Census Data: Americans Migrating From High to Low Tax States

Originally posted at FreedomWorks.

On Tuesday, Census Bureau director Robert Groves announced the first results of the 2010 Census. The findings were not so surprising. Due to population changes, 12 House seats will shift. States with low or no income tax gained more representative seats in the House and Senate. Those states with a high income tax lost seats. Just as we expected, Americans are packing up and escaping places with out of control taxation.

Growth is stronger where taxes are lower. Texas’ population grew 21 percent in just the past decade from 21 million to 25 million. While this is partially due to the inflow of immigrants, it has also attracted Americans from all other 49 states.According to Texas Governor Rick Perry “Texas has no personal income tax and no interest in getting one.” Due to Texas’ low taxes and business friendly environment, they have gained four additional House seats.

Nine states currently have no income tax. This is a large selling point that has attracted a great deal of entrepreneurs and productive citizens to these states. The no income tax states of Florida, Washington and Nevada gained a total of four seats. According to the Washington Examiner,

Seven of the nine states that do not levy an income tax grew faster than the national average. The other two, South Dakota and New Hampshire, had the fastest growth in their regions, the Midwest and New England. Altogether, 35 percent of the nation’s total population growth occurred in these nine non-taxing states, which accounted for just 19 percent of total population at the beginning of the decade.

Who were the Census losers? For the first time in history, California did not gain a single seat. Massachusetts or “Taxachusetts” lost a seat to other states with lower taxes. Under the new Census data, New York lost two House seats. Over the past decade, the state has had one of the highest tax burdens in the nation. The Tax Foundation has ranked it the worst state for businesses in 2011. Even Donald Trump has threatened to move out of New York due to excessive taxation.

New York City Mayor Michael Bloomberg weighed in on the Census results bysaying:

Unless we make this an attractive state to do business in and to live in, people are going to continue to move out. We have to reverse that trend. If you take a look at the competition, we have a lot of retired firefighters, police officers and teachers, for example, that move to Florida. Why? I don’t think it’s the better weather. It’s there’s no inheritance tax and there’s no estate tax. There’s no income tax.

Bloomberg should listen to his own advice by dropping his proposal for a soda tax in New York City.

The Census results should be a good wake up call to state governments. It’s common sense that states with low taxes will attract more people. States with no income taxes have far more job growth and economic gains than those with income taxes—especially those with high income taxes. According to the American Legislative Exchange Council, the nine states without income taxes have had an average job growth of 18.2 percent over the past decade. On the other hand, the nine states with the highest income tax experienced a mere 8.4 percent rise in jobs.

The latest Census data only confirms what we have always known. Americans are sending a message by voting with their feet. More of us are choosing low taxes, less government and more freedom.

 

‘Tis The Season For Giving– Not Taking

Originally posted at FreedomWorks.

During the holiday season, we are often reminded to give to those that are less fortunate. This time of year, many of us reach into our own pockets to donate to charitable causes that we hold dear. Even in the face of tough economic times, Americans have shown that we are still generous with our hard-earned money. In 2009, Americans voluntarily gave an estimated $307.65 billion to private charities. A total of 57 billionaires have now joined the Giving Pledge to eventually give away at least half of their fortunes to charities of their choosing. It is praiseworthy for someone to voluntarily donate their money to assist a fellow man in need. But it’s wrong to reach into someone else’s pocket and force them to pay for a charity of your choosing.

Should charity be a function of the government? In 1887, the 22nd and 24th President of the United States Grover Cleveland vetoed an appropriation bill that included taxpayer funding for drought-stricken counties in Texas by saying:

The friendliness and charity of our countrymen can always be relied upon to relieve their fellow-citizens in misfortune. This has been repeatedly and quite lately demonstrated. Federal aid in such cases encourages the expectation of paternal care on the part of the Government and weakens the sturdiness of our national character, while it prevents the indulgence among our people of that kindly sentiment and conduct which strengthens the bonds of a common brotherhood.

Today, we have tons of government “charity” programs supposed to help the less fortunate. Nearly all of these programs do more harm than good. As we have seen, these programs lure people into long-term dependence on the federal government. Moreover, all of these programs are involuntarily funded by taxpayers. Is this true compassion? No, of course not. Grover Cleveland understood that coercion is not compassion. According to Future of Freedom Foundation President Jacob Hornberger,

The essence of human liberty was the right to help one’s neighbor or not. If a person was not free to reject his neighbor (and God), then he could not be considered truly free. And Cleveland knew that if compassion was to mean anything, it must come only from the willing heart of the individual. Thus, for government to force someone to share with his neighbor was considered a denigration of both liberty and morality.

Unfortunately, some politicians portray themselves as caring since they favor expanding mandatory government “charities.” It is not kind to spend other people’s money on causes that they might not personally value. As Jacob Hornberger says, “in other words, kindness among Americans is now reflected by the willingness of the IRS to seize their incomes and of government officials to send that money to the needy.”

Here’s a thought exercise from the video below. Imagine a friend and you are approached on the street by a needy man in your community. You gladly offer him assistance by reaching into your own pocket and giving him as much money as you can afford. Your friend does not offer any money. What would you do? You may try to persuade him to donate. But most of us would feel immoral to steal money from a friend against their will to give to another person. If that is the case, why do we allow the government to do this for us? As Ayn Rand said, “Do not ever say that the desire to ‘do good’ by force is a good motive.”

In 1981, economics Professor Walter Williams said “you may win your way into office and retain that office essentially by promising some Americans that you will give them the fruits of another man’s labor.” But with the growing influence of the Tea Party movement, more Americans want government that takes away less. Once upon a time, communities used to be the ones who cared for the needs of their people through voluntary and peaceful action. Just imagine how much more we could donate to the needy if the federal government would stop confiscating so much of our paychecks. This holiday season, let’s put more faith in our fellow Americans that they will choose to do the right thing.

Tax Deal Passes—But Taxes Still Too High

Congratulations! With the Obama tax deal passing both the House and Senate, we have prevented the largest tax hike in American history. On New Year’s Day, we will not be forced to surrender more money in the form of income taxes to the federal government. As we have already noted, the tax deal was full of notable flaws and did not go far enough. We still pay way too much in taxes.

This tax deal brings more economic certainty. But temporarily keeping tax rates the same will not significantly boost the economy. We need a bold solution. It’s clear that the Founding Fathers would have vehemently opposed an income tax—let alone the current top rate of 35 percent. As Thomas Jefferson said “a wise and frugal government, which shall leave men free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor and bread it has earned.”

As we saw throughout the entire tax deal debate, we still face a fierce opposition. We will continue to push for permanent fundamental tax reform that replaces the current system with one that is far simpler, fairer, and flatter. This includes an overhaul of the entire tax code and major spending reductions.

These tax cuts will not cost taxpayers a dime. Recently, some lawmakers have espoused the flawed rhetoric that extending all of the 2001 and 2003 tax cuts would cost $855 billion. In response to the tax deal, Peter Welch (D-VT) and colleagues write that “digging the country deeper into debt to pay for misguided tax policy is irresponsible and simply doesn’t make sense.” However, we do not need to “pay” to tax cuts.

As Ron Paul legislative director Norman Singleton notes, “to say cutting taxes or not allowing taxes to raise ‘cost government money’ or increases the deficit is like saying when I stop my pocket from being picked I am costing the mugger money.” The question arises: who owns the money that you have earned? The government or yourself? To say that tax cuts cost the government money implies that all your income belongs to government in the first place.

Tax cuts allow individuals to keep more of their paycheck. It is not a “millionaire giveaway” or “millionaire welfare” as some have suggested. The government is not handing out any money to any person. This just means that individuals will choose how to spend more of their money instead of Washington bureaucrats. More of our money will go directly towards things we personally value. That can only be a good thing.

The popular assertion that tax cuts—or keeping the tax rates the same—will increase the deficit is false. In fact, top earners actually paid a higher share of taxes under the 2001 and 2003 tax cuts. These tax cuts lowered income tax rates across the board, expanding the economy by giving all individuals more incentive to create wealth by letting them keep more of every dollar they earned.  According to the Tax Foundation, top 1 percent of earners paid 37.42 percent of federal income tax in 2000. By 2007, their tax share had increased to 40.41 percent. On the other hand, Americans in the bottom 50 percent of filers paid a smaller share of taxes between 2001 and 2008. The recession has played a major role in reducing the share of taxes collected in recent years. The Tax Foundation found that “each year from 2005 to 2007, the top 1 percent’s constantly growing share of income earned and taxes paid set a record.”

This tax deal puts us in a better position to achieve the goals of fundamental tax reform. We still have a lot of work to do. It is still outrageous that the average American who makes roughly $37,000 annually has to surrender 25 percent of their income to the federal government. From rich to poor, we all deserve to keep more of what we earn.

Good News for Sound Money: Ron Paul Will Lead Monetary Policy Subcommittee

Originally posted at FreedomWorks.

The movement to audit the Fed won a huge victory last night. Representative Ron Paul (R-TX) who has been a leading critic of the Federal Reserve for decades willlead the Monetary Policy Subcommittee. In other words, the author of the book “End the Fed” will be overseeing the central bank. Look out Fed chairman Ben Bernanke.

It has suddenly become mainstream to question the Federal Reserve’s actions. A new poll shows that the majority of Americans want the Fed reined in or abolished. These polls have struck fear into the central bank. Fed supporter Senator Gregg (R-NH) even showed up for a meeting at the central bank with a box of End the Fed books. It has been reported that he told the gathering that “it would be worth reading to see what the other side is plotting.”

Over the last month, the movement has gained a significant amount of traction. The Fed’s decision to announce yet another round of quantitative easing or QE2 is largely to blame. YouTube has been full of viral videos poking fun at the reckless policy. In plain English, QE2 means that the Fed will fire up their printing presses to create more money. This will only make things worse.

Even Comedy Central Daily Show host Jon Stewart joined in on criticizing the Fed. On his show last night, he played two different clips of Ben Bernanke. The first clip showed a recent 60 Minute interview where he said “One myth that’s out there is that what we’re doing is printing money. We’re not printing money.”

As Stewart noted, the “myth” that the Fed is printing money is true. Just take Ben Bernanke’s word from about two years ago. On March 15, 2009, on the exact same program he said:

Bernanke: To lend to a bank…it’s much more akin, although not exactly the same, as printing money than it is to borrowing.

Q: You’ve been printing money?

Bernanke: Well, effectively.

Stewart’s jokes weren’t so funny. He commented that the Fed should “go ahead, print money! Aside from Zimbabwe’s hyperinflation, what could go wrong?”

Could we be following in Zimbabwe’s footsteps? It’s hard to imagine that in 1980, the Zimbabwe dollar was valued 25 percent higher than the US dollar. Beginning in the early 2000’s, the Reserve Bank of Zimbabwe fired up their printing presses to pump massive amounts of new Zimbabwean dollars into their economy to pay off debts to the International Monetary Fund.

It was an utter disaster. In November 2008, Zimbabwe’s annual inflation rate was89.7 sextillion percent. No, that’s not a made up number. For future reference, it goes trillion, quadrillion, quintillion and then finally sextillion. Zimbabwe chief statistician Moffat Nyoni announced that it had become impossible to even figure out the nation’s inflation rate.

Zimbabwe could not print money fast enough. In 2008, The Los Angeles Timesreported that “Zimbabwe is about to run out of the paper to print money on.” In early 2009, Zimbabwe printed their first 100 trillion banknote worth only 30 US dollars. It was common to see children walking out with wheelbarrows full of billions of dollars. The wheelbarrow was worth more than their pile of practicably worthless cash.

Not surprisingly, the Zimbabwe dollar officially collapsed in April 2009.  In the same month, the New York Times reported that the “Zimbabwe’s currency has been essentially worthless in-country for months. Now the Zimbabwe dollar is officially worth more on eBay, where collectors can snap up a few trillion-dollar notes for less than $25.” We may not be experiencing a devaluation of currency that rivals Zimbabwe yet. But it’s foolish to forget the lesson of Zimbabwe’s flawed monetary policy that left their dollar virtually worthless. Printing excessive amounts of money out of thin air has harsh consequences.

With the announcement that Ron Paul is to head the Monetary Policy Subcommittee, there is great hope that he may be able to rein in the excessive power of the Fed. As Ron Paul often cites, the dollar has lost 97 percent of its purchasing power since the invention of the Fed. Ron Paul will set us in the right direction to restore sound money.

For more information on sound money, please see the PDF of a Guide to Sound Money written by Dr. Judy Shelton and co-published by FreedomWorks and Atlas Economic Research Foundation.

 

STOP JET ENGINE PET PROJECT THAT MILITARY DOES NOT WANT

Originally posted at FreedomWorks.

In May, the House passed the FY2011 Defense Appropriation Bill that includes$485 million for an extra F-35 Joint Strike Fighter engine that the Pentagon does not want. Majority Leader Harry Reid (D-NV) announced that the Senate will vote on taking up the defense spending bill today. In its current state, the Senate version does not include any funding for the extra engine. Due to strong-arm lobbying tactics, key Senators will likely push for an earmark that funds the wasteful alternate engine program.

In the House today, lawmakers are voting on a four hundred page omnibus bill to fund the government for the next ten months that could include the wasteful engine. According to the Hill,

Senate and House appropriators have quietly been working on a catch-all spending bill for fiscal year 2011. A senior lawmaker told The Hill that at this point funding for the second engine is included in that omnibus legislation.

This is a clear case of special interest politics. President Obama has threatened to veto any bill that contains funding for the secondary engine. Former President Bush also pushed to eliminate taxpayer funding of the alternate engine program that burdens both taxpayers and the military. For roughly a decade, the Air Force has considered the extra engine to be “not necessary and not affordable.”

The Joint Strike Fighter alternate engine program began in 1996, when Congress ordered two engines, F135 and F136, from separate military contractors. The goal was to boost competition between the two engines. It worked. The two engines built for the aircraft differed markedly in quality. Six years later, the Department of Defense (DOD) declared the F135 engine the winner of its Joint Strike Fighter competition.

The DOD wisely chose the far superior F135 engine built by Pratt and Whitney. According to Senator Lieberman (I-Conn.),

There was a competition to build the engine for Joint Strike Fighter. Pratt & Whitney won that competition.

The developed and certified F135 has already had an impressive 17,500 hours of testing and has successfully powered vertical flight operations.

Yet, Congress fails to end taxpayer support of the F136 under development by General Electric and Rolls Royce that the military does not want nor need. Secretary of Defense Robert Gates has publicly said that “we think the current engine that GE is offering probably does not meet the performance standards that are required.” It has yet to even power a single plane in flight and it is estimated to be 5 to 7 years behind in development. The F136 engine has only been tested for approximately 200 hours total.

According to Air Force Chief of Staff General Norton Schwartz, “the reality is that the F-22 and F-18E/F are single-engine airplanes.” Not one aircraft built in the last few decades has had multiple engine suppliers. Shouldn’t we respect the wishes of the military by ending this needless program?

Defense spending has always been a lucrative source of earmarks and pet projects, and this is not an exception. It is projected that it will cost taxpayers at least an additional $2.9 billion to finally finish the inferior F136 engine. Since the additional funds to develop the F136 are not in the defense budget, the Department of Defense will be forced to take away money from more pressing military needs. As Robert Gates has said “every dollar additional to the budget that we have to put into the F-35 is a dollar taken from something else that the troops may need.”

Unfortunately, the fight over aircraft engines is emblematic of the new role Washington plays in the business world.  Today, the quickest way to profit is often through government largesse rather than innovation and entrepreneurship.  General Electric typifies the large rent seeking companies that wage battle not in the marketplace, but in the halls of Congress. In an email to his colleagues, General Electric Vice President John G. Rice writes, “the intersection between GE’s interests and government action is clearer than ever.”

In addition to lobbying for an unnecessary engine that will cost taxpayers billions, General Electric aggressively promotes other self-serving legislation, such as the costly cap and trade program that would add to the company’s bottom line at the expense of taxpayers and the American economy. Especially in an economic downturn, taxpayers cannot afford to fund the pet projects of politicians and corporations.  Congress should stand up to the special interests seeking to line their pockets with taxpayer dollars and reject the failed second engine.