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

Tax and Spin- Part 4: “Schooling” the Taxpayers”

This entry is part 4 of 11 in the series Understanding Property Tax Levies

tax

The simplest method is timing by local officials. The various government entities collaborate to put their many different levies on the ballot at different times because taxpayers would rebel were they to be presented with them all at once. Also, officials try to get new taxes passed right after the sexennial property reappraisals and triennial updates so as to get the most dollars for the millage. Other methods are more involved and are generally aimed at eating away at the benefit of H.B. 920.

Ohio law states that school districts may not have less than 20 effective mills of tax for current operating expenses for either class of property (ORC, 319.301[E]). This requirement is often called the “20-mill floor.” A school district might have, for example, 21 mills of voted taxes for current operation along with 3 inside mills that are also used for operation. While the 3 inside mills could not decrease in effective millage because the reduction factor does not apply to inside mills, the 21 voted mills could theoretically decrease over the years to perhaps, for example, 16.6 effective mills because of the aggregate increase in property values in the district and the reduction factor. Total effective mills for operation would then be only 19.6 mills (3 inside mills + 16.6 outside mills). To keep that from happening, taxes are adjusted upward by 0.4 mill, without a vote of the people, till the 20 effective mills are met (3 + 16.6 + 0.4 = 20). A similar non-voted increase continues year after year as long as the combined value of properties in the district increases and other current expense levies that count in the 20-mill floor are not passed. (Vocational schools have a 2-mill floor.)

Not all types of levies count in the 20-mill floor. School districts that are near the floor often purposely keep the millage from their levies that count in the floor low so those taxes automatically grow. They then levy other taxes that do not count in the floor, such as the income tax.

School districts also use certain kinds of property taxes, including “emergency levies” for the same purpose. Aside from a favorable vote that might be generated by the emotional term “emergency,” school districts use these levies in preference to regular levies because they are not counted in the 20-mill floor. The district benefits from the emergency levy while also benefiting from non-voted tax increases from other operating levies that do count in the floor. Emergency levies may be proposed to provide for an emergency or to prevent an operating deficit (ORC, 5705.194). However, that is often said to be the purpose of other kinds of levies, as well. School personnel have argued that emergency levies are for a fixed sum and not for a specific rate, or millage, and therefore they should not or could not be counted in the 20-mill floor. However, emergency levies are figured in mills for the ballot and for each year they are in effect, and at one time they were counted in the 20-mill floor by law. Their use is a strategy to get more tax money.

Schools use the “permanent improvement” property tax because that tax, like the emergency levy, does not count toward the 20-mill requirement for current operating expenses. The use of the permanent improvement tax is limited to assets and improvements that have at least a five-year life expectancy, but it frees up other taxes for current operations.

When a school district’s operating millage is at the 20-mill floor, another way the district can manipulate levies that might be advantageous to it and produce more revenue is to reallocate its
inside millage (a public hearing by the board is necessary for any such change [ORC, 5705.314]). With this action, current expense millage that had been inside millage would be changed to outside millage, and permanent improvement millage would be changed from outside millage to inside millage. The purpose of the swap is to get more of the millage for operations into outside millage where the reduction factor would work on it in order to provide even more automatic non-voted tax growth. Meanwhile, the permanent improvement mills that become inside millage would grow with property values (when they were outside mills, the reduction factor applied).

Yet another means to grow property taxes for schools came about with H.B. 530 in 2006. The law (ORC, 5705.211) authorizes an additional property tax for current operating expenses to be approved by the electors at such a rate that the total taxes charged by the levy each year are sufficient to offset any reduction in basic state funding caused by increases in real estate values. The rate of the tax could be set to cause revenue generated from the levy to increase by up to 4 percent, inclusive, each year, but it could be set at a lesser rate. The tax increase would occur each year for a minimum of five years, and may be continuing – year after year after year.

The legislature has also passed laws for real property tax increases that are not just for schools. With the gradual reduction of taxes on tangible personal property of electric companies (S.B. 3 in 1999) and natural gas companies (S.B. 287 in 2000), all fixed-sum levies that were in existence in 1998 and 1999, respectively, and continued to exist in the tax year preceding the distribution year, were automatically – and quietly – increased by up to ¼ mill, inclusive, to help compensate school districts and local taxing units for their “fixed-sum levy loss.” The fixed-sum levy loss is the gradual loss of tangible personal property taxes for emergency levies and levies for paying debts (ORC, 5727.84[H]). The state makes up any difference between the tax loss and ¼ mill. The added property tax and state payments began in 2002 and they even cover emergency levies that are continually renewed after 2002 through 2016 and debt levies beyond that if they are still in effect. (Details are located in ORC, 5727.84 to 5727.87.)

With H.B. 66 in 2005 (revised with H.B. 530 and S.B. 321 in 2006), the state is phasing out tangible property taxes on other businesses, and the property tax on qualifying fixed-sum levies is automatically increased by up to ½ mill, inclusive, to compensate local government units for the phased-out taxes on those businesses. State reimbursements for tax losses above ½ mill continue for levies that are in effect through 2017. Qualifying school district emergency levies include renewals through that time. Voted debt levies are reimbursed till they expire, regardless of when that is. (Details are located in ORC, 5751.20 to 5751.23.)

Questioning the legality of these non-voted, outside-millage add-on taxes, some people both in and out of government have voiced strong disapproval of them. Voters had not agreed to the extra millage when they originally voted for the emergency and debt levies. However, some legislators said that because the tangible property taxes would have been paid, it was all right to add non-voted taxes to fixed-sum levies.

The last tax to be addressed is the “replacement levy.” Because it is the most deceptive and confusing of all taxes, it is given separate treatment via Part 3.

Next: Part 5–The “place” where you raise your own taxes

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

Tax and Spin- Part 3: The REAL Growth of Government

This entry is part 3 of 11 in the series Understanding Property Tax Levies

tax

PART 2: WHY PROPERTY TAXES CONTINUE TO GROW:
KINDS OF LEVIES AND GOVERNMENT MANIPULATION

Note:The following is part 2 in the original document.

The reader might be wondering why his property tax bill continues to rise despite the reduction factor provided by H.B. 920 and the rollbacks. The most obvious reason for the ever-increasing taxes is that citizens continually vote for new taxes. Some less obvious reasons are addressed below.

Taxes grow because the reduction factor of H.B. 920 does not apply to all levies. For example, according to the Ohio Revised Code (ORC), 319.301, the reduction factor does not apply to taxes “levied within the one per cent limitation imposed by Section 2 of Article XII, Ohio Constitution.” The one percent in the Ohio Constitution refers to the limit at which taxes can be levied on the true value of any property for all state and local purposes unless additional taxes are voted by the electors or are provided by the charter of a municipal corporation. This restriction is called the “one per cent limitation” or “one per cent limit.”

At this point, an inconsistency in definitions needs to be addressed. Contrary to the Constitution, ORC, 5705.02, defines the “ten-mill limitation” as a limit of ten mills of tax on each dollar of tax valuation, or assessed value (unless more is specifically authorized). That is one per cent. It then states that wherever the term “ten-mill limitation” is used in the Revised Code, it refers to and includes the “one per cent limitation.” However, in Section 5705.51, the terms are defined as being different and more in line with how they are generally used in the Revised Code: the “one per cent limit” pertains to true value of property, and the “ten-mill limit” pertains to tax valuation.

Using the last definition, within the ten-mill limitation, ten mills of tax are levied on each dollar of assessed value of property without a vote of the electorate. These are called “inside” mills. Taxes with inside mills grow as property values grow; that is, the reduction factor does not apply. These ten mills are divided among several of the government subdivisions as specified by ORC, 5705.31(D). Each of those taxing authorities is authorized to divide its share of inside mills into separate levies for current expenses (operation), debt charges, and special levies (ORC, 5705.04).

Levies that are permitted beyond the 10-mill limitation are said to have “outside,” or “voted,” mills (even though some are not voted by the electorate). While most levies with outside mills benefit from the reduction factor of H.B. 920, some grow with property values. For example, according to ORC, 319.301, the reduction does not apply to taxes authorized by the charter of a municipal corporation or taxes levied to produce a specified amount of money (called “fixed-sum levies”), such as school “emergency levies” (explained later), or taxes required to pay debt charges.4

As pertaining to debts of a subdivision, when certain other funds are insufficient for paying the “exempt obligations” and “any other outstanding non-voted general obligations,” a non-voted tax is to be levied “in excess of the ten-mill limit, but within the one per cent limit as to any property” (ORC, 5705.51). (Here the two “limits” are clearly different, and the reader can see – despite fuzzy definitions in the Code – that not all of the one percent of true value loses the reduction all the time, whereas the one percent [ten mills] of assessed value never receives the reduction.)

Government debt can make the rollbacks on real property disappear, too. The 10-percent non-business rollback and the 2.5-percent and elderly, disability, and surviving spousal rollbacks on homesteads are reduced or eliminated altogether when there would be insufficient funds for payment of debt charges (ORC, 319.302[B]; 323.152[D]).

In addition to those ways that make property taxes grow, local government officials and the legislature (prodded by local officials) have devised more methods to increase revenue from real property taxes. Some of these are discussed here.

__________________________________________________________________________

4 As used in ORC, 5727.84 to 5727.86 and 5751.20 to 5751.22, the definition for “fixed-sum levies” includes levies to pay debt charges.

Next: Part 4: “Schooling” the taxpayers

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

Tax and Spin- Part 2: Exemptions, exemptions

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

taxThe various levies that a property owner pays generally apply to districts that are of different sizes and that have different types and values of property. The taxing district for a levy could be an entire county, a township, a school district, or so on. The reduction factor that is applied to each levy depends on the makeup of the properties in the taxing district and is therefore different for each taxing district.

After the reduction factor is applied to a levy, a 10-percent rollback (subtraction) is applied to each non-business real property owner’s tax (ORC, 319.302).1

The “homestead” portion of one’s property is adjusted with an additional rollback of 2.5 percent (ORC, 323.152[B]). The homestead is defined as an owner-occupied dwelling (house) or a unit occupied as a home in a housing cooperative, with the land surrounding it that does not exceed one acre, and with no more than one attached or unattached garage (or comparable outbuilding).

The 2.5-percent rollback is not applied to the tax on any portion of one’s property that exceeds that. A homeowner whose property exceeds an acre or has extra buildings on it can ask the county auditor for the value of the homestead portion of his property so that he can compute his 2.5-percent rollback. The homestead of most city or town homeowners includes their entire property.2

Persons who have a certificate of reduction and are 65 years of age or older, or permanently and totally disabled, or surviving at age 59-64 when their elderly or disabled qualified spouse dies can receive a tax deduction on $25,000 of the true value of their homestead (ORC, 323.152[A]).3 (A note to dampen the gladness over all these rollbacks is that local taxing units are reimbursed for the rollbacks with state money. That means that people who pay state taxes are footing the bill for what would be part of their own property tax and that of some other property owners, as well.) Lastly, county commissioners may grant a partial real property tax exemption to each homestead in counties with major league teams (ORC, 323.158).

In calculating the most typical homeowner’s tax on the assessed value of his primary dwelling (when his “homestead” is his entire property), after the tax is computed with the effective mills, the figure is multiplied by 87.5 percent (100 % – 10 % – 2.5 % = 87.5 %), or .875, to find the total property tax he pays after rollbacks are applied. The tax on a homeowner’s total tax bill and on each individual levy is figured the same way.

Following is the computation for the property tax for a levy with 2.406458 effective mills on a $100,000 home on a typical city lot (assessed at 35 %) that receives the 10-percent and 2.5-percent rollbacks: .35 X $100,000 X $.002406458 X .875 = $73.70.

The above example could very well represent the tax on a renewal levy that might have been voted at 3 mills 15 years ago, for example. The ballot, however, would not show the effective 2.406458 mills. Rather, the ballot would say that the issue is for the renewal of 3 mills, which is the originally voted millage of the existing levy. That is, the levy continues to have its old “name” despite the fact that 3 mills is not the effective rate of the tax to be renewed. After the levy is renewed at 2.406458 mills, it would still be referred to as a 3-mill tax.

The tax on each new or renewal levy can commence (that is, be applied) the same calendar year that it is voted or the following year, depending on the resolution, but the tax is always collected the year after it is applied. Therefore, it is either one or two calendar years after a vote that a person begins paying the tax on a new levy. A property owner’s total tax bill is divided in half and is paid semi-yearly.

___________________
1 With H.B. 66 in 2005, businesses lost their 10-percent real property rollback, but they received gradual reductions on tangible personal property taxes.

2 To keep the explanation of property taxes simple, this treatise does not address taxes on manufactured or mobile homes.

3 H.B. 119 in 2007 removed an income requirement.

Next: Part 3: The REAL growth of government

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

Tax and Spin–Part 1–The Basics

This entry is part 1 of 11 in the series Understanding Property Tax Levies

taxThe Institute for Principled Policy is pleased to be able to share with you a significant and important discussion on the realities of local tax levies.  This series, written by Ohio researcher Carolyn J.  Blow, is from a document entitled “Ohio’s Property Taxes”.  We will keep our editorial comments to a minimum, but I do encourage you to read each entry in this series very closely and carefully, and prepare to share this information with those in your family, community and spheres of influence.

Ohio’s property tax system is beyond the comprehension of most citizens only because most citizens would rather just pay their taxes than try to understand it. With time and study, the tax system is understandable. If the reader is new to this subject,  he should not be discouraged if he doesn’t “get it” after having read the paper only once.

With a grasp of taxation, individuals are more able to influence government officials and to vote in a knowledgeable manner. In general, whoever controls the money controls the programs.

PART 1:THE BASICS OF PROPERTY TAXATION

This treatise deals predominantly with the taxation of “real” property, that is, real estate. In Ohio, for tax purposes, real property is divided into two categories, or classes, one being residential and agricultural and the other being commercial and industrial (also referred to as “other real property” or “nonresidential/agricultural”). Properties in both classes are “assessed” at 35 percent of the appraised market value, which is determined by the county auditor; for example, a $100,000 property is assessed at, and taxed on, $35,000. (For some types of properties, such as farms, current use is considered in determining their value for taxation purposes.)

The monetary unit of taxation is the mill, which is one-tenth of one cent ($.001). A levy, or tax, is for a certain number of mills for each dollar of assessed valuation. (One mill of tax is equal to $1.00 for each $1,000 of assessed valuation.) Each levy is for the duration of a certain number of years or for an indefinite number of years; in the latter case it is said to be “continuing.”

The tax on a property for any particular levy is not computed with the originally voted millage.  Rather, it is computed with what is known as the “taxable” millage, or “effective” millage, which is generally less than the voted millage. This can best be made understandable with an explanation of the very important House Bill 920.

To replace an earlier law, in 1976 the Ohio General Assembly passed H.B. 920, which is found in the Ohio Revised Code, Section 319.301. Unlike most laws, it is still generally known by its bill name, House Bill 920, because it is so important.  The purpose of the law is to keep a lid on what would otherwise be run-away property taxes on homes and businesses. The law also has the effect of keeping government programs and spending from running amuck.  (School and other government officials dislike H.B. 920 because they would like to have an ever-increasing stream of revenue without voter approval.)

Here’s how H.B. 920 works:  Property values generally increase at a faster rate than do the funds needed to operate any school or other government agency in an appropriate manner.  Therefore, to control taxes, as the total value of all properties combined in a school district, county, or other taxing entity’s district goes up because of updated property values and new construction added to the mix, the millage on which property taxes are figured is reduced so that the total revenue generated by a particular levy remains fairly constant. This revenue-stabilizing millage that decreases every year as aggregate property values rise is the effective millage. It is what is in effect, so  it determines the tax that property owners pay.  The voted millage is not “in effect,” so it is not used to figure the tax.

To accomplish this stabilization of revenue, the state tax commissioner determines a tax reduction factor from property value information that the county auditor gives him. This factor is derived by comparing the total value of “carryover property” in each class in a taxing district from one year to the next. Carryover property is property that is on the current year’s tax list and that was also on the previous year’s tax list in the same class. Obviously, then, new construction is not immediately included in the total valuation of any district, but it is taxed nevertheless. Consequently, each new construction provides extra tax revenue for a taxing district till it is included in the carryover property.

The tax reduction factor is used to determine the taxable, or effective, millage that would keep the revenue fairly constant year to year for each particular levy. The effective millage is carried to six decimal places, for example, 2.406458 mills. If the numeral in the sixth decimal place is a zero, such as with 5.341980 mills, the millage might be stated with only five decimal places, 5.34198 mills, because the zero at the end has zero value.

A levy that has a taxable millage of 5.341980 could conceivably have been voted at 6.5 mills twenty years ago. The effective millage is closest in value to the voted millage when a tax is new. The gap between the voted and effective millage widens each year the levy is in effect as the value of all the properties, combined, in a taxing district continues to increase. The gap widens most dramatically with the six-year property reappraisals and the midterm updates because the auditor-appraised value of the totality of properties in a taxing district generally increases the most at those times. (Factors such as location, building additions, and damage affect the value of – and tax increase or decrease on – individual properties.)

The voted millage on both classes of property is the same. However, for the purpose of figuring the effective millage during the years a levy is operative, the two classes of property are considered separately because there is usually a difference between the rate of growth of the residential-agriculture properties and that of the commercial-industrial properties. The effective millage, then, is usually different for the two classes. (A tax for businesses on tangible personal property [machinery, equipment, fixtures, furniture, and inventory] is figured with a different assessed rate and does not receive a reduction factor.).

Next:  part 2:  Exemptions, exemptions…

Commentary, Economics, Biblical Worldview, Book Review

Hamilton’s Curse- Hamilton’s Disciple: How John Marshall Subverted The Constitution

This entry is part 5 of 9 in the series Hamilton's Curse

HamiltonsCurseIs the Constitution a grant of powers, nigh unlimited, or a restraint on the reach of governments run by self-serving (sinful) men?  What answer have we been given in our modern era?  Most of us would be honest and say that operationally, the former is the answer; some might go so far as to be totally honest and say that the latter is technically and legally the correct response, but our country has been taken down a path away from adherence to the letter of the law, in exchange for being “led by the Spirit”, divorced from the context of the words.

Hamiltonian “will-worship” is to blame for the current state of affairs.  Specifically, according to DiLorenzo, it was the adoption of Hamilton’s view of the ever-growing power of the central state carried out through the machinations of court decisions that have carried us to the murky waters of the swamp of socialistic impulses that our government wallows in today.

Who is the chief priest of the nationalist idolatry?  It was none other than John Marshall, chief justice of the United States Supreme Court, the man who, according to Ron Chernow in his sycophantic biography on Hamilton, stated that beside Hamilton, Marshall felt as a “candle beside the sun at noonday”.   DiLorenzo points out that Marshall relied more strongly on the Hamilton-influenced Federalist Papers than on the Constitution itself as his basis for interpretation of the document.  Hmmm, that seems somewhat akin to relying on the salesman’s word that there are no hidden costs rather than reading the fine print of the contract yourself before signing.

I was definitely struck by one specific point in this chapter:  the vital difference between courts using the Constitution and using constitutional law.   It’s the difference between Jeffersonian federalism and Hamiltonian nationalism; between seeing the governing compact as decentralized or seeing it as consolidated.  This is a significant difference indeed.

Through a series of decisions of the Marshall court, constitutional law has taken the place of the Constitution in deciding our nation’s direction.  Beginning with the infamous (though not for the right reasons) Marbury v. Madison, which, in DiLorenzo’s telling, created a virtual “judicial dictatorship” in the Hamiltonian model (though Hamilton, a master of gamesmanship, would try to belie that in Federalist No. 78), to Gibbons v. Ogden which so broadly defined commerce for federal regulatory purposes as to put all business under the shadow of central control, the courts have made our Constitutional republic “Hamilton’s America”.

Let’s sketch a brief list of the Marshall Court’s “hit parade” on our republican form of government:

Marbury v. Madison–The court gains power to review legislative or executive decisions and declare them void–putting the courts as the final arbiter of the power of supposedly co-equal branches;

Fletcher v. Peck–The court uses the Contract clause to invalidate state law–neutering state courts;

Martin v. Hunter’s Lessee–The court uses the supremacy clause to extend national governmental power beyond Article 1 Section 8 limitations;

McCulloch v. Maryland–The court finds a novel definition for the word “necessary” in the Necessary and Proper clause; now it means “useful” or “convenient” when it allows the national government to assert for itself powers “implied” (not “enumerated”) as it sees “useful”;

Gibbons v. Ogden–The court’s lexionary prowess expands the definition of commerce to an absurdity–giving the national government de facto control (negative sanction) over all business.

Given this list (and there are more examples), it is now very clear that what some of us today would classify as “judicial tyranny” by an oligopoly of nine black robed demigods is really only judicial midgets walking in the footsteps of giants of the imperial judiciary.  The analysis that DiLorenzo gives as to where this truth leaves us now is something that will help you to understand why Hamilton may have been this republic’s own worst enemy.

Commentary, Economics, Biblical Worldview, Book Review

Hamilton’s Curse-Public Blessing or National Curse?

This entry is part 3 of 9 in the series Hamilton's Curse

HamiltonsCurseIs public debt a blessing or a curse?

Recent developments in our country, including a pending multi-trillion dollar spending package being pushed by the administration, would lead one to believe that if we just spend more, and thus embrace more debt, then the economy will take off: a blessing.

But is it, really? How did our founding fathers view public debt? In Hamilton’s Curse, Tom DiLorenzo addresses the roots of the issue, and the current crisis. In fact, he lets a cat out of the bag in the opening paragraphs of chapter two, when he states: “Goverment debt is every politician’s dream: it gives him the ability to buy votes by spending on government programs (with funds raised through borrowing) that will make him popular now, while putting the lion’s share of the cost on future taxpayers, who must pay off the debt through taxes.” Is this really the system our founding generation sought to bequeath to the American public when they instituted a government to secure the God-given, unalienable rights of life, liberty and the pursuit of happiness?

Take for example the current burden of the federal debt on each and every American, whether their votes have been bought or not, whether aged or just born this very minute: $184,000 per person in 2008 dollars, according to the national debt calculations performed by the Peter G. Peterson Foundation (www.pgpf.org), with a total national debt in the vicinity of $56.4 trillion. What, you say? Just recently you were told that the debt load was a measley $44,000 per person.

Not surprising, really, considering that the “national debt” that most commentators talk about does not include Medicare and Social Security obligations, but instead focuses on just the publicly-held debt (bonds) and money that the government borrows from itself, which is now in the neighborhood of $13 trillion alone. However, our government treats debt like a junkie treats his next fix: absolutely necessary, and the bigger, the better.

Jefferson considered debt to be a curse which “has decimated the earth with blood.” He wanted government debt obligations limited to at most a 19-year term, in order for the accrued debt to be paid off in the same generation in which it was entered. Jefferson had the right idea.

Hamilton saw debt as a blessing, holding the notion that debt gave “energy” to government (hmm, my junkie analogy seems fitting here), and that it was essential for growing the state. As the first Treasury secretary, Hamilton had an opportunity to see his program be adopted and exerted great energy in creating reports to the Congress to persuade them to adopt extensive government debt and taxation.

DiLorenzo explains how in at least two instances Hamilton used his position and policies to benefit himself and political cronies: not unlike what we see today in the politico-financial complex. One scheme saw the Hamilton faction being able to speculate on war bonds at a significant profit (and at significant loss to the veterans who held these obligations which the federal government, unbeknownst to them but fully known to the Treasury secretary and his New York associates, had fully funded to be repaid); another Hamilton scheme was to have the federal government assume each state’s war debts, thus nationalizing that debt and chipping away at state sovereignty.

However, Hamilton’s plans for a permanent debt cycle were generally thwarted, with exceptions of the periods of the War between the States and the Spanish-American war, until the eclipsing of Jeffersonian fiscal restraint by the policies (adopted by the politicians) advanced by John Maynard Keynes and his followers in the first half of the twentieth century.

DiLorenzo explains this legacy, and how this “debt culture” is a curse, not only on the nation, but upon individual enterprise and prosperity. We truly now have “Hamilton’s Voodoo Economics”: read the book and see why.

Commentary, Economics, Biblical Worldview, Book Review

Book Review–Hamilton’s Curse

This entry is part 1 of 9 in the series Hamilton's Curse

HamiltonsCurseThere are times in some of our lives in which we have seminal moments of epiphany where something occurs or some information is presented to us that allow for disparate pieces to fall into place, creating a full and clear picture of how things really are. Some never are able to see the full view, thinking instead that the out of phase vision they have in front of them is all that there really is.

Reading the book Hamilton’s Curse: How Jefferson’s Archenemy Betrayed the American Revolution and What It Means for America Today by Thomas J. DiLorenzo (New York, Crown Forum, 2008, $25.95) was one of those seminal moments for me. It is an important work of scholarship, definitely not hagiographic in nature, that causes a thinking person to reassess the common assumptions that are fostered in this modern age about the way in which our government should conduct itself. As a matter of fact, it is such a volume that a mere review is an injustice; which is why Camp Director and I are planning on giving you the reader an analysis of the central theme and message of this work in a chapter-by-chapter, back-and-forth dialogue.

Please allow me to begin by conducting a small personality assessment. I am going to provide two lists of words for you. Review those two lists, and determine which list you are more attenuated to. Here we go:

limited, diminuative, divided, lassiez-faire, express, steward, de-centralized, curse, benefactor, master, servant

unrestrained, leviathan, consolidated, interventionist, implied, imperial, centralized, blessing, beggar, servant, master

O.K. then: which one is more to your liking? Unsure? Maybe a little context might be beneficial to you:

Governmental authority: limited or unrestrained

Governmental size: diminuative or leviathan

Ultimate governmental sovereignty: divided or consolidated

Economics: Lassiez-faire or interventionist

Governmental powers: enumerated or implied

Presidential attitude: steward or imperial

Governmental control: decentralized or centralized

Debt as an engine of finance: curse or blessing

States’ role: benefactor or beggar

The People: master or servant

The State: servant or master

You see, if you chose the first list, you are likely a Jeffersonian and an adherent to the original view of the compact between the states. If the latter was your preference, you are likely a Hamiltonian. Most people today, especially those in government, finance and politics, are definitely Hamiltonian.

It’s sadly ironic, really. Hamilton’s ideas of unrestrained governmental expansion, unlimited taxation and central planning were expressly rejected in the formation of the Constitution, but we live with the fruits of his legacy, not Jefferson’s, in our body politic today. DiLorenzo points to this fact in the opening chapter “The Real Hamilton” when he astutely summarizes that even so-called “conservatives” such as Pat Buchanan and Newt Gingrich are Hamiltonians economically and, in many cases, politically. The spate of modern biographies, fawning paeans to a flawed subject, issued on Hamilton verify the adage that the “victors write the history” indeed.

It is because ideas do indeed have consequences. The ideas of Jefferson that helped influence the Declaration and in many respects the Constitution have been overwhelmed by the actualization of Hamilton’s philosophy. DiLorenzo summarizes this succintly: “This battle of ideas–and it was indeed a battle–formed the template for the debate over the role of government in America that shapes our history to this day. The most important idea of all, in the minds of Hamilton and Jefferson, was what kind of government America would live under.”(pp.1-2)

As we journey through the chapters of this work, we will also be taking a journey through the shattered landscape that is the consequence of adopting the Hamiltonian philosophy of governing over against the Jeffersonian vision of liberty.

General, Commentary

My Favorite Liberal

God certainly seems to have a sense of humor.  Take the “global warming” fearmongering for example.  Isn’t it curious that almost every time these folks schedule a major conference to beat the drums on this issue, a major snowstorm or other “global cooling” happens!  After a while, one might get a complex over this, happening over and over again.

Take Al Gore for example.  Now there’s a man on a mission, who won’t let a little thing like facts or the truth stop him.  Al definitely has a complex when it comes to “global warming”.  For anyone who has been forced to sit through “An Inconvenient Truth”, you know that Al loses sleep at night worrying about San Francisco becoming part of San Francisco Bay (and we’ll forego the easy quip on that one).

Now Al has to deal with detractors.  LOTS of detractors, it is starting to look like.  These detractors aren’t just your average, everyday, run-of-the-mill folks like me who can read and reason that the “global warming” hysteria is an utter farce.  These are major-league level detractors, like the founder of the Weather Channel,  a former NASA astronaut, various climatologists and meterologists, and even the President…..of the European Union.

My favorite liberal is none other than EU President Vaclav Klaus, who has been extremely vocal about his rejection of the “global warming” (or “climate change” for those who want the edited version of it).  In January, Klaus directly took on Al Gore’s complex, and his diagnosis:  hysteria.  Klaus stated unequivocally at the World Economic Summit in Davos, Switzerland that there “is no global warming.  I don’t see the statistical data for that.”  Klaus had met directly with Gore during the Summit.

Now, my favorite liberal has come to America to give you, as the recently-passed radio great Paul Harvey would say: “the rest of the story.”  Klaus is a participant in the Heartland Institute’s summit on global warming, speaking last evening on what he sees as the major thrust of the “climate change” crowd:  control of the public, ala communism.  Minceing no words, Klaus said that the thrust of the “global warming” effort is behavioral change and energy rationing, all a part of a socialist/communist central planning framework for human behavior.  That’s the real “inconvenient truth” behind the “global warming” scam.

Oh, and Al…temperatures in New York, where the Heartland conference is being held, is an early-March average 42 degrees.  God does indeed have a sense of humor.

Public Policy Radar, Gambling, Commentary, The Vote

NO on State Issue 6

This entry is part 5 of 5 in the series 2008 Election Issues

Four times. November 4 will mark four times in the last 18 years that gambling advocates have tried to persuade Ohio citizens to allow them to set up to play in the Buckeye state. Normally, in a ballgame, three strikes is an “out”. Three swings of the electoral bat, and the gamblers have a perfect average: .000. That’s three “NO” votes, by resounding margins, one each in 1990, 1996 and 2006. Now they are swinging again.

This time the bat (or should I say bait?) is a single “resort destination” casino which, if approved, would be located right in the middle of southwestern Ohio farm country: Chester Township in Clinton County. Why there? Easy access to I-71, and within 50 miles of three major population centers (Columbus, Dayton, Cincinnati).

The team this time trying to break out and be the winners of the Gambling World (Ohio) Series is MyOhioNow, a collaboration of a retired podiatrist and a business liquidator from Cleveland, and a professional gambler from Minnesota with a history of taking the money and running. With tens of millions of dollars invested in this initiative, mainly in advertising, from television to drop mailers, they seek to assure the suckers (er, citizens) of Ohio that the odds are stacked in their favor and not the House’s.

Promises of jobs, jobs, jobs and money, money, money have flowed as freely as cheap alcohol to a high roller at the blackjack table. When one reads the material supporting their claims, one reads the words “up to” before each promise of money and jobs…”up to” meaning “we won’t be held to any hard numbers, but we will be using them to fool you into supporting this con job.”

The Institute for Principled Policy has already posted a position paper on the Biblical admonitions against gambling, which can be found here. Focus on the Family has an excellent brochure about the social costs of legalized gambling here.

Additionally, a study conducted by the Buckeye Institute for Public Policy Solutions shows that the license for this casino is worth $1 billion on the open market, but that MyOhioNow will get it for a mere $15 million, all of which is reimbursed to them upon startup by the state. Additionally, there is nothing, either in law or in the proposed amendment to the Ohio Constitution, to keep this license from being immediately sold to another interest (think Eastern Shawnee tribe).

If Ohio voters fall for this bluff, then Ohio will become, for purposes of federal gambling laws, what is known as a Class III state. This is one of the three pieces of the puzzle that the Eastern Shawnee tribe need to open a casino in the state. One other piece is the recognition of a land claim to establish a reservation (and this tribe already has or is in process of having intergovernmental agreements with numerous cities in Ohio, such as Monroe, Botkins, and Lordstown). The last piece is two signatures: one from the Secretary of the Department of the Interior, and one from Ohio’s Governor. All of these have a realistic possibility of being obtained by the tribe in the near future.

A peculiarity about Indian tribal casinos is their immunity from taxation, at the federal, state and local levels. As a sovereign nation, they cannot be taxed by another government. That makes a tribal casino’s tax rate ZERO. Accidentally, according to MyOhioNow, language was written into the amendment proposal of Issue 6 to set the tax rate for their casino at the lesser rate of either 25% or equal to any other casino that would operate in Ohio. Should voters approve Issue 6, and a tribal casino be authorized, long gone will be the promised “estimated” annual payday for all of Ohio’s 88 counties: Zero divided by 88 is still Zero.

Conveniently, Lakes Entertainment, one of the MyOhioNow partners, specializes in managing Indian tribal casinos in other states. This sounds less like a coincidence or an accident and more like a plan being executed by a savvy operator who is looking to fleece a mark who can’t read the cards.

Time to fold MyOhioNow’s hand and vote a resounding, resonating, reverberating “NO” on State Issue 6 on November 4th.

Then, on November 5th, let’s get to working on an initiative to make sure that Ohio voters don’t have to say “NO” again.