Category Archives: Taxation

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…

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.

NO on State Issue 2

This entry is part 2 of 5 in the series 2008 Election Issues

Voting MachineOhio State Issue 2, which voters will be deciding on November 4, is a proposal to allow the state of Ohio to issue and spend an additional $400,000,000 in bonds for conservation and environmental revitalization purposes. $200,000,000 would be issued for conservation puposes and $200,000,000 for revitalization. The Institute for Principled Policy urges Ohio voters to cast a “NO” vote and reject this expansion of the state’s bonded indebtedness.

In an economic environment that would best be described as “toxic”, especially as it relates to Ohio’s economy, the proposal to push for more debt so the state can use it to buy up farmlands and other private property under the guise of “conservation”, is foolhardy. The state would in effect be taking those properties out of the tax bases of communities and creating a double tax burden. Other landowners will have to assume the burden of the lost tax revenue base as the state gobbles up more land, and the bonds, once matured in 25 years, will have to be repaid with interest.

This represents hoisting an additional tax burden on the next generation, as the bonds for conservation are backed as “general obligations of the state, and the full faith and credit, revenue and taxing power of the state.” This means that these obligations will be paid first out of the public treasury, including interest and debt service, as they mature. Given the economic catastrophe that is Ohio, this is nothing more than a future tax increase on our children.

The “revitalization” package, although not general obligations of the state and thus not a guaranteed tax increase for future years, has it’s own significant drawbacks.

These bonds may be used, as authorized in this constitutional amendment, for the support of privately owned lands, in a number of ways classified as “revitalization.” This aspect of “public-private partnership” is nothing more than central planning and favoritism toward private parties utilizing public taxpayer funds (which will have to be used to pay off the $200,000,000 in bonds that may be issued under this proposal).

There are many promises made by the committee who drafted the argument in favor of Issue 2, the most repeated of which (and in actuality in the language, bolded, italicized, underlined and written in all capital letters) is the claim that passage of this “DOES NOT RAISE TAXES.” Yeah. Right. Sure. What the committee, Rep. Barbara Sears, Senator Mark Wagoner and Senator Sue Morano, neglected to add was the phrase “RIGHT NOW.” The whole truth is that yes, indeed, this is an all-but-guaranteed tax increase on future generations, just not on those who are “living for the moment.”

A long-term vision includes providing economic opportunity and security for our children’s children. State Issue 2 militates against that vision. For this reason, we ask Ohio voters to vote “NO” on State Issue 2.

…And News Outlets Who Want To Be Partisan Should Give Up Freedom Of The Press

For 54 years the first amendment of the US Constitution has been suspended for a very specific cultural demographic. That group has been singled out to be effectively gagged because many group members had a voice that corrupt politicians found too difficult to overcome in election races. So the grafters cooked up a way to silence their critics in the most effective way possible. By threatening their cash flow. The crooked politicians created a clause in the tax code that required members of this special group remain silent in political matters or to lose both their own tax-exempt status and the deductibility of any donations made to them. The group whose freedom of speech has been so obviously violated is the Church. The politician who led the effort to strip churches of their right to be heard on political matters was Senator, later President, Lyndon Johnson. This information about who did this to the Church and why it was done is a well known matter of historical fact. To everyone, that is, except the Columbus Dispatch editorial writers.

Their editorial for Wednesday September 10, 2008 titled Preaching Politics; Churches that want to be partisan should give up tax exemption displays either gross historical ignorance, a terrible naivete regarding politically motivated abuses of the tax code or a blatant disingenuousness designed to hide political partisanship. Or maybe it’s a combination of all three.

The subject of the editorial in question is the Alliance Defense Fund’s (ADF) Pulpit Freedom Sunday event on Sunday Sept, 28, 2008. The Dispatch editors begin their political speech restriction rationalization tour de force with this gem-

The idea behind a 1954 IRS rule that bars tax-exempt organizations from direct involvement in partisan politics couldn’t be clearer: Tax exemption is a privilege for those organizations whose work benefits society and is nonpartisan. It preserves the resources of these groups for the good works they do, and that includes churches.

It is difficult to believe that supposedly savvy newspaper editors could be this politically naive. It is as if they allowed a high school journalism class write this section of the editorial. The idea behind the change in the tax code was to shut the mouths of pastors who were making it clear that politicians like Lyndon Johnson were crooks and unworthy of their congregations’ votes- for biblical reasons.

What is easier to grasp is that the Dispatch editors do not understand that churches are not just exempted from taxes they are immune from them. This is a key point that is being overlooked by Christians, many of whom will loudly insist that their pastor shouldn’t endorse or disparage candidates from the pulpit. Churches are immune from taxation because the Church and the state are separate and co-equal realms of Christ’s Kingdom each with a distinct non-overlapping authority sphere. The civil realm is the realm of justice while the Church is the realm of grace.

Then Jesus came near and said to them, “All authority has been given to Me in heaven and on earth. (emphasis added)- Matthew 28:18

And He said to them, “Whose likeness and inscription is this?” They said to Him, “Caesar’s.” Then He said to them, “Then render to Caesar the things that are Caesar’s; and to God the things that are God’s.”- Matthew 22:20, 21

As committed secularists, the editors deny that the Church has any authority whatsoever. This declaration in light of Christ’s proclamation above is futile and meaningless, like an angry man that shakes his fist at and curses the wind in a storm. Hence the false notion that tax exemption is a “privilege for those organizations whose work benefits society and is nonpartisan.” The Church is tax exempt because the state has no authority over it. The Church needs no “privileges” from the state. The Church answers to Christ alone (note that this does not mean that churches can violate civil law at will and expect no consequences).

The editors go on to proclaim from on high

…every political season, the false complaint rises anew: Pastors are being denied freedom of speech and religion because IRS rules forbid them from preaching for or against candidates from the pulpit.

Imagine it! These pastors actually believe that their freedom of speech, not to mention the free exercise of religion have been violated just because they (and their parishoners) will be punished by the IRS for endorsing candidates! This is the height of hypocrisy from a profession that proclaims itself the guardians of freedom of speech, press, expression, etc. But this pretzel logic gets worse.

The rule doesn’t prohibit members of the clergy or anyone else from espousing personal political views away from the pulpit. It doesn’t prevent any organized group from supporting or opposing a political candidate. It simply says a group engaging in partisan politics has to pay taxes.

In other words, keep the fact that a candidate is anti-Christian or a corrupt grafter to yourself or face the wrath of the federal tax authorities.

So let’s look at this from a different perspective. Lets say Congress tires of dealing with pesky newspaper editors who constantly point out the pecadillos of politicians. The politicians pass an amendment to the tax code which taxes a media outlet whenever they express an opinion about a sitting government representative or a candidate for office. It’s not really an infringement of freedom of the press because no one is prohibited from printing anything. They just have to pay the tax. How long do you suppose it would take for the Dispatch and other news outlets to begin civil disobedience under these circumstances? Instantly, perhaps?

Realizing that the case is exceedingly weak the Dispatch editors try to appeal to the Christian sense of propriety.

Politics, as anyone can see today, often is a hateful and divisive business, while churches traditionally have been devoted to peacemaking, healing and reconciliation.

Politics is a dirty business. You nice Christians need to stay out of it and leave it to us grizzled news types. This is a thinly veiled and cynical attempt to maintain the main stream media’s tenuous control of public opinion and therefore policy.

The truth is that Christians have a bad habit of bringing Christian ethics to bear when they become involved in something. Truly Christian ethics are based on absolutes; truth, right and wrong for instance. Humanistic politics often deals in situational ethics and “gray areas.” This allows opinion manipulators to often act as brokers in shady political deal making and to do this means that concessions must often be made regarding what is and isn’t true. Politics has become dirty precisely because Christians have withdrawn from it for so long. A strong Christian political ethic preached from a well-informed pulpit threatens the status quo and therefore the entrenched power structure, including the compromised media. That’s right. Well informed pastors willing to speak truth about corruption in the civil realm is dangerous!

The Dispatch editors then wander off to a sort of journalistic fantasyland where tax-exempt organizations flex their new found political muscle and dive into the deep end of the political pool, actually endorsing candidates! Apple carts might be upset! Groups could demand the freedom of speech, press and assembly that other entities have! Why, they might lose donors! People might stop giving blood! They can’t believe anyone would risk donors!

More important, if churches are released from this obligation, other tax-exempt organizations, too, could rightfully challenge the law, upsetting even more apple carts. Donations to tax-exempt organizations could rise or fall based on donors’ feelings about a group’s political activities, or simply because donors might not know a group’s viewpoint and don’t want to risk supporting a view they might oppose. Think about the complications if the Red Cross endorsed politicians. Does anyone want politics to enter into the decision of whether or not to donate blood?

This is nothing more or less than a desperate attempt to appeal to the tax-exempt groups’ pocket books and, in reality, is a thinly veiled threat. And again we see the insistence that Christ’s Church bow to Caesar, as if that was biblically required. Of course, the Church answers only to God.

The editors wrap-up with a complete misstatement of the argument.

Tax-exempt charitable organizations are given a tax break because they do good works that transcend politics. The Alliance Defense Fund’s initiative would put this fine system in jeopardy.

Of course, this statement is debatable for non-church entities which are accountable to the state, though the “transcendence of politics” statement is high-sounding but meaningless drivel. But as for Christ’s Church, it must, like Peter and the Apostles “…obey God not men”-Acts 5:29. And when there is no jurisdiction, there can be no taxes.

Black Eye On Westerville- The “Tax Fairness” Argument

This entry is part 2 of 3 in the series Black Eye On Westerville

As this is being composed it is the weekend of the Fourth of July. Independence Day is always a good time to both reflect on the history of the Declaration of Independence and compare these past events with those in the present to see if we’ve got it right.

Currently, the most prominent argument being used by Westerville, apparently with some success judging by by the letters to the editors of the local newspapers, is the “tax fairness” argument.

The core of this argument is that the 60% income tax increase isn’t really about enhancing the city’s revenue, but about “being fair.” This is absurd on its face because in the next breath the same city leaders cry crocodile tears about the city’s infrastructure and the need for additional revenue to pay for it. But more about this blatant falsehood in a later post. In detail, the argument sounds like this; many surrounding communities have a 2% income tax and a large portion of Westerville residents work in those surrounding communities and must pay those taxes plus Westerville’s 1.25% additional resident income tax less a credit for taxes paid to other municipalities of 0.95% or, currently, 0.3%. So those Westerville residents are paying municipal income taxes that add up to 2.3% of their income.

The city also does some mathematical sleight-of-hand in claiming that they will, with this 60% increase, “recapture” millions of dollars in revenues that are currently “going to other municipalities.” Of course, they are recapturing nothing. They are actually increasing the overall tax burden and taking the millions of dollars that residents would have formerly had in their pockets to spend on things like books, hardware, housewares, meals out, etc. at local businesses and pouring it into the governmental black hole. The other municipalities would continue to confiscate the same amount of money (if not more) as they did before the increase. It is a well known economic maxim that a private dollar goes around 7 times but a government dollar only goes around twice. More money paid in taxes means less money for buying things. It’s a zero-sum game.

The city claims that to “be fair,” Westerville residents who both live and work in the city and non-resident employees of businesses located in the city must be forced to pay a 2% tax. Under the plan, Westerville residents who work in other cities will be given 100% credit for taxes paid in other municipalities, thus cutting their municipal tax outlay by about 13% from 2.3 to 2%. But, of course, someone has to pay the piper and that means Westerville residents and non-residents who work in Westerville are slapped with the 60% increase. It also means that Westerville residents who work in cities like Columbus would pay nothing for Westerville city services.

If you find yourself asking “how exactly is this fair?” then welcome to the club. There’s nothing “fair” about a tax plan that shifts the burden of taxation to a targeted minority of taxpayers, especially those who have no voice in how it is spent or vote on its imposition. And this is where comparisons to past events become very important to understanding what is wrong with not only the attempt to increase Westerville’s base tax rate but the way the entire municipal tax system is structured.

The Declaration of Independence issued on July 4, 1776 was the culmination of many years of abuse of power by Parliament. All of the complaints the Continental Congress made against Parliament are included in the Declaration of Independence, a document you will find most useful in this discussion, available here. As mentioned in the previous posting, the complaint we will focus on is no. 17, “For imposing taxes on us without our consent,” though other complaints on the list will also come into play.

How is it that only 232 years after the issue of a document that is foundational to the understanding of the concept of liberty (a concept now lost to the “spirit of democracy;” these are not the same by any stretch or deconstruction of the definitions), the operation and the limits of our government, so little of it is known or understood, especially by government servants? One of the fundamental principles of government in the United States of America is the idea that no one without a representative voice in any government should be required to pay taxes to that government. Another fundamental principle of government in the United States is the concept that the majority is prohibited by law from tyrannizing the minority. And yet, these two fundamental principles of liberty are being not only ignored but disparaged by government bodies eager to grow their own power and control and to do so by creating and exploiting class envy to raise revenue and create a class of tax slaves.

Think the “tax slave” accusation is too harsh? Think about the city’s argument for the increase. Most, they say, will actually enjoy a tax reduction and they are correct if they mean most voters. And that’s exactly what they mean. Non-resident non-voters don’t count in the equation. They are a voiceless non-entity to the city. They are perceived by city government as a convenient deep pocket which can be picked at the will of the Westerville voter. The fact that some of these non-voting taxpayers will now be subjected to combined municipal taxes in the 4% range (or more depending on where he lives and what kind of work he does) doesn’t phase them. Why should it? These unfortunates can’t vote the city leaders out. They can only pay and complain to… well, no one. When a man with no voice or power is coerced to surrender the hard earned fruits of his labor to an entity which has the power to impose financial harm or ruin and imprisonment for refusal to pay, he is a slave. That was the point of the Continental Congress way back in the late 18th century. The more things change the more they stay the same.

A man is also a slave if he has a voice in the system but can be forced to surrender the fruits of his labor to subsidize the services that others receive from the entity collecting the payments by a vote of the majority. This kind of system, in effect, gags his voice within the taxing entity. That’s what is happening in Westerville and has been since 1998 with the PROS 2000 tax increase. The city wants the majority of voting taxpayers who work outside the city to vote their own self-interest by promising them an overall tax cut.

In effect, Westerville residents who work outside the city will receive a net tax cut under the city’s new tax plan. All they have to do to accomplish this is shift their personal tax burden onto the backs of their neighbors who are foolish enough to both live and work in Westerville and the completely powerless non-resident taxpayers. Thus, the city increases tax revenue by using the lever of tax-relief and the fulcrum of taxation class envy to shift the burden to a powerless minority taxpayer base. The chains of tax slavery are being forged on the anvil of “tax fairness.”

The city’s argument for a tax shift and increase is shown to be among the grossest and most cynical kinds of propaganda, designed to play on the emotions of self-interest and tax-envy rather than the abstract intellectual concept of liberty. It is clear that true tax fairness can only be achieved by fairly and equally spreading the legitimate costs of city government on the residents of the city and on the businesses which own property here, exempting non-residents from the burden of paying for the services residents enjoy.

Large businesses should pay their fair share of taxes because they are large consumers of city services in the form of water, sewer, garbage collection, streets and sidewalks, etc. What about their voice in government? That’s pretty easy actually, and it’s a matter of personal choice. Any large business, if they want a voice in local government, could require some of its management personnel to live in the city limits. That would be good both for the business and the city. City residents are far less likely to propose hare-brained schemes which will, in the long run, harm their own property values or the city’s environment. Absentee ownership doesn’t have the same incentive. The government of the city of Westerville seems incapable of making this elementary political calculation.

And yet the city of Westerville, as discussed in the first article in this series, clings to the failed paradigm that businesses must be bribed with 50-100% tax abatements in order to remain “progressive” and keep the businesses “in the tax base.” Of course what they really mean that they want to keep the businesses’ employees in the tax base. The city leaders don’t seem to realize that large, often absentee owned and operated businesses that aren’t willing to pay their share of the tax burden don’t really care for the city at all. They care for big quarterly profits which impress stockholders (by the way, nothing wrong with profit when it is gained legitimately. Accepting a pay-off in the form of a tax abatement is not legitimate, especially when it is gained on the backs of your employees). That’s what makes the slap in the face of a 60% tax increase for local owners of small local businesses such a travesty; the small local business owner is the backbone of the community socially and economically. The large absentee business is a disproportionately expensive and subsidized consumer of city services. And yet the city, in the interest of additional revenue for the purpose of growing city government beyond its legitimate bounds, is willing to shift the tax burden to the local businessman.

We will be expanding on the concept of what a legitimate cost of government in the next entry.

Special Guest Blogger- A Crisis in Democracy: Are We Going Bankrupt?

John WhiteheadBy John W. Whitehead of the Rutherford Institute

“Our country is insolvent, and bankruptcy will come.”—Congressman Ron Paul (R-Tex.)

I’ve never seen our country in worse shape—culturally, constitutionally or financially. Marriages and families are falling apart, our liberties are being eroded and the U.S. economy is in serious trouble. We are, as author Robert B. Reich noted in a recent New York Times editorial, “totally spent.” All we’re managing to do now is keep our creditors at bay.

The U.S. trade deficit has reached record highs in recent years. Gas prices, which have largely contributed to trade deficit woes, have led to higher prices in transportation and other goods. The bursting of the home price bubble has triggered a crisis in U.S. housing finance. This has led to a sharp spike in foreclosures, as well as heavy losses at major banks, a pull-back in the market for securitized debt and a credit crunch worldwide.

With the value of the dollar plummeting worldwide, America is, in effect, now on sale at discount prices to foreign countries. For example, a record $414 billion was invested by foreigners in the U.S. economy in 2007, with much of it coming from sovereign wealth funds, vast pools of money controlled by anti-democratic governments from China to the Middle East.

The fact that our nation is nearing bankruptcy has become what David Walker, comptroller general of the United States, calls “the dirty little secret everyone in Washington knows.” Most politicians, says Walker, are aware of the impending financial crisis but reluctant to do anything about it. After all, it is not politically expedient to increase taxes or trim spending, but this is exactly what needs to be done.

Walker also argues that health care, a political promise rolling off every candidate’s tongue, is by and large the most prominent issue, five times bigger than Social Security. And Walker calls the 2003 measures that included Medicare prescription drugs “probably the most fiscally irresponsible piece of legislation since the 1960s.” This bill, Walker says, was “eight trillions dollars added to what was already a 15 to $20 trillion under-funding.”

Walker, who recently resigned after serving as the government’s chief internal watchdog for a decade, concludes that the nation’s “current standard of living is unsustainable unless some drastic action is taken.” But, as usual, when we leave the problem-solving to the politicians, what we end up with is bigger government, more bureaucracy and a larger federal deficit, which is projected to total $410 billion for 2008. (The national debt, which is the total amount of money owed by the government, is currently estimated to be over $9.2 trillion.)

We are living in a house of cards that’s on the verge of crashing around us, and yet most Americans remain oblivious and continue to spend beyond their means. But, as Reich notes, “That era is now coming to an end. Consumers have run out of ways to keep the spending binge going.”

Hoping to continue the spending a little longer, Congress passed a $168 billion stimulus plan made up of personal tax rebates and business tax cuts. While some Democrats criticized the plan, fiscal conservatives expressed grave doubts that the measure is too little and will reach consumers and businesses too late. Former congressman Jack Kemp asserts that “rebates haven’t worked in the past…and won’t work in the future,” as they reward past production. Other critics have voiced the concern that such a costly measure merely serves to increase the already burgeoning national deficit.

While the nation’s financial woes are grave, a recession will impact more than Americans’ pocketbooks—it will impact our very freedoms. After all, economic security and freedom go hand in hand.

In his book, A Free Nation Deep in Debt, James MacDonald, an investment banker, discusses the relationship between democracy and economic development: “Democracy (even in its most partial and imperfect form), is a system in which the citizens control the state. As long as democratic states borrow from their own citizens, their good credit is simply a reflection of the virtual identity of borrower and lender.”

Unfortunately, as economist James Galbraith explains, “The American citizenry has lost its pride of place as creditor of the American state. Today, financial intermediaries hold about 37 percent of U.S. public debt; Japan and China, along with other countries, now hold about 30 percent. The proportion of U.S. debt owned directly by Americans has fallen to below 10 percent; in 1945 (when the debt was more than twice as large in relation to GDP as now) citizen-creditors just about held it all.” But that is no longer true, and “for all practical purposes, the venerable marriage between public credit and democratic government, so vital a factor in the history of the world, has been dissolved.”

Galbraith concludes: “If MacDonald’s thesis is right, the disappearance of the citizen-creditor forces a question. Can democracy survive when its financial roots have been cut? The scale of public debt is not the issue, but its ownership is. Can a country—whether the United States or any other—be truly democratic if it is in hock to banks and foreigners? …To put it bluntly, are we still a democracy? And, if not, what would it take to bring democracy back?”

We know what must be done.

First, we need to elect fiscally responsible representatives with the backbone to resist political pressure to spend what is not there. We also need to stop putting ourselves in hock to foreign banks and nations. And we need to put a stop to the financial hemorrhaging related to the Bush Administration’s war on terror. For example, over the past six years, the U.S. has disbursed to the corrupt government of Pakistan about $80 million monthly, or roughly $1 billion a year. Yet according to the Washington Post, few receipts are provided to account for how the money is used or where it ends up. That’s just the tip of the iceberg when one considers that we spend at least $1 billion a week in Iraq on military operations alone. Just imagine how those dollars could be put to use in our own ailing economy.

Second, we need to show some personal discipline. This will mean reining in our binge spending, nationally and individually. It will also mean getting back to work. We need to bring the manufacturing jobs back to the United States and re-inject ourselves into the economy, even if it means Americans taking on jobs that are usually done by illegal immigrants.

Finally, we need to do a better job of protecting our freedoms. This means resisting the government’s attempt to amass greater authority and centralize power in the executive branch. It also means electing representatives who will abide by their oath of office to protect and defend the Constitution.

If we value our freedoms at all, we have to sober up—and fast—or we will certainly find ourselves facing an even more dangerous crisis in democracy. Yet beware: this will not be a sudden coup but a gradual transformation into a more authoritarian regime. As former presidential advisor Bertram Gross points out in his book, Friendly Fascism: “Anyone looking for black shirts, mass parties, or men on horseback will miss the telltale clues of creeping fascism. In America, it would be supermodern and multi-ethnic—as American as Madison Avenue, executive luncheons, credit cards, and apple pie. It would be fascism with a smile.”

Click here to read other commentaries by John W. Whitehead

I’ll Love You Forever, Respect You In The Morning, And Call You Later, I Swear!

Commentary By Chuck Michaelis

Those of us who grew up in the ’70’s can’t help but remember several rock ‘n roll classics. One of these memorable classics is Meat Loaf’s Paradise By The Dashboard Light. What does this song have to do with principled public policy, you might ask?

Well a quick look at an article from the Cleveland Plain Dealer (PD) should make it clearer. On Saturday July 21, 2007 they ran an article titled Medical Mart sales tax hike would be limited to 20 years.

Let’s see who’s paying attention. What’s wrong with the headline? That’s right, it’s a “temporary” tax, and will “only” last for 20 years. Now you’ll pardon this writer’s cynicism about oxymoronically named “temporary” taxes. And you may have something of a point. After all, a temporary telecommunications tax instituted in 1898 to help defray the costs of the Spanish-American War was eventually ended- in 2006. Originally 1 cent per call, it grew to be 3% of the total phone bill before Congress realized that the Spanish-American War had been over for nearly 108 years, only lasted 3 1/2 months and resulted in the acquisition of the Phillippines, Puerto Rico, Guam and the Caroline Islands, thus actually paying for itself. So granted, it was technically a “temporary tax.” On the other hand, who remembers Ohio’s “temporary” two-year 20% sales tax increase of 2003? Feeling the mounting pressure of a coming election, the Ohio GOP leadership engineered a “tax rollback” to only a 10% increase in 2005 before making the change permanent. So much for a “temporary” increase.

Of course, erstwhile gubernatorial candidate and current Cuyahoga County Commissioner Tim Hagan (whose 2002 gubernatorial platform included a statewide tax increase, thus making him the only honest candidate on taxes in that race) “promises” that the temporary nature of the tax will be in the resolution approving it. Who, in twenty years, will remember that this proposed sales tax increase was only temporary? And even if someone does, how long will it be before someone in Cuyahoga county government declares that the tax must be kept to pay for “necessary services” whose continued funding is “critical?”

The proposed 0.25% increase in the Cuyahoga county sales tax is, of course, a boondoggle corporate welfare scheme. It provides a private showcase for its goods to a privately held for-profit corporation who has made a very nebulous pledge to do it’s best to bring a few medical conventions to a permanent convention center to be built by the county for its benefit. No real promises, mind you, but they’ll try real hard in exchange for the $450 million (!) taxpayer dollars required to construct this monument to fraud and waste. Why isn’t this corporation building its own showcases? Why would it if gullible city and county leaders can be hoodwinked by pie-in-the-sky-by-and-by “pledges” like this one to do it for them? If Cuyahoga county voters allow this to be passed without some type of taxpayer response it can truly be said that while Cleveland may rock, it certainly cannot think.

The Cuyahoga county taxpayers will find themselves in the same situation as the male singer of the Meat Loaf rock classic whose final regretful lament is-

So now I’m praying for the end of time
To hurry up and arrive
Cause if I gotta spend another minute with you
I don’t think that I can really survive
I’ll never break my promise or forget my vow
But God only knows what I can do right now
I’m praying for the end of time
It’s all that I can do
Praying for the end of time, so I can end my time with you!!!

Because ’til the end of time is about how long they’ll be dealing with that tax increase.

Chuck Michaelis is the president of Rocky Fork Formulas, Inc., a dietary supplement design and distribution company. He is also the Executive Director of Camp American, a week-long summer Christian worldview education camp for ages 12 years to adult. He is currently the Vice-chairman of the Institute For Principled Policy. You can contact him at [email protected]

Update on HB 47- Bill To Rein In The Muskingum Watershed Conservancy District Board

Information provided by Marlys J. Barbee, Secretary/Treasurer CITIZENS AGAINST MWCD ASSESSMENT

Policy RadarThe Muskingum Watershed Conservancy District (MWCD) is a state government subdivision which is trying to put a $270 million general tax upon the 2.1 million people of all or part of the following Ohio counties: Ashland, Belmont, Carroll, Coshocton, Guernsey, Harrison, Holmes, Knox, Licking, Morgan, Muskingum, Noble, Richland, Stark, Summit, Tuscarawas, Washington and Wayne.

The main issue is that the MWCD is allowed by the Ohio Revised Code (ORC) 6101 to apply an assessment upon the people who receive a direct benefit for their “services”. However, the MWCD are trying to say ALL properties in the 18-county district are receiving a benefit, thus the “assessment” has now become a general tax. There is no vote by the people, no say in how much money is collected, no say as to who spends the money or how the money is spent. This government sub-division must be put back into the box. Their power is out of control.

Attempting to do just that, Rep. Bob Gibbs (R) of Lakeville, Ohio, has introduced legislation which would require a board of directors, not a conservancy court of judges, to perform certain functions under the Conservancy District’s law, and prohibits the levying of an assessment by such a conservancy district on real property that is not directly benefited from the assessment. There are a number of other reasons to support this legislation as we (CAMA — Citizens Against MWCD Assessment) have delved into the workings of MWCD, finding corruption and dishonesty.

This bill, HB 47, in now in the Economic Development and Environment Committee, chaired by Rep. Thom Collier. We need people to contact the committee members, asking their support of HB 47. By going to the web site, www.stopmwcd.org , you can find the names and contact information of all the committee members.

The next hearing on this bill is May 16, and we are hoping a final hearing on May 23 will bring this bill to a vote. Our opponents are using taxpayer’s money to pay lobbyists to convince these lawmakers of their “right” to do what they are doing. We as grassroots workers need the taxpayers themselves to come to our aid to win this battle.

This web site will also give you more detailed information regarding our research and concerns. The support from people all over the state of Ohio is necessary as we look forward to having this bill pass committee and go to the House floor for a vote, then on to the Senate. Most legislators know nothing about what is wrong with this one Conservancy District out of all Conservancy Districts across the state that has gone out of control as a “recreation district”.

Sign Up For Ohio Family Lobby Day!

OHIO FAMILY LOBBY DAY

April 25, 2007 in Columbus, Ohio

Decisions are being made for you, on your behalf many times without your knowledge. Meet with your elected officials and or their staff face to face. Discuss issues and legislation of interest to the Christian family that are pending or proposed to the Ohio General Assembly.

Our civic responsibility does not end with our vote on Election Day. We hired these men and women to represent our families and us now we must hold them accountable.

Issues and Legislation before the 127th Ohio General Assembly:

    Covenant Marriage
    Adoption Reform & Foster Parenting
    Personhood Legislation
    Community Defense Act
    Abstinence Funding, School Vouchers Plus many more

Receive training and information about the issues that concern you and your family.

Meet like-minded concerned Christian citizens who want to make a difference for such a time as this.

Sponsored By Pro-Family Network, Ohio Christian Alliance, Citizens for Community Values, Family First and Institute for Principled Policy, Citizen-USA Newspaper

Printable copy of a flyer that you can distribute.

Printable copy of the application form. Please print one out, complete it and fax it to 614-386-9804 or mail it with a check to the address indicated on the form.

Or you can pay your registration online! Click here to go to our store “Events” category. The Ohio Family Lobby Day choices are there. You can use your Visa, Master Card, American Express, Discover Card or Pay Pal account to pay the fee. Then download a copy of the registration form and fax it to 614-386-9804. Indicate that your fees were paid online on the form. Then you’re registered. It’s easy.

Ohio Family Lobby Day

OHIO FAMILY LOBBY DAY
April 25, 2007 in Columbus, Ohio

Decisions are being made for you, on your behalf many times without your knowledge. Meet with your elected officials and or their staff face to face. Discuss issues and legislation of interest to the Christian family that are pending or proposed to the Ohio General Assembly.

Our civic responsibility does not end with our vote on Election Day. We hired these men and women to represent our families and us now we must hold them accountable.

Issues and Legislation before the 127th Ohio General Assembly:

    Covenant Marriage
    Banning Homosexual Adoption & Foster Parenting
    Total Abortion Ban
    Community Defense Act
    Abstinence Funding, School Vouchers Plus many more

Receive training and information about the issues that concern you and your family.

Meet like-minded concerned Christian citizens who want to make a difference for such a time as this.

Sponsored By Pro-Family Network, Ohio Christian Alliance, Citizens for Community Values, Family First and Institute for Principled Policy, Citizen-USA Newspaper

Click here to see a printable copy of a flyer that you can distribute

Click here for a printable copy of the application form. Please print one out, complete it and fax it to 614-386-9804

To pay your registration online click here to go to our store “Events” category. The Ohio Family Lobby Day choices are there. You can use your Visa, Master Card, American Express, Discover Card or Pay Pal account to pay the fee. Then download a copy of the registration form and fax it to 614-386-9804. Indicate that your fees were paid online on the form. Then you’re registered. It’s easy.