On April 3, 2013 the Taxpayers Protection Alliance, through an initiative led by Americans for Tax Reform, joined with more than 40 other free market and taxpayer groups to support Sen. Pat Roberts (R-Kansas) and Rep. John Duncan (R-Tenn.) bill to create the Committee to Reduce Government Waste. This bill signals a serious step toward reforming federal spending and provides prudent lawmakers with an important tool to decrease the size of government. The letter points out that the Committee to Reduce Government Waste is not a new idea—in fact, the committee existed first in the 77th Congress after it was proposed by Senator Harry F. Byrd Sr. (D-Va.). Named after its creator, the “Byrd Committee” was tasked solely with cutting unnecessary and redundant federal programs and was able to enact real reform—the Committee netted over $38 billion in savings (in adjusted dollars) in its first few years of existence. The bickering over the past few months over a two percent cut in federal spending shows that fiscal restraint is hard to come by. Institutional changes, such as implementing a committee focused only on cutting spending, is the only way to ensure lasting reform for taxpayers. Passage of this legislation will be a serious step forward in advancing spending cuts and finally give taxpayers a much-needed congressional voice.
The vast majority of Americans will never spend $1.6 billion in their entire lifetime nor will most people ever see that figure in a bank account, much less spend the amount in a single day’s time. But before you say it’s impossible to do, take a look at how the Pentagon managed to spend $1.6 billion in just a single day’s work. Fortunately, The Fiscal Times did the number crunching for us and offered just exactly how such vast expenditures occur. The article rightly notes that most of the attention goes to the big-ticket expenditures, including many examples, like the Medium Extended Air Defense System (MEADS) that the Taxpayers Protection Alliance has written on extensively. So what’s particularly valuable and unique about the Times’ article is that it zeros in on some of the smaller projects. The article notes, “But smaller projects often escape scrutiny, despite costing the Pentagon hundreds of millions of dollars. To illustrate just how the Pentagon spends money each day, The Fiscal Times picked a random day – March 4, 2013 – and reviewed what contracts the Pentagon awarded on that day. From weapons systems to prescription drugs, the daily cost of running the Pentagon added up quickly: 10 days ago, the Pentagon spent $1,614,108,656.”
Today may be April Fools’ Day, but not everything that happens today is a joke. And as great as it would be to say that the topic this blog discusses is a joke, it’s not. Just like last year, the first day of April is once again greeted with the somber reality that the United States has the highest corporate tax rate. Although today marks the one year anniversary of this unwanted distinction, they’ll be no celebrating in taxpayer circles. On April 1, 2012, Japan lowered its corporate tax rate to 36.8 percent from 39.8 percent; this left the “United States with the highest effective rate among developed countries: 39.2 percent.” A US News and World Report piece dated April 2, 2012 explained the issue well in its opening paragraph. It reads “United States-based companies and hardworking Americans face a steadily growing problem, one oddly self-imposed by Uncle Sam. Our current tax system puts businesses and workers at a competitive disadvantage in the global market and discourages companies from investing in operations here at home.” This first place designation is not one the U.S. should want to retain. In addition to harming U.S. companies, there are other tangible harms inflicted upon our nation’s economy. As the Daily Caller reported, “between 2000 and 2011, the U.S. experienced a net loss of 46 Fortune Global 500 company headquarters, according to a report by Ernst and Young.”
Earlier this week Taxpayers Protection Alliance posted a blog on an IRS-funded Star Trek parody video. And if that didn’t send you into outer space, the absurd example of government waste highlighted in today’s blog surely will. The topic of this blog is a totally different sort of space: wasted. Not the type of wasted that college kids are on a Saturday night, no, the definition of wasted used here is about totally empty, unused federal buildings. The Fiscal Times recently reported on a “new Government Accountability Office (GAO) audit, which found that between 2000 and 2010, taxpayers spent $835 million in extra construction costs for 33 courthouses that were overbuilt by more than 3.5 million square feet – enough extra space for nine average-sized courthouses.” To give you an idea of just what this continues to cost taxpayers on a yearly basis, The Fiscal Times explains, “Even though the space sits empty and unused to this day, taxpayers continue to pay for $51 million in maintenance and operational costs every year.”
During one of the most challenging fiscal times in the United States unemployment spiked and citizens were told by bureaucrats and politicians to be smart about how they spent their money. It appears that the government officials weren’t taking their own advice. In 2010, the Internal Revenue Service (IRS) funded two “training” videos that cost taxpayers $60,000. The problem is that these taxpayer-funded training videos involved Star Trek and Gilligan's Island parodies.It’s a toss-up between what’s most offensive. The fact that the government found it appropriate to fund a six minute video of IRS agents or the text of the parody that asserts the IRS’ “never-ending mission to seek out new tax forms, to explore strange new regulations…”
The net neutrality world is all-abuzz with the announcement that Federal Communications Chairman (FCC) Julius Genachowski is retiring. According to The Hill, “The net neutrality rules were one of the defining achievements of the tenure of Chairman Julius Genachowski,…” That is not a good legacy and should not be considered an “achievement.” “Net neutrality,” which is loosely defined as a system that allows information on the Internet to move freely without regard to content, is in reality a not so subtle attempt to regulate the Internet and the next Chairman will determine the fate of net neutrality. The Hill also noted that, “Berin Szoka, the president of libertarian think tank TechFreedom, said he hopes the next chairman abandons the fight over net neutrality. ‘I am mystified why we have spent the last seven years arguing about net neutrality,’ Szoka said. He argued that the Federal Trade Commission's existing authority to police anti-competitive and deceptive business practices is sufficient to address potential net neutrality abuses.” The truth is that the Internet has thrived because government has, up until now, kept a light regulatory touch on the Internet. Quick reacting business and free market forces will keep the Internet thriving, not slow unresponsive government bureaucracies. A new regulatory regime for the Internet will stifle innovation and cost taxpayers millions of dollars in a newly created bureaucracy.
If you think taxes are high where you live, wait until you hear about what some Minnesota residents may soon be paying. Significant tax hikes on tobacco and other products are included in Minnesota Governor Dayton’s proposed budget. According to Duluth News Tribune, “Gov. Mark Dayton, in both his initial budget proposal in January and in his revised spending pitch last week, called for increasing the state’s current tobacco tax of $1.23 per pack by another 94 cents. Other legislative proposals would jack up the tax by anywhere from $1.29 to $1.60 more per pack. Duluth’s Democratic Rep. Tom Huntley has proposed a $1.50 increase. A $1.29 tobacco tax hike would put Minnesota on par with neighboring Wisconsin.” That increase is expected to raise an additional $365 million for the state budget over two years. Unfortunately, these revenue expectations tend to be Fool’s Gold. The Minnesota State News pointed out that “Since 2003 there have been 57 cigarette tax increases across the nation and 68% of them have failed to meet projected revenues. In 2006, New Jersey raised cigarette taxes with the hope of pulling in $30 million in extra revenue each year. Not only did the tax hike fail to bring in extra revenue, but the state actually collected $20 million less in cigarette sales.”
The Senate will be voting on legislation this week that will be, according to Andrew Moylan at R Street Institute, "paving the way for expanded state sales tax collection for online purchases." Also, according to Moylan, "On the occasion of the first Senate budget resolution in more than four years, Sen. Durbin is likely to introduce a 'deficit neutral reserve fund' amendment that is essentially a proxy for his bill, S. 336. Despite what its supporters claim, this legislation is bad news for conservative principles and limited government." That is why the Taxpayers Protection Alliance was proud to sign a letter with with 15 other taxpayer and free market groups to oppose S. 336, the “Marketplace Fairness Act.” S. 336 would countenance an enormous expansion in state tax collection authority by wiping away the “physical presence standard,” a baseline protection that shields taxpayers from harassment by out-of-state collectors. The bill would create a decidedly “unlevel” playing field between brick-and-mortar and online sales. Brick-and-mortar sales across the country are governed by a simple rule that allows the business to collect sales tax based on its physical location, not that of the item’s buyer. Under the “Marketplace Fairness Act,” that convenient collection standard would be denied for online sales, forcing remote retailers to interrogate their customers about their place of residence, look up the appropriate rules and regulations in thousands of taxing jurisdictions across the country, and then collect and remit sales tax for that distant authority.
How could anyone be against a plastic bag ban? It’s a great way to save money while saving the environment, right? If this statement were true the government wouldn’t have to prohibit people from using a plastic bag, people would choose to do so without coercion. The shortcomings of the Washington, D.C. bag tax are numerous due in part to the ill-conceived premise of banning or taxing a consumer’s choice to use a plastic bag. In March 2012, TPA noted the shortcomings of the bag tax. D.C.’s experience has been a complete failure. According to a report by Americans for Tax Reform and the Beacon Hill Institute, “the bag tax will result in the elimination of more than 100 local jobs and precipitate a $5.64 million decline in aggregate disposable income for 2011. The majority of this income would have been spent in the District and, as a result of the bag tax, D.C. will now needlessly forgo an additional $108,340 in sales tax revenue and will see investment drop by $602,000, with the bulk of the loss occurring in the retail sector.” The obvious scenario is that people will shift their purchasing behavior to patronize stores that are outside the geographical area of the tax. Seattle’s local government went even further; instead of taxing the bags, it out right banned them.
Although the current state of the federal government comes up short a lot of the time, there are a few redeeming glimmers of hope every now and then. More times than not, those glimmers come from an entity of government that’s asked to check up on, monitor, and audit other components and arms of the federal government. These beacons of fiscal responsibility are the Inspector Generals (IGs). IGs are extremely helpful to taxpayers for a variety of reasons, and they certainly strike a fear in whichever agency that’s the one under the microscope. For example, just recently the Department of Energy’s (DOE’s) IG found that a “Michigan battery-maker that received a visit from President Obama spent hundreds of thousands of dollars in stimulus grant money for workers to do things like watch movies and play cards, according to an inspector general report that blames poor management by the Energy Department. The wasted labor is a system of more widespread mismanagement of the company’s $151 million matching grant…”