Hal Smith

Why Does DHS Pay Almost 100 Employees to Stay Home?

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Posted by Hal Smith on Tuesday, October 27th, 2015, 9:41 AM PERMALINK

The Department of Homeland Security has refused to disclose why it spent $1.8 million to keep 88 employees on paid leave for one year.

Senate Judiciary Chairman Charles Grassley pushed for clarification in a letter sent last Monday – prompting Homeland Security Secretary Jeh Johnson to provide the reason for an employee’s placement on paid leave. Specifically, a full explanation of why reassignment to other duties or another location was not an option, and why the employee was not placed on some form of unpaid leave.

 Chairman Grassley’s inquiry was the latest request for transparency after DHS reported that among the 88 employees placed on paid administrative leave, four were on administrative leave for approximately three years or more, two of whom continued to be on administrative leave at the time of DHS’ response. An additional 17 employees were reportedly on administrative leave for approximately two years or more, including five who remained in this status at the time of DHS’ response

These 88 employees were also across the department’s components, suggesting systemic misuse of paid administrative leave.

And while the DHS website does have nebulous categories for paid leave, it’s not the only federal agency investigated for arbitrarily paying people to stay home. 

The investigation into paid leave by federal agencies came to the forefront after the Government Accountability Office (GAO) released a federal audit last October. The GAO report examined data from fiscal years 2011 to 2013 from more than 100 federal agencies – finding that salary estimates for paid administrative leave for fiscal years 2011–2013 totaled nearly $3.1 billion. 

Salary estimates for the 263 employees who took between 1 – 3 years totaled $31 million. At least 53,000 workers were on paid administrative leave during the period analyzed and around 4,000 stayed home with full salary for three months to a year, according to the probe. 

As Chairman Grassley stated, this flippant use of paid leave results in “employees getting paid to stay home, sometimes for more than a year, while management keeps them in limbo. This is detrimental to taxpayers and good government.” 

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Arizona Should Shed the Income Tax - Three Reasons

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Posted by Hal Smith on Friday, October 16th, 2015, 10:24 AM PERMALINK

1. Removing the Income Tax Would Make Arizona More Competitive

The nation is currently undergoing one of the largest waves ever of interstate migration—taxpayers are fleeing high tax states for states with low taxes. The Arizona Free Enterprise Club recently found that the nine zero-income-tax states gained an average of 3.25 percent of their 2010 population from domestic in-migration over the last decade, while the highest-income-tax states lost an average of 2.05 percent of their population during the same period. Although Arizona ranks as one of the highest beneficiaries of wealth and migration due to its increasingly friendly tax climate, it would increase its national competitiveness if it joined the leaders of job creation and population growth, Florida and Texas, by eliminating income taxes altogether. 

2. Arizona is in the Best Possible Position to Remove the Income Tax

The way consumption vs. income taxes are structured in Arizona makes it possible to eradicate income taxes. The Tax Foundation highlights that Arizona has a 5.6 percent sales tax rate, below the national average, and boasts the 13th lowest individual income tax and the 10th lowest state and local income tax in the nation. According to an ASU study spearheaded by former senior economist Stephen Slivinski, by shifting to a greater emphasis on consumption taxes, Arizona can eliminate personal income tax in six to eight years, without necessarily raising consumption tax rates or widening the sales-tax base. This can occur if lawmakers keep general-fund growth to no more than 2.3 percent yearly and by assuming overall tax revenues grow close to their long-term average.

3. Eliminating the Income Tax Provides Huge Potential for Growth

Florida and Texas are currently experiencing a massive influx of taxpayers and small businesses. The reason: low taxes and no income taxes. These states’ competitive tax code has not only attracted individual taxpayers its business friendly tax climate has also persuaded businesses to set up shop in their growth-oriented environment.

A report by the Heritage Foundation demonstrated that the jobs growth rate was more than double in zero-income-tax states than in high-income tax states when weighted equally.  The fact is business relocation to low-tax states is happening routinely and is accelerating. Arizona already has experienced strong trends in population growth, if it establishes a growth-oriented tax structure, it will be able to unleash its full economic potential.

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Standing up to Bullies: Pennsylvania Lawmakers look to California for Help

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Posted by Hal Smith on Tuesday, October 6th, 2015, 4:53 PM PERMALINK

Berated with calls for billions of dollars in tax increases, cajoled by Governor Jerry Brown and pressured by Democratic colleagues, Republicans in the California legislature stood strong last month and prevented Democrats from passing any of the more than $20 billion in higher taxes that were proposed.

After approving a historically high budget just months ago, Gov. Brown and legislative Democrats argued that California needed higher car and gas taxes to address transportation needs, citing $59 billion in deferred roadway maintenance, and an estimate that 87 percent of county roads have an average pavement rating of “at risk” or “poor.” 

Governor Jerry Brown had proposed a $3 billion tax increase through an annual $65 fee to drive on highways, as well as a gas and diesel tax hike of 6 cents and 11 cents per gallon, respectively. Earlier in the special session, democratic lawmakers had demanded an even greater tax hike for road repairs. Legislative Democrats called for raising $4.3 billion annually through a 12 cent gas tax increase and an annual $100 fee on zero-emission vehicles.

The ability of California Republicans to remain unified is the only thing that saved California taxpayers from another massive tax hike. Faced with a similar situation in the Keystone State, Republicans in the Pennsylvania legislature have much to learn from California Republicans about the importance of sticking together. 

Pennsylvania’s first term Governor Tom Wolf, perhaps the nation’s most liberal governor, refuses to sign a budget unless the tax hikes he has proposed are included. Gov. Wolf is insisting on a massive tax hike in a state where the tax burden is already far too high. According to the Tax Foundation, Pennsylvania’s state and local income tax collections per person are 14th highest nationally, and Pennsylvania’s tax burden is 10th highest in the nation.

As in California, the only thing standing in the way of a giant tax hike are Republican legislators. California Republicans, by remaining unified as a caucus, did what voters put them in office to do and stopped a liberal governor hell bent on raising taxes. For the sake of Pennsylvania taxpayers, Republicans in Harrisburg should do likewise. 

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Top Thug: Teamsters Audition for Villain Role – Get Callback from Attorney General

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Posted by Hal Smith on Friday, October 2nd, 2015, 3:25 PM PERMALINK

Five Boston Teamsters from a local union, notorious for criminal activity, have now been indicted for extortion after terrorizing the cast and crew of the popular Bravo show, Top Chef, at a restaurant in Milton, Massachusetts last year. Arrested and charged by the U.S. Attorney’s office for violent and threatening behavior, they had attempted to shut down the set until the show used union drivers.  

Teamsters Local 25 is a Charleston-based union of 11,000 members that has been active for over a hundred years – and despite stating on its website that it consists of “all colors and creeds” which are “not looking for trouble”– members of the Teamsters had reportedly shouted racist, sexist, and homophobic threats at host, Padma Lakshmi, and her crew eventually becoming so disruptive that the crew not only had to call the police for protection, but the arriving officer was forced to call for additional backup.

 John King, Milton’s Deputy Police Chief said the Teamsters were “threatening, heckling and harassing,” while officers “repeatedly tried to de-escalate the situation.” A group of Teamsters even slashed the tires of 14 different cars owned by crew members while the police were preoccupied with others who had started harassing the crew in the show’s hospitality tent

In response to the violent threats, Joseph R. Bonavolonta, Acting Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division was quoted in Deadline as saying:

“The strong-arm tactics the FBI has seen in this case are egregious and our investigation is far from over. Today’s arrests should send a message to those who think they can get away with manipulating the system that they better think twice.”

The published indictment even reveals that the Top Chef show had initially moved their set out of Boston and into nearby Milton in response to an unnamed official from Mayor Walsh’s administration calling the two Boston venues and stating that if they hosted the show, the union would picket the sight. And even though the show was forced to relocate at the request of their hotel, which did not want to be associated with a picket, fifty members of Local 25 were additionally sent to Milton to continue this harassment. 

The indictment also concludes by stating that it was directly “part of the conspiracy” to use this show of force and violence in order to “obtain wages for such imposed, unwanted, and unnecessary and superfluous services for themselves and other third parties.” 

This is not the first time that Hollywood has been threatened by the Charlestown-based Teamsters Local 25 either. Following the 1978 filming in Boston of “The Brink’s Job,” two members of the Teamsters were charged on racketeering charges for forcing the movie company to put fictitious workers on their payrolls and mail the checks to a Teamsters Local 25 trustee and general organizer’s home

However, what Attorney General Carmen Ortiz had called “old school thug tactics,” has applied to other activities by Local 25, not just bullying film crews.

Last year two members of Boston-based Teamsters Local 82, which has since merged into Local 25, were also convicted of racketeering for rigging elections and intimidating business owners.

In 2013 Teamsters 25 donated $14,999 to Walsh’s mayoral campaign, $1,500 to former state representative Eugene O’Flaherty, a top advisor to Walsh at City Hall, and $1,500 to Felix G. Arroyo, Walsh’s chief of health and human services. Additionally, in the last year the union has given each of Boston’s 13 City Council members a $500 donation

Ten years earlier, the heralded and outspoken leader for reform in Local 25, George Cashman, was sentenced for 34 months in prison for extorting a $20,000 kickback from a health care company and falsifying work orders so that 19 ineligible truck drivers — including a Charlestown gangster — could collect union medical benefits.

Even the current president of Local 25, Sean M. O’Brien, acknowledge in a 2011 Globe interview that the union had a “sordid past.”

With such a checkered past in criminal behavior, it is surprising that members of Local 25 have decided to continue their trend of extortion. However, when given an opportunity to shake down Hollywood – it is apparent that these Boston-based thugs couldn’t resist the urge. 

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Smoke Clears on Real Reason for Chicago E-Cig Tax

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Posted by Hal Smith on Wednesday, September 16th, 2015, 1:59 PM PERMALINK

After recently cementing its status as the highest-taxed cigarette city in the United States, lawmakers in Chicago are now targeting products used as a healthier alternative to traditional tobacco. Reeling from declining tobacco revenues and faced with a massive budget hole as a result of overspending and lack of local reform, some Democrats have decided to go after e-cigarettes with a new massive tax hike.

For those don’t simply purchase cigarettes in other jurisdictions, many tobacco consumers in Chicago have switched to the more affordable and healthy nicotine-delivering alternative: electronic cigarettes and vaporizers. However, this option may also become too expensive as one tax proposal will attempt to tax tobacco-free technology products at the same level of traditional combustible tobacco.

Alderman Proco “Joe” Moreno wants to bring a plan to the City Council to institute an excise tax on electronic smoking: $1.25 for each e-cigarette and 25 cents per mL of liquid to fill the cartridge. Misconstruing this effort as anything other than trying to compensate for the city’s unwillingness to reform government, he’s neglected to even attempt to reform the city’s pension woes.

Moreno’s proposal would do very little to fill the budget hole – it is projected to bring in less than $1 million, compared to the hundreds of millions of dollars needed to balance the budget and make public employee pension payments.

Instead of celebrating historic declines in adult and teen smoking rates in Chicago, Democrats have scrambled to find alternative revenues to compensate for a declining tax base. Instead of pretending the effort to raise taxes on e-cigarettes were about “public health,” lawmakers should admit that this is about nothing more than tax dollars.

Chicago lawmakers should not be looking to excise taxes on volatile new industries for revenue sources. These legislators should be focusing their energy on reforming citywide spending, most importantly the pension payouts.

Public health officials, agencies, and studies are concluding that tobacco-free e-cigarettes are at least 95% less harmful as traditional tobacco. Effort to tax them the same, like Alderman Moreno’s are misguided and represent a slap in the face to decades of efforts to curb smoking through cessation and harm reduction methods.  

Alabama Governor Robert Bentley Proposes More Tax Hikes in Second Special Session

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Posted by Hal Smith on Wednesday, September 9th, 2015, 2:25 PM PERMALINK

With just three weeks until the start of the new fiscal year, Alabama legislators are scrambling to address the $200 million General Fund shortfall. Governor Bentley is hoping the third time's the charm as he called for another special session - even though the first two budget discussions ended with a clear message: legislators on both sides of the aisle do not want the massive tax hike

Governor Bentley, despite promising multiple times to not raise taxes during both of his gubernatorial campaigns and signing the Taxpayer Protection Pledge, has proposed $260 million in tax increases. 

In order to raise revenue, Governor Bentley's main target is tobacco, with a 25-cent-per-pack cigarette tax, and new taxes on vapes and e-cigs. Additionally, Bentley has turned to raising the car rental tax from 1.5 to 2 percent and the car title fee from $15 to $28. Governor Bentley had also explicitly stated that he will be looking to raise the business privilege tax and eliminate the state deduction for FICA taxes. The Federal Insurance Contribution Act, which split the payroll tax evenly between employees and employers, was particularly beneficial for small business owners – and now is under threat as Governor Bentley is looking to eliminate the deduction. Finally, as the Cotton State's Governor looks for additional revenue, a shake down of nursing homes was proposed with a tax increase that is supposed to generate $8 million.

However, Alabama does not have a revenue problem, it has a spending problem. Instead of increasing taxes, lawmakers would be prudent to cut costs and explore new sources of revenue. State spending in Alabama has already far exceeded population growth and inflation and Bentley needs to take the lead the in reducing runaway spending.

Just last year, Governor Bentley promised "More Jobs, Less Government, No New Taxes," and had previously assured voters that he understood "when you hurt businesses and you tax business, you're going to lose jobs."

Governor Bentley clearly broke a promise he made to Alabama taxpayers that he would not attempt to raise taxes. Additionally, his cigarette tax largely targets lower-income households while his Nursing Home Bed Tax clearly exploits retirement income. It is apparent that Bentley has no problem breaking promises, and once those promises are broken, no qualms about imposing taxes on those who should be taxed the least.

Lawmakers should focus on budget reform and spending restraint instead of increasing the net tax burden on those who can least afford it.

Why Gov. Wolf is Holding Pennsylvania Budget Hostage

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Posted by Hal Smith on Monday, August 31st, 2015, 11:44 AM PERMALINK

Nearly two months into Pennsylvania’s budget stalemate, Governor Tom Wolf (D) is still holding the state budget hostage while he demands more spending and billions in higher taxes.

Gov. Wolf vetoed the tax hike-free budget approved by the legislature in July and continues to stick by his own proposal which calls for $4 billion in higher taxes and nearly $5 billion in new spending. The week before last, Gov. Wolf offered a phony pension reform proposal structured to protect fat payouts. In response Senate Majority leader Jake Corman (R-Centre), referred to Wolf’s offer as “an alternative proposal, one that falls far, far short of anything that we would accept.”

Since his veto, no real progress has been made to pass the budget. Gov. Wolf and fellow democrats have refused to budge on education funding and the natural gas extraction tax. Last Tuesday, in response to Republican’s impasse-breaking offer which included a $400 million dollar increase in basic education funding, Wolf simply canceled the meeting. He explained his avoidance as a result of Republicans not discussing his proposed severance tax on natural gas.

It is clear through the 0-193 rejection of Gov. Wolf’s tax hike-laden budget that, despite bluster from Wolf’s fellow Democrats, there is simply no support in the legislature for what would be the largest tax hike in the nation. Given the apparent stalemate, Republican legislators have been looking at the possibility of overriding Gov. Wolf’s budget veto. Speaker Mike Turzai, (R-Allegheny), has already stated that “we have to look at overriding if we're not going to have a substantive discussion.”

When Speaker Turzai argues Pennsylvanians already pay enough taxes and that the problem is on the spending side of the ledger, the facts are on his side. Pennsylvania already has the 10th highest state and local tax burden in the nation. In the decade from 1989 to 2009, had Keystone State lawmakers kept spending in line with inflation and population growth, they would’ve spent $302 billion less than they did. That’s a significant amount of taxpayer dollars that could’ve been put in a rainy day fund, returned to taxpayers, or both.

Pennsylvanians already contend with some of the highest taxes in the country and have been hit with over 20 federal tax increases since President Obama took office. The last thing they need are higher taxes imposed by Gov. Wolf. 

Another Reason for Tax Reform: Etsy Corp

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Posted by Hal Smith on Monday, August 24th, 2015, 12:33 PM PERMALINK

Yet another American start-up has packed up and moved out of the country. This time, Brooklyn based Etsy was forced to establish a subsidiary in Ireland as result of a corporate tax rate that continues to drive entrepreneurs and businesses overseas.

In 2014, Etsy recorded 5 million members, including 1.4 million active sellers and 19.8 million active buyers. With such a large presence, Etsy sellers generated gross merchandise sales of $1.93 billion globally.

But Etsy it taking the revenues elsewhere. It made the logical and legal decision to move under the 12.5% corporate tax rates in Ireland. The United States undercuts any competitive business at a rate of 39%.

While the corporate tax rate is hard enough, the structure of the tax code ensures that if companies don’t move overseas they will choose to go in debt rather than make a profitable business.

Corporations are heavily pressured to choose debt financing over equity as a result of a tax structure that ensures that equity profits and the required returns to investors are both taxed. Therefore, startups, which struggle to find available credit and simply cannot get suitable bank loans are forced into this double tax.

According to the Tax Foundation, the U.S. has the highest corporate income tax rate amongst the 34 members of the Organization for Economic Development (OECD) and the third highest in the world.

The average corporate tax rate for these OECD countries is 25% -- a little over half what the United States draws from struggling startups.  

Once again the antiquated, overly complicated, and anti-competitive corporate tax code of the United States has forced another start-up overseas. Forcing entrepreneurs to other countries is the last thing this recovering economy needs, but with such inefficient and debilitating economic barriers like double taxation, who can blame them for leaving?

There needs to be a corporate tax rate of 20% in order to have the fair competition that fosters innovation and American entrepreneurship.


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The Grover Norquist Show: Hillary’s Proposals to Increase Taxes

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Posted by Hal Smith on Thursday, August 13th, 2015, 4:06 PM PERMALINK

In the latest edition of the Grover Norquist show, ATR president Grover Norquist discusses Hillary’s proposed $350 Billion student loan debt tax hike and her plan to create the most complicated capital gains tax in US history.

In the podcast, Norquist illuminates how the $350 billion tax hike is simply another Alternative Minimum Tax (AMT) for millions of American families. Norquist also discusses Hillary’s plan to create a more complex capital gains tax, her questionable history with the death tax, and her opposition to any tax cuts. Throughout the discussion, it is clear that Hillary has no problem raising taxes for all Americans, except for herself. See the podcast here.


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