Friday, August 8, 2008



Congressional Approval Falls to Single Digits for First Time Ever, July 8th.

Yep, the news is a little old, but it keeps getting worse. Only 9% think Congress is doing a good or excellent job. Worse, only 12% feel any meaningful legislation is being passed. "The majority of voters (62%) say Congress has not passed any legislation to improve life in America." This is a sad time for America, the greatest repository of freedom the world has ever seen. For Americans to lose faith in their leaders says something about our vacuum of leadership and the corresponding secret and unhealthy method of 'hotlining' the majority of legislation that's passed without leaving the comforts of a Senator's office, limo, or campaign trail. Failure to read a proposed bill, sometime 400-500 pages, given 15 minutes to review it by phone, and having up to 40 of those bills pass every day by phone via 'unanimous consent' or 'hotlining' is beyond the reason of any representative's responsibility to his constituents, his conscience, and his duty to be part of the answer instead of the problem. And failure to respond by phone endorses automatic passage on bills never seen; never read; but involve billions of our taxpayer money. How often we hear from those running: 'I just want to make a difference'. Yes, they have made a difference for the worse, by being part of the dumbing down of America and raping citizens of faith, money, and violating the Constitution; not the least of which is preserving domestic tranquility and failure to 'preserve, protect, and defend the Constitution'.

Lobbyists contribute to this problem by their $ influence. Desired legislation in exchange for healthy campaign contributions or favors would constitute a bribe if proven that a 'quid pro quo' exists (tit for tat), but most are more clever than that. The withholding of money may send a message. Take a look at Build-Pac., the political action committee of the National Homebuilders. According to the Center for Responsive Politics, 2 million already poured into the 2008 congressional campaigns, but now they threatened to withhold any more because they didn't get all the provisions they wanted. "Lobbies like to pretend that congressional action and their donations aren't tied, " said Melanie Sloan of Citizens for Responsibility and Ethics in Washington. "But the home builders just confirmed that they are."

Take a look below posted at open secrets http://www.opensecrets.org/pacs/lookup2.php?strID=C00000901

National Assn. of Home Builders 2008 PAC Summary Data
Total Receipts: $3,120,469
Total Spent: $2,240,402
Begin Cash on Hand: $ 826,669
End Cash on Hand: $1,706,734
Debts: $ 0
Date of last report: June 30, 2008

Contributions from this PAC to
federal candidates (list recipients)
(45% to Democrats, 55% to Republicans): $ 977,000

Contributions to this PAC from
individual donors of $200 or more
(list donors): $2,348,885

Among the recipients of moneymade
public as of June 30th '08 by the FEC:

Burton, Dan (R-IN)

Buyer, Steve (R-IN)

Donnelly, Joe (D-IN)

Pence, Mike (R-IN)

Visclosky, Pete (D-IN)

For a full listing go to: http://www.opensecrets.org/pacs/pacgot.php?cmte=C00000901&cycle=2008

It is quite obvious that the accumulated value of small potato contributions from thousands of lobbyists and pacs can readily provide a healthy campaign war chest for those seeking re-election. Just don't answer your office hotline and lobbyists' legislation will sail on through with unanimous consent. Check will be in the mail soon. Object to provisions and you're persona non grata, and your future on the Hill may be in question.

Blunt Proof of the Feasibility to Permanently Abolish Property Tax

Media Contacts:
Melyssa Donaghy 317-938-8913
Max Katz 765-409-6669

Hoosiers For Fair Taxation, Senator Delph, Representative Noe, Representative Elrod and many other legislators along with Stop Indiana, attorney John Price, Eric Miller's Advance America, and the Statewide Taxpayer Alliance know that property tax abolishment, without substantial increases in sales tax and income tax, is realistic and possible. The economist Dr. Bill Styring's 2/2/2 Plan demonstrates that the state of Indiana can completely replace property tax without changing the state's current spending habits.

Dr. Styring's plan does not account for positive changes in Indiana's economy that will undoubtedly follow the elimination of property tax such as heavy real estate investment and increased consumer spending due to increased statewide disposable income. The real estate investment in Indiana alone would cause such an economic boom that it could likely end our abandoned property and foreclosure crisis. Property tax elimination would also likely cause a surge in Indiana's population as more people locate to Indiana to take advantage of real estate purchase opportunities without the burden of property tax. With the population surge would come more sales and income taxes.

The General Assembly does not have to adopt a specific plan until the year 2011. In the meantime, we recommend that the General Assembly approves the 27steps outlined in the report prepared by the Sheperd Kernan commission. While the Governor's commission cannot forecast the savings to the state once the plan is implemented, there is no doubt that the savings would be substantial--perhaps equivalent to the the entire property tax burden currently placed on Indiana's homeowners because our legislators have not had the political will to liberate Indiana's governing structure and her taxpayers from the 19th century.

Our citizen networks will work to replace all legislators who do not support property tax repeal in the November 2008 election.

The 2/2/2 Plan, to replace property taxes in Indiana based upon the latest revenue forecast (07/08 fiscal, estimate):

1) Current IN sales tax (state level rate of 6%): $5.601 billion2% increase would yield an additional $1.867 billion

2) Current corporate profits tax: ~$2 billion

2% increase would yield an additional $.286 billion ($286M)

3) A 2% statewide average of the COIT would yield $2.705 billion to cover local civil units of gov.

By adding these three together ($1.867 billion + $.286 billion + $2.705 billion), a total of $4.858 billion is realized; enough revenue to replace property taxes.

Indiana has a 70-plus year history of attempts to lower property taxes by raising other, non-property taxes. In every case these have failed miserably. The new taxes, or higher rates on old taxes, remain in place. And, in short order, property taxes rise back to their old levels, poised to roar even higher.

--1933. General Assembly imposes two new taxes: an individual gross income tax and a corporate gross income tax. The morgue of the Indianapolis Star indicates that the political leadership at the time said this was for property tax relief (1933 was the pits of the Great Depression, and people were losing their homes. Home prices declined by over 40% in the 1929-1933 period). Property tax relief was nonexistent. The state used the money to bail out the state's own finances.

--1963. General Assembly imposes a new sales tax at a rate of 2% and changes the 1933 individual gross income tax (from 1933) to an adjusted gross income tax (the one we have now) at a rate of 2%. Again, the ostensible reason was for property tax relief and again little PTR was forthcoming.

--1967. Those 1963 tax changes were raising more money than projected. The GA decides to give back 8% of sales and income tax revenue to local government for property tax relief. Local units spent the money. No PTR.

--1973. Gov. Otis Bowen launches the most determined PTR offensive yet. The sales tax goes to 4% and a new corporate supplemental net income (profits) tax is imposed. Strict property tax levy controls are imposed. It works... for a time. By 1980, property taxes adjusted for inflation are some 30% lower than in 1973. When Bowen leaves office the levy controls are relaxed. By the end of the decade, property taxes (adjusted for inflation) are back to 1973 levels. The doubling of the sales tax rate from 2% to 4% remains in place, along with the new corporate SNIT.

--2002. More fiddling with the sales tax in the hope of property tax relief. The results of this are obvious, or we wouldn't be debating the current property tax mess. All of this suggests that unless the property tax is totally ripped up by constitutional amendment, the assessment and collection mechanism dismantled, it will grow back. The PTR-inspired hikes in other taxes remain. That is our history. It is a terrible deal for taxpayers.

2. A vote in the 2008 legislative session for a constitutional amendment to repeal property taxes does not amend the constitution. It merely starts the amendment process. Amendments must be passed by two consecutively elected General Assemblies, then submitted to a referendum. Thus any amendment passed by the '08 Assembly must be passed by either the 2009 or 2010 legislatures, then submitted to the voters at the 2010 general election. The General Assembly does not need to decide on a "replacement revenue" package until the 2011 session.

3. What might such a "replacement revenue" package look like? The particular answer will come from the 2011 General Assembly and cannot be determined now (if for no other reason than forecasting state level taxes and property taxes out that far would be a most unreliable exercise. No one need be locked into any particular plan just yet. However, as an illustration that a replacement plan is feasible and less scary than many fear (we don't need to be talking about a 12% or 13% sales tax ... in fact, we should not be), consider just this one possibility.

Local sales taxes are generally very bad policy, for a whole host of reasons too numerous to mention in this short sketch. Sales and corporate taxes are best levied at the state level. It happens that roughly a 2% increase in the sales tax and a 2% increase in the corporate profits tax roughly take care of school propertytaxes. The loss of local control by the state assuming school property taxes is minimal. About the onlylocal control left is on building projects.

For local civil units, a statewide average increase in the individual adjusted gross income tax of about 2% suffices to replace local civil government property taxes, higher than 2% in some units, less than 2% in others.

Thus, a "2-2-2" plan~2% sales and 2% corporate profits at the state level for schools and a 2% average on personal income taxes for civil units—is about what would be needed. This is merely a ballpark projection to 2011.

There may be better plans, it's really a policy question for the General Assembly: do you want to make the trade of something like this in exchange for no-property-taxes-forever-on-anything? Everyone understands "zero."

4. Are there "practical problems? Of course. The two identified are how to make the civil government transition from a property tax base to an income tax base, and how to handle debt backed by property taxes. Without elaborating, the former can be handled using locator software (Map quest-type programs). The debt problem might be handled by treating the current state paid PTRC's as in lieu of property taxes (which they are) and paying PT-backed debt service from each unit's own PTRC.

Conclusion: Total elimination of the property tax via constitutional amendment is the only way to give property tax relief that will stick. The other tax action necessary to achieve this goal—in 2011-are large but not so scary as "a 13% sales tax." They are feasible. The question is for the General Assembly. Are we going to once again go down that 70-odd year path of failed PTR policies or are we going to rip the property tax up by the roots?

Posted by Hoosiers For Fair Taxation on Friday, January 4, 2008.