Sunday, September 26, 2010

Those Privileged to Work and Should Spread the Wealth

This morning, CBS’s Sunday Morning had a rare moment of -- should we call it objectivity?

The segment came on right before the record-setting rock skipper section. (51 skips – great Americana story even though a kilted Scott was also featured!)

Last week, Ben Stein commented that this was not the time to raise taxes on the top income-earners…those who create jobs.

CBS certainly could not let that statement stand without a firm rebuke.

This morning, Sunday Morning passed the mike to Linda McGibney, producer and writer on Sci Fi channel. Sci Fi? Really?

She likely knows as much about economics as Steven Colbert knows about immigration.

Ms. McGibney comments included: “I am willing to pay this tax increase…it is the cost of doing business…some of us need to sacrifice for our country.”

OK, Ms. McGibney. Write the federal government a check. I'm sure someone can give you the address.

She also said, “having a job is a privilege” – a privilege? She continued that those having that privilege should “spread the good fortune.”

I had no idea that work was a privilege and that those of us lucky enough to get up every day, work hard to earn a living and take care of our families, were also fortunate. What does privilege and fortune have to do with it?

I guess to some whether or not we earn a living is a roll of the dice. Either you are lucky enough to work or you are not. It’s that simple to this sci fi writer. Maybe in some alternate universe that is the case, but not in America.

But it gets worse. Ms. McGibney goes on to say that those of us lucky enough to work are greedy if we don’t want to use government as the vehicle to spread our wealth. Linda called this the cost of doing business. Really?

Who creates jobs, Ms. McGibney? Haven't we seen that using the government to spread the wealth just doesn't work?

Ms. McGibney's thinking is wrong on so many levels.

I love the nature segments which Sunday Morning leaves their viewers with. Today, it featured the tall cactus outside Tucson, Arizona. Frankly, Ms. McGibney's commentary left me a bit prickly.

Why do I watch CBS?

Monday, September 20, 2010

The Actual Truth About Bill White And Houston Property Taxes

The Actual Truth About Bill White And Houston Property Taxes
By: Bob Lemer

Former Houston mayor Bill White wants Texas voters to focus on Houston’s property tax experiences on his watch and his stewardship of the City’s finances. Fair enough.

First, let’s see what Bill White says, and then I will give you the actual truth.

Bill White says he cut Houston property tax rates. Yes, Bill White did cut Houston’s annual property tax rate in several years (by miniscule amounts) during his reign as Houston mayor during calendar years 2004-2009, obviously for later bragging rights when running for higher office.

What he doesn’t tell you is that, even with the miniscule cuts in the property tax rate, the City’s total property tax revenues established a new record high every fiscal year (ended June 30) that he was in office, due to dramatically increased property assessed values, considerably more so than due to new properties added to the rolls.

Bill White says he “balanced the budget” every year and increased each year-end general fund balance. Yes, Bill White did “balance the budget” each year (as required by law) and increased the general fund balance the first five of the six fiscal years under his watch.

But he did so solely by supplementing general fund revenues with the proceeds from property-tax-supported pension bonds, which are backend-loaded, thereby having to be paid off by future generations.

So Bill White’s claims are disingenuous, at best.

But here are the startling truths about Bill White and Houston property taxes
that he really doesn’t want you to know!

1. Even with record revenues from property taxes (and sales taxes) during every fiscal year (2004-2009) ended under mayor Bill White, the City of Houston’s annual expenses exceeded its revenues by $1.7 BILLION, in total. And $1.5 BILLION of the excess of expenses occurred by fiscal year end June 30, 2008, BEFORE the recession. This is so according to the City’s independently audited annual financial statements.

2. Bill White refused to have the City of Houston abide by the property tax law he himself tricked a fawning city council and a deliberately misinformed voting public into approving. White got city council to place Proposition 1 on the November 2004 ballot, and the voters approved it. Prop 1 was represented as placing an annual cap (lower of (a) per cent increase in population plus inflation or (b) 4.5%) on the City’s total property tax revenues. The voters were told that they would have to approve any total property tax revenues in excess of the Prop 1 cap.

However, when Prop 1 became effective, commencing with fiscal year 2006, the City began exceeding the Prop 1 cap every year. But mayor White refused to refund any annual excesses.

His reason? Prop 1 supposedly placed a cap on BUDGETED total property tax revenues, even though the ballot language said nothing about budgeted revenues and neither did public discourse on the measure.

Guess what. Commencing with the initially effective fiscal year (2006), the City suddenly started significantly under budgeting total property tax revenues. Prior to fiscal year 2006, the City was budgeting within 1% (both over and under) of what ended up as actual total property tax revenues every year (because of the timing of approval of the tax roll and rate approval).

3. When mayor Bill White took office in January 2004, his home was being taxed at an assessed value of $1,351,900, ONLY 48.2% of the $2,803, 200 fair market value (FMV) assigned to his home by the Harris County Appraisal District (HCAD).

When Bill White left office six years later, his taxable assessed value had increased 10% per year to where it finally caught up with the HCAD assigned FMV. But that was possible only because HCAD had LOWERED HIS FMV to $1,961,704 at January 1, 2007 and then slightly increased it to $2,120,195 at January 1, 2008.

HCAD lowered the FMV because White’s property supposedly could be prone to flooding over time. HCAD stated that White did not request the reduction in value.

White’s supposedly unsought largesse from HCAD should be of extreme interest to the large number of Houstonians who had to go through exhaustive HCAD appeals, sometimes presenting pictures of water standing in their homes.

The HCAD assigned FMV of Bill White’s residence has remained at $2,120,195 for the last three annual tax rolls, unlike the experiences of most Houstonians.


4. Before Bill White won the Houston mayoral election in November 2003, he was the CEO of the Wedge Group, the owner of the office tower at 1415 Louisiana in Houston. He also was the Greater Houston Partnership’s liaison to the City, regarding the City’s finances.

Therefore, it is very interesting to observe the assessed taxable value (in millions of dollars) of the 1415 Louisiana office tower on the following January 1 tax rolls:

2001 $38.1
2005 $24.8
2008 $44.2
2002 $35.9
2006 $30.7
2009 $39.3
2003 $30.2
2007 $38.5
2010 $34.3
2004 $24.4

I am sure Houstonians are not pleased when comparing the Wedge Group’s assessment track record to their own City property tax experiences during the same period.

5. Before Bill White ran for mayor, he chaired a Greater Houston Partnership committee assigned to look at the City’s property tax supported debt. A Houston Chronicle editorial quoted White as saying at that time that the City’s level of tax-supported debt would not be tolerated in the private sector.

So what did White do after becoming mayor? He increased the property tax supported debt by 50%. Houston’s debt per capita now significantly surpasses that of the essentially bankrupt state of California.

So there you have it, the actual truth about Bill White and Houston property taxes.

Bill White and several Texas newspapers are clamoring for a debate. I am available any time White wishes to defend his record while mayor of Houston. But that debate will never happen, even though White is a highly experienced trial lawyer. For he knows he would be overmatched in that I have the numbers, including his.

Bob Lemer is a retired partner of a Big Four accounting firm. He has researched and written for over a quarter-century on the finances and operations of governments from the Houston local level to the state of Texas and federal levels. He may be reached at boblemer@sbcglobal.net.

Thursday, September 9, 2010

Duck any attempts for a Lame Duck Session

Here is Sen. Snowe’s official statement on the lame duck issue.

I agree that Congress should not reconvene in a lame duck session after the November elections, since such sessions often are not productive. As a strong advocate for limited government and responsible governance, I share the concerns over the potential lack of accountability inherent in a lame duck session.

That puts both the Maine senators as clearly opposed to a lame duck session. (Congratultions, Americans for Prosperity for dogging that!)

Several other Senators and senate candidates have weighed in on a lame duck session:

Sen. Lindsey Graham: "I promise I will not vote yes on any policy bills during the lame duck session. I will even sign something if you want me to."

Sen. Russ Feingold, Wis.: "By allowing votes just after an election but before the newly elected Congress takes office, lame-duck sessions provide an opportunity to override the public's will as expressed at the ballot box. Rather than schedule a lame-duck session this year, Congress should complete its work before the upcoming elections."

Rep. Mike Castle, Del.: "The only business that should be conducted during a lame duck session of Congress is keeping the government running until the newly elected legislators are sworn-in. I do not agree with those who say this period of time should be used for passing controversial legislation and would not play a role in helping to circumvent the will of American voters."

Rep. Mark Kirk, Ill.: "The only legitimate thing for the Congress to do is to pass a short-term continuing resolution to keep the doors open -- and let the voice of the American people as communicated through their new representatives and senators speak in January."

Tom Pauken Promotes The Hartman Plan

This from Tom Pauken, Chairman of the Texas Workforce Commission:

The Obama administration has unveiled new initiatives ostensibly designed to put Americans back to work. Paying for its $50 billion infrastructure proposal by eliminating the incentives for domestic oil and gas production makes no sense at all to me and would be a job killer for Texas. Here is a better idea – it is called the Hartman Plan and would replace our onerous corporate tax system with a revenue-neutral, business consumption tax. Both the Washington Times and the Galveston Daily News recently ran viewpoint articles by me on this proposal to get Americans back to work. Below is an edited version of the Washington Times article.


An economic policy to put Americans back to work


By TOM PAUKEN
Updated: 09.07.10
Policies to put Americans back to work aren’t working.

Since the Obama stimulus spending program began in February 2009 and continued through May 2010, we have added 400,000 government jobs, while the nation has lost 2.7 million private-sector jobs.

So, what do we do instead? Strapped consumers will not spend us out of this recession. The key to economic recovery is to provide incentives to get the private sector moving again and encourage job creation here in the United States. Our current business-tax system is a major impediment to doing just that. The United States has a corporate income-tax rate of 35 percent, high payroll taxes and other burdensome taxes and regulations.

The existing tax structure rewards private-equity moguls for loading U.S. companies up with high levels of debt, while penalizing prudent business owners who would like to run their companies in a conservative fashion. That is because corporate debt is deductible under our current tax system, while employment, savings and capital investment are heavily taxed. No wonder the U.S. manufacturing base has lost one-third of its jobs over the past decade. That’s 5.5 million good American jobs that have been shipped overseas, outsourced or simply disappeared.

In addition to high tax rates, American businesses that have most of their plants and employees in the U.S. do not operate on a level playing field with our trading competitors. Every major trading country in the world –– except for the United States –– provides a tax advantage for domestic manufacturers. As countries have removed tariffs over the past four decades, they have replaced them with a value-added tax (VAT) which provides companies located in their countries with a significant economic advantage over foreign businesses. That averages out to an 18 percent disadvantage for U.S.-based manufacturers trying to compete overseas.

To make matters worse, foreign goods shipped into the United States enjoy an 18 percent VAT tax abatement –– yet are subject to none of the taxes imposed on U.S. manufacturers.

The solution to this dilemma is less complicated than one might think. Simply replace our existing corporate-tax system with a revenue-neutral, 8 percent business consumption tax. This border-adjusted VAT would not apply to U.S. exports, but would be applied to all imports.

This business consumption tax would allow for the expensing of fixed investment, eliminating the double taxation of investments. These changes in the way we tax business would result in an accelerated growth of savings and investment, while creating private-sector jobs. In the long run, the business consumption tax would bring in a lot more revenue than the taxes it would replace because the national economy would grow much faster. We would have a tax system that would encourage companies to create jobs in the United States and keep them here.

This is a real economic-stimulus plan to put Americans back to work.

Tom Pauken, a former Reagan administration official, is the chairman of the Texas Workforce Commission.

http://www.hcnonline.com/articles/2010/09/09/deer_park_broadcaster/opinion/090910_edit_pauken.txt