Jon Mahaffey

Philadelphia City Council Makes Right Call: Rejects Soda Tax

Posted by Jon Mahaffey on Friday, June 17th, 2011, 4:27 PM PERMALINK

Yesterday, in a decision applauded by Americans for Tax Reform, the Philadelphia City Council rejected Mayor Michael A. Nutter’s 2-cents-per-ounce sugary-drinks tax proposal. The Council acted in a manner that would have benefited Philadelphia’s economy and taxpayer by voting down the soda tax increase. However before the close of business last night the Council also took a step backwards.

In a move that critics contend will ultimately hurt the Philadelphia economy, council members opted to raise property taxes for a second year in a row. The Council approved a tax increase that would raise property taxes for one year by 3.85 percent. Even before this increase, Philadelphians already paid higher property tax rates than home and business owners in 211 of the 240 townships and boroughs in Montgomery, Delaware, Bucks and Chester counties. This is the third property tax increase in the city since 2008.

Councilwoman Blondell Reynolds Brown quoted in the Philadelphia Inquirer said "all of us knew we had to do something. Soda fell flat.” The “something” Councilwoman Brown mentions is a tax increase that will reduce Philadelphians’ disposable income by $100 million in the coming year.

Grover Norquist, president of Americans for Tax Reform issued the following statement:

“While I applaud the rejection of the misguided and ill-advised soda tax, the Council still made a move that will ultimately serve as a drag on the local economy by opting to raise property taxes for a second year in a row.

“Councilwoman Brown and Superintendent Ackerman miss the mark when it comes to basic economic principles. Prominent economic advisers of all political stripes suggest higher taxes are bad for the economy. Even economist Mark Zandi, a Democratic economic adviser, recently expressed his concern with tax increases and stated that the economy is still too fragile for tax increases.

“Politicians in Washington, D.C. have already levied over $350 billion in net federal tax increases in just the last two years. It’s unconscionable that Philadelphia city officials, in this fragile economy, saw fit to pile on with more anti-growth tax increases at the state level.”

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SEC commits taxpayer to needless and possibly illegal $550 million real estate lease

Posted by Jon Mahaffey on Friday, June 17th, 2011, 11:18 AM PERMALINK

The leadership at the U.S. Securities Exchange Commission interpreted the Dodd-Frank financial-overhaul law last July to mean that the SEC would secure funding to spend money however the SEC saw fit. This included signing a 900,000 square foot lease with no Program of Requirements in three days for an elegant, downtown Washington DC office building.

Thankfully, the money to fund the 900,000 square foot lease was shot down in the Fiscal Year 2011 Budget that passed earlier this year. However, the SEC still jumped the gun back in July 2010 by signing the 900,000 square foot lease at the taxpayers expense to the tune of $550 million dollars in lease obligations.

Yesterday, a Congressional hearing conducted by the House Subcommittee on Economic Development, Public Buildings and Emergency Management severely scrutinized the $550 million lease. During the hearing, Subcommittee Chairman Rep. Jeff Denham (R-CA) stated that the “half-a-billion-dollar lease for space…goes far beyond mismanagement.”

The SEC’s mismanagement comes with significant legal and political consequences in light of the SEC Inspector General’s investigation into the SEC’s leasing practices.

The SEC IG found the following:

  • The 900,000 square foot lease in downtown Washington, DC was never needed due to existing vacant space at other SEC offices
  • $75 million of lease liabilities for vacant office space in New York
  • Inflated numbers of future SEC employees to justify its need for a 900,000 square foot building
  • Failure to follow government requirements of open competition for leasing office space
  • Possible violation of Anti-Deficiency Act which prohibits employees from entering into a contract before an appropriation is made.

One must ask- how can a federal agency regulate Wall Street when it clearly cannot keep its own house in order and who pulled the trigger on this unneeded office space?

Rep. Tim Walz (D-MN), essentially stated during the hearing that members of Congress expect the SEC to fail in implementing Dodd-Frank by calling the $550 million lease “stupid and illegal decision making” creating a “beach ball” for Republicans to hit at Dodd-Frank because the SEC “can’t do anything right”.

When the later question was posed by the subcommittee, no one was left holding the politically toxic beach ball. Sharon Sheehan – an SEC employee making six figures according to the U.S. Office of Personnel Management – who was dubbed by the SEC IG as one of the major players responsible for entering the lease, did not make an appearance and is still on the job.

However, Rep. Holmes Norton (D-DC), the top Democrat on the House subcommittee, made clear to SEC Chief Operating Office, Mr. Jeff Heslop, that the SEC employees responsible for the lease decisions should be disciplined. "The notion that no process has even begun even though the IG has issued a report is very are going to have your head handed to you by the appropriators”.

To expand on the “troubling” behavior at the SEC, it is hard to believe that SEC leasing officials would enter into a $550 million lease without the blessing of SEC Chairlady Mary Shapiro.

Save the Queen at Sheehan’s expense?

Well, if Chairlady Shapiro did not sign off on the lease, major restructuring within the SEC needs to take place as the SEC’s track record continues to grow as an inept agency which has come to represent an attitude of beauracratic entitlement. The full details surrounding this “deceitful” action (as stated by Rep. Nortron), will hopefully come to light in the near future. The next hearing on this matter should be quite interesting, since Rep. Denham will most likely issue subpoenas to Sheehan and Chairlady Schapiro.

The bottom line is that taxpayers cannot afford to be stiffed with another unwarranted, multi-million dollar lease obligation.  Americans have had to tighten their belts over the course of the past few years and its time the SEC lives within its means and use the vacant space that existed before it entered into a $550 million lease obligation.

To view hearing - Click Here

To read SEC IG report - Click Here




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More from Americans for Tax Reform

Business, Taxpayers Safe in Washington State After SB 5958 Was Thankfully Defeated

Posted by Jon Mahaffey on Friday, May 20th, 2011, 5:05 PM PERMALINK

By a 24-22 vote, Senate Bill 5958, a tax hike on rental cars struck out once again. 16 years ago, the tax was levied against rental cars in order to raise so-called “emergency funds” for the construction the Seattle Mariners Baseball stadium – yesterday Democrats in the state legislature tried to extend the tax beyond its sunset date by another 4 years.  

However, baseball, beer, and cracker jacks won’t be put on the backs of Washingtonians this go around – even though voters put the original tax hike to rest at the ballot box sixteen years ago – because legislators have come to their senses and realized voters are the ones calling the strikes. 

The 24 votes that stopped a job-killing tax hike represent 60 percent of residents in Washington who are not so Gung Ho about their hard earned money going towards a tax that ultimately hinders their economic future. (The term “Gung Ho”, originated from the Chinese government practice of supplying financial support during the emergence of Communist China).

Supporters argued that this tax would exclusively burden the modern day Lewis and Clark that decides to venture west to explore the Evergreen State and drop money into Washington cash registers…these folks obviously enjoyed spending a lot of time in the Mariners left field.

The last thing the taxpayers in Washington need is a tax hike when currently Washington State has a projected unemployment rate of 9.2%, that’s 320,400 residents without work. Furthermore, Washington is tied with Alabama and Colorado, ranking 33rd out of the 50 states in the number employed – raising taxes will not help them improve upon this number.  In the end this logic was thankfully recognized as a sham because it actually places multiple burdens on Washingtonians.

According to a National Business Travel Association study, a leading car rental company that began imposing a $4-per-day rental car tax experienced a well deserved snub from its customers. Key findings included the following results of the tax:

  • 9-percent reduction of car rental customers at locations where the tax was in effect reduced car rental demand among people living near taxed locations by as much as half
  • A reduction of between 69 and 86 percent in the number of days people rented cars from taxed locations.
  • States where the tax was levied drove customers across the border.

Most importantly, a study by the Global Business Travel Association shows that local customers paid more than 62 percent of this tax last year.

In 2010, taxpayers taxpayers across the nation ran out the elected officials that enjoyed spending time in left field when it came to understanding basic economic principles. If the 22 Washington state Senators that voted for the tax hike want to stay in the game, they need to wake up and take note - only reductions in taxation and spending will encourage economic growth and prosperity.

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