WSJ Tax Hike Scorecard

This morning's Wall Street Journal has a disturbing tax hike scorecard on the opinion page.

The Journal notes;

"It's all the more remarkable given that federal tax revenues as a share of GDP are currently above their modern historical level. The latest budget estimate is that fiscal 2007 revenues will reach 18.8% of GDP, compared to the 40-year historical average of 18.3%. Tax revenues this year are rising by nearly 8%, following increases of 11.8% in 2006 and 14.6% in 2005. The budget deficit is down to 1.5% of GDP, and falling. But apparently Democrats still think Americans are undertaxed."

Some of the proposed hikes noted;

• A Senate Finance Committee plan to raise the federal tobacco tax by 61 cents to a total of $1 a pack to finance the Schip health-care expansion. The Senate figures this will raise $35 billion in revenue over five years, if you choose to believe this tax increase won't produce even more tax-free cigarette sales from Indian reservations.

• The so-called "Blackstone tax" on private equity partnerships that go public, raising their 15% rate to the regular corporate tax rate of 35%. This bipartisan Senate proposal hasn't been scored yet for revenues but may well pass Congress.

• A tax increase on the "carried interest" of hedge funds and private equity to 35% from 15%. This has been introduced in the House and endorsed by Ways and Means Chairman Charles Rangel and the major Democratic Presidential candidates.

• New York Senator Chuck Schumer tells the New York Times that he'll oppose this unless the tax increase also applies to real estate and other partnerships that also now pay the 15% carried interest tax rate. To put it another way, Mr. Schumer is saying he'll only support the higher tax rate if it applies to more people. Meanwhile, by playing this "good cop" role, Mr. Schumer is raising millions of dollars in campaign contributions from hedge funds and private equity for Democratic Senate candidates running in 2008. Brilliant.

• Higher withholding taxes on the U.S. subsidiaries of foreign companies -- in essence a tax increase on foreign investment in America. This $7.5 billion tax proposal from Texas Democrat Lloyd Doggett came out of nowhere last week to appear in the House farm bill to pay for more agriculture subsidies. It passed.

• Raise the capital gains rate to 28% from the current 15%. This would repeal not only the capital gains tax cut of 2003 but also the tax cut (to 20% from 28%) that Bill Clinton signed into law in 1997. Presidential candidate John Edwards proposed this 86% increase in the capital gains tax last week, and he's been echoed in recent days by such Democratic tax sachems as Alan Blinder and Leonard Burman. Mr. Blinder thinks capital gains should be taxed no differently than regular income, which means the tax rate would rise to 39.6% if the 2003 tax cuts expire in 2010. The last time the U.S. had a capital gains rate that high was 1978 -- the Jimmy Carter era.

• Deny the domestic manufacturing deduction to oil producers. This is part of the Senate Finance Committee's energy bill and is estimated to raise $11.4 billion over 10 years. How this will increase domestic oil production amid $77 a barrel oil and widespread clamor for "energy independence" is one of those mysteries that Congress prefers not to explain.

• A levy on oil and gas produced from deep-water leases in the Gulf of Mexico. This tax on domestic energy production is also part of the subsidy-fest known as the House farm bill and would allegedly raise $6.1 billion.

• A tax surcharge of 4.3 percentage points on income of more than $500,000, which would take the top marginal rate to 39.3%. A leading tax writer on Ways and Means, Massachusetts Democrat Richard Neal, promoted this idea in June as a way to prevent this year's increase in the Alternative Minimum Tax. Mr. Neal told the Washington Post that his plan had broad support from Democratic leaders and that "Everybody's on board." Other Democrats balked after that story appeared and Mr. Rangel told us not to believe it, but something's clearly in the air because Democratic tax guru Mr. Burman is also pushing a four-percentage-point income tax surcharge to pay for AMT relief.

Unfortunately, these ideas are not all they have.

New Political Blog

I recently spoke to a group of young people with sight, hearing and mobility limitations at the capitol. They seek to become involved and educated about the political process because of their disabilities, but also because of their incredable love for, and pride in, our country.

One of the young people informs me he has a blog; Confessions of a Conservative (with security protections). He writes very well about politics on his blog. He hopes to be a lawyer someday and work for "our great nation." It is very interesting to learn the opinions of our future leaders.

Alex reminds us that not only are gender and race no encumbrance for achievement but he reminds us that such physical limitations too are merely physical, and do not limit our thoughts, opinions or drive for a better future.

Best of luck to you Alex! You're an inspiration. Here is your letter.

Mrs. Lynn,

My name is Alex (withheld). I was part of the Tennessee Youth Leadership Forum you met with on Wednesday, July 11.

I apologize for the delay in writing you, but I have been busy. I wanted to take an opportunity to thank you for speaking to us, because I did not get a chance to do so properly. I had the chance to ask you a question, and I felt you did so quite adequately.

I am totally blind and have been for nearly my entire life. Despite my blindness, I refuse to call it a disability. Instead it is a limitation. A disability is something that I feel renders someone incapable of changing their circumstances. A limitation is something that can be adapted and overcome with hard work, ingenuity, and a desire to succeed.

This leads to my point. I hope to one day enter the law profession and eventually politics. I am already writing a political blog to help me become more familiar with the political atmosphere. I have a strong desire to serve this great nation and the people in it. I found your speech to be very encouraging to both myself and anyone else who desired the same as I.

Many people are shocked when they hear of my goals, but you spoke as if you would expect nothing less of someone with the limitations such as those displayed by the students in the forum. Every word you spoke seemed to be sincere and honest. You handled every question with the utmost care. Your attitude undoubtedly restores confidence in government for more than just a few people. Thank you for your service to your district and Tennessee, and for upholding the values you obviously feel to be true.

Sincerely
Alex

ALEC

The American Legislative Exchange Council's annual conference met last week. Over 2000 members of ALEC came together to promote economic and political freedom in our state legislatures.

My Commerce task force learned a lot, and had very lively discussions and voting on several issues.

The working groups, sub-committees and task forces brought to us some of the brightest conservative thinkers in the country.

I was thrilled to meet and have a conversation with President Bush. He was very friendly and down to earth.

Former Congressman Billy Tauzin gave an inspiring speech about medical research and the need to keep the free market.

Mr. Bernard Poussot, Vice Chairman of Wyeth updated us on advances in research.

Former Congressman Dick Armey gave an incredible speech on economics that geeks like me could listen to all day long.

Neal Cavuto, Your World, FOX News, gave us food for thought when he spoke about the good things capitalism has accomplished in the world.

John Fund, OpinionJournal.com, The Wall Street Journal, spoke intelligently about a vast array of things as only Fund can.

Presidential candidate and former Governor, Mike Huckabee was truly inspiring as his speech unfolded in waves about issues with vision.

And former Senator Fred Thompson uplifted and reinforced the legislators by speaking about federalism and states rights.

All in all, the conference was very educational.


An aside; on Saturday afternoon my brother drove in from Maryland and we ventured out to visit our parent's first home. It is a very pretty row house on Waverly Street where we were each born quite a few years ago.

Invalid Voters

The Nashville City Paper reports that the State Election Commissioner has finally responded their questions as to how many voters may have registered to vote using an invalid Social Security Number...Answer 62.

Might I suppose the reply to my three letters is in the mail?

Regulation and Our Liberty

Since session ended, I have been busily studying government regulation, and observing media accounts of the effect of such regulation on our lives.

Accounts have been amazing, from the conversation over reintroducing the fairness doctrine to the licensure of occupations which pose no threat to the public. We need government to consider certain principles before imposing such regulations on us; regulations that often result in law and policies that restrict competition, may have unreasonable compliance costs, and often promote the interests, or beliefs and views, of firms or pressure-groups over consumers.

As chairman of the American Legislative Exchange Council’s Commerce Task Force I actually find myself in a position to do something about it; not just in Tennessee, but in the entire nation.

This week ALEC will meet in Philadelphia for our annual conference. I am going to give an impassioned call to my fellow legislators to help roll back the tide of government invading our lives and from hurting consumers. We’ll attempt to provide tools for legislators to judge regulatory ideas. The goal is to identify the difference between patronage and when unregulated practice can clearly harm or endanger the health, safety, or supply of goods or services to the public, and if the potential for the harm is easily recognizable and not remote or dependent upon tenuous argument.

We’ll hear from the Department of Justice, the Institute for Justice and others. We’ll also work to develop model legislation to bring home to all 50 states.

One of our attorneys at the legislature encouraged me by giving me a little history lesson. He stated that with President Carter and prior, the build up of regulation got pretty intense; hurting competition, choice and opportunity. Then with Ronald Reagan there was a huge roll back in the states and federal government. Since that time regulation has been building again. No one really remembers the roll back times in the 80’s.

I am excited about this opportunity. I hope we will serve you well.

Shared Parenting

Rep. Stacey Campfield discusses shared parenting on his blog today.

I'd really like to know your thoughts about this. So far, the bill has never made it out of committee and I am not on the committee that hears the bill...but just the same, I'd like to know your thoughts.

Let's Talk Frank

I'll be on blogger Terry Frank's radio show this afternoon in the 3 o'clock hour discussing the Copeland Cap and other matters.

Let's Talk Frank airs on 850 WKVL Knoxville, 1290 WATO Oak Ridge, 1140 WLOD Loudon and 1400 WGAP Maryville.

Thanks Terry.

President Visits Nashville

A good friend got me in to see the President in Nashville yesterday. I feel like I got to see the President that the major TV media doesn’t allow us to see. It seems the only thing we ever get to see is a deer in the headlights.

Yesterday the President was bold, brave, commanding, out spoken, confident, charming, quick witted, thoughtful, decisive and compassionate.

I want to assure you, he’s our President, and he was awesome!

Thank goodness we have studies to tell us what is "fair"

None of us resent anyone receiving a good salary; especially if they do a good job. That’s what we all hope for.

I think what bothers us about the Governor’s recent raises for his commissioners is this; he’s violated a tenet of capitalism, and in doing so, he's offended us, the taxpayers.

Labor is a commodity just like any other input of production. Every business manager wants to please the stockholders by keeping expenses as low as possible and profits high.

As such, buyers (employers) negotiate to pay as little as they can while still getting the quality they want, and sellers (employees) negotiate to get as high a salary as they can by promoting their skills.

One thing that is really funny to me is that not only would most employers not pay for a study like this, but if they did and the results came back like this one, they’d probably lock it in a file cabinet for the next ten years and feel very satisfied that they’d done a very good job of hiring talent.

So when the governor raises the salaries of current employees by such an extraordinary amount due to a study of what’s “fair” we realize he isn’t looking out for us, the stockholders.

We think "fair" is what they agreed to work for.

If someone is threatening to leave and the Governor wants to keep him or her, sure, offer more money to stay. But why just raise their salary when we the taxpayers apparently had a bargain?

He’s basically violated a tenet of capitalism for a tenet of socialism.

In socialism, all workers are equal drones. Never mind performance, experience, skills of persuasion, talent, initiative, instinct and enthusiasm – all should make the government study regulated rate.

I have a wage study of my own, wages for commissioners in Tennessee are - exactly what we've been paying. Apparently, despite valuable skills and abilities, the prestige, honor and future resume benefit of being a commissioner in a governor’s administration has in the past made up for any wage disadvantage when compared to the private sector.

Studies are just that…a study. They are not instructions on how much we should pay but an indicator of what the free market is bearing at the time. It doesn't mean we need to conform. We should continue to negotiate as we always have to get the best qualified person for the job. A study can indicate if we are paying too much and can also indicate that we’re getting a really good deal.

Investigating the Copeland Cap

Today I am requesting that the state Attorney General clarify if the administration must use appropriations to determine the extent of state budget growth as per the Constitution (Article 2, Section 24), and state law, (TCA 9-4-5203).


I'd like to thank Ben Cunningham and Bill Hobbs for reporting on this previously and today. Their posts explain the measure very well.

http://www.youtube.com/watch?v=c4eo3UIkoj8

Rex and the City

In today’s Nashville City Paper, Rex Noseworthy, of “Rex and the City,” makes some humorous and true comments about the Tennessean’s recent correction of an article regarding the excessive number of bills and congratulatory resolutions the state legislature filed during session.

I didn't think the stats on the chart looked quite right myself and still don't.

After reading the Tennessean's article, one of my colleagues commented to me "You know, during the income tax battle they wouldn't let me pass a single bill; not even to name a bridge. So was I an effective legislator? We don't have an income tax do we?"

Maybe the newspapers should report what happens and the public and the editorial pages should decide who is effective and ineffective from now on. :-)

From Rex in the City…

“Recently, The Tennessean calculated its most successful/least successful state legislators by determining the number of bills they passed and the percentage of the bills they sponsored that were actually approved.

The newspaper picked what it called the three most successful and least successful legislators from the mid-state, and ran a chart on its Web site showing the stats on all 132 state lawmakers.

The, ahem, science behind this method is certainly up to debate. Some might argue the most effective legislators are the one who pass the fewest laws, period. Another argument might be the most successful legislators are the ones who can get through a legislative session without getting indicted. But, we digress.

The real problem was, according to sources on the Hill, the Tennessean got 100 percent of the lawmakers’ stats wrong. Sources have said House Republican Leader Jason Mumpower had a lengthy meeting at 1100 Broadway last week to explain how to use the proper methodology in figuring out how many bills a lawmaker passed.

The Gannett daily followed with a correction last week and after formulating new stats, proclaimed a new list of most/least successful lawmakers. Overall, it was a big screw up, and a fairly presumptuous story given the fact that The Tennessean rarely covers the Legislature anymore, typically running Associated Press stories instead.

For instance, House Majority Leader Gary Odom of Nashville was proclaimed one of the most successful lawmakers. While Odom is adept, his role as Democratic leader makes him the primary House sponsor on the majority of Gov. Phil Bredesen’s legislation. Bredesen’s legislation usually passes the Democratic-controlled House.

It also didn’t appear that the story gave the lawmakers deemed least successful a chance to defend themselves. Rex hears some lawmakers were irate and have heard about it from constituents upset that they’re represented by what The Tennessean determines as the least successful legislator. CP”

Excessive Number of Bills

Today Rep. Stacey Campfield and Tennessee Politics Blog each write about the Tennessean's article regarding the excessive number of bills and congratulatory resolutions the state legislature filed during session.

The Tennessean's article states that they reviewed over 6000 documents. While the number of filings is probably far too large (depending on what you might personally think is important), the total number of bills, House Joint Resolutions, Senate Joint Resolutions, House Resolutions and Senate Resolutions amounted to 4114.

The total number of House bills filed was 2416, or an average of 24.4 per House member. HJR’s 702 or 7.1 per member. HR’s 215 or 2.1 per member.

The total number of Senate bills filed was 2395, or an average of 72.6 per Senate member. SJR’s 589 or 17.8 per member. SR’s 193 or 5.8 per member.

This means that 21 House bills had no Senate companion bill. However, the member can have a Senator file a companion when the Session resumes in January, 08. If none is filed, the bill dies.

I think the stats in the article might be off. My stats said I filed 40 bills - I filed 34 (extremely important) bills. The number of resolutions I filed was correct at 13. Eleven of my bill ideas were enacted in the following manner; I passed seven bills, three ideas were amended in to other bills opening the same section of law, and one idea received funding in the Governor's budget although no legislation passed.

To rate a legislator effective or ineffective is not entirely fair. Gary Odum passes a far greater number of bills than most because, as Majority Leader, he is asked to file all of the administration's bills. The Majority Leader's job is to represent an administration of the same party. The same goes for committee chairmen. They carry the work of the committee for the administration or for "housekeeping" purposes.

There are so many types of bills that it is very hard to rate these things. There are general bills, local bills, simple amending bills that change happy to glad, technical bills, bills that create a whole new way of doing things or a whole new idea. The latter type of bill may take years to pass because people have to get used to the idea, or it may cost money and the legislator has to find a way to do it cheaply.

Stacey is correct; they are supposed to charge our mail accounts for the Resolutions.

No doubt that some over do it on the Resolutions. But you'd be surprised, some people actually break down and cry when they've been recognized by the state for a long and supportive marriage, a job well done or a life well lived.

Recommit Ourselves to Freedom

Two hundred and thirty one years ago our founding fathers dissolved their political bands with the British Crown and gave us the gift of self-government. A government governed of the people, for the people and by the people. They declared it “self-evident” that all men are created equal and bestowed by our creator with inalienable rights; life, liberty and the pursuit of happiness among them.

A land of limited government where laws would govern all and afford no one special rights or treatment. Yet, everyday government does create special laws due to pressure-group action seeking to make the government impose regulations, restrictions, and expenses on citizens that the group has been unable to persuade an individual to do on their own. Just as often, industries demand to be regulated because it will create scarcity and raise prices.

Numerous examples of attempts to direct the will of others abound. The question is, how jealous are we of our rights and of the rights of our brothers? How much are we willing to allow government, our self-government, to take from us and impose on us?

Regulation theory states a need for the government to regulate industries that have immediate health, safety or supply concerns for the public or market. However, legislatures often go much further than this. It seems that public action upon commerce has been replaced by public action at the legislature to promote or ban anything an interest group decides it does or does not like. The danger is, regardless of liberty and freedom, once legislators fear the constituency in favor of action has grown too large the legislature will take action.

The “Fairness Doctrine,” or forcing radio to grant equal time to both sides of a political point of view, has been resurrected. Sure radio with its limited bandwidth rightly receives some government regulation. Without it competing stations might be chaotically broadcasting over each other.

Apart from its supply concerns, regulators discovered that radio also has an ability to aid the public interest by immediately broadcasting important information such as news, weather or emergency notices. Radio also cannot incite riot or panic, express gross indecency, or perpetuate fraud because these things can affect immediate health, safety or supply concerns too. Other than such general concerns, the business of radio should be left free to creatively produce programming that will sell and generate the highest rates determined by listenership.

I personally think its going to be great to go into restaurants in Tennessee and not have to smell smoke. I don’t like smoke. Although I didn’t vote to ban smoking in restaurants because restaurant owners have always been free to ban smoking any time they wanted; it’s their restaurant. Further, studies state that second hand smoke concerns are overblown, and the body recovers completely from such casual exposure.

But just as important, why haven’t patrons simply refused to patronize restaurants if they don’t like the environment and force owners to change instead of legislatively forcing their will upon their brother at his establishment?

Commerce does work. When a local newspaper recently posted a list of handgun carry permit holders on their Web site readers immediately responded with their intense disapproval. The link was removed within hours. No legislative action was required to make this happen, and the public can still make legitimate requests for information should they need it.

What about minimum wage? We know several things; we know most minimum wage earners are students, retired or part-time and supported by other income sources; these workers actually have the ability to earn more if they choose. We know the majority of the ‘poor’ already make more than minimum wage. We know that the young and unskilled lose out on on-the-job training opportunities due to the artificial wage. We know that in a free market economy prices must be subjective - related to employers' needs. So wages must be allowed to rise and fall as supply and demand dictates – that includes the price of labor. So why do we legislate a minimum wage? Plainly, pressure groups make us feel guilty for our own wage. However, shouldn’t we just let willing buyers and willing sellers deal with each other?

Our own legislature has an endless list of pressure group regulation. This year the legislature and the Governor ignored a letter from the U.S. Department of Justice on a piece of legislation stating that it would cause “significant harm to consumers” by disallowing certain discounts because the industry doesn’t want them: this bill became law.

One tender idea mandated title lenders give discounts to military veterans and their families. It is true that veterans have sacrificed for all of us, and title lenders don’t win many popularity contests. But the fact is, these are legal private businesses. If any business owner wants to give discounts to veterans on their own that is noble. For a legislator to force such discounts is just plain voter patronage. At least the federal government allows a tax break for charitable contributions. With my cherished son in the military, I didn’t have to worry about being accused of being against our veterans – but other legislators certainly did worry.

And then some legislation is designed to feed business to other industries. One new law change mandates that certain would-be licensees serve three years in apprenticeship instead of one, and that they pay for a designated number of post high school class hours instead of home study before taking the licensing exam. Sure more experience and formal education is always good but there was no proof of any harm that’s been done without it. By the way, there is only one school in the state that licensees can attend, no curriculum for this idea, the board couldn’t state what licensees need to learn, nor could the school tell us how much the course will cost – the bill passed.

This year interior designers desired to be licensed. Designers wrote tons of emails to legislators attempting to convince us of the necessity to license their occupation. It is difficult to detect any immediate health, safety or supply concerns...the bill was taken off notice.

When a group of geologists came to us this year wanting increased regulation of their licensure they accidentally revealed their real compliant when they stated that geologists from other states were doing business in Tennessee. Still, they got what they were hoping for.

Government shouldn’t be attempting to aid businesses by boosting their sales, prices or wages – this hurts you, the consumer. Government shouldn't create unnecessary entry barriers to occupations; hindering opportunity and competition. Government should allow you unfettered participation in business and activities that don't have immediate health, safety or supply concerns. And each of us should exercise our economic power and freedom upon commerce instead of running to government.

This July 4th as we celebrate freedom, let us recommit ourselves to freedom and be ever vigilant to demand that government allow us to live freely.