Category Archives: economy

Ohio’s Public Union Collective Bargaining Reform (SB 5) Issue

If you drove down Dayton Avenue last Sunday, you may have noticed the traffic in and out of the Fraternal Order of Police parking lot. You may have also noticed the little sign inviting the public to sign the union-initiated referendum petition against Ohio Senate Bill 5. This is the recently passed law forbidding public employees from striking and limiting collective bargaining.

Notice, the bill does not end collective bargaining. Rather, it places considerable restrictions on the procedures and content of public union bargains. It also includes limits on employee benefits such paid sick leave, accrued vacation days, and the percentage of employer contribution to employee health care. The new law even prohibits public employers from paying employee pension plan contributions.

Offensive to members of NEA is the end of mandatory time off as sick days and the end of tenured contracts. The new law requires school boards to provide the specific number of paid sick days thus ending mandatory time off. Except for teachers with existing tenured contracts, the law ends continuing contracts.

In addition to reductions of benefits and certain perks, the new law will make public employees earn increased salaries. That is, the SB 5 makes employee pay based on merit not union seniority, time of service, or statutory pay scales. To unions, that is probably the most grievous evil of all.

SB 5 provides two additional benefits for taxpayers: public employers are now able to modify an existing bargaining agreement when such is in fiscal emergency or fiscal watch, and the new law prohibits a bargaining agreement from limiting a public employer’s ability to privatize operations.

It appears public union collective bargaining reform (SB5) law is meant to bring public employee pay and benefits in-line with the public sector. By doing so, the cost of government will be reduced.

Whether or not public employee unions get the required signatures to place the new law on the November ballot, the next reform on the public agenda should be the hierarchical reduction of government spending and subsequent taxation.

See a complete analysis of SB 5 at http://www.lsc.state.oh.us/analyses129/s0005-ps-129.pdf

May 3 Election Results

Xenia voters passed two school renewal levies

In my previous post, I had the renewal levies reversed. Issue 3 was the 1.3 mill levy on property that will be used for renovating one of the schools for new offices. Issue 3 passed with 58% for and 42% against. Issue 4 was the 1/2% income tax renewal used for daily operation of schools. It was renewed by 10% voter margin, 55% for and 45% against.

The 1/2% income tax that passed with the bond issue also was for building renovations, repairs, and the like. Along with the renewed 1/2% income tax levy and 1.3 mill levy, Xenia schools officials will be able to continue fixing emergency issues like declining of income from investments (e.g, buying textbooks 70 fewer classrooms), turning good school buildings into new administrative offices, and repairing the 3 existing school buildings.

If they maintain those 3 building as they did the run-down elementary schools and the current administrative offices, those school building will surely be in dire need of being replaced in a few years.

Of course, a new high school complex would be nice I’m sure. But, what of the junior high/middle schools?

I hear Warner Jr. High already needs replaced. Maybe school officials will actually use some of the renewed money to renovate that school building. Most likely, they will not. Instead, they will let the remaining schools catch up to Warner’s condition. Then they will offer to place all junior high students in the not quite as run down high school facility. Poor junior highers they are only worthy of an old raunchy high school building.

May 3 Ballot: Renewing School Levies Issues 3 & 4

On May 3, Xenia voters will determine Xenia School officials will have enough money to convert one of the abandoned elementary schools (i.e. Arrowwood) into a new office building.

Voters should remember that they passed 1/2% income tax levy with the passing of the bond issue. By renewing the 1/2% income tax due to expire, taxpayers will be paying 1% of their incomes to our schools. In addition to the property taxes.

It would be a dream come true if voter turnout was nearly 100 percent or at least comparable to November turn outs. However, public officials depend on low voter turn out during off-season elections. That is because those showing up at the polls are mostly those officials have convinced to support their issue.

Nevertheless, the issue is whether our school officials actually need more of our incomes to either convert good school buildings for their preferred uses and/or to maintain the 3 other schools. I answer is no they do not.

The $5 million projected budget deficit may be real. But seeing budgets are always bloated by about 10% for contingencies, it just as likely the deficit is on paper only. In other words, it justifies their plans to close schools for the building program and to convert one into a new office complex.

To prove public institutions over-budget by around 10%, let’s look at the 2009 City fiscal audit.
The City projected operating expenditures would be $16,497,434 but actual reported expenditures were $15,195,407. This shows the budget was 8% over actual costs. The was true of revenues. City management’s estimated budget 8% higher than actual income ($16,457,683 budget and $15,096,409 actual). After looking at the schools financial audits, it appears that the officials have consistently over budgeted projection to around 3 percent. That means the school budget was $1.4 million less than actual expenditures last year.

The last fiscal audit showed a district-wide operating deficit of a little over $3 million. The reasons were all related to the recessionary economy except for an increase of salaries and benefits. It looks like the increase was in the range of 4-6 percent or $2-3 million.

Repeating the question, do school officials need another 1/2% of our income, which by the way amount to nearly $2 million? Should taxpayers funded converting usable school facilities into new offices?

What school officials should do is repair the old historic building they currently occupy. With appropriate renovations, the landmark could be restored to a well-functioning office building. In fact, all of the continuing income tax dollars could have been used to do that long ago. The other 1/2% income tax levy should be sufficient for maintenance and repair of the high school and the two middle schools.

The previously mentioned $2 million might do more to help the local community if spent at local businesses.

For those all of those reasons, Issue 4 should not be renewed. The school district actually does need the operating levy (Issue 3) renewed.

Senator Sherrod Brown Opposes Defunding Planned Parenthood

On April 14, United States Senator Sherrod Brown had the opportunity to protect our tax dollars from going to the largest abortion provider – Planned Parenthood. Senator Sherrod Brown had the opportunity to stop funding Planned Parenthood and he failed us. Senator Sherrod Brown supports Planned Parenthood with your tax dollars!

In 2009, Planned Parenthood reported 332,278 performed abortions, 8,270 more abortions than it performed in 2008. Planned Parenthood recently stated a mandate that every Planned Parenthood affiliate have at least one clinic performing abortion within the next two years.

Senator Sherrod Brown refuses to listen to Ohioans. In a letter response to pro-life Ohioans, he stated:

“I will continue to oppose efforts to eliminate or drastically reduce funding for Planned Parenthood and the Title X family planning program.”

Ohio Right to Life urges all Ohioans to never forget what Senator Brown has done.

In less than two years Senator Brown will stand before each of us and ask for our votes to be re-elected for another six year term. On that day, let us all collectively respond to his vote to support Planned Parenthood.

Source:Ohio Right to Life, April 15, 2011

NSBA Survey on Small Business and Taxes

The National Small Business Association (NSBA) released the 2011 Small Business Taxation Survey. This survey provides detailed insight on how America’s small-business community is being impacted by federal taxes. In short: complexity and inconsistency with the tax code are depleting small businesses of their time and money merely so they can handle the administration of federal taxes.

“One in three small-business owners spends two full work weeks every year dealing with federal taxes, and the overwhelming majority (87 percent) are forced to pay an outside accountant or other tax return preparer,” stated Larry Nannis, CPA, NSBA chair and shareholder at Levine, Katz, Nannis + Solomon, P.C. “The federal tax code is a massive resource drain for small businesses.”

Payroll taxes were ranked the most burdensome taxes—both financially and administratively—for small businesses. Only 44 percent of small businesses report using an external payroll company, and even those that do report a significant amount of time dedicated to dealing with payroll taxes.

Given the relatively high number of small businesses that handle payroll internally, it’s no wonder that the majority (63 percent) said the new W2 reporting requirement, beginning in 2012 that will require employers to report health care spending, will have a negative impact on their business.

Compounding matters, IRS audits of small businesses and funding for enforcement activities continue to rise despite new research that shows the IRS misappropriated an undue responsibility of the tax gap upon the small-business community. Illustrating this growing fear and mistrust small-business owners have for the IRS, less than half (47 percent) of eligible small-business owners utilize the home office deduction, primarily due to concerns it will “red-flag” their return for an audit.

“The time for a serious debate on broad tax reform is now,” stated NSBA President Todd McCracken “The ever-growing patchwork of credits, deductions, tax hikes and sunset dates is a roller coaster ride without the slightest indication of what’s around the next corner. This is unsustainable and unacceptable.”

Given that 83 percent of small businesses are pass-through entities and pay business taxes at the individual income level, the majority support proposals that would reduce the corporate AND income tax rates and eliminate certain deductions, as well as sweeping reform in-line with the Fair Tax.

Tax Day

By Congressman Steve Austria

Because today is the day Americans are required to have their tax returns mailed back to the government, I thought I would take the opportunity to share some thoughts on taxes with you. When it comes to the U.S. Tax Code, the numbers are simply astonishing. The most recent tax code has more than 3.8 million words in it. The most recent version of the IRS regulations contained nearly 7 million words – 9 times the total number of words in the King James Bible. No wonder most Americans are frustrated with our tax code. Trying to complete a tax return is so complex that many must rely on an accountant or computer software to make it easier.

These are troubling statistics for most Americans. Additionally, more complicated tax increases may be imposed on taxpayers in 2012 if Congress does not permanently end the crushing tax hikes. Because Congress and the President only agreed to a temporary two-year extension, we are in jeopardy of seeing those tax hikes again in a year and a half. This continues to bring uncertainty to our financial markets, hurting small businesses and hard-working families.

Like most Americans, I believe the current tax code needs to be simplified and reformed. In the end, I trust our families and our small businesses – the taxpayers – to spend and invest their money back into their economy creating long-term sustainable jobs in the private sector. That is what will get Americans back to work. I’m pleased that this new Congress is placing a high priority on reducing federal spending to help put our economy back on a fiscally-sustainable path forward. It is time for Congress to work together on both sides of the aisle to simplify and reform our tax system.

Boehner-Obama Debt Reduction Deal In Perspective

The Boehner-Obama plan cuts the $14.3 trillion national debt by $38.5 billion, which is a little less than 3/10%. This is not a very impressive amount.

No wonder many conservatives are calling it a Republican sell-out.

Since fiscal year began on Oct. 1, 2010, the national debt has increased by $653.4 billion. According to a CNS report, the federal debt increased $54.1 billion during the eight days preceeding the deal. Compare that to a $88.4 billion increase over the 58 days covering February and March; the only reasonable conclusion is the federal government went on a spending spree. Why? The mostly likely reason was to cover the losses to be incurred during April. Consequently, there was no reduction of the national debt because there was no a decrease in spending.

I heard one expert say the debt reduction deal was a miniscule amount when compared to the overall debt. No, there was not any reduction. It is like the inflationless great recession: the inflation came prior to the recession i.e, housing prices, fenergy prices, food prices, and devaluing of the dollar.

Let’s hope the next round of budget cuts are real reductions of government spending and debt.

Nothing “Certain” About Taxes

by Cameron Smith

This time of year, flowers are blooming, birds are singing and most Americans are indoors putting together their tax returns. In 1789, Benjamin Franklin famously stated that “in this world nothing can be said to be certain, except death and taxes.”

Unfortunately for many Americans, taxes are anything but certain. Yes, they must be paid, but how they are paid is a source of considerable heartburn for households across the nation.

In the 2010 fiscal year, the IRS processed just over 141 million individual income tax returns. At the same time, the IRS issued more than 119 million refunds with an average refund of over $3,000. In total, the Government held more than $358 billion of individual taxpayer money in 2010.

Before taxpayers rejoice at the refunds returning to their bank accounts, they should stop to consider the economic cost of the practice. Every dollar in overpayment held by the IRS is a dollar removed from the U.S. economy and job creation efforts. Consider that the national median household income in 2009 was $49,777. The money sitting on the economic sidelines because of the inefficiency in our tax code could have “funded” over 7.2 million households. Even though that money eventually makes its way back into the economy as refunds are issued, billions and billions of dollars of economic productivity are lost.

The economic inefficiency in the tax code comes in part from the code’s complexity and how taxes are collected. In 1943, Congress passed the Current Tax Payment Act which established the quarterly income tax withholding system that Americans experience today. Rather than suffering through the pain of writing the IRS a large check at the end of the year, most Americans make rough estimates of their tax liability through their payroll departments. The obvious benefit of this system is that it improves the federal government’s ability to collect taxes. The downside is that most Americans have little awareness of how much tax they are actually paying because they essentially estimate their tax liability. Often this estimation fails to include many of the credits, deductions, and other provisions contained in the tax code.

Not only do Americans make educated guesses at how much they owe the IRS, they are also fail to correctly interpret the code itself. This confusion leads to even more headaches in the form of dreaded IRS audits. In fiscal year 2010, the IRS conducted almost 1.6 million examinations, up from less than half that number a decade earlier.

The most recent major simplification of the tax code was the bipartisan Tax Reform Act of 1986. Almost 25 years later, the tax code has bloated into a patchwork of specialized provisions providing little encouragement or clarity to the average American simply trying to pay what he or she owes.

Regrettably, after the tax bill is paid and refunds are issued, the American taxpayer enters yet another uncertain area. Taxpayers are ill-informed about the effectiveness or direction of their tax dollars moving through the federal government.

Even the Department of the Treasury’s Resource Center recognizes the importance of tax clarity:

Government has become a dominant factor in our economy, absorbing significant resources for its purposes and redirecting many more resources through its regulatory policies and through a mixture of taxation and spending programs that remove resources from some areas to transfer those resources to other areas. It is critical, therefore, that citizens have as much information as possible regarding these diverse programs and regarding their aggregate totals so they may decide for themselves whether the government’s activities are appropriate. Taxes, and especially the paying of taxes, yield citizens a personal sense of the total price of those activities.

The federal government created by the American people also works for the American people. Americans slogging through their tax returns recognize the unnecessarily complex burden placed upon them and the subsequent drain on the economy. The challenge before them now is to decide whether that complexity and drain is necessary or justified by the way the federal government uses the resources it collects.

Most Americans know that we can do better funding our nation, and we must. The beauty of the American democracy is that the will of the people can reform something even as “certain” as taxes.

Cameron Smith is General Counsel and Legislative Liaison for the Alabama Policy Institute, a non-partisan, non-profit research and education organization dedicated to the preservation of free markets, limited government and strong families, which are indispensable to a prosperous society.

Government by the Rich: Is This the American Dream?

By John W. Whitehead

“It’s called the American dream because you have to be asleep to believe it.”—George Carlin

As it now stands, the upper 1 percent of Americans control 40% of the nation’s wealth and take in nearly a quarter of the nation’s income. Included among these very rich and powerful are mega-corporations such as General Electric that manage to rake in obscene profits while paying little to nothing in taxes. For instance, despite pulling in more than $14 billion in 2010, GE not only paid no taxes, but they also managed to claim more than $3 billion in government tax credits. All the while, more and more Americans are struggling to find jobs, keep jobs and stop the banks from foreclosing on their homes.

It’s a grim state of affairs and one that Congress, itself comprised of those from the upper 1%, is doing little to improve. In fact, although America is supposed to be a representative republic, the numbers relating to wealth distribution among elected officials tell a far different tale. As Joseph Stiglitz writes for Vanity Fair:

Virtually all U.S. senators, and most of the representatives in the House, are members of the top 1 percent when they arrive, are kept in office by money from the top 1 percent, and know that if they serve the top 1 percent well they will be rewarded by the top 1 percent when they leave office. By and large, the key executive-branch policymakers on trade and economic policy also come from the top 1 percent. When pharmaceutical companies receive a trillion-dollar gift—through legislation prohibiting the government, the largest buyer of drugs, from bargaining over price—it should not come as cause for wonder. It should not make jaws drop that a tax bill cannot emerge from Congress unless big tax cuts are put in place for the wealthy. Given the power of the top 1 percent, this is the way you would expect the system to work.

Indeed, one almost has to be rich in order to aspire to public service today. Whether it be the Oval Office or the halls of Congress, the road to the ballot box is an expensive one, and only the wealthy, or those supported by the wealthy, are even able to get to the starting line.

Not even public anger over fiscal overspending has done much to alter the status quo in Congress. In fact, there are actually more millionaires in this year’s freshman class in Congress, with 60% of Senate freshmen and 40% of new House lawmakers belonging to that rarefied group.

The unfortunate but simple fact is that the rich sit perched at the top of the government. As Stiglitz points out, “The top 1 percent have the best houses, the best educations, the best doctors, and the best lifestyles, but there is one thing that money doesn’t seem to have bought: an understanding that their fate is bound up with how the other 99 percent live.”

The simple truth of the matter is that those who have, and have in abundance, do not have any connection with the working poor—those who live from paycheck to paycheck in the exhausting struggle to simply survive. Consequently, once in office, these already privileged wealthy bureaucrats enter into a life of even greater privilege and perks, at the expense of the American taxpayer. These perks range from generous six-figure salaries to even more generous allowances for multiple offices, staff salaries and related office expenses including travel, furniture and constituent mailings, as well as top-of-the-line health coverage and retirement plans and a three-day work week.

Clearly, there is a disconnect between the rich bureaucrats in Congress and the working-class Americans they are ill-equipped to represent. Nevertheless, the rich continue to get richer and get elected, while the average American remains blissfully unaware of the fact that the basic foundations of the country are being steadily eroded by a wealthy, largely corrupt overclass whose values are largely dictated by lobbyist dollars.

Indeed, with an estimated 26 lobbyists per congressman, it should come as no surprise that once elected, even those with the best of intentions seem to find it hard to resist the lure of lobbyist dollars, of which there are plenty to go around. Oil and gas companies alone spent $44.5 million lobbying Congress and federal agencies in the first quarter of 2009, more than a third of the $129 million they spent lobbying in 2008. As of 2010, mega-corporations have spent $3.49 billion on lobbying and campaign contributions.

What we are faced with is a government by oligarchy—in other words, one that is of the rich, by the rich and for the rich. Yet the Constitution’s Preamble states that it is “we the people” who are supposed to be running things. If our so-called “representative government” is to survive, we must first wrest control of our government from the wealthy elite who run it.

That is a problem with no easy solutions, and voting is the least of what we should be doing. However, comedian/social commentator George Carlin hints at the answer in his diatribe on the American Dream and the wealthy elite who have co-opted it for their own purposes:

You know what they want? They want obedient workers…people who are just smart enough to run the machines and do the paperwork. And just dumb enough to passively accept all these increasingly shitty jobs with the lower pay, the longer hours, the reduced benefits, the end of overtime and vanishing pension that disappears the minute you go to collect it, and now they’re coming for your Social Security money.

“What they don’t want,” continued Carlin, is “a population of citizens capable of critical thinking. They don’t want well-informed, well-educated people capable of critical thinking…That doesn’t help them. That’s against their interests.”

A population of citizens capable of critical thinking? That’s a good place to start, and it’s a sure-fire way to jumpstart a revolution.

To read Whitehead’s article by the same title, click here, or you can watch the video on YouTube.

Constitutional attorney and author John W. Whitehead is founder and president of The Rutherford Institute. He can be contacted at johnw@rutherford.org. Information about the Institute is available at www.rutherford.org.

An Ohio Budget Perspective

Ohio’s new budget preserves $7 billion in tax breaks and keeps in place tax cuts exceeding $10,000 a year for the wealthiest 1% of Ohioans. It also cuts over $2 billion from schools and over $1 billion from local government, and slashes state spending for libraries, mental health and children’s services, while proposing selling the state liquor profits, five state prisons, expanding charter schools and vouchers, and proposing a semi-privatized state for higher education institutions called ‘charter’ universities. Weve heard it called a “slash and sell budget” and a “pass the buck budget” and both seem right, as it will certainly result in more unequal services across communities and higher local taxes. Here are (just some of) Policy Matters Ohio’s initial analyses:

Local Government Fund – The state seizes more than $440 million in local government funds, and more than $560 million in replacement funds for local government tax sources eliminated or reduced through state action. This will result in cuts to basic services delivered at the local level from policing, to fire protection, to snowplowing, to recreation. Expect longer waits, fewer hours, weaker services and higher local taxes as a result.

Education – The two-year budget slashes more than $2.3 billion from education compared to the 2010-11 budget while putting potentially hundreds of millions more into charters and vouchers. The proposal would drop state funding for schools below 2003 levels by 2013 and push more of the funding burden to local taxpayers.

$7 Billion in Breaks – While shredding schools and local governments in the above ways and more, the budget does not examine even one of the 128 tax breaks that cost the state more than $7 billion, preference some businesses over others, and continue crazy credits like the one to hire a lobbyist without paying a sales tax or to pay a pittance in tax when purchasing a timeshare for a private jet.

And Break some More – Amid disingenuous cries that “we’re broke”, is a continued push to add new breaks for the very wealthiest. Two new proposals would give special favors to those who need them least. The capital gains cut would save middle-income taxpayers $2 a year on average while the top 1% would pay more than $6,500 less. The estate tax grab would hurt local government and preference the wealthiest heirs more than 90% of Ohioans would never owe the estate tax after they die.