Our Tax System is Broke

Well fellow citizens, it is April 15, affectionately known as “tax day.” This is the day when most of us end our annual battle with the Infernal, er. . . I mean Internal Revenue Service. I assume most of you are like me—you don’t mind paying taxes, you just hate this annual battle. I think each of us are torn between two fears; 1- that we’re paying more taxes than our neighbors, and 2- that if we claim a questionable deduction IRS agents will be knocking down our doors to drag us off to federal prison. I also think that a lot of us feel kind of resentful on tax day because we keep hearing that rich individuals and corporations never pay their fair share of the costs of government.  

A few years back, this maven wrote a piece on the Fair Tax proposal, which was sort of popular for a while. I think the Fair Fax proposal has moved to the back burner. But some of the stuff I said then still applies and I will quote it here. Don’t worry; I gave myself permission to plagiarize so there are no copyright problems. 

“A tax system should have only one purpose—raising revenue for the government to carry out the functions that the representatives of the citizens have assigned to it. In addition, under the theory that those who accumulate the most wealth derive the most benefit from the country or state, the tax system should be progressive. Those who earn the most should pay a higher percentage of their income in taxes than do those who earn the least. Finally, a tax system must not only be fair, it must also be perceived as fair by the citizens.

“Under these standards, our current tax system ranks low. First, rather than being only a mechanism for raising revenue, our current system is used continuously by the government as a mechanism for controlling the behavior of individuals and corporations in our society. When the government wishes to encourage certain activities it offers tax incentives to those who abide by those wishes. Likewise, when the government wishes to discourage certain behaviors it places tax costs on those behaviors. This management of our society by use of the tax code is probably as old as the code itself and has been used by both Republican and Democratic governments. It explains why the Internal Revenue Code is thousands of pages rather than only a few pages long.

“Second, our tax system is unfair and is perceived by most citizens as unfair. It is set up as a yearly game between the citizens and the IRS. The objective of the IRS in this game is to maximize the amount of taxes each citizen pays. The objective of each citizen is to minimize the amount of taxes he, she or it pays. The rules of the game are tens of thousands of pages long, and those who can afford expensive CPAs or tax lawyers who have mastered those rules are going to play the game much better than those who can’t. A tax system in which the amount you pay depends on how clever you and your tax preparer are is not a fair system. And it cannot be perceived as fair. Many taxpayers get the feeling that somehow they are paying more than their fair share of taxes. They fear that their neighbor has discovered a hidden deduction that they don’t know about. Or they fear the dreaded audit in which the IRS will discover that they have claimed more in deductions than the law allows.

“The unfairness of the system extends into its progressiveness. Although our tax system is, on its face, progressive, the presence of so many loopholes and deductions and credits and shelters reduces the tax burden on those with higher incomes. The result is that in many cases individuals with high incomes may be paying a lesser percentage of that income in taxes than do individuals with lower incomes.”

I would love to see our present system replaced with a tax system that is fair. I would love to see the IRS disappear. I would love to eliminate the anxiety I suffer every year in playing the 1040 game.  

We’ve been using the income tax as our primary source of government revenue for just over a hundred years. It’s about time we think this through again.

 

Slick and Well-Spun, But the Same Old Cantor

To this maven the greatest scourge of television is the advertising. That is why I much prefer to watch just about any show “On Demand” rather than when it is initially broadcast. Then I can “fast-forward” through all of the ads. (Actually, I’ve become quite adept at switching back to “play” just when the show resumes.) Unfortunately, some of the networks have become aware of the maven’s viewing habits and have now disabled the “fast-forward” function for “on-demand” viewing. So, alas, I am stuck watching the ads.

Just the other night, while catching up on an episode of “Awake,” which I can’t yet decide whether I like (although I am fascinated with the idea of leading simultaneous alternative lives), I was suddenly stuck in an ad. Since we are temporarily between elections, I assumed it was a commercial rather than a political ad. Since it started with statements from Richmond-area businessman, I was sure that the ad was selling the product or service for which they are known. But it quickly became apparent that they were really selling small business. All of these entrepreneurs were telling me that small businesses are the backbone of the American economy and that small businesses create most of the jobs in our country. Then they were telling me that because of high federal taxes and unreasonable federal regulations small businesses were not making enough money—money that they intended to use to create more jobs. And, suddenly, it was a political ad. Only Congressman Eric Cantor understands the importance of small business and he is introducing legislation to cut taxes and regulations on small business and we should all support Congressman Eric Cantor by reelecting him in the fall.

What a great ad! By the end of it I was ready to go marching down Broad Street with a sign extolling the wonders of small business. I was ready to take down the “Kane” sign in my front yard and put one up for Eric Cantor. I was going to go farther than that—I was going to renounce my life-long commitment to the Democratic Party and declare myself a Republican. Wow! It was like the high I get when I increase the dosage of anti-depressant I am taking. It was much better than champagne.

What an epiphany! All my life I had thought that people went into business to make money. And I also thought that they used that money to buy a nice house or two, two or three luxury cars, and several yachts or they went on long and glorious vacations and wore designer clothes and the like. Boy was I wrong! Now I knew the truth. People, especially small businessmen, go into business not to make money but to create jobs so that other people can buy all those things. Businessmen are not greedy! Rather, they are altruists. And, if it were not for that despicable federal government that has the audacity to tax and regulate them they would create even more and more jobs. And to think, I needed somebody like Eric Cantor to tell me the truth.

Well, dear reader, even the greatest high starts to wear off in time. So, very quickly the Cantor-induced euphoria started to fade and I started to feel the onset of the inevitable hang-over. I started getting this feeling of déjà vu. Hadn’t I heard this message before? Is this any different from that stuff that conservative Republicans started feeding us in 1980 and that then-presidential candidate George Herbert Walker Bush called “Voodoo” economics? Isn’t this just trickle-down economics in a new package? As the conservative message goes, if we cut taxes for the wealthy they will put more money into circulation, which will expand the economy and eventually some of that wealth will make it down to the less-affluent, like you and me. Isn’t this the same stuff that little “W” Bush and his loyal supporter Eric Cantor imposed on us for eight years, a time in which the rich got richer but in which everybody else was lucky just to break even?

And, of course, nowhere in the ad does Mr. Cantor explain how he plans to pay for these additional tax cuts. Mr. Cantor and his Republican friends in the Congress claim to be interested in reducing our national debt. Yet they are constantly advocating reducing taxes on the wealthy and on businesses. Don’t they realize that reducing tax rates inevitably results in decreased revenues to the government which necessarily increases the national debt? Wasn’t Mr. Cantor watching during the years when his party controlled both the presidency and the Congress and tried their “tax-cutting fixes everything” philosophy and nearly doubled our national debt? Wasn’t he watching, or was he too busy trying to become the leader of his party to pay any attention to governing?

Also dear reader, let us not forget the second part of Mr. Cantor’s wonderful ad: we must eliminate federal regulations to allow small businessmen to engage in their favorite pastime—creating new jobs. Again I must ask whether Mr. Cantor was paying attention during those years that his party was in control of Washington. His president and his party’s leadership in Congress convinced us that federal regulation of business was costly and unnecessary. His president and his party in the Congress drastically reduced federal regulations. That reduction in regulation resulted in businessmen engaging in risky practices that produced the financial crisis of 2007-08. That crisis produced the most severe economic recession since the 1930s. Is this the type of policy that Mr. Cantor urges us to return to?

On balance, I have to conclude that Mr. Cantor has issued a great political ad. It is slickly made and places a great spin on Mr. Cantor’s ill-advised policies. The wealthy out-of-state contributors to Mr. Cantor’s campaign fund clearly are getting their money’s worth. And, it’s nice to see Mr. Cantor actually spend his campaign funds on getting reelected for a change, rather than spending them to purchase his party leadership position. I would only recommend that an additional disclaimer be attached to the ad: Caution, this ad may contribute to unwarranted euphoria and may cause delusional behavior.

GOP in House Breaking Promises Already

Now, don’t get me wrong. I did not vote for any Republicans this past November. Nor did I support any of our local Tea gals and guys. I took the Republican promise to reduce our runaway national debt with a grain of salt (which certainly would ruin the flavor of most teas that I drink.) And, since I spent a good portion of my pre-maven professional career on federal budget matters, I knew that promising both to reduce the debt and to cut taxes was quite a large bottle of snake oil to swallow. But, a lot of people drank the oil and voted for our friends the Republicans and now they will awaken to a nasty hangover.

As we all know, Republicans hate to pay taxes. So reducing them is their number one priority. There is not a tax yet invented that would make a Republican happy. Not that Republicans don’t want a certain level of government services at the federal, state and local levels. They just want don’t want to pay for these services.

The leading lyric in the Republican campaign song is that the Democrats (to be pronounced L-I-B-E-R-A-L-S) only want to raise your taxes so that they can spend more and more federal dollars on wasteful and perhaps even socialistic programs. They sing this song over and over again and sing it louder and louder to make sure that the American people don’t realize that despite their rhetoric Republicans have been spending money at a rate higher than the Democrats. Republicans Sure Ain’t Conservative With Federal Checkbook. And, worse than that, because they would rather die than raise taxes Republicans pay for all their spending with borrowed money.

But wait, dear reader, I am being unfair. As my neighbor Eric Cantor pointed out in his recent book “Young Guns,” (coauthored by his fellow musketeers Paul Ryan and Kevin McCarthy) it was the old congressional Republicans who had this terrible borrow and spend habit. The new Republicans are different. They want to cut spending. They want to be fiscally responsible. They want to lower the outrageous national debt (a national debt that became that large because of the tax cuts and the large spending bills that the Republicans voted for when their president was in the White House). Yes, the Republicans have changed. And it’s not just their rhetoric. You can see the change in their behavior. Or, can you?

But first, a word from our sponsors: Now, for the first time, at an exceptionally low price, all you never cared to learn about early attempts by the Congress to stop the burgeoning annual budget deficit during the 1980s and 1990s. Lyndon Johnson began our deficit spending habit in the 1960s by insisting that he could pay for both the Viet Nam War and his Great Society programs without raising taxes. But it wasn’t until Ronald Regan’s 1981 tax cuts and increased federal spending early in his administration that the annual deficit and the resulting growth in federal debt became the way of life of the Federal Government.

The Congress tried to bring deficits under control with the Balanced Budget and Emergency Deficit Control Act of 1985 (popularly known as the Graham-Rudman law and subsequently as the Graham-Rudman-Hollings law (GRH)). The Congress was well-meaning, but GRH had no enforcement mechanism and federal deficits continued to increase between 1985 and 1990. In 1990, the Congress enacted the Budget Enforcement Act (BEA), which actually had teeth.

Under the BEA, federal programs fell into one of two categories—discretionary spending or direct spending. Discretionary spending programs were those that were funded by the thirteen annual appropriations acts. Direct spending programs (often referred to as entitlements) were funded by permanent appropriations contained in the legislation that created the programs. BEA set maximum annual appropriations amounts for discretionary spending and required that annual budget resolutions apportion these amounts among the thirteen appropriations bills. BEA provided that any appropriation bill that sought to exceed the annual allotment contained in the budget resolution was out of order in the House of Representatives.

For direct spending programs, BEA set up the requirement that all legislation affecting these programs and all tax legislation enacted in a budget year had to be deficit neutral. This requirement, known as pay-as-you-go (or PAYGO), meant that any legislation creating new or increased direct spending had to be offset in the same budget year with legislation eliminating or reducing spending in another direct spending program or by legislation increasing federal revenue. (Since there may be sensitive Republicans reading this, I did not use the “T” word). Further, any legislation cutting taxes (it is okay to use the “T” word when we are talking about cuts) had to be offset by legislation reducing direct spending or increasing other revenue. In short, under PAYGO, the aggregate of direct spending and tax legislation in any given budget year could not increase the federal deficit.

The enforcement mechanism in BEA was the requirement that if any of the annual thirteen appropriations acts exceeded the budget resolution allotments or if the aggregate of PAYGO legislation resulted in an increase in the deficit, the president was required to sequester (or rescind) sufficient amounts to cure the BEA violation. The threat of sequester was so potent that I can only remember one actual sequester during the period of BEA. BEA worked quite well. During its operation the annual federal deficit went from a high of about $290 billion in 1994 to a low of $22 billion in 1997, and there were actually budget surpluses in the remaining years of the Clinton Administration.

Then came the Bush Administration, accompanied by Republican control of the Congress. BEA was allowed to expire. The Congress enacted tax cuts in 2001 and 2003. On September 11, 2001, the United States was attacked beginning the War on Terror. Concern over annual budget deficits evaporated and the total debt of the Federal Government has doubled since 2001.

In 2010, the Democratic controlled Congress and the Democratic president enacted the Statutory Pay-As-You-Go Act of 2010. With a number of significant exceptions, the 2110 PAYGO Act restored the PAYGO requirements of the BEA. As described by the White House:

If Congress enacts PAYGO bills cutting taxes or increasing mandatory expenditures without fully offsetting the costs, the Act specifies a penalty, called "sequestration." If Congress adjourns at the end of a session with net costs – that is, more costs than savings - on the scorecard, the Office of Management and Budget (OMB) is required to calculate, and the President is required to issue a sequestration order implementing, across-the-board cuts to a select group of mandatory programs in an amount sufficient to offset the net costs on the PAYGO scorecard.

Because of the exceptions contained in the 2110 PAYGO Act it will not be as significant factor in controlling budget deficits as was the BEA. In fact, an exception in the Act allowed the enactment of tax cuts in the recent lame-duck session of Congress that will increase deficits by hundreds of billions of dollars.

I now return you to our scheduled program: Despite the fact that it has the potential to reduce budget deficits, no Republican, in either the House or Senate voted in favor of the 2110 PAYGO Act. Why? That is quite simple. The Republican addiction to tax cuts is so powerful that they cannot agree to any legislation that might block such tax cuts. So, in the Republican hierarchy of governing philosophy, tax cuts are far more important than deficit or debt reduction.

But, again, I am being unfair. It’s the old Republicans that had the addiction to tax cuts and spending supported by borrowing. Eric Cantor’s young studs-er-guns are responsible. They will reduce the annual deficit. And to prove it, the new Republican masters of the Congress have issued their proposed rules for the 112^th Congress. I am sure that they have included the PAYGO provisions of the 2010 Act. Anything less would just increase the federal debt. Well, let’s look at House Resolution 5, which contains the new House rules.

Well, this is a surprise. The new rules drop the concept of PAYGO and replace it with “Cut-as-you-go,” which only applies to the spending side of direct spending programs. CUTGO requires that any increase of spending in a direct spending program be offset by a reduction of spending somewhere else. Under CUTGO, legislation cutting taxes gets a free ride despite the fact that it will add significantly to the national debt.

Another surprise: If tax reduction legislation is designated as an “emergency,” it does not count for budget purposes.

And, an additional surprise: For the purposes of estimating the budgetary effects of certain legislation, the Chair of the Budget Committee shall not count deficit increases made by:

• Extensions of the 2001 tax cuts
• Extensions of the 2003 tax cuts
• Repeal or adjustment of the health care or educational affordability acts enacted in the 111^th Congress
• Adjusting alternative minimum taxes or extending the recently enacted estate tax exemptions.

Additional surprises? I will leave them to you, reader. This piece has already gone too long, and I am sure I have missed my deadline.

With all due regard for Mr. Cantor and his other musketeers, it appears to this maven that the Young Gun Republicans are just like the old Republicans. They are more than willing to add trillions of dollars to the national debt for the sake of tax cuts. Their election promise to cut the national debt lasted only until their first official act of the new Congress. But, as I have pointed out many times before, don’t ever accuse Republicans of being fiscally responsible. For you millions of Americans who were swayed by the Republican promise to reduce federal debt: Take two aspirins and call me in 2012.

700 Billion Tax Hike To Pay For Bailout

Let’s just say, hypothetically of course, that the Republicans were fiscally responsible, rather than the borrow and spenders that they are. Let’s also say, as hard as it is to believe, that they just wouldn’t allow the government to spend money it didn’t have. If that were true, than President Bush’s bailout plan for Wall Street would include a $700 billion tax increase to pay for itself. I just wonder how much support there would be for the bailout if that were true.

Well, dear reader, the bailout proposal does contain that massive tax hike. It’s just being deferred for a few years. Like the other four or five trillion dollars in additional debt that the spendthrift Republicans have added to our national credit card since Mr. Bush took office, sooner or later somebody has to pay the piper. Since it won’t be them, our avoid-paying-taxes-at-all-costs leaders just don’t care. So what if they are crippling our grandchildren with an incomprehensibly big debt to pay for things they never used?

The next time you see those McCain-Palin ads that talk of Senator Obama and his liberal allies “promising” to raise our taxes, just remember that it is Senator McCain and his Republican allies that have raised our grandchildren’s taxes by trillions of dollars over the years. And ask Senator McCain how many of those deficit appropriations bills, which have increased our debt so dramatically, he voted against.

Don’t Lower the Tax Rate, Invest in Schools

According to Michael Martz in the TD this morning, increased property assessments will produce extra revenue for the City of Richmond equal to a one cent change in the tax rate. 1 City Council President Bill Pantele used this news as additional ammunition in his debate with Mayor Wilder over whether the tax rate should be lowered in the city. Mr. Pantele argues that increased revenues anticipated from higher assessments will make it possible for the City Council to lower the tax rate from its current level of $1.23 per hundred dollars of real estate value. The mayor, on the other hand, argues that in these times of economic weakness it would be irresponsible to lower the tax rate.

You know me—there is little that Mayor Doug does that I approve of. However, in this dispute I have to agree with him that it would be irresponsible to cut the tax rate. It would be irresponsible, at least until the council makes sure that Richmond Public Schools are getting adequate funding. Since in preparing their budget both the Superintendent and the School Board were restricted by the council to the same level of city funding as in the two previous years, I do not believe that the school budget really meets the needs of our city’s children.

As I have, hopefully, made clear, our city’s public schools have a serious problem which is adversely affecting River City’s demographics. Richmond Public Schools is failing to educate hundreds of middle class children that reach school age in the city each year. These are the children whose parents opt out of RPS by moving out of the city, using private schools or home schooling their young’uns. The fact is that no matter how good Dr. Deborah Jewell-Sherman tells us Richmond’s public schools have become and how much better we’re gonna get, a large proportion of the students in RPS are there only because their parents cannot afford the other options.

Unfortunately, other commitments kept me from hearing Dr. Jewell-Sherman’s second “State of the Schools” address last week. I did read about it, however. The superintendent’s remarks are inspiring and make me feel really optimistic about the future of our schools. I felt the same way last fall when I attended two of the School Board’s public forums on the proposed “New Direction” for RPS. Come to think of it, I was equally enthused by Dr. Jewell-Sherman’s first “State of the Schools” last year, when she discussed her 2015 plan. Sometimes, however, I wonder whether all this inspiring talk is enough.

Look, I know that the members of the School Board and the entire RPS staff are doing a wonderful job. I know that the performance of our children, at least on the state’s SOL tests, has improved considerably. I spend a couple of hours each week in two of our elementary schools and I see dedicated teachers and our children working hard and eager to learn. You may remember that last fall I bragged about what a good a job RPS is doing. 2


Yet, there are so many parents in this city that do not believe that their neighborhood elementary school can give their child a first-class education. Our mayor has repeatedly told our citizens that the School Board and RPS are doing a bad job—wasting money with little results. Twenty-six of the Metro area’s business leaders have declared the state of our schools to be an “emergency.” The Crupi report, last fall, described one of the Richmond area’s negatives as “Weak City Public Schools.”

Look, I don’t like paying high taxes. Last summer, I raised the question of why we in the city pay so much more in taxes than do our neighbors across the border. 3 I would really enjoy the reduction in tax rates being offered by Mr. Pantele and other members of the City Council. But, I don’t want a tax cut if it means we are not giving all our children the best possible public education. I assume that the other residents of our fair city feel the same.

So to the City Council I say:
1- add funding to the school budget so that RPS can more quickly implement the “New Direction”;
2- add funding to the school budget to pay for converting several of the city’s elementary schools to International Baccalaureate Primary Years schools;
3- provide sufficient additional funds to the school budget so that RPS’ share of general fund expenditures is restored to at least the 26.11% level it was in fiscal year 2007, rather than the 24.71% currently planned for fiscal year 2009.

Honorable members of the City Council, you must look at money you appropriate for Richmond’s public schools as an investment in the future of our children, not as just dollars spent. We have thousands of children in our city who must have a first-class public education if they are to break out of the multigenerational poverty they were born into. We also must do something to win back the city children whose parents have not enrolled them in our public schools. Adequately funding our public schools is not just a matter of dealing justly with our children. It is also a matter of moving this city toward the greatness it can achieve.

The “Fair Fax” Just Ain’t Fair

Reading Jon Wakefield’s op-ed in Monday’s TD, “Tax Code Change Would Benefit All” (http://www.inrich.com/cva/ric/opinion/oped.apx.-content-articles-RTD-2007-12-17-0062.html) might lead you to believe that he had discovered Nirvana. Mr. Wakefield has apparently become a true believer in the so-called “Fair Tax” proposal. In his article he spits back the arguments made by Americans For Fair Taxation on their website (http://www.fairtax.org ). And it sure is a compelling argument. The Fair Tax proposal would repeal all federal income-based taxes and replace them with a 23% federal sales tax on all purchases made in the United States. It would eliminate everybody’s nemesis, the Internal Revenue Service, and would convert April 15 into just another beautiful spring day. No more loopholes, no more tax cheating, no more expensive tax lawyers or CPAs, no more H&R Block commercials all winter, no more anxiety-producing tax forms, no more keeping of receipts. It would truly be a taxpayer’s heaven. But, would it be fair?

A tax system should have only one purpose—raising revenue for the government to carry out the functions that the representatives of the citizens have assigned to it. In addition, under the theory that those who accumulate the most wealth derive the most benefit from the country or state, the tax system should be progressive. Those who earn the most should pay a higher percentage of their income in taxes than do those who earn the least. Finally, a tax system must not only be fair, it must also be perceived as fair by the citizens.

Under these standards, our current tax system ranks low. First, rather than being only a mechanism for raising revenue, our current system is used continuously by the government as a mechanism for controlling the behavior of individuals and corporations in our society. When the government wishes to encourage certain activities it offers tax incentives to those who abide by those wishes. Likewise, when the government wishes to discourage certain behaviors it places tax costs on those behaviors. This management of our society by use of the tax code is probably as old as the code itself and has been used by both Republican and Democratic governments. It explains why the Internal Revenue Code is thousands of pages rather than only a few pages long.

Second, our tax system is unfair and is perceived by most citizens as unfair. It is set up as a yearly game between the citizens and the IRS. The objective of the IRS in this game is to maximize the amount of taxes each citizen pays. The objective of each citizen is to minimize the amount of taxes he, she or it pays. The rules of the game are tens of thousands of pages long, and those who can afford expensive CPAs or tax lawyers who have mastered those rules are going to play the game much better than those who can’t. A tax system in which the amount you pay depends on how clever you and your tax preparer are is not a fair system. And it cannot be perceived as fair. Many taxpayers get the feeling that somehow they are paying more than their fair share of taxes. They fear that their neighbor has discovered a hidden deduction that they don’t know about. Or they fear the dreaded audit in which the IRS will discover that they have claimed more in deductions than the law allows.

The unfairness of the system extends into its progressiveness. Although our tax system is, on its face, progressive, the presence of so many loopholes and deductions and credits and shelters reduces the tax burden on those with higher incomes. The result is that in many cases individuals with high incomes may be paying a lesser percentage of that income in taxes than do individuals with lower incomes.

Look, I would love to see our present system replaced with a fair tax system. I would love to see the IRS disappear. I would love to eliminate the anxiety I suffer every year in playing the 1040 game. However, I see no purpose in replacing one unfair system with another unfair one.

By their very nature sales taxes are not progressive. In a state with a 5% sales tax, everybody who makes a purchase in the state pays the same 5% tax regardless of their income. Further, since lower income families spend a far higher percentage of their incomes on subsistence items such as housing, clothing, food or fuel, the 5% percent tax they pay on each purchase is more onerous. The Fair Tax proponents are, of course, aware of this inequity. They have tried to deal with it by creating a mechanism called the “prebate”.

Under the Fair Tax prebate, the Social Security Administration (you read me right) would mail a check to every household in the United States each month. The purpose of this prebate would be to compensate each household, in advance, for the amount of sales tax it pays on subsistence. The Fair Taxers have established an “annual consumption allowance” for each household that varies with the number of persons residing in that household. For example, for 2007 had the Fair Tax been in effect, the consumption allowance for a single adult household with three children would have been $20,650. For a two adult household with one child the allowance would have been $23,900. The sales tax that would apply on the amount of this allowance is calculated and constitutes the annual prebate. One twelfth of this amount would be sent to the household each month--$396 for the first household above, $458 for the second household. (If this sounds complicated, blame the Fair Taxers, not me).

The Fair Tax proponents prepared a chart that demonstrates that with the addition of the prebate feature the federal sales tax would actually be progressive. There are two problems with the chart. The first is the assumption that a household’s annual income and its annual spending will be the same. The second is the calculation of the tax rate as a percentage of the amount the household spends rather than as a percentage of the household’s income. If we look at a hypothetical real world (how’s that for an oxymoron), however, things are not as fair as they seem.

Let’s look at some examples:

The Smiths have an annual income of $50,000. They would like to put away part of their income in a savings account. However, with the cost of living in their city being so high, they are unable to save and end up spending all their income. The 23% federal sales tax they pay on their $50,000 consumption amounts to $11,500. Based on the size of the Smith household, they receive a prebate of $5,497. Therefore, the actual federal tax they will have paid is $6,003. As a percentage of their income, they are paying a tax of about 12%.

At the other end (but not the far end) of the income spectrum are the Jones. The Jones household has an annual income of $1,000,000. Because the Jones are not conspicuous consumers they spend only $200,000 and are able to save or invest $800,000. The 23% federal tax they pay on their consumption amounts to $46,000. Like the Smiths, the Jones receive a prebate of $5,497. The actual federal tax paid by the Jones is therefore $40,503. As a percentage of the household’s annual income, the Jones are paying a tax of a whopping 4%.

Let’s review. Under the so-called Fair Tax, the Smiths with an income of $50,000 would pay a 12% tax. The fortunate Jones, however, with an income of $1,000,000, would pay a tax of only 4%. I don’t know about you, but to me this is not a fair tax.

Despite Mr. Wakefield’s assertion, the Fair Tax plan also has its loopholes. If our Jones household wishes to be less frugal they may choose to buy a $500,000 yacht with the amount of their income they don’t need to live on. If the Jones buy that yacht in Newport News, they will pay a federal sales tax of $115,000. However, if the Jones are smart (and I assume they are), they will buy their yacht from some boat yard in the Bahamas. They will then pay a federal sales tax of zero. And, this loophole does not only apply to the wealthy few. It is also available to those of us who live along the Canadian border. Why buy a $25,000 car in Detroit and pay $5,750 in federal tax on that purchase when you can go across the river to Windsor and buy your car without paying any federal tax.

I can discuss other unfairnesses that I have found in the “Fair Tax,” but this post is already much too long. When the Fair Taxers fix these inequities, I will be happy to support their proposal.

To Earn More, Ask Your Boss for a Pay Cut!

If you think the title of this post makes no sense, then you’re gonna love “Krugman Ruined a Beautiful Day,” the winner of the maven’s most wonderful letter of the day for October 2, 2007. This letter was written in response to a TD op-ed by Paul Krugman. I don’t remember Krugman’s column, but today’s letter was surely entertaining.

My favorite sentence in today’s letter is “Even students in Econ 101 understand that tax cuts increase the revenue going into the U.S. treasury. This has been proven many times.” Hey, it’s been a long time, but I did take Econ 101 and I never learned this amazing principle. I learned about supply and demand and all that cool stuff that only works in a hypothetical world. But never did my Economics professor have the nerve to suggest to me that lowering taxes increases revenues.

Now, this is becoming crystal clear to me. The more money we want to raise for the United States government, the lower our taxes should be. Over the years my brain has begun to resemble Swiss cheese. However, I still have enough gray matter to extend our letter writer’s theory to its ultimate conclusion. If lower taxes mean higher revenues, then if we eliminate taxes entirely we will maximize the revenues we collect.

How come nobody has thought of this before? Wait, now I remember. Isn’t this what George Herbert Walker Bush called “Voodoo Economics” in 1980? Isn’t this what became known back in those days as Reaganomics? Isn’t this what created huge budget deficits over the past few decades? Aren’t we in mega trillions of dollars of debt because we had presidents who thought you could cut taxes and increase spending at the same time? Despite what our letter writer claims, this inane theory has not been proven; it has been disproved two disastrous times—in 1981 and in 2001—and our great grandchildren will be still be paying off our obscene debt in sixty years.

Why do we pay more in Richmond?

In Michael Paul William’s column in the July 23 TD he discusses whether it is better to live in Mechanicsville or Glen Allen (notice that the City of Richmond was not even discussed.) Williams refers to the article in Money magazine that lists Mechanicsville 54th best and Glen Allen 66th best among places with between 7500 and 50,000 residents. Williams indicates that the magazine lists the median home price for Mechanicsville at $267,969 while its average real estate taxes were $1624. For Glen Allen the figures were $235,885 and $2055.

It’s been years since I learned arithmetic, but it seemed to me that these figures must be wrong. The homes in Mechanicsville were costlier, but the real estate tax in Glen Allen was higher. I was sure that either Mr. Williams or the magazine must have made an error. Then it hit me. These places are in different counties and therefore they have different real estate tax rates.

So, I went to my friendly Internet to see what the tax rates were for Richmond and its nearby bedrooms. Now, some of the websites have 2006-07 rates and some have 2007-08 rates, so these figures may not exactly match. However, here’s what I found out—
City of Richmond: $1.23 per $100 of assessed value
Chesterfield County: $1.02 per $100 of assessed value (going to .97 at the end of this year)
Hanover County: $0.81 per $100 of assessed value
Henrico County: $0.87 per $100 of assessed value

So what does all this mean? If my house is assessed at $250,000 (which I wish it was), I would pay the following amount of annual real estate taxes in the various jurisdictions:
City of Richmond: $3,075
Chesterfield County: $2,550
Hanover County: $2,025
Henrico County: $2,175
Well, I live in the City of Richmond. So, I am paying between $500 and $1,000 more in real estate taxes than if my house were in the surrounding counties. (These figures do not include various miscellaneous fees that I also pay to the City of Richmond.)

So, why do I pay so much more for local government than do some of my friends? Obviously, I must pay more because I get more. I must get better schools, better maintenance of streets and other infrastructure, more police and fire protection, better libraries, etc. and etc. It’s like the old Yuban commercial (if you’re under 40, you probably never heard of it), “You get what you pay for!”

I'm a newcomer to Richmond (been here less than 37 years) so I'm not sure, but I suspect that more or better services is not the reason I pay more.

In a July 10 TD OpEd, 1st District Councilperson Bruce Tyler gave his reason for why I pay more:
“Richmond is fortunate to be the capital of Virginia. With this blessing comes the hidden burden of providing essentially free police, fire, and infrastructure to state government. Richmond taxes are higher than taxes in surrounding localities because they don't share this burden; therefore, we are less competitive.”

Tyler presents an interesting issue. Commonwealth-owned buildings in the city do not generate any tax revenue. Shouldn't the Commonwealth compensate the city for this lost revenue by means of an annual payment in lieu of taxes? I know that the Federal Government pays the District of Columbia a substantial annual payment to compensate for the revenue the District loses because the Feds pay no taxes. But, does any state government compensate its capital city for lost tax revenue?

In my opinion, making up for the revenue lost because the Commonwealth does not pay taxes can only account for a small part of the extra taxes we Richmonders (Richmondites?) pay each year.

As you all know, our beloved mayor, Doug Wilder, gives another reason for our high real estate taxes. In his Vision newsletter for January 22, 2007, His Lordship said,
“I do not believe that our citizens desire for their real estate assessments to continue to rise in order to support the exorbitant spending by our public school system, which maintains too many half-empty school buildings at a cost of millions each year.”

Well, Mr. Your Honor, I cannot believe that I pay higher taxes in the city simply because RPS has some half-empty buildings. Only about one quarter of the City’s operating budget goes for schools. (http://www.ci.richmond.va.us/departments/budget/pdf/PieChartTotalExp.pdf) Is it just possible that there is some waste in the rest of the City government--the part that you are responsible for?

So, here is my question to Mayor Wilder. Here is my question to the nine members of the City Council. Why do we pay more for municipal services than do our neighbors in Hanover, Henrico and Chesterfield counties?

Real Estate Tax (part 2)

In my earlier post (February 15, 2007), I explained why the real estate assessment-taxation process is inherently unfair. I argued for the repeal of this obsolete tax and its replacement by another source for local government revenue. I realized that this repeal would not take place soon, so I proposed the following fix to make the real estate tax more equitable:

1- All assessments are frozen at their current level (or preferably rolled back to their January 2006 level);
2- Owners of real estate pay taxes based on the current assessment until either they sell the property or refinance to access their equity in the property;
3- Sellers or owners of refinanced property pay a real estate surtax at settlement based on the increased value of the property;
4- After sale or refinance the assessment will be adjusted to the sale price or the appraisal that is the basis of the refinancing.

I received a comment from somebody who calls himself the Yankee (I assume that means s/he is a member of some New York sports team.) The Yankee said,


"If you sell your property at a profit, you will owe real estate taxes based on the idea that the value of the property actually increased some time earlier and you weren't taxed at that time on the increased value. Is there a fair way to calculate this belated tax?

"Let's say that you lived in the house for 20 years. If the value was constant for the first 19 years, and then jumped in the last year, the tax should have risen only one year ago. If the value went up in the first year, and then was constant for the last 19 years, the tax should have been higher for 19 years. Since there's no way to figure out how long the house was under-assessed, there's no fair way to calculate the surcharge."

The Yankee misinterpreted my proposal. I did not propose that the entire amount of taxes that would have been paid under a yearly reassessment should be paid when the house is sold. I proposed a one time surtax of five or ten percent of the profit that the homeowner realizes from the sale.

"There are other issues as well. What happens if the property becomes so valuable that the owner can't afford to sell and incur the surcharge? And how does the city stay solvent when revenue falls behind inflation, because 95% of properties cannot be revalued in any given year?"

Since the surtax will only be a percentage of the profit the property owner realizes in selling the property, the property will never get to valuable to sell. As far as the revenue flow to the local government, the Yankee needs to realize that the real-estate tax a property owner pays is only partly dependent on the assessed value. The local government, whether it is a county board of supervisors or a city council still must establish a tax each year. For example, the 2006 tax rate for the City of Richmond was $1.29 per $100 of assessed value. Presumably, if the projected revenue in any year is insufficient to operate the local government, the board of supervisors or city council can raise the tax rate.

"Wouldn't it be fairer if valuations were fixed in constant-value dollars (that is, indexed to inflation) until the property is sold? That would allow the community to maintain its revenue stream without making homeowners pay taxes based unrealized gains caused by a rising real estate market."

This might help a bit. However, when the rate of inflation is one or two percent but the annual assessment rate is going up fifteen or twenty percent, as it has this year in Virginia, indexing will not cure the problem.

"Of course, if the property itself changed (such as by adding another story to the house), a change in the real estate tax would be appropriate. But such a change should be based objectively on the change in the property, not on market prices. For example, if you added a floor to your house, the city might calculate the percent increase in floor space, and then increase the assessment by some fraction of that percentage. That would allow people to improve their property without being slammed by huge tax increases based on rising market prices."

The City of Richmond has a tax abatement program that delays the reassessment of certain property when the homeowner makes improvements. If the house is more than twenty years old and the improvements increase the value of the property more than 20% the homeowner may defer all or part of the increased value for up to ten years.

"If at any time a property owner thought that the calculated valuation was higher than the actual value of the property on the open market, he ought to be able to apply for (and, if successful, lock in) a downward adjustment."

In Richmond, any property owner who disagrees with a reassessment may appeal. However, the burden is on the taxpayer to prove that the assessment was wrong. It may be difficult to establish that the assessment was in error.

"Finally, the valuation would have to be adjusted based on the actual market value of the property whenever the house is sold. In most cases, the new valuation would be the actual sale price. But the city should also do a traditional assessment, and if the city finds that the market price is far too low (perhaps more than 10% below market), it should use its own valuation instead. To prevent unpleasant surprises after the sale, the city should provide a document stating the valuation before closing."

I have to disagree with the Yankee. The sale price that a willing seller and willing buyer agree on is the fair market value of the property. It is not relevant that other properties in the neighborhood may be selling for a higher price. The problem with using the sales of other properties as a basis for assessment is that no two properties are identical. Houses differ in size, model, and age, and each house has a different location. The actual sale price of the property is its fair market value.

Fair Tax?

There is a fair tax movement afloat in the land. Fair tax? Is that an oxymoron? I thought the only fair tax is one my neighbor pays but I don’t. LOL.

But, really, what is this fair tax stuff? I’m always a little suspicious when somebody labels something as “fair.” It’s sort of a propaganda ploy. It’s like conservatives labeling the federal estate tax as the “death” tax. Or a former candidate and then governor of the Commonwealth labeling a portion of our property tax as the “car” tax. Of course, there is no “death” tax or “car” tax. But, it surely helps to convince people by using this kind of labeling. Who could possibly object to a “fair” tax?

Let me first explain the fair tax proposal. It would eliminate all federal income-type taxes—individual and corporate income tax, payroll tax, self-employment tax, capital gains tax, gift tax, alternative minimum tax—and replace them with a twenty three percent federal sales tax on new retail sales of goods or services in the United States. In essence, the fair tax proposal would substitute a tax on consumption for our current taxes based on income. The twenty-three percent is the level at which the sales tax must be set to produce the same revenue for the federal government as the income-type taxes that are being eliminated.

So, if the proposed new tax is fair, I must assume that the old income-based tax is unfair. But, is it? The Internal Revenue Code is huge; it contains hundreds of pages, thousands of sections. The implementing regulations, issued by the Internal Revenue Service, are bigger still. Our federal tax system is an adversarial game between the taxpayers and the IRS. The taxpayer’s goal in the game is to pay as little tax as possible; the IRS’s goal is to make the taxpayer pay as much as possible. And, because the rules of the game—the Code and regulations—are so complex, the taxpayer who has the best accountant, tax lawyer, tax service, or tax preparation software, ends up paying the lowest tax. The basic unfairness in the system is that two taxpayers can have identical incomes but will pay different amounts of taxes depending on how well they (and their people) play the tax game. So, if the fair tax proposal eliminates the tax game, it’s got to be fairer than the current system, right?

Wait, wait, wait! Twenty three percent seems like an awful high sales tax. That means for every dollar I spend, I have to pay another twenty-three cents to the federal government. But it’s not that high, the fair-taxers tell me. For one thing, under the current system more than fifteen percent of the retail cost of the goods and services I buy represents federal taxes paid by the manufacturers, middlemen, and retailers. With the federal income and related taxes gone, these costs will be saved, and the pressures of the market will guarantee that these savings are passed on to me, the consumer. That means that the effective rate of the federal sales tax will be only about eight percent. And, don’t forget that I will no longer be paying federal income-type taxes so my take-home pay will be significantly higher. So, an eight percent sales tax is not that high.

Okay, but I thought that a sales tax is very regressive. Since economically disadvantaged people spend a much higher proportion of their income on subsistence consumption, charging everybody the same sales tax rate results in a regressive tax. Poor people will necessarily pay a larger part of their income on the sales tax than will wealthier people. Does the fair tax program provide an exemption for food and other subsistence items to reduce the inequity of the regressive rate? No, there are no exemptions for any kind of purchase. That would make the system too difficult to administer. Instead, the fair tax proposal includes a "prebate" for poor people. In my opinion, this is the weakest part of the fair tax proposal.

Under the prebate, the Social Security Administration will mail to every family in the country with an income lower than the poverty level a monthly check to offset the costs of the sales tax it pays for subsistence consumption. The amount of the prebate is based on an annual consumption allowance that varies with the size of the family. For example, a single-adult household with three children has a consumption allowance of $20,650, while a two-adult household with four children has a consumption allowance of $34,340. The first of these families would receive a monthly prebate of $396; while the second would receive a monthly prebate of $658. According to Americans for Fair Taxation, if the fair tax proposal was enacted now, 113 million United States households would qualify for prebates in 2007.

In the opinion of this maven, the prebate constitutes a serious flaw in the fair tax proposal. For one thing, it is an invasion of privacy; it requires families to publicly declare and prove their poverty. Worse than that, however, is the fact that the federal government will be disbursing 113 million payments per month. Although the fair taxers were smart enough not to create a new agency to administer the program, payment of prebates will place a significant extra administrative burden on the Social Security Administration. It is a needless burden, because it would be much simpler to simply exempt food and other subsistence consumption from the federal sales tax than to collect the tax and then return part of it to 113 million households in the form of a monthly check.

Doesn’t the fair tax proposal have loopholes? Can’t an American citizen avoid paying the tax by making purchases outside the United States? If I were a rich man, and I wanted to buy a $5,000,000 yacht, I could avoid paying the federal tax by purchasing my yacht in Italy and then sailing it home. This loophole must be plugged.

Further, the proposal will be disruptive of the planning of many American families. Millions of families, in purchasing homes, have counted on a yearly tax deduction for the mortgage interest they will be paying. Under the fair tax proposal there will be no federal income tax and therefore no deduction for homeowners. This will make home-ownership more expensive because the federal government will no longer be subsidizing part of the monthly payment.

The proposal may also have disastrous effects on the ability of charities to raise funds. Will people continue to make contributions to charities if the federal government is no longer providing a subsidy in the form of a tax deduction? Fair taxers say it won’t make much difference. I’m not sure.

If you want to know more about the fair tax proposal go to fairtax.org, the website of Americans for Fair Taxation. The site has plenty of propaganda explaining why the fair tax proposal will save America.

The Real Estate Tax Must be Fixed

Real estate assessments are skyrocketing and the natives along both banks of the James are getting restless. Governor Kaine supports an amendment to the Virginia Constitution that would allow local jurisdictions to exempt as much as 20% of the value of a home from real estate taxes. Mayor Wilder has proposed that increases in property assessments be limited to 10% per year. The Richmond City Council is considering a proposal that would allow homeowners to defer payment of any annual real estate tax increase in excess of 5%. Unfortunately, none of these proposals go far enough in dealing with what is perhaps the most oppressive tax we have to pay.

Although real estate taxes have been the predominant means of local government financing in Virginia for hundreds of years, the tax on real estate is the least fair of taxes. The tax is unfair because it bears no relationship to the ability of the taxpayer to pay or to the level of municipal or county services that she or he receives.

I bought my Richmond home only two years ago. Since then, the assessed value of my property has gone up more than $60,000. My assessment notices have not explained how the assessor determined the basis of this increase. The Code of Virginia and the Richmond City Code requires the assessor to assess for tax purposes all real estate in the city “at its fair market value.” There is, however, only one way to actually determine the fair market value of property—to put it on the market and see what price the seller and buyer agree on. Any other determination is only an approximation based on recent sales of property that may be different in style, condition and age and may be located some distance from the property being assessed.

Even if the assessment does approximate the actual market value of the property, taxes levied on the assessment are unfair. If I bought my house for $200,000, and then a neighbor on the next block sells his for $230,000 and another neighbor sells hers for $225,000, I have gained nothing. To me, my house is worth no more than what I paid for it. My neighbors may have sold their homes at a profit but I received no part of their profit. It could be argued that the equity in my home has increased, but until I sell my house, or refinance it to get access to the equity, it is merely a hypothetical gain. It is grossly unfair to increase my real estate tax when I have gained nothing from the property sales in my neighborhood.

Further, it is terribly unfair for taxpayers in a jurisdiction to pay different amounts in taxes for the same municipal services. In the City of Richmond, a citizen receives the same level of city services whether he or she pays $2,000 or $4,000 or more per year in real estate taxes.

Of course, our elected representatives—whether supervisors or council persons—love the real estate assessment process. It provides them with significant increases in revenue to spend each year without ever having to vote to increase taxes. In fact they can appear to be heroes by cutting the tax rate by two or three cents, and still have most of the increase revenue.

In the interests of fairness and to avoid further alienating citizens who are suffering significant hardships in paying constantly rising real estate taxes, our legislators need to act to fix the real estate tax. Unfortunately, none of the existing proposals provide the necessary fix.

Governor Kaine’s proposal, if fully implemented, would leave homeowners still paying taxes on 80% of the assessed value of their property, and would have no effect on rapidly rising assessments. Also, because it relies on a constitutional amendment, it cannot be implemented quickly.

Mayor Wilder’s proposal would necessitate a change in state law. Currently, Title 58.1, section 58.1-3201, of the Virginia Code requires real property to be assessed at 100% of its fair market value. The City’s Assessor has no authority to restrict assessment increases to 10% as suggested by the mayor. Further, even if authorized by the General Assembly, under Mr. Wilder’s proposal homeowners would still face yearly increases of 10% in their real estate taxes.

The proposal in the City Council would merely allow homeowners to delay the pain of paying taxes on the constantly increasing assessed value of their property. The taxes would continue to accrue and eventually the homeowners who chose to defer would have to pay the entire amount of the deferred tax, plus interest.

The only real solution to the inequity of the real estate tax is for the tax to be eliminated and for some other mechanism for financing local government to be found. It is not likely that this will happen any time soon. In the mean time, the General Assembly and the Richmond City Council need to take action to rein in real estate assessments. I suggest the following approach:
1- All assessments are to be frozen at their current level (or preferably rolled back to their January 2006 level);
2- Owners of real estate will pay taxes based on the current assessment until either they sell the property or refinance to access their equity in the property;
3- Sellers or owners of refinanced property will pay a real estate surtax at settlement based on the increased value of the property;
4- After sale or refinance the assessment will be adjusted to the sale price or the appraisal that is the basis of the refinancing. The owner of the property will then pay taxes based on the new assessment.

I certainly am not an expert on the law of real estate taxes. I do not know whether my proposal needs a constitutional amendment, a law passed by the General Assembly, or an ordinance passed by City Council. I urge Governor Kaine, Mayor Wilder, members of the General Assembly, and members of the City Council to get serious about the tax hardship being faced by homeowners. Only a change in the assessment process can fix the real estate tax.

Male Bovine Excrement!!!

I CAN’T BELIEVE THE AUDACITY OF THE REPUBLICAN NATIONAL COMMITTEE! WHAT GALL! WHAT NERVE! WHAT CHUTZPAH!

(Maven, you’re shouting. Calm Down.)
(I DON’T WANT TO CALM DOWN! THIS TIME THEY HAVE GONE TOO FAR!).
(Maven, take a deep breath. Relax)

Okay. I think I’m rational again.

Not only are they polluting the air waves with their political lies, now, they are smelling up my mail box. It’s a huge over-sized post card and it says “Tax-and-spend liberals have a message for you.” TAX AND SPEND LIBERALS? Then they show pictures of John Kerry, Ted Kennedy, Nancy Pelosi, and Howard Dean. Next it says, “If the Democrats win, they will roll-back the Republican tax cuts—and that means higher tax bill for everyone.” It concludes with “Don’t let the tax-and-spend liberals win.

TAX AND SPEND LIBERALS?

Male Cow Poop!

Can we look at the facts? In the four fiscal years from 1998 through 2001, the United States Government, with a Democratic President, a Democratic Senate and a Republican House of Representatives, reduced the national debt held by the public by $394.6 billion.[*] In the five fiscal years from 2002 through 2006, the United States Government, with a Republican President, a Republican Senate and a Republican House of Representatives, increased the national debt held by the public by $1,503.9 billion.

Let’s look at this again. While the “tax and spend” liberals controlled the White House and half of the Congress, the Federal Government spent $394.6 billion less than it collected in revenue. While the “fiscally responsible” Republicans controlled the White House and the Congress, the Federal Government spent $1.5 trillion more than it collected in revenue. That is an average annual deficit exceeding $300 billion.

The Republicans keep lying and lying about spending. It is the Republican Congress and the Republican President that have continued to spend money at a deficit rate year after year after year. The “fiscally responsible” Republicans with their reckless spending have made future tax increases inevitable. It will be our children and grandchildren who will have to pay for the Republican spending binge.

Citizens of Virginia, the cradle of American democracy: Would Thomas Jefferson stand for these lies? Would Patrick Henry tolerate such rubbish? Would George Washington accept such trash? When in the course of human events it becomes necessary to get rid of our Republican oppressors, I know not what course others may take; but as for me, throw the anuses out!

[*] The debt held by the public represents the total national debt less that portion that the Government owes to the Social Security Trust Fund, the Civil Service Retirement Trust Fund and other government funds. The information I use comes from the Bureau of Public Debt website. publicdebt.treas.gov/

Taxes

I really love the new ad from the Republican National Committee. It accuses all Democrats of wanting to raise taxes to pay for their outrageous spending. It says that, if the Democrats are elected, spending and taxes will go through the roof.

Huh! The Democrats are big spenders?

This one suddenly eclipses Senator John McCain’s outrageous statement that Bill Clinton is responsible for the North Korean nuclear test as my nominee for the October Chutzpah Award. (For those of you unfamiliar with the term, chutzpah is a Yiddish word meaning nerve or gall. An example of chutzpah is the teenager who kills both his parents and then asks for leniency from the judge because he is an orphan.)

Let’s look at the facts. Since January 2001, when Republican George Bush took office as president with a Republican-controlled House of Representatives and a split Senate, which became controlled by the Republican two years later, the United States Government has spent $2.8 trillion dollars more than it has received in revenue. That means that the “fiscally responsible” Republicans have increased the national debt, which you and I and our children and our grandchildren and probably our great-grandchildren will have to pay off, by about 48%. How can they blame this on the Democrats when they have controlled the White House and the Congress while this new debt was piling up? Let’s all recognize that it is the Republicans who are the big spenders in Washington.

The Republicans claim they are fiscally responsible. They claim they have lowered taxes. Come on RNC. Are the actions of Mr. Bush and his Republican congressional cohorts really resulting in lower taxes? Hell no! They have merely moved the tax burden from themselves to a future generation. Eventually some one has to pay off that debt. Their spend now-pay later philosophy is the farthest thing from fiscal responsibility I can think of.

Despite this the RNC has the chutzpah to blame everything on the Democrats. I suppose the big bad Democrats armed with assault rifles, thanks to the National Rifle Association, forced the Republicans to approve all those bloated appropriations acts. And what about Mr. Bush? Did he veto even one of those huge appropriations and insist that the Congress be fiscally responsible? Did he suggest that because we are in a major war perhaps we need to delay the tax cuts for his wealthy friends?

Returning the Republicans to power for two more years of uncontrolled deficit spending makes no sense. It is time to throw the rascals out