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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

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

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

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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

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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

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

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

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

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

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

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…

Taxation, Commentary, Public Policy Principles News, Economics

Is Alan Keyes Really a Constitutionalist?

In a word-NO!

In the video posted below you can see Alan Keyes being questioned on several core constitutionalist issues. He gives a mixed-bag of answers. He likes the mis-named “Fair Tax” which supposedly replaces the hated income tax with a GIGANTIC federal sales tax. We say supposedly because there’s no guarantee that the income tax will disappear, leaving us with both an income AND what amounts to a value-added tax or VAT. There are many objections to the “Fair Tax” but that is not the subject of the article.

What the article is about is a practical application of what we have learned from our (incomplete) study of the character of Alexander Hamilton and the tactics he used to achieve his strategic goal of twisting a federal constitution into a mercantilist national government. As the study continues we hope to provide more tools to enable you to understand that Hamilton’s vision is the dominant one in American government and has been since the War Between The States. We also hope to help you develop the skills to recognize what that means to you and how it effects the way your government works.

Chances are if your representative, it really doesn’t matter at what level- city, township, county, state, federal, gets elected by running as a “conservative” but consistently votes for bills which ignore constitutional limits on his particular branch of government while citing the “greater public good” as justification then he is a political descendant of Alexander Hamilton. Especially if the bill in question ultimately creates new powers for government and/or concentrates that power in very few hands, especially un-elected ones especially while granting special exemptions, rights and privileges to common interest blocs, either business or social.

Watch this clip then we’ll discuss specifics.

[youtube]http://www.youtube.com/watch?v=BNkkXT84PoI[/youtube]

Alan Keyes is an excellent example of a Hamiltonian in the guise of a constitutionalist. A true Hamiltonian is an extremely intelligent and charismatic political chameleon who has no qualms against assuming the political disguise of having a philosophy that he disdains in order to win the support of those who are adherents to that philosophy. Like all Hamiltonians, Keyes is a master at equivocation. He is able to speak in terms that can be interpreted by both constitutionalists and nationalists as friendly to their positions, depending upon his audience.  Only by examining in detail his statements can we get anything like a clear view of his constitutional interpretation.

Take, for instance, Keyes’ view of the “Fair Tax.” This author has heard Alan Keyes make impassioned pleas for the end of the 16th amendment, the amendment that allows direct taxation of individuals by the federal government. We ran a review of a conference where just such a plea was made by Keyes available here. We noted that within 4 hours Dr. Keyes employed two diametrically opposite hermeneutics of constitutional interpretation for different reasons to different audiences, thus bolstering our case.

In the video Keyes’ position on the “Fair Tax” does not comport with his claim at the conference reviewed that the 16th amendment should be repealed. If the 16th amendment is repealed then an authorization for ANY direct taxation of individuals evaporates and the “Fair Tax” necessarily dies since there’s no longer any direct taxation authority. An intelligent man like Dr. Keyes must know this. Why not be truthful about it then? The facts in detail do not fit the needs of the proponents, therefore the facts in detail may be equivocated because it’s for “the common good.” Hamiltonian to the core.

Dr. Keyes also makes a rather absurd claim that Rep. Ron Paul (R-Texas) appropriated his views on the Federal Reserve (Fed) from him. This is nothing more or less than an attempt to “earn his chops” among skeptical constitutionalists who know who Paul is and where he stands on issues like taxation, the Fed, presidential authority, war powers and US sovereignty issues. Many do not know where Keyes stands on some of these key issues so he’s attempting to skim off some of Paul’s supporters to his own camp.

As we showed in our review of our personal conversations with Keyes and what he spoke about at the conference, He and Rep. Paul are on completely different wavelengths regarding presidential power, war powers, US sovereignty, especially as regards the surrender of that sovereignty to the UN via the treaty power. Keyes “stand” against the Fed on the basis of  our economy being controlled by “international bankers” flies in the face of his support of the idea that the US has legally surrendered at least some of its sovereignty to the UN via treaty obligation, which he unsuccessfully argues is allowed under article VI of the US Constitution. In short, Keyes is trying to equivocate his way into the constitutionalist camp while remaining firmly in the nationalist camp with feelers out to the globalist camp.

Frankly, no one except some policy wonks ever heard of Dr. Alan Keyes before he was appointed to the UN Economic and Social Council ambassadorship in 1985. His explanation of his opposition to the Fed in the video is, at best, nebulous and appears that it is being developed extemporaneously as he is asked questions. Some of it seems to be  a kind of modified Independent Treasury System and some of it is just platitudinous nonsense; ear candy for the uninformed who know that something’s wrong with the economy and the Fed’s the most likely culprit.

Keyes is the perfect example of a politician who is truly pro-life (and we are definitely not questioning his stand on the life issue) and believes that his pro-life credentials is a get-out-of-jail-free card with Christian constitutionalists on other issues as long as he says what seem to be the right things. This attitude is all too prevalent among Christian Republicans who are ALWAYS surprised when their favorite pro-life “conservative” betrays them on taxes, gun control, education, business regulation,campaign finance, free speech, police powers and you name it.

Dr Paul, on the other hand, has been in Congress, with hiatus, since 1976. He has a well-developed stance on economics, being from the hard currency, local control of banking Austrian economic school. He has a well-defined body of work on the constitutional issues that Dr. Keyes is the most ambiguous on. He has never been afraid to tackle difficult constitutional subjects and has always been open and honest about where he stands on issues. He is a strict constitutional constructionist. He isn’t perfect by any means, but he is open and honest. In short, he is a true constitutionalist. There isn’t any question of what Dr. Paul means when he is done speaking or has written a paper. He does not engage in ambiguities or equivocation.

We bring Ron Paul into the picture because Keyes does. It is obvious he is at least trying to compare himself to Paul because Paul has such a loyal base and he wants in on the action. In order to do that he is willing to make ridiculous claims regarding Paul’s position on economics, war powers, presidential authority, state sovereignty, etc and to gloss over his own globalist/interventionist leanings to make it appear that he and Dr. Paul are not that far from one anothers viewpoints. The fact that some have bought into this in spite of the evidence to the contrary that surfaces only when  Keyes’ statements are examined in detail bolsters our point about his being a Hamiltonian heir.

Biblical Worldview, Public Policy Radar, Commentary, Public Policy Principles News, Economics

Constitutional Government 101

This entry is part 6 of 5 in the series Federalism, Democracy And Presidential Elections

constitutionOne can get so used to watching career party politicians stretch, bend, fold, spindle, mutilate or openly flout the Constitution that it comes as a shock when one of them actually makes a correct reference to it.

And that correct reference when wielded by a courageous legislator can be a “shock and awe” spectacle striking fear in appointed bureaucrats who have never seen the Constitution used as it was designed.

Just such a case has happened recently as Rep. Michelle Bachmann (R) Minn. as a member of the House Financial Services Committee asks a question that is rarely uttered and obviously a subject of dread among both the unelected nomenklatura and the elected representatives in attendance. The question that wreaked such havoc? “What provision in the Constitution can you point to to give authority for the actions that have been taken by the Treasury since March of  ’08?”

Posted below is a video of the hearing on from Youtube. Things to watch for:

  1. Chairman Barney Frank’s seeming (but not shocking) gender confusion. He seems to calls Rep. Bachmann “The gentleman from Minnesota.” Having met and conversed with Rep. Bachmann, this author can testify that there could be no mistaking her for a gentleman.
  2. The complete inability of Secretary Geithner to cite a single constitutional delegation of power, explicit or “implied,” for what he, the Treasury Dept. or the Fed are doing to the economy.
  3. Fed Chair Ben Bernanke’s a) suicidal tendency to rush in where angels fear to tread b) a complete inability to point to any actual constitutional authority other than an undefined congressional authority to appropriate funds and c) the American public should be kept in the dark because we are too stupid to discern how central banking works.


[youtube]http://www.youtube.com/watch?v=E9DgMG-_6Ls[/youtube]

What Rep. Bachmann gives here is a quick lesson in Constitutional Government 101, a class that should be required for all freshman Representatives and Senators an all members sitting for 2 terms or more. Note too, that Rep. Frank gives a lesson in old-style partisan political hackery. When Bachmann asks a question that will,  frankly, cause Geithner and Bernanke to only make the inescapable hole that they have dug even deeper, he quickly steps in so that they will not have to answer the question, since there is no good answer to it.

This is the kind of representation that Christian constitutionalists want. What we need in the United States Congress is 435  Michelle Bachmann’s and Ron Paul’s and 100 more like them in the Senate. Then we might, if we are as a nation sufficiently repentant and reliant on Christ as our guide, begin to dig out from the unconstitutional nightmare that is the federal leviathan.

Public Policy Radar, Commentary, Public Policy Principles News, The Vote

The Return of “Divided Sovereignty”

This entry is part 5 of 5 in the series Federalism, Democracy And Presidential Elections

constitutionThe enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people. –The Ninth Amendment to the US Constitution

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people. -The Tenth Amendment to the US Constitution

In the compound republic of America, the power surrendered by the people is first divided between two distinct governments, and then the portion allotted to each subdivided among distinct and separate departments. Hence a double security arises to the rights of the people. The different governments will control each other, at the same time that each will be controlled by itself. -James Madison in Federalist 51

That this Assembly doth explicitly and peremptorily declare, that it views the powers of the federal government, as resulting from the compact, to which the states are parties; as limited by the plain sense and intention of the instrument constituting the compact; as no further valid that they are authorized by the grants enumerated in that compact; and that in case of a deliberate, palpable, and dangerous exercise of other powers, not granted by the said compact, the states who are parties thereto, have the right, and are in duty bound, to interpose for arresting the progress of the evil, and for maintaining within their respective limits, the authorities, rights and liberties appertaining to them.- The Virginia Resolution of 1798

At least 20 states are currently crafting or holding hearings on legislative resolutions that re-asserts the original jurisdictions and powers guaranteed to them in the 9th and, especially, 10th amendments (quote above).

And now that list has expanded to include Ohio. Just this week (Wednesday March 18, 2009) House Concurrent Resolution (HCR) 11 was introduced into the Ohio House. Virtually all of the resolutions in the various states cite what has become in the last century or so the largely forgotten 10th amendment to the US Constitution. All of the various state resolutions have slightly different language and motivation behind them, according to the needs of the individual state.

In Oklahoma, for instance, the underlying motivation is the attempt by the federal government to force Oklahoma to allow a NAFTA superhighway (actually a HUGE multi-lane car, truck, rail, communication corridor under international control; just imagine being pulled over for going 66 in a 65 zone by a law enforcer who answers not to some local elected body but an unelected international board and may not even be an American citizen) that allows foreign rail and trucking, beginning in Central America and terminating at a hub in Canada, onto US territory without benefit of Customs inspection until they reach the main terminal in Kansas City (no terror threat to see here; move along), to cut a huge swath through the center of the state. Of course, the federal government has been busy denying that any such corridor actually exists.

Unfortunately, Texas Department of Transportation let the cat out of the bag a couple of months ago by holding a press conference to announce that Texas’ portion of the project that never existed had been canceled by popular demand of Texas residents. Enterprising Texans had gotten control of local and regional zoning and planning boards and simply refused to allow the corridor permission to begin construction within the confines of their jurisdiction. This was forcing an exceptionally large detour in the highway (3 counties or so). Further information can be obtained by purchasing DVD’s of last July’s Freedom 21 Conference in Dallas TX, available here. The details of this was one of the best presentations at Freedom 21 last year. This year’s looks to be at least as good.

In Ohio the fulcrum is unfunded federal mandates. This is a brilliant move on the part of the drafters. The drafters also wisely cite Article IV, sec. 4 and the 9th Amendment of the US constitution. Article IV, sec. 4 guarantees each state a separate republican form of government, meaning that each state has the right of self-determination through the action of its duly elected representation. The 9th Amendment states that men have many more inherent rights than are mentioned in the bill of rights and that the fact that they are not mentioned does not mean they may be usurped by an omnipotent federal leviathan but are to be protected as strenuously as the others which have been mentioned. This has become an extremely important consideration but has been virtually ignored since the War between the States.

“OK,” you might be saying, “but why is this such an important consideration?” The answer lies in the Virginia Resolution, quoted above. Passed immediately following the passage of the Alien and Sedition acts, federal laws which openly violated the 1st and 5th Amendment protections of the right of free speech and press and the right to due process of law. Virginia and Kentucky each passed resolutions declaring their sovereignty under the 9th and 10th Amendment and furthermore declared their intention to interpose on behalf of citizens of their own states whose rights were being trampled by means of federal usurpation.

It is interesting to note that the word interposition has virtually disappeared from modern legal dictionaries even though, obviously, it was a well-known legal concept in the early part of the American Republic. The War between the States nearly killed the concept.Interposition takes place when the lesser (state) authority places itself between the greater (federal) authority (exercising its authority unlawfully) and the citizen subject to both authorities.  Thus, the Article IV guarantee of a republican form of government for each state.

It must be understood that the Constitution is a negative law document. In contrast, the old Soviet Constitution was a positive law document; the Soviet government assumed all authority and the peoples rights were specifically outlined within the document. The US Constitution, on the other hand, assumes that all authority rests in the people (there is an important distinction that the Christian must make here, discussion of which we are going to forego right now. Suffice it to say that the Christian knows that ALL authority in heaven and earth has been given to Jesus Christ. Individuals have authority to establish government insofar as Christ delegates it to them) and that the government’s power is strictly restricted to those specific powers that the people willingly delegate to it. All other authority is forbidden to government and reserved to the individual. Hence, the enormity and complexity of positive law documents and the simplicity and, often, eloquence of negative law documents. It’s much simpler and easier to say “you have all rights except these” versus “here is a specific list of your rights.”

The purpose of government in the limited authority model is the protection of the rights of the individual both from other individuals and from government abuse. In this light, the lesser authority has not just the right to interpose in opposition but the duty to do so since the whole of his authority was given to protect the rights of the citizen.  So what does this have to do with unfunded mandates? Because of the loss of the original balance precipitated by the growth of federal power at the expense of state authority and individual liberty in violation of the 10th Amendment, the federal authority has assumed the power to dictate to the states that they must administer certain programs at their own expense.

In essence the federal authority is shirking its responsibilities to pay for the state administered federal programs that they have forced on the states, usually over the objection of the citizens, mostly because of political considerations. It’s a lot easier to let state authorities take the heat over unpopular tax increases that must come with unfunded mandates than to increase federal taxes to cover their cost.

The former insures that political wrangling at the state level over how to make it look like the other political party was “really at fault” for mandatory tax increases from federal mandates will both disgust and eventually numb the citizens to the real problem which is with their federal representation. The latter option would quickly result in a change in federal representation and a quick end to the programs that are increasingly consuming the citizens’ assets against their wills. In this light it is easy to see why the unfunded mandate is the method of choice for the federal politician.

“But aren’t you talking about nullification with resolutions like these?” you might be asking. Quite simply the answer is no. Interposition is not nullification. Nullification is a complex political activity. It requires the calling of a special state convention independent of the state legislature, the selection of delegates to represent the people of the state and debate of the issue followed by a vote of those delegates based on whatever criteria that convention develops on whether or not to declare the federal legislation null and void within the confines of that particular state.  Interposition is an act of a state legislative body saying simply “you can’t do that here because you don’t have the constitutional authority.”

Some might be saying “you just want to use this as an excuse to start a secession movement, don’t you?” The answer is obviously no. Interposition and nullification are both remedies: one legislative, the other political, for grievances against federal usurpation of state authority and individual liberty. They are specifically designed to eliminate the possibility of  secession, not make it more likely. No one who thinks is thinking of secession.

What sovereignty resolutions like HCR 11 are about is the re-balancing of the state-federal government equation. It is a re-distribution of authority, already constitutionally restricted to the states and local bodies, back to its intended delegates.