Light at end of FasTracks tunnel?

Nope, it's really the headlight on an oncoming train. RTD admits it won't be able to finish FasTracks without a tax increase, otherwise the last rail won't be laid down until it's time to start replacing what's working now. Sad details were in the Rocky on Tuesday.

"The Regional Transportation District says it would need a 0.2- to 0.3-cent hike in the metro sales tax - half again or more of the original FasTracks sales tax increase - to build what was promised to voters in 2004.

"Absent other new revenue from federal, state, regional or private sources, meeting the original 2017 completion date and building out all 10 corridors to their planned end points would require the extra tax on top of the 0.4-cent hike voters approved four years ago."

So this white elephant that I see whizzing by me - mostly empty - every morning as I drive down I-25 is looking so swinish there isn't enough lipstick in the front range for RTD to make it look better. I could take the thing into work, except that I'd either have to drive to the station or take two buses on the way in and a call-for shuttle once I got down here.

When Amendment I came up last year, I calculated that this little property tax increase - the one they asked about, as opposed to the one they didn't - was going to cost me three months of my retirement. Looks like we're about to be up to a full half-year. Which is good, because I can spend the extra time riding the Light Rail from station to station.

Taxes: Here's the truth

Obama isn't the agent of change he pretended to be during the primaries. He's an old-school "tax and spend" liberal who will pursue an economic plan that involves increases in all the major income and investment tax rates, while spending billions on new social programs and regulatory schemes. Now that the general election is well under way, he and Joe Biden have taken on the populist mantra that is popular in front of liberal audiences -- couching these new taxes in typical "soak the rich" class warfare politics, promising to raise the taxes of "those who can afford it most" to help those "who need it most". If this sounds a lot like Marx -- "from each according to his ability, to each according to his needs" you'd be right. That's why Obama's ecomomic platform is a classic, socialist income redistribution scheme. Not long ago, Stephen Moore of the Wall Street Journal took a look at income, taxes and wealth in this country. The objective was to better understand whether there is merit to the left-wing contention that the rich don't pay "enough", and whether their largesse really comes at the expense of the middle class.

Here are some of his findings:

** Who pays the most taxes? The latest data show that a big portion of the federal income tax burden is shoul­dered by a small group of the very richest Americans.=2 0The wealthiest 1 percent of the population earn 19 per­cent of the income but pay 37 percent of the income tax. The top 10 percent pay 68 percent of the tab. Meanwhile, the bottom 50 percent—those below the median income level—now earn 13 percent of the income but pay just 3 percent of the taxes. These are proportions of the income tax alone and don’t include payroll taxes for Social Security and Medicare.

** Did the Bush tax cuts favor the wealthy? In static terms, yes. But in reality -- when taking in investments and income generated by those savings, the answer is absolutely not. The latest IRS data show an increase of more than $100 billion in tax payments from the wealthy by 2005 alone. The number of tax filers who claimed taxable income of more than $1 million increased from approximately 180,000 in 2003 to over 300,000 in 2005. The total taxes paid by these millionaire households rose by about 80 percent in two years, from $132 billion to $236 billion.

** Did the Bush tax cuts put a greater burden on the middle class and poor? No. Moore examined the Treasury Department analysis of how much the rich would have paid without the Bush tax cuts and how much they actually did pay. The rich are now paying more than they would have paid, not less, after the Bush investment tax cuts. For example, the Treasury’s estimate was that the top 1 percent of earners would pay 31 percent of taxes if the Bush cuts did not go into effect; with the cuts, they actually paid 37 per­cent. Similarly, the share of the top 10 percent of earners was estimated at 63 percent without the cuts; they actually paid 68 percent.

** What has happened to tax rates over time? They've fallen -- and this has made the tax system more fair, not less so. As tax rates have fallen by half over the past quarter-century, taxes paid by the wealthy have increased. In 1980, for example, the top 5 percent of income earners paid only 37 percent of all income taxes. Today, the top 1 percent pay that proportion, and the top 5 percent pay a whopping 57 percent.

** Do the rich pay more in taxes because they earn more income? Yes. There’s no doubt that the share of total income earned by the wealthy has increased steadily over the past 25 years. Since 1980, the share of income earned by the richest 1 percent has more than doubled, from 9 percent to 19 percent. The share of the income going to the poorest income quintile has declined. Income disparities, in absolute dollars, have grown substantially.

What is significant is that for the top 5 percent and 10 percent of earners, the ratio of taxes paid compared with income earned has risen. For example, in 1980, the top 10 percent earned 32 percent of the income and paid 44 percent of the taxes—a ratio of 1.4. In 2004, this group earned more of the income (44 percent) but paid a lot more of the taxes (68 percent)—a ratio of 1.6. In other words, progressivity—in terms of share of total taxes paid—has risen.

Contrary to the Democrats' class-warfare rhetoric, gains by the rich have not come at the expense of the middle class:

Median family income in America between 1980 and 2004 grew by 17 percent. The middle class (defined as those between the 40th and the 60th percentiles of income) isn’t falling behind or “disappearing.” It is getting richer. The lower income bound for the middle class has risen by about $12,000 (after inflation) since 1967. The upper income bound for the middle class is now roughly $68,000—some $23,000 higher than in 1967. Thus, a family in the 60th percentile has 50 percent more buying power than 30 years ago.

Another canard of the left is that the low taxes on dividend income and capital gains -- a central component of the Bush tax cuts -- favors "only the wealthy".

The latest polls show that 52 percent of Americans own stock and thus benefit directly from lower capital gains and dividend taxes. Reduced tax rates on dividends also triggered a huge jump in the number of companies paying out dividends. As the National Bureau of Economic Research put it, “The surge in regular dividend payments after the 2003 reform is unprecedented in recent years.” Dividend income is up nearly 50 percent since the 2003 tax cut.

The 1997 tax reform, passed under President Clinton, reduced the capital gains tax rate from 28 percent to 20 percent, and taxable capital gains nearly doubled over the next three years. The 2003 reform brought the rate down to 15 percent, and between 2002 and 2005 there was a 154 percent increase in capital gains reported as income.

It is appealing populist rhetoric to cry "soak the rich" while talking to crowds of middle-class workers who think that somehow they will get the benefit from making the wealthy pay more. It even works in front of elite crowds who may feel guilty over their success and feel compelled to pay more in. Joe Biden this week famously called paying higher taxes "patriotic" -- as if somehow giving your hard earned money to the federal government for them to waste on pork is good for the nation.

But this analysis by Moore shows clearly that the fundamental logic of this is flawed. The wealthy already pay a disproportionate percentage of their income in taxes. Higher taxes don't result in more income to the treasury (just ask the state of Michigan) -- but rather create a quieting effect on the kinds of investment that is necessary to create jobs and fuel market growth. The "dreaded" Bush tax cuts did not fall on the backs of the middle class -- but rather have disproportionately hit the wealthy instead. And the cuts in dividend and capital gains taxes have been shown to be a tremendous engine for economic growth -- leading to more treasury dollars, not less.

It may not make good political theater, but the cry should be "tax cuts for the rich" -- because the old adage that "a rising tide lifts all boats" is true.

Gloating begins by TABOR's enemies

Breathe easy, taxpayers. The Denver Post’s big-government dinosaur, Bob Ewegen, informs us “the good folks” are finally back in charge — i.e., those who want to make it easiest for government to spend every last dime are back in charge at the state capitol and taxpayers are about to take it in the shorts. Ewegen is, of course, cheerleading for what he hopes will be the death knell for Colorado’s Taxpayers Bill of Rights (TABOR) — a ballot initiative championed by outgoing Speaker of the House Andrew Romanoff and State Treasurer Cary Kennedy.

The initiative would gut everything that remains of TABOR after Referendum C, except the taxpayers’ right to vote on tax increases — or at least the right to vote on anything the legislature and governor admit are “tax increases,” as opposed to tax increases they deceptively call tax “freezes” or “fee increases.”

Ewegen falsely asserts for the umpteenth time that, when Ref C expires, TABOR will rise from the ashes, baring its fangs to devour all that remains of state government. This, of course, is rubbish.

Ref C not only allowed state government spending to rebound after the recession by repealing the TABOR spending limit entirely for five years, but it also repealed permanently what Ewegen tirelessly refers to as the “notorious ratchet effect.” Except Ewegen conveniently ignores that fact.

In plain English, allowable state government spending under TABOR (even after Ref C) will grow every year to accommodate inflation and population growth. Even if state revenues dip due to an economic slowdown, the TABOR spending limit grow higher and higher so that another Ref C is never necessary — based, at least, on the justifications of Ref C proponents in 2005.

Back then, the argument was that TABOR would permanently lock state government spending into recessionary levels from which the budget could never recover no matter how well the economy rebounded.

However, a key provision of Ref C says that after the five years of budgeting without guardrails, the state legislature can then calculate future spending limits based on the highest of those five years multiplied by automatic increases for inflation plus population. Had that provision been written into TABOR originally, spending could have rebounded to approximately current levels without Ref C.

Ewegen clairvoyantly declares that the Romanoff-Kennedy plan “locks in the core of TABOR by guaranteeing that you have the right to vote on all tax increases.” It’s curious that an ardent TABOR-hater claims to know what voters who passed TABOR really intended — despite polls showing that voters clearly wanted more than just the right to vote on tax increases.

So, after voters gave state government permission to spend $3.7 billion of TABOR surplus — a figure that ballooned to $6.1 billion thanks to a booming economy — Ewegen now thinks voters should permanently surrender their authority to cap state spending. Never mind that even state economists dispute Ewegen’s fallacious claim that TABOR will “resume chipping away at state government” when Ref C expires.

Oh well, Ewegen obviously subscribes to the Don Quixote dictum, “Facts are the enemy of truth.”

Are tax dollars pushing tax hike?

If Douglas Bruce authored a ballot initiative that simply said, "Taxes shall be reduced by $300 million a year" but couldn't explain which programs should be eliminated or scaled back, pundits would ridicule his half-baked scheme and scold him for wasting the public's time. That's the treatment Gov. Bill Ritter should be receiving for his hastily proposed $300 million oil and gas tax increase - money to be showered on various programs with few specific instructions.

Perhaps because he's the Governor, some editorialists have suggested that state bureaucrats should flesh out the details of his proposal, specifically his vainglorious "Colorado Promise" college scholarships.

There's just one problem: state law frowns on commandeering government workers at taxpayer expense to do homework for a ballot campaign that hasn't even qualified for the ballot, much less been approved by voters.

After the Governor changed his tune about how the scholarships would work and whom they would benefit, higher ed chief David Skaggs, the former Boulder congressman, rode to the rescue:

"[T]he Colorado Commission on Higher Education instructed staff . . . to prepare recommended policies to implement the provisions of the scholarship ballot measure and to have them ready for the commission to consider at its next meeting, July 10," Skaggs wrote in a letter to the editor.

Didn't these state staffers have any work to do before the Governor decided to play Santa Claus to college students by raising taxes on oil and gas? If not, then perhaps he could create a few scholarships simply by eliminating unnecessary bureaucrats in higher ed.

Both Denver dailies have correctly noted that Ritter's ballot initiative is in trouble without more specific detail, but it is not proper for state employees to develop those details for the campaign.

Colorado Revised Statues (1-45-117) allow government employees to "respond to questions" but they may not spend "more than fifty dollars of public moneys in the form of letters, telephone calls, or other activities incidental to expressing his or her opinion on any such issue."

No doubt, Gov. Ritter and Mr. Skaggs will contend they are simply asking state staffers to answer questions - not using them to garner support for the initiative. But these are not technical questions, like "Will the scholarships come in the form of a reimbursement or as a credit against tuition?" These are essential policy decisions, such as "How much will the scholarships be worth?" and "Who will be eligible?"

Without these specific details - which the Governor and other proponents failed to provide - the tax increase and the Governor's vanity scholarship program are dead in the water.

Still, the courts have ruled that the purpose of the aforementioned law "is to prohibit the state government and its officials from spending public funds to influence the outcome of campaigns for political office or ballot issues."

Another court case said that even an informational "brochure mailed by (a government entity) explaining proposed improvements violated the law because it did not present arguments for and against."

On June 18, I filed an open records request to find out exactly how much homework higher ed officials and the Governor's staff are providing for the ballot initiative. Mr. Skaggs responded that his staff could not produce this material within three working days "without substantially interfering with the staff's obligation to perform other public service responsibilities."

While I await his final response, I will contemplate how it is that his staff can develop, almost from scratch, a $130 million scholarship program without compromising "the staff's obligation to perform other public service responsibilities."

Term Limits: Some Failure

Out of the 15 states that limit legislative terms, 10 rank near the top in economic competitive- ness among the 50 states. Colorado, one of the first to enact term limits back in 1990, ranks 7th. If that's what Denver Post columnist Dan Haley calls policy failure, let's have more of it. Haley's piece on May 4, "Term limits have failed," doesn't prove its case. He says the eight & out rule for Colorado's state senators and representatives "hasn't made our government by the people more efficient and effective," but gives no examples to support that.

I'd argue, to the contrary, that firm restraints on government growth and activism, imposed by the people in the late '80s and early '90s -- the 120-day legislative session, term limits, and tax limits under TABOR -- have done much to help the state as a whole grow and prosper ever since.

Economists Arthur Laffer and Stephen Moore, writing in the "Rich States, Poor States" survey at ALEC.org, rate the bullish or bearish outlook of each state according to its fiscal, regulatory, and labor policies. States in the top half of the class where term limits don't seem to spell failure include...

Arizona #2, South Dakota #3, Colorado #7, Nevada #11, Oklahoma #13, Florida #14, Arkansas #15, Michigan #16, Missouri #17, and Louisiana #21.

I'm not suggesting term limits are either a necessary or a sufficient condition for achieving a strong economic outlook. Obviously the rest of the top-rated states got there without term limits. And term-limited states in the bottom half of the class include Montana #33, Nebraska #34, California #41, Maine #44, and Ohio #47.

I'm just saying Dan is going to have to show me some evidence that term-limited states are necessarily worse governed, because on the evidence so far it appears they may be somewhat better governed.

Maybe it's matter of what we think government should do. Many of us believe it should stay off our backs and out of our pockets. By that measure, the Haley concern that too little is being done to "bridge partisan tensions" and that "statehouses with term limits are growing... less powerful" is no concern at all.

His source for the latter quote, the National Conference of State Legislatures, being a trade association for legislative careerists, naturally dislikes term limits. To which again, some us merely say: too bad for them.

Give NCSL credit, though; their research is generally professional, thorough, and accurate. Here's their overview on the factual status (not the subjective evaluation) of term limits today.

The 15 states that do have them, a number that my friend Dan suggests is paltry and embarrassing, should in my opinion be considered the fortunate few.