake the intentions underlying the premise of a Value-Added Tax (VAT). Those who advocate more government spending need to identify new revenue streams. Instead of cutting back on spending to tackle the looming debt crisis, unfunded entitlements and government bailouts, the White House and other Democratic leaders are looking for ways to capture more revenue by adding new layers of taxes. As suggested by former Federal Reserve Chairman Paul Volcker, the White House is entertaining the idea of the first-ever consumption tax in the United States.

Just consider, federal spending is on track to reach 25 percent of the U.S. economy. Washington’s march away from the historic average of 18.2 percent threatens the economic dynamics of a competitive marketplace. A chronic cycle of borrowing and spending by the federal government is arguably a risky route to economic recovery and certainly a misguided way to achieve long-term economic growth and job creation."

What makes the forthcoming VAT debate so potentially dangerous is that a lot of good-thinking free market economists actually support the adoption of a VAT - but only if it replaces the federal income tax.

If the VAT is adopted as an addition to the income tax, the increase in size of the federal government that will follow would be similar to the once-a-generation increase that happened in 1930's with the adoption of the "New Deal" programs and again in the 1960's with the "War on Poverty" programs.

There is much to be said about an economy where the taxes that are needed to run a government, which Tea Party supporters believe should be far, far less in amount than what most people over the last 100 years have come to think, come from taxing consumption (which is what a VAT accomplishes) rather than an income tax (which in effect taxes investment).

However, supporters of a VAT need to be vigilant to the risk of being tragically misunderstood to the extent their support for adopting a VAT as a means of eliminating the income tax is massaged by the mainstream media into being support for a VAT that supplements an income tax.

Another Writer Complains About Taxes - That They're Too Low!

David North, an 81 year old resident of the state of Virginia, penned an article in the Washington Post in which he contrasts his state tax bill with someone with the same amount of income but who is much younger.

"As it cuts back drastically on services, Virginia is overlooking the foolishly generous income tax break it gives its affluent elderly. My wife and I had a federal adjusted gross income of $92,000, but our state income tax bill came to only $474, about one-half of 1 percent, compared with the $7,529 we paid to the feds.

With a total income of almost $100,000 a year, we pay all of $1.30 a day in state income taxes. But a 40-year-old couple with my income would pay the state $3,716 in taxes, about eight times what my wife and I pay.

I am neither an economist nor a tax-policy specialist, but I do know something about how tax systems work. U.S. taxes are much lower than those in other modern democracies, and Virginia's taxes are much lower than those in most other states. Further, Virginia's tax system, with a marginal tax of only 5.75 percent on income over $17,000, and no tax on estates, is rigged for the rich and against the middle class."

A few items worth noting on Mr. North's comments:

1) It's commendable that someone of his age is productive enough to bring in $92k of income (even if $32k of it comes from Social Security).

2) Although Mr. North complains about the exemption the state of Virginia provides him for his income from Social Security, he should keep in mind that for most people, Social Security payment represent a return of taxes previously paid. Even if in nominal dollars he has now received from Social Security more than he originally paid in, the effects of inflation mean that he more than likely has not been paid back in full in real dollars.

3) His complaint that Virginia's 5.75% marginal tax rate is "rigged for the rich" rings false. Considering the highest federal tax rate on individuals is 35%, putting the total federal plus state marginal tax rate for Virginia residents over 40%, is that combined rate somehow too low? If so, perhaps Mr. North should enlighten us as to what he believes the highest all-in marginal rate should be?

4) Mr. North's comment that "U.S. taxes are much lower than those in other modern democracies" is demonstrably false. The U.S. federal government and its states collect more taxes (whether in the form of income taxes, state taxes, sales taxes, social security, you name it) than ANY other government in the world. Perhaps Mr. North was referring to tax rates.

Although he personally seems to prefer higher tax rates, the reality is that most Americans do not share his thinking. If Mr. North wishes to transfer more of his own personal assets to fund Big Government, perhaps he should take a few moments today to write a check to the bureaucrats in Richmond or Washington DC. However, he should stop insisting that other Americans be required to follow his own personal wishes and pay more in taxes.

Another Advocate for a VAT

Nationally syndicated columnist Froma Harrop has penned a recent article championing her very own "Five Commandments of Tax Reform".

In general, the article makes the familiar arguments in favor of steeply higher levels of tax. In particular, the author's view on the desirability of a national VAT are worth pointing out.

"The middle class shall pay something: You can understand why Democrats would limit new tax increases to upper-income folk, who enjoyed enormous tax cuts during the George W. Bush era. A correction was in order.

But eventually everyone must pitch in. Politicians can't go on telling the middle class that it can enjoy new entitlements, and keep the ones it has, without paying more taxes.

The difficulty of getting this message across makes the VAT (value-added tax) a righteous idea. A kind of national sales tax, the VAT is considered regressive because the poor also pay it. But the social programs these taxes fund are progressive."

Ms. Harrop vastly overestimates the public's willingness to pay a VAT in order to continue to be "lavished" with the benefits of various government programs and entitlements.

Most Americans were and are opposed to the government's recent efforts to muscle in on health care. So they hardly would agree to a massive tax increase in order to pay for it.

Although the adoption of a VAT might be the current holy grail for central planners and their champions in the mainstream media, there is no support for the VAT from the people who would actually be footing the bill.

An Argument Against Governments Providing Services

What would the public response be if Greyhound had been involved in 3 separate, fatal accidents within a short period of time, all (likely) involving incidents of unsafe driving on the part of the bus drivers?

Let's be honest - there would be editorials across the country denouncing the company, lawsuits would be filed, and Congress would be licking its chops as it looked forward to using its bully pulpit to investigate, pontificate and castigate.

But what would the response be if the owner of the bus company involved in all of these accidents was a government agency?

Take a look here, here and here for a spate of recent accidents that highlight just such a case.

The public reaction would largely be muted, as it has proved to be with these accidents. Sure, there would be a few articles urging the agency to do their job better and safer, goshdarnit. But what about major lawsuits? Nope, the government limits the amounts awarded against it.

In case after case, in attempting to perform routine functions the government demonstrates that these are best left to the private sector and free market.

If Greyhound had been the operator of these buses and their drivers had been responsible for one accident after another, they likely would be forced to make significant upgrades to their training and services, key officers would be dismissed, the company would disgorge significant amounts in lawsuit settlements and it probably would lose their contract to another company that employs better, safer practices.

This isn't going to happen to the government agency in Denver that operates their bus system.

Sure, they'll hold a few safety meetings and maybe put up a poster or two in the employee lounge, but the same drivers will soon thereafter be back on the road doing the same old thing. And Denver pedestrians and car drivers would be well served to keep their head on a swivel when they see a bus approaching.

Just another reason that a monopolistic government should not be in the business of squeezing taxes out of its citizens in order to render services that should be left to the private sector.

Group of Wealthy Individuals Demands Tax Hikes

Wealth for the Common Good, a self-described "network of business leaders advocating for shared prosperity and fair taxation", issued a report today designed to convince Americans that we actually aren't being taxed quite enough!

"Over the last half-century, America’s wealthiest taxpayers have seen their tax outlays, as a share of income, drop enormously, by as much as two-thirds for the highest-income grouping the IRS tracks. Meanwhile, the share of their household income that middle class Americans pay in federal taxes has increased slightly."

The fact that people get to keep more of their hard-earned money is a problem in exactly which way?

Of course, one has to balance their spin on events with a story from the AP that talks about how the tax burden today actually falls:

"Tax Day is a dreaded deadline for millions, but for nearly half of U.S. households it's simply somebody else's problem.”

About 47 percent will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. That's according to projections by the Tax Policy Center, a Washington research organization."

It's apparent that higher-income people are the only ones paying any income taxes, and so the point being made by this organization lacks clarity and purpose, and raises the specter of another agenda being at work.

Maybe Wealth for the Common Good can disclose the net worth of their individual members, so the public can better judge whether their appeal to raise tax rates on high-income people is truly as self-sacrificial as they want others to believe. For example, if the better part of their membership is already wealthy, then any increase in tax rates will not affect them nearly as much as other high-income people who don't quite have their amount of wealth.

The members of Wealth for the Common Good need to be reminded that there is no reason they can't already pay as much in extra taxes as they wish to the US Treasury. If they feels that would be especially patriotic or will somehow be invested wisely by the US Government, they should do so. But in the meantime, leave the rest of us out of their quixotic cause.

Small Businesses Face SkyrocketingTax Costs

The ability of the federal and state government to continue to force small businesses to pay more and more in taxes for their social utopia is increasingly in question.

"America's jobs growth engine is being choked to death.

A record 25 percent increase in the taxes against US small businesses -- from costs associated with new health care law, to an increased Medicare tax, increased capital gains taxes and higher state and city taxes -- is repealing any ability of these entrepreneurs to add jobs to their payroll.

And the numbers for New York's small- to medium-sized business are just as harrowing."

It's complete and total hubris for the elected clowns in Washington DC to increasingly burden small businesses with higher taxes, and then expect those same businesses to be able to hire more workers.

The first order of business for sane-thinking Americans is to throw those bums out of office, elect politicians who don't expect hard-working Americans to pay for the existence of other Americans, and move our economy squarely over to free-market, low-taxed principles.

In order to emerge from the current recession, it's becoming increasingly clear that we are going to need a 2010 version of the 1980's Ronald Reagan.

Community Colleges Need More Taxpayer Money?

Attendance at community colleges is surging across the country. This can be credited to tax incentives, the intentional delay of younger students of attending higher-cost four year colleges, and older students looking to re-train for a new career.

One would think that all of these new students would only cause the bottom line to soar at the community colleges (just imagine how giddy an actual business would be with all these new customers!).

But, alas, in the government-funded world, just the opposite appears to be happening.

"Grappling with soaring enrollment and plummeting state support, community colleges are grateful for the higher profile but disappointed money has yet to materialize to help them keep up with demand, let alone meet ambitious Obama administration goals to make the U.S. the global leader in college graduates again by 2020.

The economic downturn has pressured both schools and their students, most of whom work long hours. Sinking tax revenues at state and local levels have forced public colleges to cut courses or schedule them around the clock, slash summer sessions, eliminate academic programs and even restrict enrollment."

Fine, I get the reduced amount of dollars sent to community colleges by state governments.

But instead of whining about the reduced amount of transfer payments, community college presidents should be thankful for surging demand and the ability to run their campuses like an actual business by reducing costs and increasing tuition as necessary.

If they are not up to the task, then resign and put someone more competent in charge.

Paul Volcker Advocates Tax Hikes, VAT

President Obama's advisor Paul Volcker today said that the U.S. should consider raising taxes and implementing a value-added tax.

"Volcker, answering a question from the audience at a New York Historical Society event, said the value-added tax "was not as toxic an idea" as it has been in the past and also said a carbon or other energy-related tax may become necessary.

Though he acknowledged that both were still unpopular ideas, he said getting entitlement costs and the U.S. budget deficit under control may require such moves. "If at the end of the day we need to raise taxes, we should raise taxes," he said."

This is what's known in political circles as floating a trial balloon.

And if anyone has the bona fides to broach the subject, it's the man who as Federal Reserve Chairman in the late 70's and early 80's made the unpopular but ultimately successful move to choke off inflation by mercilessly raising interest rates.

But Volcker is out to lunch if he thinks installing a VAT would somehow be receptively received today.

Is he really serious in believing that, in the face of a massive recession and with sky-high unemployment, Americans are going to willingly pay an extra 15% or more for the goods they buy, in addition to all of the federal and state taxes they already pay?!?

It would certainly be one thing if the proposal was to scrap federal income taxes in favor of a national VAT.

But the Obama Administration is sending signals that they want Americans to pay both forms of taxes.

Obama and other Democratic politicians should start packing their bags and brace themselves for upcoming election defeats if they believe moving this proposal forward is actually going to fly with Americans.

Article Parses "Tax Myths"

An interesting recent article in the Washington Post by Roberton Williams and Rosanne Altshuler of the Tax Policy Institute addresses five of what the authors perceive as "tax myths".

Some of the myths the authors discuss are complete canards, while others have real merit.

"Myth #1 - The poorest and the richest Americans pay no taxes."

Here the authors argue that the poor pay significant amounts of tax in the form of Medicare, Social Security, use taxes, etc. However, I'm not aware of any observer who thinks the poor pay "no taxes". Rather, the argument is that they pay no income taxes, which in many ways allows them to vote en masse for various tax benefits at the federal and state level without actually have to contribute in any real manner to the costs themselves.

"Myth #2 - Americans are overtaxed."

The authors contend "that other developed countries collect even more" taxes than the U.S. The authors are clearly wrong on this point, but in fairness they appear to be arguing that other countries collect taxes at higher rates than the U.S. or as a higher percentage of GDP, even if their total tax haul is actually far less than what the U.S. federal brings in annually.

Bottom line: the fact that other countries choose to tax themselves to death is not evidence that the U.S. itself is not similarly over-taxed; rather it just proves that other countries seemingly want to tax themselves into Socialist oblivion.

"Myth #3 - Higher taxes could eliminate the federal deficit."

On this point I have no argument with the authors. It's apparent that imposing more and more taxes on Americans will result in less economic activity overall, which would have the effect of decreasing total tax receipts, not increasing them.

"Myth #4 - Most people's tax returns are way too complicated."

Again, the author's resort to a straw-man argument. The U.S. tax code is too complicated, with too much social engineering being run through it in the form of tax credits, exemptions, etc. The surging business at H&R Block, Liberty Tax Service, as well as independent CPA firms, attests to the fact that for a lot of Americans, tax returns are too complicated to complete on your own.

"Myth #5 - You should aim for a big tax refund."

The authors argue that the prevailing myth that looks favorably on a big refund from Uncle Sam come tax return filing time is a more or less a scam. I agree completely. Better to owe the government a little money when you file your return, so that you know you had access to every last dollar you were entitled to throughout the prior year, than to get a big refund which means you lent your hard-earned money out on an interest-free basis.

Excerpts from Interview with Bob Kerrey

Former two-term Nebraska Senator Bob Kerrey was recently interviewed by Tax Analysts (TA), and offered some interesting insights into the state of the recent Fiscal Commission established by President Obama.

"TA: What do you think the chances are that the current commission achieves its goals?

Kerrey: I think the president selected two really good people (subscription required). He started it off absolutely the way it needs to be started off, with a strong Republican [former Wyoming Sen. Alan Simpson] and a strong Democrat [former White House Chief of Staff Erskine Bowles] on the commission cochairing it."

Seriously, with a couple of has-been's or never-were's running it, this commission is dead before it even meets for the first time. The best that can be said about former Senator Alan Simpson is that he is now irrelevant. The best that can be said about former Clinton Chief of Staff Erskine Bowles is that he has never been relevant.

Next up, the interviewer from Tax Analysts attempts to gauge whether the commission will ultimately recommend tax hikes.

TA: A lot of people wonder whether Republicans on the commission would be able to accept the more Democratic view of how to solve the problem, perhaps through the tax code. Is Alan Simpson someone who you think could accept that?

Kerrey: I think the facts show that this is a problem that wasn't created by Republicans or Democrats. It's a demographic problem, and you can't blame the size of the baby-boom generation on Republicans or Democrats. It's their claim on Medicare and Social Security that's the challenge. You could say the Republican view is, well, no tax increases under any circumstances. But that was not their position in '83 when they participated in solving the cash flow problem of Social Security. So I don't know in this particular case whether there is a Democratic or Republican point of view when it comes to at least agreeing on the nature of the problem.

Kerrey's response is simply ridiculous.

First of all, the fact that the elected politicians in Washington DC are blowing the doors out with spending has nothing to do with demographics, and everything to do with a lack of fiscal discipline, and completely irrational overspending in hopes of winning the favor of various voter blocks.

Secondly, tax increases will not be supported by any Republican that has any hopes of staying in office beyond their current term.

Therefore, this commission is destined to ultimately split on party lines (Democratic "solution" = tax hikes, Republican "solution" = no tax hikes), with no realistic, growth-oriented solution recommended.

Los Angeles City Employees Appeal to Retain Jobs

In a recent Los Angeles City Council meeting, streams of city employees filed in to make appeals that their jobs not be eliminated.

"A week ago, council members listened uncomfortably from their leather swivel chairs as half a dozen technicians from the city's public access channel begged for a last-minute reprieve. On Wednesday, in an effort organized by labor unions, council members faced a stream of city employees such as Edwards, who urged them not to go through with layoffs that would virtually shut down the city's licensed child-care programs and curtail hours at libraries and recreation centers."

Although it's emotionally difficult to eliminate employees in an economy in which no jobs are being added (except in this area), the reality is that public unions over the years have sucked taxpayers dry with their escalating pay and lavish retirement benefits.

If LA city union membership wants to retain their jobs, they need to be prepared to discuss significant cuts in pay and retirement benefits as a trade-off. Until they do so, their appeals should fall on deaf ears.

Obama in Wonderland

President Obama recently offered a 17 minute, rambling, non-responsive response to a worker who complained about being overtaxed.

"Obama started out feisty. "Well, let's talk about that, because this is an area where there's been just a whole lot of misinformation, and I'm going to have to work hard over the next several months to clean up a lot of the misapprehensions that people have," the president said.

He then spent the next 17 minutes and 12 seconds lulling the crowd into a daze. His discursive answer - more than 2,500 words long -- wandered from topic to topic, including commentary on the deficit, pay-as-you-go rules passed by Congress, Congressional Budget Office reports on Medicare waste, COBRA coverage, the Recovery Act and Federal Medical Assistance Percentages (he referred to this last item by its inside-the-Beltway name, "F-Map"). He talked about the notion of eliminating foreign aid (not worth it, he said). He invoked Warren Buffett, earmarks and the payroll tax that funds Medicare (referring to it, in fluent Washington lingo, as "FICA")."

Obama's response to the questioner can be distilled down to six words: Shut up and pay your taxes.

The fascinating part is that he doesn't even pretend to be sympathetic to anyone that feels they are either paying too much in taxes or believe they do not get sufficient value for the taxes they do pay.

Obama's response is actually very appropriate in that it comes from a person who identifies with and now personifies Big Government, and believes that he can and should be given most of the fruits of your labor to spend as he sees fit.

Democrats Plummeting in Polls

A CNN/Opinion Research Corporation poll shows that Americans increasingly do not think Democrats are up to the task of fixing the economy.

"A CNN/Opinion Research Corporation survey released Thursday indicates 48 percent of Americans say Republicans in Congress would do a better job dealing with the economy, compared to 45 percent for Democrats. That's a switch from last August, when Democrats held a 52 percent to 39 percent advantage on the economy."

Some of the decline of course can be attributed to the fact that Democrats now "own" the state of the economy, at least more so than when they originally took control of Congress and the White House.

But their declining poll results also have to be attributed to the policies they have enacted since taking office en masse, health care in particular. Voters know that the health care mandate is no panacea for a slumping economy, and will heap untold costs on companies that are forced to comply with its provisions.

Unfortunately however, voters think Republicans are potentially the answer to the country's economic woes.

Although some of the Republican policies are pro-growth and helpful, the only way to get back to a truly sound, thriving economy is by eschewing Republicans and Democrats alike and going with the freedom-loving, free market Libertarians (Ron Pauli in particular).