Archive for category Taxes

An Oldie But Goodie

With the Denver Mayoral race starting to heat up, and with Chris Romer trying to position himself as a ‘pro-business’ candidate, it’s good to revisit exactly what he means by that.


This comes from a conversation he had with the DaVita CEO who remarked that Coloradoans don’t know what investment means.  Apparently, aside from normal infrastructure spending, it means getting taxpayers to fund businesses.

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All Parts of the Constitution Are Equal

But some are more equal than others.

I’ll be writing a lot about SCR-001 in the next few days and weeks.  It’s an attempt to make it harder to amend the state Constitution, and the way it’s written, its target is TABOR.

The giveaway is the provision concerning repeal thresholds.  Here are those provisions:

  1. It will take 50% to pass this amendment
  2. It will take 60% to pass amendments in the future
  3. It will take 50% to repeal amendments passed before 2013
  4. Except for this amendment, which it will take 60% to repeal

Got that?  If something was passed with 60%, it takes 60% to repeal.  If something was passed with 50%, it takes 50% to repeal.  Except for this amendment itself, which takes 50% to pass and 60% to repeal.

Under the Colorado Constitution, not all portions of the Constitution would be subject to the same rules.  Some parts of the Constitution would be more equal than others.

As nearly as I can tell, this is without parallel in the United States.  I made a quick review of the 50 state constitutions this evening and their amendment processes.  None of them has different thresholds for different parts of themselves.

Massachusetts, in provisions that only a lawyer, or a Puritan, or a Purtian lawyer, could love, does restrict the subject matter than initiative-based amendments can address, but doesn’t set separate thresholds, and doesn’t separate merely by date.

Mississippi does say that certain sections of its constitution can’t be amended by initiative, including:

(a) For the proposal, modification or repeal of any portion of the Bill of Rights of this Constitution;

(b) To amend or repeal any law or any provision of the Constitution relating to the Mississippi Public Employees’ Retirement System;

(c) To amend or repeal the constitutional guarantee that the right of any person to work shall not be denied or abridged on account of membership or nonmembership in any labor union or organization; or

(d) To modify the initiative process for proposing amendments to this Constitution.

And Florida does have a 2/3 requirement for raising or initiating new taxes or fees.

But as far as I can tell, that’s it.  While the initiative and referendum process varies significantly from state to state, states use subject matter, not the manner of adoption, as the standard for whether or not it’s subject to repeal.  And they don’t set different thresholds for those sections, they just say that it has to come from a referred measure or in a state constitutional convention, and can’t be addressed by initiative.

Colorado, by adopting this idea, would be unique in the country in this regard.

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We Could Start By Repealing ObamaCare

President Obama claims in this morning’s Wall Street Journal to want to reduce the regulatory burden on American business, and so has ordered a review:

This order requires that federal agencies ensure that regulations protect our safety, health and environment while promoting economic growth. And it orders a government-wide review of the rules already on the books to remove outdated regulations that stifle job creation and make our economy less competitive. It’s a review that will help bring order to regulations that have become a patchwork of overlapping rules, the result of tinkering by administrations and legislators of both parties and the influence of special interests in Washington over decades.

I can remember hearing this sort of thing from every President since Jimmy Carter.  You’ll note that the government is now considerably larger, more restrictive, and more intrusive than it was 35 years ago. Their failure is, in part, explainable by the nature of bureaucracy.  Agencies fight interminable turf wars, and any attempt to systematically get them to play well together is doomed to failure.  The FCC, for instance, insists on trying to regulate the Internet even in the face of specific Supreme Court decisions denying them the authority.  Imagine how much more combative they are when the only opponents are other bureaucrats.

Philip Howard in his classic, The Death of Common Sense, notes how the USDA requires floors in certain food operations to be clean, while OSHA requires them to be dry.  Good luck with that one.

The EPA has become a mini super-government unto itself, its authority reinforced by the automatic standing that many professional environmental lobbying groups have to bring suit on behalf of, “the environment.”  Aside from trying to limit our breathing, ot currently is preventing the Border Patrol from patrolling parts of the border, meaning it’s exercising control not only over every aspect of manufacturing, it’s arrogating the right to regulate other federal agencies.

The FDA has tried, and will no doubt try again, to use price as a measure for approving medicine.  As the president professes to be worried about medical innovation.

Of course, regulation isn’t even the major retardant of economic growth – government spending is.  Obamacare amounts to a gigantic increase in the percentage of GDP explicitly devoted to government spending.  The so-called stimulus hasn’t even been spent yet, largely because the same government didn’t know that there was no such thing as a “shovel-ready” project.

Coming after a miserable electoral repudiation of his policies, Obama’s comments recall President Clinton’s 1995 State of the Union Address.  Realizing that he wouldn’t be able to push through large pieces of legislation, he famously declared that “the era of big government is over,” and embarked on a program of increasing regulation.  Obama realizes much the same thing, but also recognizes that it will take years for bureaucracies, new and old, to absorb their new powers under Health Care reform, financial regulatory reform, and his expansive readings of executive authority.

Either Obama realizes this, and knows that he can give the appearance of understanding the problem without really giving substantive ground, or he doesn’t really understand the problem.

The subhead on his oped reads, “If the FDA deems saccharin safe enough for coffee, then the EPA should not treat it as hazardous waste.”  Maybe we can get him to do the same thing with carbon dioxide.

If the FDA deems saccharin safe enough for coffee, then the EPA should not treat it as hazardous waste.

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The Quantum Theory of Government

Back in the early days of quantum theory, Sir William Bragg used to say that on Mondays, Wednesdays, and Fridays, physicists thought of the electron as a wave, and on Tuesdays, Thursdays, and Saturdays, as a particle.

The Obama Administration, and their Democrat counterparts here in the state, have adopted a similar theory of taxation.  First, it was the state Democrats insisting that a fee wasn’t a tax, except when it was.  Now, the Obama Administration, in response to Virginia’s lawsuit against Obamacare, has changed its tune about the penalty you will soon pay for not carrying health insurance.

Initially, they claimed it wasn’t a tax, in order to avoid rhetorically breaking the President’s promise not to raise taxes on anyone making less than $250,000 a year.  Now, in response to the lawsuit, which claims that the government can’t impose a penalty for not engaging in commerce, and that the IRS can’t be used to collect penalties unrelated to taxation, the Administration has decided that it’s a tax, after all.

Which will create difficulties of its own.  The Constitution limits the direct taxation authority of Congress pretty severely.  While the 16th Amendment permits income taxes, this isn’t an income tax.  And while it permits capitation taxes, those taxes have to be in proportion to a state’s population, which this also isn’t.

So we’re left with a situation where something is a tax on Monday, Wednesday, and Friday, a fee on Tuesday, Thursday, and Saturday, and a penalty on Sunday.

The resolution to the quantum paradox, most agree, is that the electron and other particles aren’t really particles or waves at all, but something else entirely that has features of each.  I think it’s pretty clear what’s what in this case, but no doubt the Democrats will soon be arguing that it’s neither a penalty nor a fee nor a tax, but something else altogether.

The one common denominator to all these definitions is that it means more money for them, and less for you.

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The Very Expensive “New Energy Economy”

There are times when one wonders whether or not the writers for the Denver Post actually read the Denver Post. Then, there are times when one wonders whether is would make any difference if the did.

On October 14, the Post carried an AP story noting that the new German government, a coalition between the Christian Democrats – Mark Steyn’s right of left of right of center party – and the Free Democrats, who actually permit themselves the luxury of promoting free markets now and again, would be cutting Germany’s legendary solar subsidies, which the country had maintained for about two decades. Apprently, subsidizing expensive energy doesn’t look so good during a recession, and Germany is willing to forego the expensive green jobs that such industry creates:

Investors expected Germany to cut back on solar subsidies this year as the recession sapped demand and tightened government budgets, said Benedict Pang, an analyst with Caris and Company in San Francisco.

“During the downturn, the wheels started to come off” in Germany, Pang said. “A lot of solar companies have weaned themselves off of that market.”

Germany has guaranteed renewable energy generators fixed payments for the power they produce to encourage the production of solar panels and several of the world’s leading producers of the technology are based here.

A week and a half later, Bloomberg reported that the Germans had done just that:

Chancellor Angela Merkel’s new junior partner in government, the pro-business Free Democrats, approved a four-year coalition program that points Germany toward tax cuts and a reprieve for nuclear energy….

Separately, the government will seek talks with solar-energy industry on possible “adjustments” to avoid “excessive subsidies,” according to the coalition draft.

So naturally, it was a source of much rejoicing when the German company, SMA, no longer able to make money on its home turf, shifted production to Colorado, bringing with it its prize of 300 jobs, at a cost of a mere $12,000/job to the Colorado taxpayer.

Now, that’s not as much as the colossal $240,000 per job – plus the added cost of the actual electricity – that Germany’s worked itself up to. And the so-called “green jobs” trap has been largely responsible for the depth and intractability of Spain’s contractiion during the global recession. Of course, they’re paying about $600,000 a job, so we’ve still got a ways to go to match that.

These jobs are incredibly expensive, as Colorado is about to find out, and apparently don’t survive the end of subsidies.

Let’s just hope that those interim committees take note of why Colorado beat out other US states:

[Colorado Office of Economic Development and International Trade’s Pete] Roskop said other states were throwing more money for incentives at the company, but Colorado had lower costs for items such as corporate taxes and worker’s compensation insurance.

Then, there are the times when one wonders whether some people ever read the business pages at all.

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Coast to Coast to Taxes

Ben DeGrow follows up on a John Fund piece in the Wall Street Journal last week, discussing a couple of ballot initiatives in Maine and Washington State.  The closely mirror our own Taxpayer Bill of Rights, which limits budget growth to inflation + population growth.  Ben sees these as almost more of a bellwether than the NY-23, and New Jersey & Virginia governor’s races.  The referenda, I-1033 in Washington and Ballot Question #4 in Maine, however, both appear to be going down to defeat, in large part because of massive spending by the opposition.

In Washington, opponents have dumped $3 million into the race in the last month, moving I-1033 from 13 points up to 12 points down in SurveyUSA polls.  This despite significant differences between Colorado’s Taxpayer Bill of Rights and I-1033, detailed by sponsor Tim Eyman:

Colorado’s TABOR is a constitutional amendment — it couldn’t be amended by the Legislature; I-1033, like I-601, is a law, providing the Legislature with flexibility to change it. TABOR encompassed every government – school districts, library districts, fire districts, ports, public utility districts, etc. I-1033 focuses only on the state, counties and cities. TABOR put a limit on every governmental account and every tax dollar received, including transportation funds, pension funds, capital budgets, workman’s compensation, unemployment insurance funds, federal funds, etc. I-1033, like I-601, only addresses the general fund, the account that state, counties, and cities have the most trouble showing fiscal discipline with. TABOR didn’t allow rainy day funds. I-1033, like I-601, gives ‘first bite’ of excess tax revenues to the rainy day fund. TABOR didn’t exclude federal funds; I-1033 explicitly does. TABOR prohibited governments from borrowing money except with voter approval; I-1033, like I-601, has nothing like that. TABOR required voter approval for any tax and fee increase by any government; I-1033, like I-601, doesn’t.

Despite all these difference, the SEIU, the education establishment, and other big-government groups still can’t swallow limits on government growth, and asking the people first before taking more of their money.  Has Washington passed the tipping point where the patronage groups have enough money to defeat any efforts to limit them?  According to the resident lefties, and the Seattle P-I, Eyman’s initiatives have tended to poll worse than they perform on election day.  Probably the Bradley effect.  So there’s still some hope the thing will pass.

Maine is another story.  There, as Ben points out, a similar prop failed a couple of years ago, and now they’re back again with another try.  Polling also has this one down, and for much the same reason.  The opponents have outspent supporters 10-1.

These two point out a reason that ballot initiatives are different from elections.  Ballot initiatives tend to be narrow, elections are about broad coalitions.  For that reason alone, ballot initiatives tend to attract more one-sided money.  So there’s a dual effect here.  More money on a narrower issue almost certainly means more volatility.

As a test of Obama’s staying power, I still like elections better than referendums.

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