Thomas Sowell: Fiscal Cliff Notes (Part II) — Frontiers of Freedom

Part II of Thomas Sowell's rational analysis on the political charade that dominates Washington these days. The nation has a spending problem, not a revenue problem, a fact that the media fails to fully examine. Instead, they buy the Democrat political spin.

Thomas Sowell: Fiscal Cliff Notes (Part II) — Frontiers of Freedom: "The bottom line is that Barack Obama’s blaming increased budget deficits on the Bush tax cuts is demonstrably false. What caused the decreasing budget deficits after the Bush tax cuts to suddenly reverse and start increasing was the mortgage crisis. The deficit increased in 2008, followed by a huge increase in 2009.
So it is sheer hogwash that “tax cuts for the rich” caused the government to lose tax revenues. The government gained tax revenues, not lost them. Moreover, “the rich” paid a larger amount of taxes, and a larger share of all taxes, after the tax rates were cut.
That is because people change their economic behavior when tax rates are changed, contrary to what the Congressional Budget Office and others seem to assume, and this can stimulate the economy more than a government “stimulus” has done under either Bush or Obama."

http://townhall.com/columnists/thomassowell/2012/12/05/creators_oped

Washington Times, Thomas Sowell: Fiscal Cliff Notes (Part I), 12/4/12

Thomas Sowell is right about politics dominating any serious discussion publicly about the trillion dollar deficits and mounting debt from TeamObama. The hand-wringing about recession and the fiscal cliff is steeped in politics and not serious negotiations to right the nation's fiscal ship.

Washington Times, Thomas Sowell: Fiscal Cliff Notes (Part I), 12/4/12“All the political angst and moral melodrama about getting ‘the rich’ to pay ‘their fair share’ is part of a big charade. This is not about economics, it is about politics. Taxing ‘the rich’ will produce a drop in the bucket when compared to the staggering and unprecedented deficits of the Obama administration.”"

'via Blog this'

Vermont is #1. Not Desirable

http://www.forbes.com/2009/03/30/highest-state-taxes-lifestyle-real-estate-state-taxes.html

Vermont is the state with the highest taxes. But we already knew that. We have many apologists for this situation but the responsibility rests solely on the the liberal government establishment and those who elect them.

True North Reports — Vermont's Cloud Tax Controversy

http://truenorthreports.com/clouds-continue-to-gather-over-tax


Rob Roper, in an interview with Mike Wasser, [a state tax attorney with State Tax Services, LLC, and who served in the Vermont Tax department at the time the legislation in question regarding the cloud tax was implemented] provides an excellent overview of the issue that flared up in Vermont recently.


I think the issue should be addressed head on by the Legislature. The technical bulletin issued by the Vermont Tax Department in 2010 should be rescinded. and no further back taxes should be levied. Any already paid should be refunded.


The issue is enormously important because so much functionality will be living in the cloud that jurisdictional issues become very complex. The whole issue should be given serious thought about whether a tax should be levied and who should be responsible for collecting it.

"...I want to clarify that when this bulletin first came out, I don’t believe it was done with any malicious intent by the tax department. It’s a complicated issue as we’ve discussed… and they just got it wrong…. It’s really in how you address a mistake like that that makes a difference. What concerns me is in larger part, to my knowledge, nobody that’s looking at how to resolve this issue has even bothered to consult the former tax commissioners who actually administered this policy. Why aren’t they asking commissioner Pelham and commissioner Westman what the department’s official policy was on cloud services?...”"

Thoughts From the Frontline - John Mauldin

Below is an excerpt from John Mauldin's weekly newsletter, this issue is titled The Cancer of Debt and Deficits, (John Mauldin | February 18, 2012) 

John writes a long newsletter each week full of interesting thought and analysis.

His introduction to this week's piece:

"We are coming to the point in the United States when even the US government will no longer be able to borrow at very low long-term rates. That point is a few years off, and we have time to change paths; but as I have shown in previous letters, the longer we wait to get the deficit under control, the fewer choices we have and the more painful they are. NO country can run deficits the size we are currently running, along with unfunded deficits over four times the size of the economy and a growing overall debt burden, without consequences. At some point, investors in bonds will start wondering exactly what the process is by which they will be repaid. And what will the value of those future payments be?"

Then, further on, he discusses a tax approach that he believes makes sense for the revenue portion of a deficit reduction plan that must be implemented soon if the U.S is to avoid the type of degradation we are witnessing in European countries. While reforming entitlements is absolutely required, any serious proposal to reduce deficits and long term debt must also reform the tax code and raise revenue. Here's one way:

"Taxing ConsumptionSo let's get down to details. I met with Marc Sumerlin for breakfast a few weeks ago, and he later sent me a book he coauthored back in 2007 with Larry Lindsey, called What a President Should Know … but most learn too late. Both men are serious economic thinkers, and Lindsey is a specialist in tax policies. They both worked as economic advisors in the White House, and Lindsey was on the Board of Governors of the Federal Reserve. They do understand some of the mechanics of politics and economics. They now work together at The Lindsey Group, an economic advisory service based in DC. They do excellent work.
Marc outlined to me their thoughts on reforming the tax code. I read the chapter in the book on reforms, and like it better than anything else I have seen.

What they suggest is to tax consumption with a 20% Value Added Tax (VAT). There would be no taxes for incomes under $100,000. None. No Social Security. No Medicare. If you make less than $100,000 you pay nothing.

All income over $100,000 is taxed at 20%, no matter what the source. No capital gains rate or dividend break. I assume that also means no municipal bond exemptions. No exemptions for anything. Every last tax expenditure goes away. Corporate tax rates would be 20%, and again I assume no exemptions. If you make a profit, you pay taxes.

Although they did not say it in the book, they essentially agree with Hobbes that income measures what you contribute to society and spending measures what you take from it.
What society wants (and needs) is more income, as that grows tax revenues and general wealth. Consumption – what you get from society – is taxed. We don't just need to tax millionaires more, we need more millionaires that we can tax. And you get that by encouraging growth in the economy.

They also note that their proposal was revenue-neutral in 2007, and included a $2,000 per child tax credit. Every worker would get an approximate 7.5% pay raise from the removing of Social Security and Medicare taxes. While businesses would also get that same tax break, they would have to pay a VAT on salaries, which would be an increase in cost. Welfare, the social safety net, and health care would all be funded.

As the VAT would not be paid on exports, it would put us on a more even ground with those nations that have a VAT and certainly lower business taxes, both of which would make us more competitive and increase exports and thus employment.

While they did not suggest it, I would change the tax code over four years, although phasing out tax expenditures faster to help the current budget crisis. A sudden change might be disruptive, and it would take time to get the mechanism in place for collecting a VAT. States with individual income taxes would need to adjust the sources of their incomes. (It would also give my tax-accountant and tax-lawyer friends time to find a different career focus.) Businesses would need some time to adjust their costs and sales.

This is different from the so-called "Fair Tax," which is essentially a national sales tax. While I like the idea of taxing consumption, a 20% sales tax on top of state and local sales taxes of 8-10% would encourage much of our economy to move to either a barter system or a cash economy. A VAT might provoke similar reactions on a smaller level, but I think overall it is more readily collectible.

One can adjust the levels of both the VAT and income taxes to match the desired level of government spending. I might prefer less, but that is not the point here. Match these taxes (along with the normal excise taxes) with entitlement reform, a properly structured health-care system, and some cuts in other areas, and you are close to a balanced budget.

One caveat. It may surprise a few readers, but I met with David Krone yesterday for a long breakfast in Washington, DC. David is chief of staff for Senate Majority Leader Harry Reid. He is passionate, articulate, savvy, and an all-round nice guy. We found many areas of common ground and concerns. When I broached the idea of the tax proposal above, he seemed open to it, but came back with one thought.

"It has to have a trigger." I must admit, I had to ask what a trigger is.
"A trigger is a pre-agreed-upon outcome if the desired budget outcome does not happen. Either spending cuts, tax increases, or some combination, but it must be automatic." Quite a reasonable suggestion.

I readily admit there is something for everyone to hate in a VAT tax. It would raise my costs for employees substantially. I would lose several nice deductions. But given our current tax code, I think it would be the better of two evils for the economy.

Do you hate the idea? Then come up with an alternative that collects enough revenue and doesn't have the problems of the current structure, and can get the votes. As I noted above, I would vote for something like Simpson-Bowles if that was my choice. I think Reid and Boehner should introduce Simpson-Bowles for an up or down vote before the next election. Let's see what happens.

Italy Struggles with Austerity, Growth, Debt and New Leadership

http://www.nytimes.com/2011/11/13/world/europe/silvio-berlusconi-resign-italy-austerity-measures.html

Italy's politics are far more complicated than ours. This brief summary of the austerity and stimulus measures shows how deeply ingrained is patronage and spending. Italy would benefit enormously if people just paid their legitimate taxes. It's estimated that tax avoidance/evasion in the 'shadow economy' is 22.3% of Italy's GDP.( From this link: "According to a 2007 paper by Austrian economist Friedrich Schneider, the shadow economy in Italy accounted for 22.3% of gross domestic product (GDP), that of Spain 19.3%; Portugal 19.2% and Greece a staggering 25.1%. By comparison, the U.S. shadow economy was 7.2% of GDP. A recent European Union report came up with similar figures.")

"...The measures are aimed at reducing Italy’s $2.6 trillion public debt and increasing growth by selling $21 billion worth of state assets and increasing the retirement age to 67 from 65 by 2026. It also would loosen the power of professional guilds, liberalize municipal services and offer tax breaks for infrastructure and companies that hire young workers..."

Click here for more details of the various changes that are being voted by the Italian parliament.

Vermont and New Hampshire Property Tax Comparison

Another comparison of VT with New Hampshire. Overall, NH wins the two state tax comparison with no sales or income tax. The good news for homeowners is that VT's residential property values did not suffer in the housing bust as did most other states.

3. Vermont
> Average Property Taxes as % of Median Income: 5.4% (3rd Most)
> Average Median Property Taxes Paid on Homes: $4,618 (3rd Most)
> Unemployment Rate: 5.6% (5th lowest)
> Average Median Income for Home Owners: $77,161 (7th Highest)
> % decrease in Median Home value (2006-2009): +9.0% (20th largest increase)

Vermont residents spend 5% of their net incomes on property taxes, the third most in the country. The median homeowner income is the seventh-highest in the U.S., at $77,161 per person. An additional boon for state homeowners is a 9% increase in home values between 2006 and 2009, well above the national average. Unemployment is low, which in theory should mean the pool of potential homebuyers should be greater than in many other states.

2. New Hampshire
> Average Property Taxes as % of Median Income: 6.38% (2nd Most)
> Average Median Property Taxes Paid on Homes: $4,168 (2nd Most)
> Unemployment Rate: 5.4% (4th lowest)
> Average Median Income for Home Owners: $72,489 (13th Highest)
> % decrease in Median Home value (2006-2009): -2.8% (11th Greatest Decrease)

Vermont’s neighbor, New Hampshire, has an even higher rate of property taxes as a percent of resident income, at 6.38%. The state’s residents also pay the second-most overall on taxes, a median of $4,168 per household. Unlike Vermont, property values decreased by 2.8% between 2006 and 2009, the  11th highest decrease in the country. New Hampshire has comparably low unemployment rates and median income for homeowners, meaning residents are probably more capable of paying these large property taxes than the residents of less well-off states.

Read more: The Ten States With The Worst Property Taxes - 24/7 Wall St. http://247wallst.com/2011/04/05/the-ten-states-with-the-worst-property-taxes/#ixzz1IwBG57fz

California Tax Commission Releases Ground-Breaking Plan - WSJ.com

California Tax Commission Releases Ground-Breaking Plan - WSJ.com:

Our own Vermont Blue Ribbon Tax Structure Commission created by the Legislature in the 2009 session would do well to consider this recommendation by a similar group in California. Vermont, on a much smaller scale, has many of the same problems and underlying culture/ideologies driving the painful deficits that are staring us in the face in the next 2-3 years.

"...They [CA commission members] may be motivated by the reality that California's steeply progressive tax rates are defeating the purposes of progressive government. To wit, only a growing economy can create opportunity for the middle class and enough state revenues to finance schools and health care for the poor. A tax code that depends on 1% of taxpayers, 144,000 filers, to finance 50% of state income tax revenues has proven to be unsustainable, notwithstanding the liberal dogma that says tax rates don't matter."

Businesses have been fleeing California for tax-friendlier states. Meanwhile, Vermont has seen little economic growth and virtually no job growth in the private sector during the past decade.

Under Agreement, UBS to Give Up 4,450 Names - NYTimes.com

Under Agreement, UBS to Give Up 4,450 Names - NYTimes.com

Bravo for the Justice Department and the IRS! This is the type of enforcement action that is worthwhile!

I have no quarrel with people being rich or making large amounts of money, but when they illegally evade the taxes due on those monies when I and other taxpayers pay their proper share, they deserve to be prosecuted and pay all taxes due.

What the story doesn't reveal is how many years in the past will they attempt to collect taxes and penalties.

We also expect the names will be made very public along with the back taxes and penalties they must pay. If there's jail time after prosecution and conviction for those who don't pay, we'll also want to know that.

A follow-on story in the 8/20 NY Times has this to say:

"The current penalty for this type of failure to disclose assets is up to 50 percent of the highest annual balance of each account for each of the last three years — an amount that can quickly wipe out an investor and still leave him owing taxes and interest.

Investors who come forward before Sept. 23 face a reduced penalty, of 5 percent to 20 percent, depending in part on whether the wealth was inherited. They will also be hit with the penalty just once, on the highest balance in the accounts during the last six years.

The Justice Department has opened criminal investigations of 150 UBS clients, and is likely to bring more indictments on top of the four it brought in recent months. Only clients who are prosecuted are likely to have their names become public."

Now, if Justice can root out more of the fraud involved in Medicaid and Medicare...

Thomas Kostigen's Ethics Monitor: The happiest places on Earth are heavily taxed - MarketWatch

Thomas Kostigen's Ethics Monitor: The happiest places on Earth are heavily taxed - MarketWatch

I was thinking that our Vermont Legislature must be trying to emulate these northern European countries in providing everything for everybody. I can't imagine paying 2/3 of my income in taxes as do Danish taxpayers. (I wonder what % of Danes actually pay income taxes?)

"...social welfare programs include health insurance, health and hospital services, insurance for occupational injuries, unemployment insurance and employment exchange services. There's also old age and disability pensions, rehabilitation and nursing homes, family welfare subsidies, general public welfare and payments for military accidents. Moreover, maternity benefits are payable up to 52 weeks..."

America, for all its schisms, contentions, and problems would still be my country of choice. I'd rather be responsible for my own happiness instead of turning that over to a social network run by a government.

Unfortunately, I think TeamObama and our left-leaning Legislature has other ideas, all the better to retain power. We must resist the loss of liberty that follows if we take that path.

There's a lot not to like about Denmark's system. Have a look at the suicide rates in these Nordic countries? Is that happiness?

Response to an Email from a Friend

Our government exists on this basic premise: ".. in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity..."

Inherent in this ideal is the expectation that people will be reasonably free to conduct commerce, business and trade to enrich themselves in order to participate in and benefit from the framework of government created under the Constitution.

Certainly much has changed with respect to commerce and government in the intervening centuries, but one thing has not changed. That constant is the nature of Man.

While Man is capable of noble thoughts and deeds, our basic nature is inherently sinful, selfish, and greedy. Else why do we need laws to regulate and punish errant behavior and protect us from each other?  Laws are necessary to control the limits of greed and other destructive behaviors carried to extremes by some.
As long as we expect men and women to provide for their personal and family well-being and to create wages and wealth to be taxed for the 'general welfare and 'common defense,' the inherent traits of 'selfishness and greed' are a far more effective stimulus for individuals than any government decree or general prohibition.

I don't want my government prescribing how I should earn my living, regulating how much money I should earn, how much or how little wealth I can own or what business I can engage in. A framework of laws and sensible regulation for the common good, yes, but our Founders wisely recognized the inherent nature of man and intended that it flourish within a system of necessary  laws and common sense. This is the essence of freedom and an appeal to, but no guarantee of, nobler motives.

Yet because the interconnected systems of banking, finance and commerce have become so entwined and interconnected in this digital age, we are in uncharted territory. This calamitous complexity certainly could not have been envisioned by our Founders, perhaps not even by Mr. Friedman.

To avoid collapse, intervention by government is necessary, but we should recognize they are only human, too, and none of them have been down this road before. To some degree, they are winging it.

I'm not particularly an Obama fan, primarily because of his inexperience and understandable lack of wisdom. Perhaps he will mature in office. I am deeply concerned that 'team Obama' intends to implant an ideological agenda in our country disguised as an economic recovery plan and likely to spend ourselves into servitude to crushing debt and rampant inflation resulting in the country's rapid economic demise.

An expensive approach to climate change | Cap and binge | The Economist

An expensive approach to climate change | Cap and binge | The Economist

The Economist has some problems with President Obama's cap and trade plan. So do I.

C&T will be an overly expensive way to reduce greenhouse gases and as I have posted previously, if public policy evolves to reducing carbon in the unproven belief that the climate can be changed, let that play out with a tax on the end users of products and services with a 'carbon content.' Let consumers know what they are paying for, rather than masking the 'carbon cost' in energy and product price increases brought on by C&T.

If public policy is established is to reduce carbon emissions, the government should be willing to take the heat directly via proposing and defending a tax rather than forcing the public to blame providers and moan about higher prices. The politicians should be willing to stand up and defend the tax. C&T is nothing but a tax disguised as a market mechanism.

Some quotes from The Economist piece:

..."But fighting climate change will be costly. It will involve swapping cheap but dirty fuels for cleaner but dearer ones, as Congress intends, as well as building lots of expensive new power plants to replace older, more polluting ones. That in turn will lead to higher electricity and fuel prices. Despite the president’s airy talk of green jobs, cutting emissions, by almost all calculations, will increase costs for most businesses and families. Those extra costs must be kept to a minimum.

....The main effect of these schemes would be to raise the costs of cutting emissions. Much of the money doled out by the government would inevitably be wasted, adding to the overall bill for fighting climate change. Worse, such measures would risk distorting the carbon market, steering private capital as well as public money away from the cheapest technologies and towards those that have caught the eye of the politicians...."

The Talking Heads Will Love This!

Update: 1:16 pm 2/3/09.

If the President means what he says about ethics, this had to happen.

NEWS ALERT
from The Wall Street Journal

Feb. 3, 2009

Tom Daschle withdrew his nomination to be secretary of Health and Human Services. President Obama said Tuesday he accepted the withdrawal "with sadness and regret." Mr. Daschle had failed to pay more than $100,000 in taxes in a timely fashion, and his relationship with EduCap is under investigation by the Internal Revenue Service.

Not paying taxes must be the 'in' thing for the Obama crowd. This would be hilarious if it weren't so sad. The proposed 'performance' czar is delivering a really riveting performance.

Perhaps the tax code is far too complex for them to follow or they hire lousy tax accountants. No wonder there's a call from Democrats to tax the rich even more...many of the wealthy Democrats don't pay all their taxes. This bodes ill for Daschle

But it gets worse! Check out this story at Time Magazine!!!!!

"...She [Killefer] took a hiatus from her work at McKinsey from 1997 to 2000 to serve as Assistant Secretary of the Treasury in the Clinton Administration, where she led a major modernization of the Internal Revenue Service. Clinton later appointed her to the IRS Oversight Board.

• Despite her extensive knowledge of the system, she ran afoul of the IRS in 2005 when it placed a $946 tax lien on her home, accusing her of failing to pay unemployment compensation tax for her household employees. Killefer was cleared shortly thereafter.

I don't remember a fiasco like this for Bush nominees.

NEWS ALERT
from The Wall Street Journal

Feb. 3, 2009

Nancy Killefer, nominated by President Obama to be the federal government's first chief performance officer, is withdrawing from the post, the White House said. An administration official confirmed that she is withdrawing over a tax problem. "On the heels of Geithner and Daschle, she just didn't want to go through with it," the official said.

http://online.wsj.com/article/SB123367405418643627.html?mod=djemalertNEWS

Daschle Pays 3 Years of Tax on Use of Car - NYTimes.com

Daschle Pays 3 Years of Tax on Use of Car - NYTimes.com:

I would love to know what particular expertise Mr. Daschle has and what services he performed for $83,333 a month. I always though he was a professional politician. Was he lobbying? Was he registered? This is a serious omission in reporting. Is this NY Times bias at work again?

Given what was included in the story, Daschle seems unqualified for his proposed appointment. He never showed me any talent as a a senator.

"Under his consulting arrangement with InterMedia, the report said, Mr. Daschle received $1 million a year, or $83,333 a month. The payment to Mr. Daschle for May 2007 was omitted from the annual statement of income sent to him by InterMedia. Ms. Backus said the omission resulted from “a clerical error by InterMedia.”"

Is the U.S. Going Broke? - Forbes.com

Ahem, may I have a moment of your time Senator Obama and Senator McCain? I really would like your proposed solutions to the terrible problem outlined in this article from Forbes (click on the link below). Or would you prefer to tell me the sky isn't falling? Or is it more fun to talk about lipstick and pigs?

• How will you pay for the massive energy transformations you both promise?
• What will you do to control the costs and pay for Medicare and Medicaid?
• You are apparently not willing to bail out any more investment banks... because the Feds don't have the money?

 

Just one quote to entice you to read the full column:

"The real liability facing our government is $70 trillion. This represents the present value difference between all the government's projected future spending obligations and all its projected future tax receipts. This fiscal gap takes into account Uncle Sam's need to service official debt--outstanding U.S. government bonds. But it also recognizes all our government's unofficial debts, including its obligation to the soon-to-be-retired baby boomers to pay their Social Security and Medicare benefits.

Given current policies, each of the 78 million boomers can expect, on average, to receive $50,000, in today's dollars, from these programs in each and every year of retirement. Multiply 78 million boomers by a $50,000 annual payment and you get close to $4 trillion per year. This helps you see why our nation's true indebtedness is so extraordinarily high."

Is the U.S. Going Broke? - Forbes.com

Who Pays Federal Income Taxes?

Based on newly released IRS data, the Wall Street Journal opines on July 21 that the Bush tax cuts have worked. The following is an excerpt:

"... the top 1% of taxpayers, those who earn above $388,806, paid 40% of all income taxes in 2006, the highest share in at least 40 years. The top 10% in income, those earning more than $108,904, paid 71%. Barack Obama says he's going to cut taxes for those at the bottom, but that's also going to be a challenge because Americans with an income below the median paid a record low 2.9% of all income taxes, while the top 50% paid 97.1%. Perhaps he thinks half the country should pay all the taxes to support the other half. (emphases added)

Aha, we are told: The rich paid more taxes because they made a greater share of the money. That is true. The top 1% earned 22% of all reported income. But they also paid a share of taxes not far from double their share of income. In other words, the tax code is already steeply progressive."

Wouldn't it be refreshing for politicians, particularly on the left, to state the facts rather than trying to mislead Americans by spouting their 'soak-the rich' rhetoric?

Vermont Does Not Need More Taxes

Frank Mazur says it all. The costs of government are too high.

More taxes not the answer by Frank Mazur

Democrats are advocating tax increases to pay for education and transportation. They also advocate an expansion of state bureaucracy and the preservation of costly mandates. They have picked up the support of Anthony Pollina who wants to make our tax system "fairer." But fair to them means increased government spending at the expense of the minority whose cumulative vote is insignificant.

Vermont's progressive tax structure is devastating. Thirty-six percent of tax filers, those who earn less than $20,000, pay only 1 percent of our income tax. The top 16 percent of tax filers earning more than $76,000 a year pay 70 percent of our income tax. Hurting the people who are already carrying the main tax burden is confusing fairness with stupidity.

Gov. Douglas' affordability agenda's focus is to reduce tax burdens. Opponents want to preserve or raise spending levels and services. Legislative priorities will determine Vermont's destiny.

Compared to the other 50 states Vermont's state and local tax burden is No.1; top rate for income tax, No. 3; education spending, top corporate income tax rate and property taxes, No. 4; electric rates No. 8, and fuel and Department of Motor Vehicles fees per capita No. 14. Not included are hidden taxes that increase health insurance premiums about 35 percent. Democrats are inciting class warfare in health care as they did in promoting equity education funding.

House Speaker Gaye Symington's and Pollina's leadership may unite their comrades, but it won't create the change needed to insure prosperity our parents enjoyed years ago. Oppressive taxation drives away investors and entrepreneurs. Others will vote with their feet to a friendlier tax climate.

Join Vermont's Tax Revolt

I have invested a half hour on Tom Licata's website, www.vermonttaxrevolt.org. He has done an impressive amount of research to lay out the huge dilemma Vermont faces in paying for what we predict we need. Everyone interested in their future in Vermont should read this section. Here he lays out the future trauma by citing a multitude of funding shortfalls recently reported in the media and from other studies and reports.

However, his proposal for a tax revolt seems to me an emotional response to today's and tomorrow's pain. The only realistic answer to reduce taxes is to control and reduce spending.
He's right that leadership and lawmakers must 1.) understand the nature of the problem, and 2.) exert the fiscal discipline needed by making very hard choices to constrain costs, rather than raising revenue.

His citing of job data is particularly telling and I had uncovered similar data in some of my research.

His data is here:

Some of the most troubling data I've uncovered show Vermont lost 11,000 private sector jobs between 2000 and 2006: 10,000 of those from Manufacturing and about 1000 in the Information field. In its place, 20,000 jobs were added for a net job gain of 9,000.

Of the 20,000 jobs added - and it's this number that is disturbing - over half or 13,000, were either from Government employment (4,000) or from the Education & Health Services field (9,000). Of this 9,000, over half are in the employment of "social assistance".

In essence, we've replaced high paying private sector jobs with relatively low paying public assistance and government jobs. Private sector job growth has almost been non-existent; all this according to "The State of Working Vermont 2007", prepared by the Public Assets Institute.

Mine is shown below:

From 2001-2005, Vermont, at 4.5%, had by far the highest growth in government (state and local) jobs among the six New England states. In fact, three states substantially reduced the number of government jobs while we had double the growth rate in Maine and triple that in New Hampshire! These jobs are funded by our taxes and we wonder why Vermonters complain about the high cost of government!

The only realistic approach to exerting some control over our government spending is for elected officials to become very serious about no new spending. If they won't, then a new crop of quality people must be convinced to run for office who have a realistic outlook on the future financial crisis facing Vermont.

To be candid, I'm not optimistic that we can bend the trend without a crisis. Americans seem predisposed to status quo unless a problem is right in their face. On the other hand, a tax revolt could be a contrived crisis, I suppose.

Town Watched Wallet, but Maybe Too Well - New York Times

Fiscal Fun in a Vermont Town!



What a great story!

Only in Vermont do people want to turn a silk purse into a sow's ear. For Fair Haven taxpayers to complain about a town surplus of a million dollars, apparently created by sound fiscal discipline, is hilarious. If I get this right, past and current taxpayers are upset because future taxpayers will get a break as this surplus is spent on the town budget. Frugality is derided...this must be the American way... because consumers routinely overspend their personal resources, they find their town's frugality troubling. What a laugh!

Every Vermont town should be so lucky. Fair Haven had better watch out because maybe the State of Vermont will find a way to get their hands on some of this surplus.

Taxes in the Global Economy - New York Times

Taxes in the Global Economy - New York Times

Why is it a bad thing for corporations or individuals not to pay more taxes. The Times would have you believe that government is the better decision maker for spending. Not true! If U.S. companies that are successful players in the global economy were made less profitable or handicapped by raising U.S. taxes, our whole economy would likely suffer.

The Times would have you believe that more government is better and that Americans are better served by a more socialist society than the one we now enjoy, though it continues moving toward socialism. Yes, jobs are displaced because of the rising tide of other world economies, but the answer is not 'more government.' We are better served by higher quality education, a more uplifting culture and vibrant capitalism at home.

More taxes is exactly the wrong answer.