The Cost of Paying Your Taxes

Tax day came and went. Other than the burden of paying 30-50% of your income to all levels of government, what about the burden of complying with the difficult tax laws? Just how difficult is it to comply with tax laws? H&R Block is expected to do just over $1 Billion dollars in sales for this past tax season. That is $1 Billion that individual families and small businesses pay out this year on top of their regular income taxes! The Tax Foundation estimates that in 2005, Americans spent $265 Billion just to pay their taxes! That is $883 for every man woman and child in the US, and $3,532 for a family of four!

Why are Americans paying so much money to, well, pay so much money? Just how difficult is it to comply with tax laws? The tax code is long, complex, and difficult, and the average person has almost no way of knowing what is current and what is not. The current US tax code is 66,000 pages long! Since 2000, 100 brand new forms have been added. Even the 2 page 1040 form that most Americans fill out is no walk in the park. If you want to learn how to fill it out, you need to read a manual that is 143 pages long. If you want to learn more about tax regulation to fill out the 1040 (and not just the instruction manual), you need to read IRS’s Publication 17. That publication is 295 pages long! That is why many Americans hire a tax professional to prepare their taxes.

It would make a lot more sense for the tax code to be a lot simpler. Experience has shown that a simpler tax code is good for the economy. Estonia, once an impoverished former Soviet Block country, instituted a flat tax in 1995. It was 28%. It has since dropped to 22%. They have seen annual double digit growth in their GDP. The amount of foreign investments has quadrupled in that same time. Hong Kong went from being a poor island nation with very few natural resources to one of the wealthiest nations in the world. They have had a flat tax of 15%.

As much as we hate to see government waste our hard earned money, it is time we start focusing on how expensive it is to pay our taxes.

Stop This Train, I Want to Get Off

The National Underground Railroad Freedom Center (NURFC), initially hailed as an important addition to Cincinnati’s riverfront and economy, has become another government-subsidized boondoggle. The facts:

Construction costs:
1996 estimate: $70 million
Actual cost: $110 million (on taxpayer-donated prime riverfront real estate)

Endowment:
1996 estimate: $10 million (to be raised from private sources)
1998 estimate: $20 million
2007 actual: $1 million

Annual Operating Budget:
1996 estimate: $3 - $4 million.
1997: $12 million
2007: $9 million

Visitors per year:
1996 estimate: 1 million
2000 revision: 450,000 the first year and 250,000 per year thereafter.
Reality: 125,000 visitors per year, many of them students on field trips, thus adding nothing to our downtown economy

Construction Costs:
1997 estimate: 75% from private sources
Reality: 51% from taxpayers and 49% from private sources.

Economic impact per year:
1997 estimate: $17 million.
Reality: $1 million on a $9 million annual operating budget

Salaries:
Spencer Crew, President: $320,000
Donald Murphy, CEO $270,000
Love Collins, Vice President of Advancement: $210,000

Most importantly, voters and taxpayers were promised that once the facility was built, it would stop seeking tax subsidies and become self-sustaining. On December 12, 2006, the Center broke that promise by announcing that it will need a $3 million per year perpetual taxpayer subsidy.

On that same day, the Ohio House of Representatives voted to give the National Underground Railroad Freedom Center an additional $2 million in taxpayer money.

Governor Ted Strickland, in his current budget bill, has included a line item for $250,000 in annual operating support for the NURFC.

On April 11th, Cincinnati City Council member Chris Bortz introduced (and then withdrew, on a procedural issue) a motion to give $1,000,000 to each of four Cincinnati organizations, including the NURFC.

All this money is being thrown at what is, at best, a broken institution, and, at worst, a failed one, despite the fact that a May 2006 survey of Cincinnati-area voters by Public Opinion Strategies showed that 55% of Cincinnati voters and 76% of Hamilton County voters were opposed to providing additional money.

The main cheerleader for more taxpayer subsidies for the Center is John Pepper, retired Procter & Gamble Company Chairman and Chief Executive Officer, current Chairman of the Board of The Walt Disney Corporation, and current CEO of the Center.

I have a suggestion for Mr. Pepper. If he so strongly supports the Center, why doesn’t he organize a fundraiser, invite 300 of his well-heeled friends, and raise the needed funds for the Center? If each of his friends gave $10,000, the Center would have its funding - for a year, at least.

Of course, that’s not going to happen. Mr. Pepper and Mr. Bortz, both millionaires, clearly don’t understand what it’s like to have to work hard to make ends meet. Libertarians do. Please join us in opposing any and all taxpayer subsidies for the National Underground Railroad Freedom Center.

Democrats showing Republican-like Ethics

Today, the Whistleblower is reporting that the state of Ohio just approved a Department of Transportation budget request to waive competitive selection and issue contracts to 18 consulting firms whose PACs or principals (individual donors) made $2,000 or more in contributions last year to the Strickland campaign.

• Barr & Prevost - $25,000 to inaugural and other contributions from principals
• Burgess & Niple - $25,000 to inaugural from principals
• CH2M HILL, Inc. - $2,000 from principals
• DLZ Ohio Inc. - $2,000 from principals
• EP Ferris & Asscs. - $5,000 from principals
• Evans Mechwart Hambleton & Tilton - $16,000 and $2,000 from each principal and their wives
• Gannett Fleming Engs & Arcs - $3,000 from principals
• Hull & Asscs. - $6,600 from the Hull-Teater-Gebhardt PAC
• Jobes Henderson & Asscs. - $3,000 from principals
• Jones Stuckey Ltd - $3,000 from principals
• M-E Companies, Inc. - $6,500 from the M-E Companies INC PAC
• MS Consultants, Inc. - $4,000 from principals
• Palmer Engineering - $2,000 from principals
• PB Americas / Parsons Brinckerhoff - $10,000 Parsons Brinckerhoff, INC. PAC
• Prime Engineering & Architecture - $2,000 from principals
• Richland Engineering Ltd. - $2,000 from principals
• Tetra Tech Professional Services $2,600 from Tetra Tech Engineers of Ohio INC. SSF
• TranSystems Corp. - $5,000 from principals

So much for the new Democratic leadership cleaning up Columbus politics. The Democrats and Republicans are looking more and more like the same party each day.

Knock me over with a feather

I know this is only tangentially related to the recent increase in the marijuana penalty in Cincinnati, but it's so mind-boggling that I had to post it.

According to Salon.com and confirmed on the Marijuana Policy Project (MPP) web site, former US Representative from Georgia Bob Barr, once one of the most ardent drug-warriors, has signed up as a lobbyist for the MPP. The MPP focuses on removing criminal penalties for marijuana use.

Increased marijuana penalty made permanent; Council ignores will of the people

Despite over 300 emails protesting the increased penalty for possession of marijuana, despite the fact that not one person who was present at either the Law and Public Safety Committee hearing, nor the full Council session, spoke in favor of the ordinance, and, most alarmingly, despite clear evidence that Cincinnati is less safe under the new law, Cincinnati City Council voted 7-2 to make the increased penalty for marijuana possession permanent.

How they voted:

Jeff Berding - Yes
Chris Bortz - Yes
Laketa Cole - Yes
John Cranley - Yes
David Crowley - No
Leslie Ghiz - Yes
Chris Monzel - Yes
Jim Tarbell - No
Cecil Thomas - Yes

Only Vice Mayor Jim Tarbell and Council member David Crowley had the courage to say no this counter-productive law.

Not one Council member challenged Police Chief Thomas Streicher when he said, with total disregard for the facts, that crime had gone down in the past year. In fact, serious crime rose 4.4% in 2006.

Council member after Council member justified their vote by pointing to one statistic - that 62 guns had been seized when people were arrested for marijuana possession – and holding this up as evidence that the law was effective.

Every Council member received a copy of my report on the increased crime in Cincinnati (the same information that was in my previous post). They had the facts - murder rate up, robbery rate up, crimes committed with guns up, but they ignored those facts and kept repeating “62 guns off the streets, 62 guns off the street.”

Assuming that there are actually 62 fewer guns on the street (a big assumption, as no one can know how many illegal guns are on the street), it pales in comparison with 11 more murders, 317 more robberies and, the kicker, 429 more crimes committed with guns. Apparently, to the 7 council members who voted to make this ordinance permanent, 62 minus 429 is a positive number.

Please remember who voted in favor of this ordinance when Council members start their campaigns this year. Ask those who voted in favor of it how they justify their vote in light of the increases in murders, robberies, and crimes committed with a gun. And be sure to ask Mr. Thomas and Ms. Ghiz why they broke their promise to not renew this law if it wasn’t effective.

This law has been and will continue to be a disaster for the safety of the citizens of Cincinnati. But the battle is not yet over. I, for one, will continue to fight to overturn this law.