Patrick M. Gleason

John Kerry Flat Out Lies on Meet the Press


Posted by Patrick M. Gleason on Monday, November 21st, 2011, 10:25 AM PERMALINK

On the Sunday talk shows yesterday, members of Congress predictably began pointing fingers at who was to blame for the supercommittee’s inability to find $1.2 trillion in spending cuts over the next decade.

On Meet the Press, Arizona’s Senator Jon Kyl, a Republican member of the supercommittee remarked:

“When our democratic friends are unable to cut even $1 in spending without saying it has to be accompanied by tax increases, I think that tells you all you need to know about our runaway spending.”

Senator John Kerry, Kyl's Democratic counterpart on the supercommittee, tried to rebut that assertion from the senator from Arizona by claiming that Democrats cut $550 billion from Medicare in Obamacare without raising taxes.

Really, John Kerry? Obamacare is what you’re going to point to as your evidence that Democrats can cut spending without raising taxes? Wow, OK, where to start.

First of all, not only did the 2010 health care bill entail higher taxes, Obamacare included 21 different tax increases, totalling over $500 billion in higher taxes. This despite the fact that just last December President Obama remarked that the last thing lawmakers should want to do in this economy is raise taxes.

So no, Senator Kerry, Obamacare is not a good example to use if you’re trying to make the case that Democrats can cut spending without demanding higher taxes. It’s just too bad Meet the Press moderator David Gregory failed to point out that Kerry’s statement was grossly inaccurate, nor did anyone on Morning Joe feel the need to correct Kerry’s factually incorrect statement when re-airing the clip this morning.

If you really want to know why the supercommittee was unable to come to an agreement, American Enterprise Institute’s Jim Pethokoukis has a great post up this morning explaining how the Democrats' tax hike obsession killed the prospects for any deal:

"It’s like the 1990s never happened and the 1970s never stopped happening for the Washington Obamacrats. The U.S. economy faces two screamingly obvious problems: historically slow growth and historically high government spending leading to massive budget deficits. In this way, American is already frighteningly like Greece and Italy.

Yet Democrats used the SuperCommittee to push a trillion-dollar tax hike and block fundamental entitlement reform. As one GOP aide told Politico, “If they were willing to go a little further on entitlements, we’d see what we can do on revenues. That was the way it would have to work. What we found was, they needed a trillion-plus in revenues, and weren’t willing to do anywhere near that on entitlements.’”

To read Pethokoukis’s piece in its entirety, which I recommend, click here.

For another good read on what really happened with the supercommittee, check out this morning’s post from Cato’s Dan Mitchell, which explains how claims that Democrats were offering significant spending cuts in exchange for higher taxes is a complete lie and the sequester that everyone in the media is attributing “drastic cuts” to will actually yield at $2 trillion expansion of the federal government over the next decade.

Unfortunately for Americans searching for factual information, Sen. Kerry is not the only high ranking government official to lie about the tax hikes in Obamacare. Earlier this year, Austin Goolsbee, President Obama’s former chairman of the White House Council of Economic Advisors, in testimony before the House Ways & Means Committee, also lied about the fact that Obamacare imposes more than $500 billion in higher taxes.

As John Adams famously said, “facts are stubborn things.” Apparently there are not too stubborn for the Sunday talk show circuit, or the White House for that matter.

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Pennsylvania House Bill 1950: It's a tax


Posted by Patrick M. Gleason on Thursday, November 17th, 2011, 12:17 PM PERMALINK

Moments ago, ATR president Grover Norquist sent the following letter to all members of the Pennsylvania House:

Dear Members of the Pennsylvania General Assembly, 

I understand that Gov. Corbett’s staff has responded to the letter that Americans for Tax Reform sent to you on Monday expressing ATR’s opposition to HB 1950. Their response simply entails a list of reasons of why they think this tax is a good idea. However, that doesn’t change the fact that HB 1950 is a tax.

Just look at where the money goes and it is easy to see that it does not pass the laugh test when it comes to trying to claim this as a fee. Regarding the revenue that HB 1950 would direct to the commonwealth, it goes to increasing revenue for first responder training, transportation infrastructure, health care provider training, and “citizen outreach and education.” Other businesses cause wear and tear on roads and bridges, yet HB 1950 singles out one industry to pay for upkeep. Other industries and the broader populace also benefit from increased funding for health care providers and first responders.

That’s just the commonwealth’s share of the revenue. The money that stays at the local level would be used for things such as “social services, including domestic relations, drug and alcohol treatment, job training and counseling.” So this is needed because of the economic boom in western Pennsylvania? Utilization of resources in the Marcellus Shale does have an impact, which has been the creation of tens of thousands of high paying jobs, which equates to LESS demand for the aforementioned services.

The ability to utilize Marcellus Shale resources is one of the best things to happen to Pennsylvania in decades. In the last five years it has generated over one billion dollars in state taxes and more than $7 billion in taxes, royalties, lease payments, and fees throughout the commonwealth. ATR is active in 50 state capitals. Trust me, lawmakers in the other 49 would love to be coping with such impacts.

This silly part of all this is the amount of money that is being talked about. It is estimated that HB 1950 could generate $120 million in the first year. While only 25 percent of that would go to Harrisburg, the total sum still represents less than two tenths of one percent of the state budget. If the additional services that this bill would fund are a priority, make it one. Budgeting is all about priorities. Those who say government needs to raise additional revenue on top of what is already being taken in are actually admitting it is their last priority.

The Commonwealth Foundation recently suggested that “elected officials should consider whether the current tax and fee structures need to be revised to cover any uncompensated costs of government. For example, is it appropriate to adjust local hotel and emergency services taxes to address large numbers of seasonal workers? Or are there other fee mechanisms that can be more directly tied to government services being provided to gas drillers?” I couldn’t agree more. Let’s take such considerations into account and make sure we get this right as opposed to just “having something.” Such considerations should also keep in mind that Pennsylvania already has the 10th highest state and local tax burden in the country and the nation’s second highest corporate income tax.

I understand that the regulatory side of this bill is positive. Great. Let’s separate those aspects out into a separate bill.

Again, ATR applauds Gov. Corbett for moving the ball in the right direction on this issue and for restoring fiscal sanity in Pennsylvania after eight years of tax and spend policies under Ed Rendell. Again, taking the time to get this right is better than simply “doing something.” If you have any questions please contact ATR’s Director of State Affairs, Patrick Gleason, at 202-785-0266 or pgleason@atr.org.

 

Onward,

Grover G. Norquist

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Pennsylvania Gov. Tom Corbett Continues to Clean up Ed Rendell's Mess


Posted by Patrick M. Gleason on Thursday, October 27th, 2011, 6:13 PM PERMALINK

How was your summer? Did you have a strong finish to your third quarter at work?

Well if you’re like Tim Costa, you saved your state millions of dollars. Costa, the executive deputy secretary at the Pennsylvania Department of Public Welfare, has purged over 113,000 cases from Pennsylvania Medicaid rolls since July, saving the Keystone State over $25 million in the process.

According to today’s Pittsburgh Tribune-Review, Costa “told House Republican lawmakers that officials examined cases over a three-month period and found thousands of Medicaid cases that should have been closed under existing state laws. He contended that previous administrators failed to consistently monitor eligibility and enforce regulations.”

It is believed that the Dept. of Public Welfare can save over a hundred million by cleaning up Medicaid rolls when it is all said and done.  It’s both refreshing and good news for Pennsylvania taxpayers that the folks in Gov. Corbett’s administration are rolling up their sleeves, cracking open the books, and cleaning up the mess left over by eight years of Ed Rendell. 

Ed Rendell’s tenure as governor is a perfect example of how raising taxes is what politicians do instead of prioritizing spending and imposing necessary reforms. Rendell was too busy pushing for perennial tax increases, funneling cash to corrupt mass transit systems, and burning countless taxpayer dollars on things such as shrines to fellow tax-and-spend Pennsylvania politicians like Arlen Specter and Jack Murtha.

The good news is that there is new management in Harrisburg and Gov. Corbett has tasked capable people like Tim Costa to dig in and clean of the mess left by Rendell. The work being done in Pennsylvania’s Dept. of Public Welfare is a model for other states,  and the federal government.

Indeed there is a thing or two the White House could learn from the Corbett administration. Despite Obama’s promise to comb through the budget “line by line” and identify savings during the ’08 campaign, annual federal spending has gone from $2.9 trillion to $3.8 trillion under the Obama administration. As I noted in the Philadelphia Inquirer following the completion of Pennsylvania’s current budget, Corbett’s inaugural spending plan represents a three percent year over year reduction in spending, something that hasn’t happened in Pennsylvania in decades. The thing is, when politicians like Rendell and Obama talk about “devastating spending cuts,” they are really talking about increasing spending less than they would like, not real cuts like those implemented this year by governors like Tom Corbett and Rick Perry.

While the White House just talks the talk on fiscal responsibility and good governance in taxpayer-funded campaign style events around the country, the Corbett administration is quietly walking the walk in Pennsylvania.

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Maryland's Martin O'Malley wants to be the spokesman for Reid's millionaire surtax, Really!?!


Posted by Patrick M. Gleason on Friday, October 21st, 2011, 2:29 PM PERMALINK

For those in need of a good chuckle, Americans for Tax Reform recommends checking out the Democratic Governors’ Association’s twitter feed. The latest gem came this afternoon, when the DGA sent out a tweet touting Maryland Gov. Martin O’Malley’s denunciation, during an appearance on Fox News this morning, of Republican opposition to Harry Reid’s millionaire surtax in the U.S. Senate.

O’Malley began by referring to the current economic doldrums as “the Bush recession,” despite the fact that President Obama is in his third year in office. The good news is that the electorate isn’t buying such nonsense anymore. A new Gallup poll released this week found that, for the first time ever, a majority of Americans now blame Obama for the current economy and not Bush.

The funny thing about O’Malley's critique of Republican opposition to a tax hike on high earners is who it is coming from. O’Malley, better than anyone, should be familiar with the unintended consequences and folly of raising taxes on higher earners.

In 2008, to address a state budget deficit brought about by Maryland’s structural overspending problem, Gov. O’Malley championed and signed into law a new millionaire income tax bracket, raising the rate to 6.25%. A May 2009 Wall Street Journal editorial described the result of O’Malley’s tax increase one year later:

“One year later, nobody's grinning. One-third of the millionaires have disappeared from Maryland tax rolls. In 2008 roughly 3,000 million-dollar income tax returns were filed by the end of April. This year there were 2,000, which the state comptroller's office concedes is a 'substantial decline.' On those missing returns, the government collects 6.25% of nothing. Instead of the state coffers gaining the extra $106 million the politicians predicted, millionaires paid $100 million less in taxes than they did last year -- even at higher rates.

…All of this means that the burden of paying for bloated government in Annapolis will fall on the middle class. Thanks to the futility of soaking the rich, these working families will now pay Mr. O'Malley's "fair share.”

The bad news is that O’Malley hasn’t learned from his own experience and is now a cheerleader for the same misguided tax increase at the federal level. The good news for everyone else is that no lawmaker is a total failure, some just serve as bad examples. Clearly, Senator Mitch McConnell and his entire caucus, along with some Senate Democrats, have learned from Gov. O’Malley’s bad example.

Going back to the DGA’s belief that Gov. O’Malley is a good spokesman for Harry Reid’s tax hike, all we have to say is, really!?!

For those in need of a source of non-stop hilarity, I encourage you to follow @DemGovs today.

For more information on why Harry Reid's millionaires' surtax is bad for the economy and will kill jobs, click here.

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Even a 10 to 1 Deal Should be a Non-Starter for Republicans


Posted by Patrick M. Gleason on Friday, October 21st, 2011, 8:56 AM PERMALINK

In the New York Times earlier this month, George Mason economics professor Tyler Cowen was critical of the fact that all Republican presidential candidates stated that they would refuse a debt reduction deal that entailed $10 dollars in spending cuts, in exchange for every dollar of higher taxes.

Despite Cowen’s opinion, real world experience shows the judgment of the GOP candidates to be correct on this matter. ATR’s Ryan Ellis articulated it best in his initial response to Cowen:

Would a grand bargain with $10 in promised spending cuts for $1 in tax hikes be a good deal for conservatives?  No.  We have been through this before.  In 1982, President Reagan was promised $3 in spending cuts for every $1 in tax hikes.  In 1990, President George H.W. Bush was promised $2 in spending cuts for every $1 in tax hikes.  In each case, all the tax hikes went through, since that's a matter of a single, affirmative tax law change.  The spending cuts never materialized.  It doesn't matter how unbalanced the promised ratio is.  The first number in the ratio always has been and always will be a mirage.

Despite repeatedly pointing out that when higher taxes are on the table, lawmakers never implement necessary spending restraint, politicians, pundits, and some policy wonks still contemplate such an illusory deal. MSNBC’s Morning Joe raises the prospect of such a grand bargain on an almost daily basis. The consensus among MJ panelists, which tilts towards that of folks like Donnie Deutsch, who proclaims he would feel “privileged to pay more taxes,” is that Republicans are insane for not taking such a deal and are being unreasonable. Just this week ATR president Grover Norquist went on Morning Joe to remind viewers why such grand bargains have not worked out well for taxpayers – click here for the clip.

Historical experience aside, it was the Wall Street Journal’s James Taranto, who earlier this year best illustrated with the following story why Republicans would be foolish to entertain a deal that includes even just one cent in tax increases for every hundred dollars in spending cuts:

A man goes into a bar. Sees an attractive woman and asks,

"Would you sleep with me for a million dollars?"

After only a slight hesitation, "sure."  

"Well, how about ten dollars?"

"What kind of woman do you think I am?!?"

"We've already established that. Now we're haggling over price."

 

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Clearing Up a Few Falsehoods in Today's Patriot-News


Posted by Patrick M. Gleason on Monday, October 10th, 2011, 4:12 PM PERMALINK

Reporter Don Gilliland has an article in today’s Patriot-News that attempts to make the case that some Pennsylvania legislators who have signed the Taxpayer Protection Pledge didn’t understand it and/or have disavowed it. However, Gilliland’s piece is based on a false premise and is riddled with statements from lawmakers that are either misinformed or misleading.

According to Gilliland, some legislators told him that “they were never provided an explanation that by signing they were committing themselves for as long as they held the office.”

Cited in the story is serial Pledge breaker Rep. Camille “Bud” George, who was quoted as saying: “I — as I’m sure many others — believed that we were signing the pledge for the year and budget then in question,” George said. “It is patently ridiculous to think that a responsible lawmaker would sign a pledge that, I’m now led to believe, was meant to last for eternity.”

So George thinks lawmakers should only be bound to the Pledge for one budget or one term. This is the equivalent of a candidate thinking it makes perfect sense to run for office telling voters that he or she is pro-life and that no one will mind if they support a pro-abortion agenda after their first two years in office. Also, the Pledge is not for “eternity,” as Rep. George mistakenly claims. In fact, I spoke to Gilliland while he was working on this story and informed him that ATR sends a list of frequently asked questions about the Pledge to all candidates during every election cycle that makes clear that their commitment to constituents “to oppose and vote against any and all efforts to raise taxes” is effective for the duration of the office for which they signed. For whatever reason, Gilliland chose not to include this information in his story. A copy of that FAQ sheet can be found here. Again, ATR sends this to every challenger and incumbent in all 7,000 plus state legislative districts across the nation every election cycle.

The false premise that Gilliland’s piece is based on is that the Taxpayer Protection Pledge is a promise to ATR or Grover Norquist. If that were the case then the Pledge would be a silly and meaningless document, but the fact is that the Pledge is a commitment that lawmakers make to their voters and constituents, not any one person or organization. A quick glance at the simple language of the Pledge makes this clear. In light of the hundreds of billions of dollars in higher federal taxes that have come out of Washington, D.C. during the Obama administration, it’s understandable that Gov. Corbett, along with 12 other sitting governors and over 1,260 state legislators, find it economically prudent to rule out further raising taxes at the state level. Such a commitment is even more understandable in Pennsylvania, home of the 10th highest state and local tax burden in the nation.

One of the most entertaining passages in the article is from Rep. Tom Creighton, who claims he has no recollection of signing the Pledge and is quoted as saying “I’m a no-tax guy, but occasionally, you have to raise taxes. There are times when taxes are needed.”

Shorter Creighton: I’m opposed to raising taxes…until I’m not. How’s that for straight talk from a politician.

Regarding Creighton’s denial that he signed the Taxpayer Protection Pledge, the fact is that Creighton signed the Pledge, a commitment to his constituents that they probably appreciate, on April 3rd of just last year and his signing was witnessed by a family member. A copy of Creighton’s signed Pledge, which has a copy of the FAQ sheet on the back side, can be found here. I would’ve been happy to provide this information and proof of signing to Gilliland to make his piece more informed, but he never asked about it or mentioned Creighton's denial.

Lastly the article inaccurately notes that “Corbett’s impact-fee proposal has received Norquist’s nod of approval.” Actually, this is not ATR’s position, because the fact is, there is no legislation for ATR to take a position on. Gov. Corbett’s impact fee proposal is merely an outline to guide General Assembly members who will be crafting the legislation. What ATR has said about Corbett’s impact fee outline is that it is a tremendous step in the right direction away from the state severance tax that Ed Rendell sought during his final year in office, as well as the impact “fee” proposed by Sen. Scarnati earlier this year, which was really an extraction tax, not a fee.

ATR supports the guiding principles and improvements to Gov. Corbett’s impact fee outline that have been suggested by the Commonwealth Foundation. Additionally, any impact fee legislation should include a strong burden of proof provision to ensure that counties and municipalities are only assessing fees on drillers in order to pay for the uncompensated costs to remediate documented infrastructural or environmental impacts.

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Memo to WaPo's Eugene Robinson: It's the Baseline And Not the Waistline that Voters Care About


Posted by Patrick M. Gleason on Tuesday, October 4th, 2011, 9:33 AM PERMALINK

The media has been consumed for the past week with speculation over whether New Jersey Gov. Chris Christie will jump into the presidential race. The Washington Post's Eugene Robinson, apparently having trouble coming up with anything of value to write about, penned a laugable column in last Friday's Washington Post alleging that  Christie's weight made him unfit for the Oval Office (Flashback: remember when calling Obama skinny was considered racist by folks at Slate). As ATR's Patrick Gleason recently responded in the Daily Caller:

If the best Obama supporters can come up with against Chris Christie is “bu bu but, he’s fat,” then White House staff should begin circulating their resumes if Christie enters the race, because that argument didn’t work for former Democratic Governor Jon Corzine, who ran campaign ads in 2009 not so subtly drawing attention to Christie’s weight.

The fact is, when it comes to discipline amongst politicians, voters are more interested in fiscal discipline — and in that regard Gov. Christie’s record stands in stark contrast to that of President Obama.

When Chris Christie was elected in 2009, he was confronted with a massive budget deficit as a result of both the recession and years of profligacy under Jon Corzine. Christie responded by putting expenditures in line with revenues and making necessary spending cuts. And we’re talking about real cuts, not the kind of cuts that the White House bemoans, which are nothing more than modest downward adjustments in increased spending. The first budget Christie signed into law cut spending by five percent from the previous year.

The FY 2012 budget signed into law by Christie this summer was $900 million less than what legislative Democrats wanted. Christie also vetoed job-killing tax hikes on small businesses while increasing state education funding by $850 million. What’s more, Christie stayed true to his campaign promise to fix the state’s broken and unsustainable public employee compensation structure, enacting reforms that will save the state $130 billion over the next 30 years. The Washington Post’s Robinson feigns concern over Christie’s health and Bloomberg’s Kinsley questions Christie’s ability to lead, yet it is due to Christie’s political courage and leadership that New Jersey’s long-term fiscal health is improving.

Contrast this with Obama, who, like Christie, came into office after years of overspending by his predecessor. Rather than begin to rectify the spending problem in Washington, as Christie did and continues to do in Trenton, President Obama doubled down on George W. Bush’s overspending, increasing annual federal spending by 31 percent — from $2.9 trillion in FY 2008 to $3.8 trillion in 2011.

To read Gleason's response in its entirety, click here.

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ObamaCare Precipitates Premium Spike; Can't Say We Didn't Tell You So


Posted by Patrick M. Gleason on Thursday, September 29th, 2011, 4:16 PM PERMALINK

Washington press and political circles have been abuzz this week over the new Kaiser Family Foundation survey that found families enrolled in employer-provided health care plans have seen their premiums rise by 9 percent in just the past year, a significant increase. The Kaiser Foundation’s report attributes over 16 percent of the premium hike to ObamaCare.

A Wall Street Journal editorial from yesterday noted that (emphasis added):

“Much of this surge is due to ObamaCare's new coverage mandates, and in anticipation of insurers becoming public utilities with government imposing price controls on rates.”

While the premium spike has many in the press and professional Left baffled, they can’t say they weren’t warned. In December 2009, during the height of the health care debate on the Hill, I and ATR’s Ryan Ellis made the case in an OC Register op-ed that the increase in insurance mandates sought by President Obama and congressional Democrats would have the opposite effect of bending the cost curve:

Health insurance mandates are government-imposed requirements that insurers and health care plans either cover, or offer coverage, for a condition or treatment. As recently as the 1960s, mandates were few and far between. However, today there are more than 2,000 mandates imposed by the federal and state governments.

Health insurance mandates drive up the cost of health insurance significantly. According to a recent study by the Council for Affordable Health Insurance, insurance mandates increase the cost of a basic health care plan by 20 percent to 50 percent. This estimate is based on analysis of insurance policies, not theories or modeling.

To understand how mandates drive up health insurance costs and price many out of the market, consider the following hypothetical situation: A new college graduate is in the market for a new car. At this point in her life she just wants reliable transportation. However, the government requires her to buy the fully loaded Lexus, with heated seats, navigation system and pricey options, even though that is not what the customer needs or can afford.”

ATR wasn’t the only one sounding the alarm. This from J.P. Wieske, Executive Director of the Council for Affordable Health Insurance:

“While some state and federal legislators continue to pass new mandated benefit laws, others recognize that mandates drive up the cost of health insurance and make health insurance policies unaffordable for millions of Americans. As implementation of the new federal health insurance law further drives up the cost of health insurance, the cost of adding new mandated benefits will become a more important issue.”

That said, as the aforementioned WSJ editorial made clear, Republicans do not have clean hands on this issue either, failing to pass legislation sponsored by former Congressman John Shadegg that would’ve helped rectify the matter when they controlled both chambers on the Hill. The Shadegg bill would have permitted consumers to buy health insurance from anywhere in the country. Shadegg’s proposal lives on in the form of H.R. 371, Congresswoman Marsha Blackburn’s Health Care Choice Act of 2011, which ATR supports.

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Silicon Valley Becomes Rent Seeking Valley Under Obama


Posted by Patrick M. Gleason on Monday, September 26th, 2011, 11:33 AM PERMALINK

During President Obama’s recent visit to North Carolina, ATR highlighted how his policies adversely impact small businesses in the Tar Heel State. Today the POTUS travels to Silicon Valley, where his economic agenda has had an equally deleterious effect on a region renowned globally as a hub of ingenuity and innovation. A Wall Street Journal article from last November highlights how President Obama’s command and control energy policies, in addition to his obsession with “green jobs” is having the effect of transforming Silicon Valley into place populated by companies whose business models rely on taxpayer subsidies, government mandates that consumers buy their product, or both:

“In the past, Kleiner Perkins funded scores of vital ventures, from Apple and Applied Materials to Amazon and Google. But now Kleiner is moving on to such government- dependent firms as Miasole, Amyris Biofuels, Segway and Upwind Solutions. Many have ingenious technology and employ thousands of brilliant engineers, but they are mostly wasted on pork catchers.

Other venturers plunged into solar panel manufacturer Solyndra, which received some $500 million in federal subsidies and a campaign visit from Barack Obama before laying off 17% of its work force and giving up on a new factory that was supposed to create 1,000 green jobs

Many of these green companies, behaving like the public-service unions they resemble…Virtually every new venture investment proposal harbors a 'green' angle that turns it from a potential economic asset into a government dependent....the green campaign wastes scarce and precious technological and entrepreneurial resources indispensable to the nation's future.”

While Obama’s energy policies are turning Silicon Valley into a hub of government-dependent, rent seeking start-ups, the onerous tax and regulatory burden imposed by the Democratic-controlled California legislature is making the valley a less attractive place to start a company and create jobs. Don’t take it from me; take it from Scott McNealy, co-founder and former CEO of Sun Microsystems:

“I see a migration from the early days of the Valley. We aren't doing manufacturing; we aren't doing design; we aren't doing computers. It's all moving to Asia and other places where there are lots of technical engineers who are willing to work at a more reasonable salary because they don't have to spend $3.5 million on a home and pay half of it to taxes.

I think every new transition has created less job opportunity as technology has become very leveraged. I don't think our education system, our regulations, our government policies have kept pace with the changes that technology is driving…It's not the Valley. It's the overhead and the overhang, the clouds brought in by Sacramento and Washington, D.C., the regulations, the deficit and the misallocation of resources. It's all of those things. Obviously, I'm a believer in the private sector and in personal responsibility.

The biggest issues with the Valley are local, state and federal governmental overreach and overregulation. It's over-pensioned, over-unionized and over the top.”

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Obama's Economic Policies Given Test Run by D.C. City Council


Posted by Patrick M. Gleason on Thursday, September 22nd, 2011, 7:36 PM PERMALINK

This week the notoriously dysfunctional and economically illiterate Washington, D.C. City Council rammed through an upper-income tax increase on District residents and small businesses. The measure, which passed by a 7-6 vote, raises the tax rate on incomes in excess of $350,000 by 5 percent, taking the rate from 8.5  to 8.95 percent, and leaving D.C. with the dubious distinction of having one of the highest marginal rates in the country.

Foregoing normal legislative protocol, the proposal, which was hastily concocted behind closed doors, bypassed the tax and revenue committee and was approved without public input. Even the Washington Post editorial board referred to it as “D.C.’s irresponsible tax hike.” To borrow a tongue and cheek phrase from the Wall Street Journal’s erudite James Taranto, when you’ve lost the Washington Post editorial board, you’ve lost middle America.

Councilman Phil Mendelson and Mary Cheh, the tax hike’s chief proponents, utilized the same class warfare and soak-the-rich rhetoric that the White House has perfected in recent weeks. Yet, as with President Obama, Mendelson and Cheh fail to realize the consequences of their actions. The fact is their tax increase on “the rich” takes its toll on small businesses, since the individual income tax system is the one under which they file. In fact, according to IRS data, over 52,000 small businesses in the District of Columbia pay D.C.’s income tax, which was already onerous and uncompetitive prior to this week’s events. Nearly 5,000 D.C. small businesses pay taxes on annual income in excess of $200,000, and a large portion of these employers will see a reduction in their job-creating capacity thanks to the misguided and opaque actions of D.C.’s corrupt City Council. In this gloomy and uncertain economy, it is unconscionable that lawmakers would do anything that would make employers less likely to hire, yet that’s precisely what Mendelson, Cheh and company did this week.

Such an economically-damaging tax increase would be bad enough by itself, but the fact is that it is also completely unnecessary. The District is currently sitting on an $89 million surplus, and that’s even after ramping up spending by 8 percent in just the past year. The tax increase is projected to yield a little over $100 million over the next four years. However, given the DC Council’s poor revenue projection record, don’t be surprised if this latest tax increase misses the mark when businesses and high earners, who are the most mobile, adjust their behavior or simply relocate. D.C.’s neighbors to the north have already shown what happens when lawmakers sack the rich. In 2008 Maryland Gov. Martin O’Malley signed into law a new tax bracket on millionaires, only to see the number of millionaires filing taxes in Maryland drop by a third the following year.

D.C. residents and those thinking of moving to the District don’t have to go far to avoid the higher rates found in the nation’s capital. As the Tax Foundation noted yesterday, “High-income taxpayers who plan to move to D. C. may choose to live in Maryland where they would be subject to 5.5 percent statutory income tax rate (plus local income taxes as high as 3.2 percent), or Virginia where they would be subject to 5.75 percent income tax rate.”

The saying goes that taxpayers vote with their feet, leaving high tax locales for more friendly tax climates. Don’t be surprised to see Washington families and employers vote with their metro cards as a result of the D.C. Council’s actions this week.

 

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