Fiscal Responsiblity

In November, I gave my third Annual Address to the delegates of the National Grange. The following two paragraphs were from the fiscal responsibility section.

"There is no issue with greater impact on our Nation than the fiscal responsibility of our elected officials at each level of government. If we allow our elected officials to fail to exercise prudent fiscal restraint we destroy what our country has stood for over the past 234 years. Our nation and states cannot spend more than we receive over the long-term, and we cannot continue to raise taxes and fees without harming the initiative and strong work ethic of the average American.

"Our great nation has developed a serious spending problem over the last few decades. Over the past two years our federal government has accelerated this problem beyond any precedent. In the past year, 37 cents of every dollar that our federal government spent was borrowed. By having huge deficits in the budget, we are creating long-term debt that was unimaginable a decade ago."

The debate in Congress on keeping our taxes at their current level should have been held months or even years ago instead of this week. Instead of making the debate one of partisanship, it should be one of finding the best solution for American taxpayers and our economy.

From the looks of things today, a great deal of increased spending will be included with keeping our taxes at their current rate. The estate or death tax looks to be re-instituted, but at somewhat lower levels than they were in 2001. It appears that no one will be happy with the final bill, but there is hope that something will pass this week.

2011 needs to be the year that we reduce spending and Congress needs to continue hearing that message.

Paying For Tax Cuts

It has always irritated me when a news reporter or politician talks about paying for tax cuts and today I read an article where once again they were talking about the taxpayer paying for a federal tax cut.

Last time I checked, when you balance a budget, you adjust your spending to fit the income you have. From my point of view, the same principle would seem to apply to the government. If they raise your taxes they don’t credit anything in the budget, so why if they were to lower, or in this case not raise, your taxes where would anyone be paying for them?

For most of us, we don’t set our wages and we do not set the amount that will be taken in taxes, but we do choose how, and on what, we will spend our money. When income goes down, we stop spending on certain items or reduce spending on several. When income goes up, we choose to either spend a bit more or maybe even save a little for the future.

However, the Federal Government sets the tax rates on income and they set the deductions and credits, which means they choose how much to collect from each of us for earning each of our respective livings. They control the income side provided that they keep a balance between people being able to invest and make a dollar and trying to keep it safe from taxes by not investing it. So the income side of this equation is that it is our money that the government uses.

Yet the Federal Government is also in charge of spending all of our tax dollars. A balanced budget would be one that didn’t spend more than it took in, and think about that last time that happened in Washington, D.C. The answer to that question will date you if you remember being there.

The current situation where we are spending far more than we take in (deficit), means that our children and grandchildren are going to have to pay back sometime in the future the money we’ve borrowed and spent (debt).

I remember when President Bush proposed tax cuts and after Congress passed them and the President signed it into law, I had a decrease in the taxes I paid. And just for the record, I’ve never been rich in my life, at least as far as money goes. Now some of these reporters and politicians are saying if they don’t take more of my money we’ll have to pay for it. Did I miss something or are we trying to spin math now?

Now I do believe that all Americans should help contribute financially to support our country. An open debate on how much we should pay through our taxes is proper. From my perspective our government has a spending problem and the only way it is an income problem is if we are determined to spend freely and then try to raise taxes to match.

It is time to call things what they are and quit trying to spin words and facts to confuse people or to further muddy the issue. It is our money that our government takes through taxes and it is our money that they spend to operate our nation. At the moment it is also the money that is being spent that our children, grandchildren, and great-grandchildren are going to be earning in the future.

Regardless of whether the politicians want to raise, lower, or keep taxes at the current level, at least don’t tell us that we have to pay for a tax cut.

Basic Economics

I just don’t quite get why so many politicians seem to be missing the common sense boat when we talk about the economy. It would be truly discouraging if it required a degree in economics to see some of the solutions.

I’ve had a checking account since I was about 16 and at an early point in life, I knew that if a person writes a check or charges a debit for more money than they have in the account, the check bounces, the debit is declined and the bank punishes you with a hefty overdraft fee. When you don’t pay a bill, someone is going to ask some tough questions. If you constantly spend more than you make, you will go bankrupt.

It is seems obvious to me that when you increase taxes, there is less money being spent to hire people by businesses. Undoubtedly there is a tax rate that will generate the maximum revenue for the government with the least negative impact on the economy and while I am not sure what it is exactly, I just have a hunch it is somewhat lower than the total bill we have today.

The bottom line is that the government as a whole doesn’t create wealth and wealth is what increases our standard of living. Without wealth generation, the ideas, services, food, fiber, and widgets that are produced, the economy just can’t grow.
It is also painfully obvious that when you increase taxes on the rich, that many people find themselves being classed as rich who really are not. Most importantly, if the amount of taxes I pay as a percentage of my income goes up, it is a tax increase. The more of my money that the government takes, the less that I can use for the things I think are important. Now don’t think that I oppose paying taxes, I just want a civil discussion on how much I should pay.

It would seem to me that there are some simple solutions to help stimulate the economy.

First stop spending more than is received in revenue. I realize that means making choices, but that is what people normally do when they run out of money.

Second stop raising taxes, especially the ones aimed at business. All they seem to do is discourage hiring. While we’re on this subject, maybe just following a bit of Grange policy and make the tax system simpler would aid the economy. If farmers, businesspeople, and the rest of the taxpayers knew the tax system was consistent and predictable it would be a lot easier to make investments that would lead to new jobs.

Third quit using taxes as a partisan position and as a wedge between voters and start talking about our nation’s financial health. After all, we are all citizens of this great nation.

I have a hunch that just these three basic ideas would keep Congress busy for a couple of years while the rest of us keep working and building the secure financial future we want for our families.

Hiding Taxes

I found a new tax in Washington DC. When I bought my lunch the person running the cash register asked me if I wanted a bag. It seemed like a silly question to me as I had a sandwich, a bag of chips, and a drink and it was to go, so I said yes. As I paid my bill, I saw a posted sign that notified me that bags now cost 5 cents due to a new District of Columbia law that became effective January 1.

I have now done some research and found that DC now requires all businesses that sell food or alcohol to charge five cents for a plastic bag. Not only does it require payment, but the bag must be made from #2 or #4 polyethylene and the bags must be printed with a phrase that encourages recycling (such as “Please recycle this bag.”) Paper bags must contain a minimum of 40 percent post-consumer recycled content and have the printed message also.

The business gets to keep 1 cent unless they offer a rebate for customers providing their own bag and then they get to keep 2 cents.

The 3 to 4 cents left of this new tax will go to the new Anacostia River Clean Up and Protection Fund which will be administered by the District Department of the Environment (DDOE). They have announced that they plan to use it to clean and protect the Anacostia and other local waterways, conduct public education campaigns about the impact of trash on the District’s environmental health, and continue to provide reusable carryout bags to District residents.

Of course as with most government mandated programs, there are some bags that will be banned and other bags from certain businesses that are exempt from this tax.

The real question is not how this impacts the District of Columbia, but why is this a standard way of raising revenue for many cities, counties, and states? Hiding taxes for causes in fees that people don't perceive of as taxes doesn't promote support. The Grange believes in good stewardship of our environment. We would support many efforts to clean up rivers, reduce trash and litter, or even to educate people about their options. However, government often forgets that there are multiple ways to get the message out and to create effective solutions.

Especially in tough economic times, just charging more for taxes and letting a government agency address the topic doesn't seem prudent. Did the city really evaluate their priorities and find nothing of less importance to discontinue? Did they really find that this issue was of such critical importance that a new tax needed to be created?

I know it is only a nickel. If you buy one bag a week it is only $2.60 of which the government will get about $2.00 of. The question I have for those who ask, "why complain about a nickel?" How many nickels, dimes, quarters, and dollars are already being used for worthwhile causes with taxes that are hidden? When I pay my income tax I know how much it is. When I pay my property tax bill, I know who gets every part of it. When I buy an item and there is a sales tax, it is there for me to see. The problem is that government officials realize that people don't want to pay more taxes so they are hiding them in plain sight as user fees, bag fees, or have them included within the price of something we purchase.

This D.C. five-cent bag fee will have no impact on most Grange members. The question for each member is how much money do you spend each year without realizing it is a tax from your government and which is often dedicated for some specific purpose? Do you feel that you are paying your fair share? Is your money being spent wisely and for important services? Are you going to bring even one issue to your Grange this year?