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Education, Public Policy Radar, Private Property, Commentary, Economics, Biblical Worldview, Book Review

Hamilton’s Curse–Hamiltonian Hegemony

This entry is part 7 of 9 in the series Hamilton's Curse

HamiltonsCurse

Nationalized banking, protectionist trade policy, corporate welfare–is this the definition of the current state of affairs (or those soon to come) in America? It likely will be. It is the definition of a mercantilist system of governance, and it is one that Alexander Hamilton advocated for during the period of the Constitutional convention. Those three legs were (and still are) the base of the stool of Federalist big-government nationalism.

It was, however, not the way government actually operated up until the latter part of the 19th century. Jeffersonian ideals of limited, divided sovereignty still held a pulse until that time, but the times, as the song goes, were a’changing. It took a “crisis” in order to knock the supports out from under the republican form of government.

The crisis, the War between the States, allowed the administration of Abraham Lincoln, the “greatest disciple” of Hamilton according to DiLorenzo, unprecedented opportunity to radically shift the country toward a truly mercantilist position. The method of the manipulation took the form of Congressional acts supported by Lincoln after the point in the conflict when southern Democrat members of Congress had exited.

In order to revive the national banking system, the Legal Tender acts of 1862 were put into place, and a paper money system (greenbacks) was locked into place with the National Currency Acts of 1863-64. The interface between government interest and the banking industry was noted by the New York Times as having “crystallized a centralization of power, such as Hamilton might have eulogized as magnificent” (quote from page 129 of the book).

DiLorenzo goes into a long account of Lincoln’s tariff policy, showing that protectionism and its cousin autarky (economic isolationism) were very welcome in the “house that Lincoln built”. Ohio’s own Clement Vallandigham was willing to speak out against this radical consolidation of power in the hands of the national government, but was deported by the administration for his troubles.

The third leg of the stool, the establishment and nurturing of corporate welfare, took the form of: railroad subsidies; land grants in order to give railroad owners free access to construct; the creation of powerful lobbies; and eventually bribes in order to keep the whole profit-taking scheme going (the Credit Mobilier scandal).

Now, such welfare takes the forms of: subsidies through various bureaucracies (think farm subsidies); favored corporation status (think FDA and other governmental barriers to competition in various markets); the creation of powerful lobbies; and “stimulus” or “TARP” acts to give taxpayer dollars directly to non-competitive private corporations that are “too big to fail” according to the national government.

Then, as now, the public reaction to such scandals as Credit Mobilier and AIG consists of a demand for more governmental control of business, which happened to be the problem in the first place. Not that this is something that the corporations are really trying to avoid. In fact, the public is being hustled by very crafty operators all around. The public naivete is best summed up by DiLorenzo while quoting Butler Shaffer on page 141 “‘government regulation has generally served to further the very economic interests being regulated’ and that the advantages businesses sought were those ‘denied them in the marketplace.'”

From Lincoln through Obama, the mercantilist system advocated and advanced by Alexander Hamilton has grown steadily along with the growth of governmental power and control over all aspects of American life.

It’s just another part of the “curse”.

General, Public Policy Radar, Public Policy Principles News

Policy Points–new feature

1 Comment
This entry is part 1 of 1 in the series Policy Points

Public Policy RadarPolicy Points from the Institute for Principled Policy
June 29, 2009

State policy actions
House Bill 176 (Steward {D} and McGregor {R})–Equal Housing and Employment Act—This legislation would create special protections under the state’s civil rights laws for “sexual orientations” to include homosexual, bisexual and “gender identity” classifications. The bill contains language to require the development of educational programming to teach of the origins and sources of “discrimination”, which is mandated to be taught to all public school children and “all Ohioans”. There are exemptions for religious organizations or orders in relation to hiring and housing, but not for individuals whose religious beliefs or conscience would be violated by having to comply with these provisions. The bill passed from the House State Government committee on a party line vote, but may come to the floor of the House this week where it may pick up some additional bipartisan support.

House Bill 1 (Sykes) State operating budget—This legislation, which is the funding mechanism for state government for the biennium beginning July 1, 2009, is currently before a committee of conference to work out difference between the House version and the Senate version of the bill. The House version would resurrect the old Outcomes-based Education catastrophe that was defeated in this state 16 years ago, create mandatory “community service” as a condition for graduation in Ohio, assess students on behavioral or belief positions as part of their ability to graduate, and turn over key decision making to the State superintendent rather than to elected education policymakers. The Senate has removed this from the bill.

The bill was sent from the House with a growth of spending of over $1 billion from the Governor’s proposal, which was itself a 6% spending increase over the biennium. Economic conditions and the reduction in revenue estimates have made this spending level unachievable without significant increases in taxes. The Senate has removed the additional spending growth, but is faced with having to replace nearly $1 billion in resources that were going to be used in this upcoming biennium from the state’s rainy day fund, as that money will now need to be used to bring the current budget into balance, as revenues have fallen below the projections upon which the current budget’s spending were based.

The bill also “balances” the budget on one-time funds (stimulus money), grows government by over 6%, increases taxpayer burden through the imposition of increased and newly-created “fees” and “penalties”. The state auditor has projected the next biennium’s shortfall, because of the use of one-time funds to bring this budget in “balance”, as in the neighborhood of $8.2 billion. Without more one-time funding, such an irresponsible budget now will ensure tax increases in the next biennium.

The budget must, by the Ohio Constitution, be in balance and in place by July 1. The conference committee will meet to try to finalize their difference and issue a report that both chambers mayvote upon on Tuesday.

Video Lottery Terminal proposal—This move by Governor Ted Strickland would allow for up to 2500 “video lottery terminals” (ie slot machines) at each of Ohio’s seven horse-racing tracks, in an effort to prop up a dying racing industry. Ohio’s restaurant and bar lobbies, retail merchants, grocers, and others also want to be included in the plan. The Ohio Lottery Commission would oversee this radical expansion of gambling in Ohio, much as they have recently presided over the rollout of the wildly unsuccessful Keno game in bars and restaurants in the state. This has become a showdown with the state’s out of balance budget used as the vehicle to move this proposal forward. Numerous studies have shown the deep and traumatic effects of this form of gambling on the family and on communities in which this is allowed, where the costs outweigh benefits by a significant factor. Additionally, there are serious Constitutional questions as to whether this can legitimately be accomplished as an expansion of the lottery.

Casino ballot initiative–A group of casino operators (Penn National, Argosy, etc.) have circulated petitions to place on the November 2009 ballot a casino authorization measure, allowing full casino gambling in 4 Ohio cities. The proponents collected and submitted to the Ohio Secretary of State over 800,000 signatures of registered voters, needing just over 405,000 to qualify this initiative for the ballot. It is highly likely, barring any legal challenges, that voters will be deciding upon this on November 3.

House Concurrent Resolution 11 (Martin and Jordan) and Senate Concurrent Resolution 13 (Grendell and Faber)–State Sovereignty—These companion resolutions would put Ohio on record as reiterating their rights under Article 4 and the 9th and 10th Amendments to the US Constitution to protect the sovereignty of the state against federal mandates and actions. The House version has had one hearing in the Democratically-controlled chamber, and will not likely be brought back up for hearings. The Senate version has been scheduled for its second hearing in the Senate State Government committee, but that hearing has been postponed due to the pending budget action.

General

The Institute on the Road

Institute for Principled Policy Director Barry Sheets will be on the road in the upcoming days speaking at churches.
He will give the message “A Christian’s duty in relation to government” at Bethel Baptist Temple in Columbus on Sunday morning at 11 a.m. Visit their website for more information and directions. On Monday, he will address the “God and Country” class of High Street Baptist Church in north Columbus at 7 p.m. to discuss current policy issues at the national and state levels that will impact our families, faith and freedom.

We hope to see you at one or both of these events.

General

Live from CHEO

I am blogging today from the vendor room of the Christian Home Educators of Ohio annual convention, in downtown Columbus at Veterans Memorial Auditorium. Traffic is light but steady on this early Friday afternoon.

I am here not because I am a home educating parent (which I am), but because I am doing a favor for a friend. I will be broadcasting a live, 3 hour radio program from 3-6 p.m. on AM 880 WRFD radio, filling in for regular host Bob Burney on his drivetime program on this Salem Radio affiliate. Bob’s wife Joy is undergoing surgery today, so please keep them in prayer.

I will be interviewing a number of home education experts, speakers and analysts, as well as taking calls from listeners. It is always a great time to be among so many people taking personal responsibility for the education of their own children, without government assistance or funding, while still paying for “public” education through their taxes and dealing with governmental requirements, not to mention the well-meaning but generally uninformed critiques of their choices by family and friends.

Tune in and learn why home education is an exercise in liberty and freedom, for now and for our future.

Public Policy Principles News, Economics, Taxation, Education, Public Policy Radar, Private Property

Tax and Spin- Part 10: Conclusion-Accountability the Key

2 Comments
This entry is part 10 of 11 in the series Understanding Property Tax Levies

taxOhio does combine a “renewal” levy and an ordinary “additional” levy into one single vote, and although renewal-plus-additional-levy issues and ballots are straightforward – unlike replacement levies and ballots – they still deny voters a real choice. In this writer’s opinion, such combination votes ought to be illegal; renewals and additionals should be in separate votes. Thus, the replacement levy should also be illegal.

A partial solution to the replacement levy problem – one that addresses only the ballot language – would be to change the ballot wording to show the true tax increase. That is, it must show at least the proposed millage and the effective millage of the levy to be replaced and in no way indicate a tax decrease, including in the ballot title. (The Revised Code prescribes the wording for the body of the ballot but does not address the title, which is as deceptive for replacement levies as the body and is more noticeable to the voter.)

Repealing the replacement levy or changing ballot wording would be done by the Ohio General Assembly – with much encouragement from citizens. Although at least some of the legislators are aware of the deceptive ballot language, any action by them thus far has been inadequate to remedy the problem.

The fact that state lawmakers are very greatly influenced by local officials cannot be stressed too strongly. Local officials have had much to do with getting the legislature to create the types of levies described in this treatise. Replacement levies, in particular, have been a cash cow that local governments will likely lobby to keep, should a legislator introduce a bill to repeal their existence (no bill has been introduced as of this writing). That means that many citizens must be able to understand replacement levies and care enough about fairness that they can and will explain to their representatives and senators the unjustness of these levies and will encourage them to actively support the repeal of the law or change in the law that authorizes the levies. Unfortunately, in addition to possible pressure from local officials, another hindrance to getting the law changed is what this writer has found: some legislators do not understand replacement levies.

Because repeal of the replacement levy law or even a change in ballot language could take months or years – or might not happen at all – informed citizens should also work at the local level by educating other citizens, including their local officials, and supporting only those candidates that pledge not to use replacement levies. Citizens should also vote against all replacement levies, no matter how desirable the intended use of the funds might be. Only if the levies repeatedly fail will local officials stop using them and again make more use of the simple “additional” levy when they truly need funds for appropriate services.

It is the hope of this writer that Ohioans will hold their government accountable – that they will learn about taxation and individual tax issues, that they will educate others, that they will work to eliminate unfair and deceptive taxes, and that they will support only those candidates for office who are honest enough to do the same.

You can access and print a copy of Carolyn’s full article here. Put this information into the hands of your family, friends and neighbors.

Taxation, Education, Public Policy Radar, Private Property, Public Policy Principles News, Economics

Tax and Spin- Part 9: Some Solutions

This entry is part 9 of 11 in the series Understanding Property Tax Levies

taxOhio law has traditionally given local voters the final say for all property taxes other than those that are levied on the ten inside mills, with a few exceptions. However, that authority is no authority when tax laws are cleverly written to force more taxes on citizens without their vote. Neither is that any authority when laws are written so that voters are misled into voting for the opposite of what they really want or when both the Yes and No choices on a ballot issue might be undesirable, as with replacement levies.

What is the solution to the replacement levy problem? One answer is to repeal the law that authorizes the levies. Following are some reasons:

• The replacement levy is an unnecessary tax. Simple “additional” property levies have always been available – and are still available – to increase revenue for the government.

• The replacement levy is an early product of the legislature’s continuing effort to diminish the effects of H.B. 920 and to tie taxes to increases in property values. However, there is no correlation between the rising cost of appropriate government services and increases in property values. Even if there were, trying to make levies match property growth is generally unworkable because, in addition to their property tax levies, government taxing districts get various other kinds of funding from local, state, and federal government sources, as well as private sources. Further, the fact that the “replacement levy and increase” and “replacement levy and decrease” exist is evidence that replacement levies don’t always fit with inflation of property values. Also, this writer has observed that the plain “replacement levy” is often used to inch up taxes – just because it is available – when renewals would be appropriate and would have been used previously.

• Replacement levies limit the reasonable authority of citizens – even citizens who know the levies are used to increase taxes – to determine the magnitude of their government. When an existing levy is expiring, replacement levies force voters to choose between 1) voting No to no longer pay even the tax they had been paying, or 2) voting Yes to increase their tax. They are unable to vote simply to continue to pay the same tax they had been paying, as some people prefer. Government officials know that the majority of voters generally would not vote to eliminate a tax; therefore, by using the replacement levy, they use the equivalent of a
new tax with the old – the equivalent of a renewal levy plus an additional levy. In that way, they twist the arms of the voters to increase their property tax. In fact, levy proponents often insist that the voters must pass a levy or the government agency would have to cut services because it would not even have the revenue it had been getting.

Next: Part 10: Conclusion–Accountability the Key

Taxation, Education, Public Policy Radar, Private Property, Public Policy Principles News, Economics

Tax and Spin- Part 8: Eliminating Confusion-Step 3

This entry is part 8 of 11 in the series Understanding Property Tax Levies

taxBallot Example No. 3

The third ballot example, proposed in November 2003, is for a “replacement and decrease.” It is even more deceptive than the first two examples because it appears to provide a tax reduction. Instead, it produced a 267% increase. It reads as follows:

“14 PROPOSED TAX LEVY (REPLACEMENT AND DECREASE)
GREENE COUNTY

A Majority Affirmative Vote Is Necessary for Passage.

A replacement of a portion of an existing levy, being a reduction of 0.02 mill, to constitute a tax for the benefit of Greene Memorial Hospital for the purpose of CURRENT OPERATING EXPENSES OF GREENE MEMORIAL HOSPITAL, INC. FOR THE SUPPORT OF HOME HEALTH SERVICES AND FOR THE PURCHASING OF EQUIPMENT SERVING THE EMERGENCY DEPARTMENT, NURSING SERVICES, CANCER SERVICES, BIRTHING CENTER AND OTHER DEPARTMENTS OF THE HOSPITAL at a rate not exceeding 0.5 mill for each one dollar of valuation, which amounts to $0.05 for each one hundred dollars of valuation, for a period of five years, commencing in 2004, first due in calendar year 2005.”

The words “decrease,” “portion of an existing levy,” and “reduction of 0.02 mill” appear to indicate a decrease in tax. Nothing in the wording on the ballot in any way indicates a tax increase.

The misleading ballot language is explained as follows: Although the ballot does not show it, the existing levy that was to be replaced by this issue is called a 0.52-mill levy. That, unfortunately, refers to the millage that was voted at least as far back as 1976.

The ballot language compares the proposed levy of 0.5 (or 0.50) mill with the old, no-longer-in-effect 0.52 mill. The proposed levy was indeed 0.02 mill less than the old voted millage, but that old millage had nothing to do with one’s then-current tax.

The so-called 0.52-mill levy had been renewed a number of times over the years and, consequently, by 2003, the effective millage – the millage that determines one’s current tax – had decreased to 0.136028 mill. Therefore, instead of the tax being reduced from 0.52 mill down to 0.50 mill, as the ballot wording seems to imply, it was actually increased from 0.136028 mill to 0.50 mill.

The cost of this replacement levy was this amount: 35% X $100,000 X $0.0005 X 87.5% = $15.31.

Had the proposal been for a renewal levy, the tax would have been this amount: 35% X $100,000 X $0.000136028 X 87.5% = $4.17.

Therefore, the replacement levy cost 3⅔ times the existing levy – with no clue of the increase on the ballot.

In the case of another election and a similar “replacement and decrease” levy, this writer asked a number of people afterward what their thinking was about the tax issue. Every one of them said that he voted for the levy because he thought he was voting for a tax cut. Although the “replacement and decrease” is the most deceptive tax, none of the replacement levy issues gives any indication of a tax increase in the replacement portion of the ballot.

The reader should realize that although the dollar size of these countywide levies might seem small, each property owner pays on many such levies. Also, a large increase in the percentage of tax on individual properties is reflected in a large increase in revenue for the government because so many property owners are paying on the levies. To be informed, a voter needs to know the true effect of these levies so that he can question why such a large increase in revenue is suddenly necessary.

Next-Part 9: Some solutions

Commentary, Public Policy Principles News, Economics, Taxation, Education, Public Policy Radar, Private Property

Tax and Spin–Part 7: Eliminating confusion-Step 2

This entry is part 7 of 11 in the series Understanding Property Tax Levies

taxBallot Example No. 2

The second ballot, presented in November 2001, is for a “replacement and increase.” It replaces a 0.3-mill existing levy and adds 0.2 mill:

“1 PROPOSED LEVY – (REPLACEMENT AND INCREASE)
GREENE COUNTY COMBINED HEALTH DISTRICT

A Majority Affirmative Vote Is Necessary For Passage.

A replacement of 0.3 mill of an existing levy, and an increase of 0.2 mill, to constitute a tax for the benefit of Greene County for the purpose of PROVIDING THE GREENE COUNTY COMBINED HEALTH DISTRICT WITH SUFFICIENT FUNDS TO CARRY OUT ITS HEALTH PROGRAMS INCLUDING BUT NOT LIMITED TO CHILD AND SENIOR CITIZENS SERVICES, CONTROL OF COMMUNICABLE DISEASES, FOOD AND WATER PROTECTION, HEALTH EDUCATION, AND AIDS/HIV DIAGNOSIS AND EDUCATION at a rate not exceeding 0.5 mill for each one dollar of valuation, which amounts to $0.05 for each one hundred dollars of valuation, for a period of 5 years, commencing in 2002, first due in calendar year 2003.”

This proposal amounts to two tax increases in one vote: the hidden increase in the replacement tax part of the levy and the obvious 0.2-mill increase.

The proposed tax for just the 0.3-mill replacement tax part of the ballot was this amount: 35% X $100,000 X $0.0003 X 87.5% = $9.19.

The 0.3-mill tax includes a hidden increase because what is not shown on the ballot is the effective rate of the existing levy that was to be replaced, which was only 0.283881 mill. Had the existing levy been renewed rather than replaced, the cost would have been this amount: 35% X $100,000 X $0.000283881 X 87.5% = $8.69.

Therefore, just the 0.3-mill replacement tax is nearly 6% percent greater than the existing levy. That’s without the obvious 0.2-mill increase.

The cost of the entire 0.5-mill proposal was this: 35% X $100,000 X 0.0005 X 87.5% = $15.31, which was a 76% increase over the existing levy.

Next–Part 8: Eliminating confusion-Step 3

Public Policy Radar, Private Property, Commentary, Public Policy Principles News, Economics, Taxation, Education

Tax and Spin- Part 6: Eliminating Confusion- Step 1

This entry is part 6 of 11 in the series Understanding Property Tax Levies

taxSince much of voters’ confusion has come from their thinking that replacement levies are renewal levies or from their having no idea how much greater a replacement levy is than a renewal, the explanation for each of the examples below includes a comparison of what the tax was as a replacement levy versus what it would have been as a renewal levy.

For simplicity, the following examples all deal with only the residential-agricultural class of real property. A $100,000 typical city/town residence assessed at 35 percent of its value with 12.5 percent in rollbacks is used to show the cost of the levies. (The taxes are 87.5% of what they would have been without the rollbacks.)

Ballot Example No. 1

The first ballot, presented in November 1999, is the plain “replacement” levy for 1 mill:

“15 PROPOSED TAX LEVY (REPLACEMENT)
GREENE COUNTY

A Majority Affirmative Vote Is Necessary For Passage.

A replacement of a tax for the benefit of Greene County for the purpose of SUPPORTING CHILDREN SERVICES AND THE CARE, PROTECTION, AND PLACEMENT OF ABUSED, NEGLECTED AND DEPENDENT CHILDREN at a rate not exceeding 1 mill for each one dollar of valuation, which amounts to $0.10 for each one hundred dollars of valuation, for a period of five years, commencing in 1999, first due in calendar year 2000.”

On a $100,000 residence, the cost of this proposal was this: 35% X $100,000 X $.001 X 87.5% = $30.63.

This replacement levy represents an increase compared to the existing tax that it replaced. Because of House Bill 920, taxpayers were not being taxed on the full 1 mill that had been voted years before. Instead, as the aggregate value of properties in the county increased, the effective millage on which their tax was figured had gradually decreased in order to keep the revenue for the government on that levy at a fairly constant amount. In fact, the effective rate had decreased to 0.844364 mill.

If the 1-mill tax that had been in existence had been renewed instead of replaced, voters would have been voting on the then-effective millage of the existing levy, which was 0.844364 mill. (Even though the effective millage is less than 1 mill on such a renewal, the levy keeps its originally voted 1-mill “name.”) A renewal levy would have cost a homeowner with a $100,000 home this amount: 35% X $100,000 X $.000844364 X 87.5% = $25.86.

Comparing $30.63 with $25.86, or 1 mill with 0.844364 mill, the replacement levy cost about 18½ percent more than the existing tax.

Many voters thought they were voting for a renewal levy. The ballot provides no indication that the proposal is for a tax increase, much less, how great an increase.

Next–Part 7: Eliminating confusion–Step 2

Taxation, Education, Public Policy Radar, Private Property, Commentary, Public Policy Principles News, Economics

Tax and Spin- Part 5: The “Place” Where You Raise Your Own Taxes

This entry is part 5 of 11 in the series Understanding Property Tax Levies

taxPART 3: THE DECEPTIVE REPLACEMENT LEVY

The replacement levy, authorized by the Ohio General Assembly in 1990 (Ohio Revised Code, Section 5705.192), is a specific kind of property tax that has been used for the purpose of generating more money for a government subdivision or agency. Because it replaces an existing tax, it is a new tax. It is not a renewal tax.

Replacement levies have generated large amounts of revenue. Often that is not because voters have been so generous; rather, voters have been misled and are confused.

The problem with replacement levies is that the proposed millage is compared with the old, no-longer-in-effect, originally voted millage of the existing levy. This problem is reflected on the ballot. The old voted millage is not always shown or designated as such on the ballot; sometimes it is merely implied, as in Ballot Examples No. 1 and No. 3 below. To be clear and correct, the ballot should compare the proposed millage to the effective millage of the existing levy because that is the comparison that reflects what would happen to the property owner’s tax with passage of the levy.

Some local government officials and other levy proponents are well aware of the problem and have taken advantage of the deceptive ballot language and have put out misleading levy campaign advertisements, articles, letters to the editor, and speeches. For example, they have emphasized “no increase in millage” or “reduction in millage” by using the false comparison of the proposed millage with the irrelevant voted millage of the existing levy. They have even said “no increase in tax,” which is untrue no matter what millage is used. Unfortunately, some other public officials throughout the state still do not understand replacement levies. Also unfortunate is that newspapers and other media do insufficient investigative reporting and rarely publish information about tax issues other than what is handed to them by taxing authorities, including those seeking a tax increase.

Replacement levies are presented to voters in three ways: “replacement,” “replacement and increase,” and “replacement and decrease.” Not obvious from those terms is that all three are used to increase a tax. The operation of each and the reason they are so confusing to voters can best be shown with examples of actual tax issue ballots. The ballots reproduced in this treatise have been presented to voters in Greene County. The levies, ballot examples, and resultant voter confusion are typical of that found all over the state.

Next–Part 6: Eliminating confusion, Step 1