Voice For Liberty

Tag: Taxation

  • Wichita school bond issue impact is an illusion

    In today’s Wichita Eagle (February 17, 2008), USD 259 (Wichita public school district) school board member Lynn Rogers makes the case that a bond issue for the Wichita public schools will have a positive economic impact on the local community.

    Many people are skeptical about the tax rebates recently passed by Congress and their ability to stimulate the economy. Why? That’s because the money being sent to households is not “new” money. It had to come from somewhere. Many people realize that taking money from the pocket of one person and sending it to another doesn’t add to total economic activity. And as our nation is drowning in debt at the federal level, many people are wary of borrowing money just to get a little boost now, when there is so much debt to be repaid.

    It is the same at the local level. The money that will pay for the new facilities has to come from somewhere. When people pay taxes to USD 259, those tax payments represent money they can’t spend somewhere else. Economic activity that might have taken place will not, because people had to spend their money on taxes.

    This means that if the bond issue passes, and you drive by a construction site being funded with bond money, the workers you see will have displaced other workers in our local community.

    If you see a new school building or new tennis courts, you see construction that has displaced other construction in our community.

    School district officials will highlight the construction projects, just as they have in the past, as evidence of economic impact and progress. They can do that because it’s easy to identify and show the new facilities. School officials will lead tours of the shiny new schools. They’ll be promoted endlessly on the district’s cable television channel. What is far more difficult, however, is to find the economic activity and jobs that were displaced to pay for these projects. No television or news reporters will look for them. There is no one to speak for them.

    In a television news story, a teacher at an overcrowded school suggested that Wichitans forgo a couple nights out at supper to pay for the bond issue. What would be the impact on restaurants in Wichita if all families did that? How would that affect the people who work in those restaurants? I am tempted to ask what this teacher has against these people.

    Mr. Rogers is correct on one thing: spending money the next few years while paying it back over 20 years does lead to more economic activity right now. He didn’t mention, however, the economic activity that is not taking place this year because we’re paying off the 2000 bond issue, and he doesn’t mention the activity we’ll lose in the future in order to pay for this bond issue.

  • Wichita school bond issue not the only proposed tax increase

    As the residents of Wichita consider whether to vote for the $350 million school bond issue proposed by the board of USD 259 (Wichita public school district), be aware that the bond issue and its associated increase in property taxes is not the only tax increase the public schools in Kansas would like to have. The following article from Karl Peterjohn explains.

    Tax Funds Being Spent To Push For Kansas Tax Hike
    By Karl Peterjohn, Kansas Taxpayers Network. Released September 20, 2007.

    Your tax dollars are being used to push for an increase in Kansas income taxes. Do you want your tax money spent on raising your taxes?

    This tax hike plan was initially reported by in the Hawver’s Capitol Report (www.hawvernews.com) state capitol newsletter August 27. The Kansas Association of School Boards (KASB) is seeking another statewide income tax hike. This tax hike would be used to provide more state tax dollars to the 296 Kansas public school districts.

    What is not clear is how big a tax hike is being sought by the government school spending lobby. KASB is a large organization with over 30 employees operating out of its posh, marble floored offices with a multi-million dollar budget in west Topeka near Wanamaker Road. KASB is funded with tax dollars coming from 295 Kansas public school districts with only one district not having a KASB membership.

    In the 2007 legislative session KASB registered 13 lobbyists to push for more spending and additional property tax authority during the 2007 legislative session. In addition to this taxpayer funded lobbying group, many of the KASB member school districts also have their own taxpayer funded lobbyists at the statehouse too.

    This tax hike scheme would provide additional tax funds to substantially expand the already budgeted $122 million to pay off the final year of the Kansas Supreme Court’s Montoy school finance lawsuit. That budgeted amount will provide roughly $275 per pupil or over $5,000 more per 20 student classroom next year. For KASB, that is inadequate. The school districts want more money in addition to the increased local property tax increases authorized by the legislature this year for all 296 Kansas public school districts. Your tax dollars are helping raise your property taxes.

    This isn’t the only fiscal battle your tax funds are helping finance. There has been a major open records battle trying to get the recalcitrant school districts funding this lawsuit to report how much money has been spent for this litigation.

    Kansas taxpayers face automatic tax hikes due to property tax appraisal valuation inflation as well as higher income taxes through inflation generated bracket creep in our state income tax. KASB and other taxpayer funded lobbyists regularly fight any proposals to make it harder to raise state and local taxes in Kansas.

    Many Kansans are unhappy about these tax hikes that no elected official has to vote for. More Kansans would be outraged if they knew their tax money is being spent to promote higher taxes as well as more state spending. This year the state’s General Fund budget grew 10.4 percent but that is not enough for these groups.

    There are roughly 70 school districts, cities, counties, and other governmental bodies lobbying legislators at the statehouse. Efforts by legislators to stop this abuse have failed often due to the powerful push from these taxpayer funded lobbying organizations.

    When the senate’s local government committee chairman Tim Huelskamp, R-Fowler, held hearings on a bill to stop this taxpayer abuse last year the room was filled with tax funded legislators opposing this bill. The bill was killed by bipartisan senate leadership and never even got debated on the senate floor. So taxpayers are left with this question: How much of your tax dollars are the lobbyists spending at the statehouse trying to raise your taxes?

  • New tax targets Kansas senior citizens

    News Release: Kansas Taxpayers Network Opposes New Tax On Elderly

    A proposal to raise a new “assessment” or tax on nursing home bound Kansas elderly will have its first hearing in front of the Kansas senate’s Ways and Means Committee February 14. The new charge on nursing home residents will total $1,733.75 a year or $4.75 a day if the proposed bill, S.B. 585, becomes state law. Nursing home operators would be required to collect this charge from nursing home residents who are not covered by Medicaid or are in a veterans home. This legislation is structured to turn the nursing homes into unpaid tax collectors for the state and make them the fall guys by having this new charge hidden in their current bills.

    “The proposed ‘assessment’ is actually a new and well hidden tax on the most frail and weak Kansans who are nursing home bound and in the twilight of their lives. Many of this nursing home residents and their families are struggling to pay their current nursing home bills without this massive new charge being added,” said Karl Peterjohn, executive director of the Wichita based Kansas Taxpayers Network. Peterjohn will be testifying in opposition to this proposed new state charge. Peterjohn’s committee testimony is below.

    The Kansas Taxpayers Network has been testifying against a variety of proposed new taxes, fees, and charges coming out of the 2008 legislature. KTN has opposed raising state excise taxes, against the new carbon tax that would dramatically raise Kansans utility bills, and worked for a proposal to limit property tax growth. “Normally proposals to raise Kansas taxes follow an election year. So it is quite unusual to see so many tax hikes and other so called “revenue enhancements” appear this year. There seems to be a consensus that Americans in general and Kansans in particular do not mind seeing new or higher taxes and fees placed upon them. KTN’s supporters across Kansas remain opposed to seeing more of their hard earned money grabbed by government at all levels,” said Peterjohn.

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    KANSAS TAXPAYERS NETWORK
    www.kansastaxpayers.com
    P.O. Box 20050
    Wichita, KS 67208
    316-684-0082 fax 316-684-7527
    Testimony Opposing S.B. 585

    By Karl Peterjohn, Executive Director

    The legislation before you today would massively increase the cost of nursing care services to citizens who would need to come up with an additional $4.75 per day or $1,733.75 a year to reside in a Kansas nursing home. While this legislation is described as an assessment or fee, this actually appears to be much more like a tax on nursing home patients with their own private resources. Medicaid and certain other seniors would be exempt from this new tax.

    There does not seem to be any visible benefit to the nursing home resident who will have to find the additional funds to pay for this new state imposed tax. Nursing home residents are by their very nature people who are in poor health and without the ability to generate additional income by going to work. In many cases their families are already struggling to pay the substantial bills that nursing home residency requires today. The additional revenue raised by this bill would be used to subsidize Medicaid recipients’ bills.

    Adding an additional state charge while a loved one is struggling to regain or even maintain a level of life is a pernicious new burden to add to these elderly, sick, and the most frail Kansans. These are the weakest people who are facing a new cost that appears by this legislation to be largely hidden from them by the way it is going to be imposed under this bill.

    S.B. 585 appears to hide this additional cost by forcing the nursing home operator to be the tax collector for this additional state charge. This is another new unfunded state mandate onto this residential industry in Kansas. The private sector in Kansas lacks the home rule powers that local units have that often allows the local governments to avoid or evade the state’s new mandates that are non uniform in Kansas law.

    S.B 585 will make the nursing home industry serve as the tax collector for this new state tax burden. This is inappropriate too.

    The creation of a new tax or all right, you can call it an assessment, is the worst type of way to show our responsible senior citizens who are in the twilight of their lives and see how they are treated in Kansas by our state government: badly.

  • Thanks for picking up the tab, or, taxpayer-funded lobbying hurts

    This article explains the prevalence of and the problems with taxpayer-funded lobbying. This type of lobbying is especially egregious, as it is using taxpayers’ own funds to harm them further. It’s bad enough that a governmental body — say the Wichita Public Schools — receives funds, increasing rapidly from year to year, from the local taxpayer. It then compounds the damage by using some of that money to persuade other governmental bodies to send them even more. Sometimes they use your own money to fund lawsuits to get even more of your money.

    You may be thinking that these local governments have the best interests of their constituents as their goal, so it’s okay for them to lobby. But you’d be wrong. The League of Kansas Municipalities (how could an institution with a civic-minded name like that do anything wrong?) lobbies for the ability to take a person’s private property and give it to another through the process of eminent domain, all in the name of economic development. This is a serious violation of the right to be secure on your own property, and they are spending your tax money to support this lobbying effort.

    Thanks for Picking up the Tab
    By Alan Cobb, Americans For Prosperity Kansas State Director

    It’s a common scene in Topeka — a lobbyist treating an elected official to lunch, giving a legislator a cigar, or picking up the tab at a local watering hole. Of course, there is talk. Talk about new programs, regulations, budget increases, and the like.

    Who is paying for these perks?

    You are.

    Your tax dollars are used by school districts, city and county governments and other taxpayer funded organizations for direct lobbying efforts in Topeka.

    Some local officials say it isn’t “lobbying” but rather “representing our town, county, or school district” before the Legislature. Your tax dollars are being used to influence legislators to voting a particular way. That’s lobbying.

    It’s proper for private citizens and groups to petition their government, but should one government be “petitioning” another? Do you agree with the things they are lobbying for? Do you even know?

    How prevalent is this? Well, it’s hard to say, and that’s part of the problem.

    Over 70 individuals and organizations, paid by local governments, peddle their influence in the Kansas Statehouse. Their expenses are reported to the Governmental Ethics Commission.

    Some of larger cities, counties and school districts have their own lobbyists. Others rely on their associations to do their lobbying for them.

    But the amount of tax dollars that cities, counties and school districts are paying these folks — specifically for lobbying — is anybody’s guess.

    In November, Americans for Prosperity sent an open records request to every city, county and school district in Kansas — over 1,000 government entities — asking them to disclose how much they spend to lobby.

    The responses we’ve received are quite interesting. While most local governments complied with our request, few could say with any certainty how much money is actually spent on lobbying.

    Many of those responses went something like this: “While the city/county/school district spends XX amount each year to join associations that lobby, we have no way of knowing how much of that goes toward lobbying.”

    But shouldn’t someone know how much of our taxes go to lobbying in Topeka?

  • Taxes in Kansas at an All-Time High

    Taxes in Kansas at an All-Time High
    By Dr. Barry Poulson

    At no other time in the state’s history have state and local governments imposed such a heavy tax burden on Kansas residents. This year, state and local taxes will capture 11.2 percent of the state’s income.

    The graduated income tax contributes to this all time high by creating a boom of revenue and spending during prosperous economic times. In periods of rapid growth, income tax revenue increases faster than income. Excited by these new funds, legislators increase state spending with new or expanded programs to match.

    With this boom often comes a bust. In a recession, income tax revenue falls more rapidly than income. Politicians offset the shortfall with “temporary” taxes, fees, and debt. That additional revenue is then built into permanent spending programs, and the “temporary” taxes, fees, and debt rarely disappear. With the exception of Nebraska, the state has raised individual and corporate income taxes more than any other state in the region.

    This boom and bust of revenue and spending was especially evident during recent economic cycles. Throughout the 1990’s, the economy grew and revenue increased more than 7 percent per year, outpacing the growth in income of only 5.2 percent. When recession hit in 2001, the state found itself with a shortfall. Most of it was due to declines in personal and corporate income tax revenue. As they had in prior recessions, politicians responded by increasing taxes and fees, and by issuing more debt.

    Paralleling the increased tax burden has been an unprecedented increase in the debt burden imposed by the state on its citizens. In 1992, Kansas’ government debt was around $424 million, a lower than average level for a state of similar size. By 2005, debt had swelled to $3.95 billion, an increase of nearly 832 %.

    The current budget is projected to incur a deficit of half a billion dollars. During the recent recession, state spending continued to grow despite the fall in revenue. Initially, spending from state general funds decreased as the recession hit, but they have since recovered. Even with a recovery from the recession, revenue growth will not be enough to fund current policies.

    In fact, the unconstrained growth of state spending has far outpaced the growth in personal income for the last three decades. Limiting our scope to the last three budget cycles, we find that General Fund spending increased 8.6%, 9.6%, and 8.6%. In the current budget, state General Fund spending is projected to increase an incredible 18%, far outstripping the growth in the state economy.

    In recent years, Kansas has been in a race to the bottom to become the most heavily taxed state in the region. While Kansas has been raising taxes and adding debt, surrounding states have pursued more prudent tax policies.

    The sharp increases in spending, taxes and debt have resulted in a decline in the state’s business climate. Throughout the last decade, Kansas has consistently ranked among the bottom group of states in business tax climate. Among the surrounding states, only Nebraska has a lower business tax climate ranking.

    Kansas has been an underachiever in economic growth during the past decade. The difference is exacerbated when compared to the more rapidly growing neighboring states like Colorado. At one time, Kansas had a larger population and higher Gross State Product than Colorado. As Colorado’s individual and corporate income taxes were reduced, their population and Gross State Product outgrew Kansas.

    A heavy tax burden is a major factor contributing to slower growth in some states, and Kansas in recent years has fallen into this category of one of the nation’s heavily taxed states.

    Dr. Barry Poulson is a professor of economics at the University of Colorado and a distinguished scholar with Americans for Prosperity.

  • Floods and whirlwind (of spending in Kansas)

    Floods and Whirlwind
    By Karl Peterjohn, Executive Director Kansas Taxpayers Network

    Kansans are focused upon the floods as well as the results of the tornados that tore up this state in early May. The wrath of Mother Nature is upon us just as the Kansas legislature has left its own flood of spending and whirlwind of legislative changes on this state. The legislature’s fiscal wrath might be overlooked by Kansans focused upon their flooded basements or providing help and assistance to the devastated folks who survived in Greensburg. Kansans ignoring the legislature do so at their peril.

    Kansans will soon have to pay another $1/2 billion more for state government. As one liberal Democrat legislative leader put it, “We spent it,” was the watchword from assistant minority leader State Representative Jim Ward, D-Wichita, to his home town newspaper April 22 when asked about the 2007 session at that point. A few days later the legislature returned to Topeka and spent even more.

    That’s the budget that will soon become law as a result of the 2007 Kansas legislature. Governor Sebelius’ signature is needed to make this $6.089 billion General Fund budget official. This is a 10.4 percent spending hike over last year’s budget.

    It is almost a billion more than the 2006 budget of $5.139 billion. That’s 18.5 percent in two years. Has your salary gone up 18.5 percent in the last two years?

    Ironically, there have been newspaper articles targeting the less than $35 million in tax cuts as a fiscal problem for Kansas. The Wichita Eagle warned that cutting the business franchise tax and reducing the tax penalty on social security payments to seniors could place this state in fiscal jeopardy. Tax cuts are a problem while spending growth is ignored among the liberal Kansas newspapers.

    Obviously, these are fiscally liberal journalists who never bothered to read the budget. Now there was pressure from the liberal spending lobbies starting with the Kansas Supreme Court as well as the governor demanding massive hikes in state school spending. That part of the court’s edict will expand almost $200 million in one year or $450 per pupil. In addition, the rest of the spending lobbies from the state regents universities and social service welfare spending advocates are among the most prominent who perpetually dominate the budget process in Topeka. That why a liberal spending advocate like state senator Tony Hensley, D-Topeka, praised the 2008 budget on the senate floor before voting for it.

    Nebraska is looking at major reductions in a variety of anti-competitive state taxes and may use a sizable part of their budget surplus coming from the Bush tax cuts for some major, over $200 million in income and property tax cuts in a state with 60 percent of the Kansas population. Last year Oklahoma passed an even larger dollar amount of income tax cuts. In April the Tax Foundation (taxfoundation.org) reported that Kansas has the 15th highest total of state and local taxes as a percentage of income among the 50 states.

    Kansas went into this budget cycle with over $734 million as a beginning cash balance. That will soon be spent. The real challenge that awaits us is state revenues are growing at only a fraction of state spending, and this spending growth cannot continue without raising Kansans’ taxes.

  • It’s not yours to cut

    An article in the April 22, 2007 Wichita Eagle by Dion Lefler states: “All together, those [tax] cuts will cost the state $570 million in lost revenue in the next five years, according to the consensus report estimates.”

    A statement like this reveals a faulty line of thinking: that the government has a legitimate claim on a large part of our incomes and wealth. Then if, somehow, the government is persuaded to “give” any of that claim back to us, this gift has to be paid for.

    It’s the people who “give” tax money to the government, not the government who “gives” it back to the people in the form of tax cuts. If the government cuts taxes, the government gives us nothing. It simply takes less of what is ours in the first place.

    Liberal publications with a national audience like The New York Times use thinking like this all the time. It’s very disappointing to see it at home in Wichita and Kansas.

    This backwards thinking about taxes was also revealed in reporting by David Klepper in the May 12, 2006 Wichita Eagle: “They [Kansas lawmakers who supported the cuts] consider the cuts a wise, $128 million investment to spur new investment by business, new jobs, more economic activity and, consequently, higher tax receipts.”

    In the same article: “Gov. Kathleen Sebelius, a Democrat, who first proposed the business machinery tax cut, agreed. ‘We’re not giving away money for the sake of giving it away,’ she said. ‘I’m hoping that the economic growth will actually help fund the school plan that we just passed.’” (emphasis added)

    It is depressing to realize that the Governor of Kansas equates letting people keep a little more of the money they earned with the state “giving it away.”

    Furthermore, the true motives of politicians are revealed: they say they are “investing” in tax cuts in the hope that the state will collect even more tax money in the future.

    We should be asking this question of our elected representatives: If tax cuts stimulate investment, jobs, and economic growth, why didn’t you cut these burdensome taxes last year?

  • The Real Cost of Higher Taxes

    Dan Mitchell of the Center for Freedom and Prosperity writes:

    A column in the Wall Street Journal explains how certain tax cuts generate additional growth and thus lead to some degree of revenue feedback to the Treasury. The authors point out that higher taxes, by contrast, would impose harsh costs on the economy for every dollar collected by the IRS:

    …a recent study by Gregory Mankiw, an economist at Harvard…concluded that a $1 tax cut on dividends would reduce government revenue collections by about 50 cents, after taking into account taxes on $2 of additional economic growth induced by the tax cut. A $1 tax cut from an across-the-board rate reduction would cost the IRS about 77 cents, after taking into account taxes on the 95 cents of additional economic growth induced by the tax cut. …If Congress is willing to forego 50 cents of revenue, the economy would grow and people would have $2 more income. If given the choice, most people would take the $2. Now apply the conclusions of the Mankiw study in reverse — to tax increases. The results illuminate the high costs of providing the government with an additional $1 to spend. A purported $1 tax increase on dividends only nets the Treasury 50 cents — but costs Americans $2 in lost income, plus 50 cents in tax. When a higher rate is levied on all forms of income, an attempted $1 tax increase yields only 77 cents — but costs Americans 95 cents in lost income plus 77 cents in tax. If the government were to kick up the tax increases enough to collect a full additional $1, the cost to the public would be between $2.25 and $5, counting both tax paid and income lost. A May 2006 study by Harvard’s Martin Feldstein, “The Effect of Taxes on Efficiency and Growth,” confirms the disproportionately large economic losses associated with tax increases. blockquote>

    online.wsj.com/article/SB117668162125270737.html (subscription required).

  • Pay As You Go?

    Pay As You Go?
    By Karl Peterjohn, Kansas Taxpayers Network

    On the rare occasions the mainstream national news media bothers to cover federal spending and taxes you are sure to hear the phrase, “pay as you go,” as the primary talking point of the new congressional Democratic majority. This phrase is supposed to reassure us now that the profligate “Bridge to Nowhere,” free spending Republicans have been relegated into the minority.

    New York City Congressman Charlie Rangel, who now heads the powerful tax writing house ways and means committee, wants to dismantle the most successful legacy of George W. Bush’s administration, the 2001 and 2003 federal tax cuts. These tax cuts are scheduled to expire because of arcane congressional budgeting rules. However budgets must be enacted now and not put off until after the 2008 election.

    Liberal North Dakota Senator Byron Dorgan, who heads up the budget committee in the senate, is joining Representative Rangel in this push. While the national “news” media is focused upon Al Sharpton’s take on the Don Imus firing or the latest DNA results from the Bahamas, there is a large federal tax hike in your future as well as increased IRS powers to enforce tax laws.

    Congressional liberals want you to “Pay MORE as you go,” and the lower federal income tax rate of 10 percent, increased child credit, and pro growth capital gains and dividend tax rates from the 2003 Bush tax cuts are all likely to be allowed to expire. The left wing blogosphere is determined to eradicate every last accomplishment of the Bush presidency.

    March 28 the Heritage Foundation’s 2008 budget report warned, “The budget blueprint reported out of the House Budget Committee last week and supported by Democratic leadership is a study in fiscal irresponsibility … the House budget resolution boosts discretionary spending, does nothing to tackle out-of-control entitlement spending, and, worst of all, would impose the largest tax increase ever on the American people.”

    A few days later the Wall Street Journal warned their readers, “The Bush tax cuts don’t expire until 2010, and Democrats aren’t about to tip their tax hand before the 2008 election. But under cover of zero media attention, Democrats are constructing a budget process that will make a tax increase all but inevitable.”

    “The ploy here is ‘pay-as-you-go’ budget rules that Democrats are implementing in the name of ‘restoring fiscal responsibility.’ A few journalists even quote that phrase with a straight face. But everyone in Washington knows that ‘paygo’ is all about making tax cuts more difficult and not about slowing the growth of spending,” the journal editorialized.

    The Heritage Foundation report criticized the Democrat budget, “… the (2008 proposed) budget assumes tax increases of $900 billion over five years which would be accomplished in part by allowing the 2001 and 2003 tax cuts to expire.” The U.S. economy has enjoyed solid growth and lowering unemployment rates ever since the 2003 tax cut was enacted. Federal budget deficits have also fallen despite bipartisan fiscal spending growth since 2004 too. This reduction in federal deficits has occurred because tax revenue growth grew more rapidly than federal spending hikes.

    Fiscally responsible and informed citizens need to know, “… that the tax increase fuse has now been lit. Do nothing and taxes will rise as much as they have at any one time since World War II. Democrats have made the decision to obscure this burning fuse and the press corps is ignoring it. But that doesn’t mean the rest of the country has to play along … It’s a debate we should start having now, before the fuse burns down,” the Wall Street Journal warned April 5.

    Kansans reading these words have now been warned. Tax and spend has returned with the Democratic majority that is now controlling congress.