The idea that we'll be assessed fees without breaking any rules seems absurd to us. That is what is happening all over the country as cities are not able to enforce their anti-litter regulations. Instead of charging fees to the violators, some cities, like El Paso, are going to start charging a tax for every bag used at the grocery store. Sure, they hope to also reduce bag usage as a whole, but again, should we be looking to build a revenue stream from something we want to abolish? We've seen this with cigarettes: when a tax was imposed, the state thereafter became dependent on that revenue, and as smoking actually decreased, the state then had to raise the tax to absurd levels to maintain status-quo revenues. Admittedly, we're not a fan of stifling the market like this. For more information about El-Paso's bag tax, you can read the article on the Houston Chronicle website here. According to the article, "Brownsville this month became the first city in Texas to ban single-use plastic bags commonly offered by grocery and retail stores. Brownsville shoppers must pay a $1 surcharge if they want a store's single-use plastic bag."
Additionally, over 30,000 people have joined the Facebook group "Kill the Bag Tax." The group can be found here.
here to read the entire article which also discusses the current battles that other websites are fighting in other states, including Overstock.com's huge tax battle with the State of New York.
Paul Krugman, in an opinion article in the New York Times, questions Texas' "Never Raise Taxes" policies, and sees them as evidence that adopting the policies on the Federal level can never work. The article is copied below. To read the full article and comments, click here.
New York Times
January 6, 2011
"These are tough times for state governments. Huge deficits loom almost everywhere, from California to New York, from New Jersey to Texas.
Wait — Texas? Wasn’t Texas supposed to be thriving even as the rest of America suffered? Didn’t its governor declare, during his re-election campaign, that “we have billions in surplus”? Yes, it was, and yes, he did. But reality has now intruded, in the form of a deficit expected to run as high as $25 billion over the next two years.
And that reality has implications for the nation as a whole. For Texas is where the modern conservative theory of budgeting — the belief that you should never raise taxes under any circumstances, that you can always balance the budget by cutting wasteful spending — has been implemented most completely. If the theory can’t make it there, it can’t make it anywhere.
How bad is the Texas deficit? Comparing budget crises among states is tricky, for technical reasons. Still, data from the Center on Budget and Policy Priorities suggest that the Texas budget gap is worse than New York’s, about as bad as California’s, but not quite up to New Jersey levels.
The point, however, is that just the other day Texas was being touted as a role model (and still is by commentators who haven’t been keeping up with the news). It was the state the recession supposedly passed by, thanks to its low taxes and business-friendly policies. Its governor boasted that its budget was in good shape thanks to his “tough conservative decisions.”
Oh, and at a time when there’s a full-court press on to demonize public-sector unions as the source of all our woes, Texas is nearly demon-free: less than 20 percent of public-sector workers there are covered by union contracts, compared with almost 75 percent in New York.
So what happened to the “Texas miracle” many people were talking about even a few months ago?
Part of the answer is that reports of a recession-proof state were greatly exaggerated. It’s true that Texas job losses haven’t been as severe as those in the nation as a whole since the recession began in 2007. But Texas has a rapidly growing population — largely, suggests Harvard’s Edward Glaeser, because its liberal land-use and zoning policies have kept housing cheap. There’s nothing wrong with that; but given that rising population, Texas needs to create jobs more rapidly than the rest of the country just to keep up with a growing work force.
And when you look at unemployment, Texas doesn’t seem particularly special: its unemployment rate is below the national average, thanks in part to high oil prices, but it’s about the same as the unemployment rate in New York or Massachusetts.
What about the budget? The truth is that the Texas state government has relied for years on smoke and mirrors to create the illusion of sound finances in the face of a serious “structural” budget deficit — that is, a deficit that persists even when the economy is doing well. When the recession struck, hitting revenue in Texas just as it did everywhere else, that illusion was bound to collapse.
The only thing that let Gov. Rick Perry get away, temporarily, with claims of a surplus was the fact that Texas enacts budgets only once every two years, and the last budget was put in place before the depth of the economic downturn was clear. Now the next budget must be passed — and Texas may have a $25 billion hole to fill. Now what?
Given the complete dominance of conservative ideology in Texas politics, tax increases are out of the question. So it has to be spending cuts.
Yet Mr. Perry wasn’t lying about those “tough conservative decisions”: Texas has indeed taken a hard, you might say brutal, line toward its most vulnerable citizens. Among the states, Texas ranks near the bottom in education spending per pupil, while leading the nation in the percentage of residents without health insurance. It’s hard to imagine what will happen if the state tries to eliminate its huge deficit purely through further cuts.
I don’t know how the mess in Texas will end up being resolved. But the signs don’t look good, either for the state or for the nation.
Right now, triumphant conservatives in Washington are declaring that they can cut taxes and still balance the budget by slashing spending. Yet they haven’t been able to do that even in Texas, which is willing both to impose great pain (by its stinginess on health care) and to shortchange the future (by neglecting education). How are they supposed to pull it off nationally, especially when the incoming Republicans have declared Medicare, Social Security and defense off limits?
People used to say that the future happens first in California, but these days what happens in Texas is probably a better omen. And what we’re seeing right now is a future that doesn’t work."
Fred Schulte and Ben Protess wrote this unbelievable article about tax collection being taken on by hedge funds, banks, and other big wall street entities. They're buying up everythign is sight, and are ultimatly going to be acting as quasi governmental entities.
"Nearly a dozen major banks and hedge funds, anticipating quick profits from homeowners who fall behind on property taxes, are quietly plowing hundreds of millions of dollars into businesses that collect the debts, tack on escalating fees and threaten to foreclose on the homes of those who fail to pay.
The Wall Street investors, which include Bank of America and JPMorgan Chase & Co., have purchased from local governments the right to collect delinquent taxes on several hundred thousand properties, many in distressed housing markets, the Huffington Post Investigative Fund has found.
In many cases, the banks and hedge funds created new companies to do their bidding. They gave the companies obscure, even whimsical names and used post office boxes as their addresses, masking Wall Street's dominant new role as a surrogate tax collector.
In exchange for paying overdue real estate taxes, the investors gain legal powers from local governments to collect the debt and levy fees. At first, property owners may owe little more than a few hundred dollars, only to find their bills soaring into the thousands. In some jurisdictions, the new Wall Street tax collectors also chase debtors over other small bills, such as for water, sewer and sidewalk repair."
Read the rest of the article here.
Huffington Post commented today on republicans' inability to explain how they planned to afford tax cuts. By cutting entitlements? Well, they wouldn't come out and say that in an election year. Its obviously very hard to cut taxes when we already have a deficit. As Andrew Olivo said in response to this story, "In other news, sun is bright, hot." Tax Free Texas is working hard to find solutions to this problem, join us and be a part of it.
On "Fox News Sunday," host Chris Wallace told Fiorina that he hadn't "gotten many specifics" from her and said, "So now, as a non-career politician, as the anti-Barbara Boxer, you tell me specifically what are you going to do to cut the billions, the trillions, of dollars in entitlements?" Fiorina replied by blasting talk of a value-added tax, but Wallace interrupted her and again asked her whether she would cut entitlements. The result was a lengthy exchange in which Fiorina accused Wallace of asking her a "political question" and coming up with no answers other than cutting "waste" and saying "we ought to engage in a long conversation with the American people so they understand the choices."
To read the whole story click here.
CNNmoney.com recently posted a story noting that the federal deficit has once again topped one trillion dollars. Click here to read the full article. Commenting on the long term problem, Jeanne Sahadi writes,
"There has been a lot of political hysteria expressed over the annual deficits of the past two years.
Fiscal experts note, however, that the abnormally large deficits incurred in the wake of the financial crisis are not the primary source of the country's biggest fiscal problems.
The biggest source of fiscal concern remains the so-called structural deficit, which is made up primarily of spending on the big three entitlement programs. That structural deficit will continue to balloon faster than the economy grows long after the current downturn has ended.
Indeed, the Government Accountability Office projects that by the end of this decade, the vast majority of all federal tax revenue will be swallowed up by just four things: Interest payments on the country's debt, and the payment of Medicare, Medicaid and Social Security benefits.
The president's bipartisan fiscal commission, charged with recommending ways to get U.S. debt under control, will issue a report in December."
James Quintero originally posted this on TPPF's "Speak Freely" Blog:
The next big financial crisis to hit the U.S. may come as a result of overstretched state budgets, according to a new report from influential financial analyst Meredith Whitney.
Whitney, who just a few years ago correctly predicted the nation’s big banking crisis, makes the case in her 600-page report, “The Tragedy of the Commons,” that many of America’s largest states are suffering from crippling debt brought on by the use of budget gimmickry and unsound accounting practices. The accumulation of so much state debt, in a relatively short period of time, could cause some localities to default on their bonds and further complicate the nation’s already slow recovery.
Perhaps even more concerning, however, is Whitney’s prediction that the looming crisis may require a federal bailout, which would make for “an incredibly divisive issue.”
For the few states that earned high marks in Whitney’s report, namely Texas and Virginia, a federal bailout would mean that states who have exercised spending restraint and sound judgment could be on the hook for other states reckless spending habits—an act that promises to reward failure at the expense of success.
We are very excited that Texas Budget Source has launced its new website here.
The site is funded and run by the Texas Public Policy Foundation, and it is a wealth of information on where our tax dollars in Texas are going -- from the state level all the way down to municipal and county governments. We're going to be tracking their progress and posts with updates on our site, but see for yourself, click the link above.