May 24, 2013

Obama’s surreal fiscal cliff speech

After a refreshing vacation to Hawaii for Christmas, President Obama took the stage this afternoon (EST) to make a speech on the impending fiscal cliff. Driving home during lunch, I listened to KSL’s Doug Wright describe the scene, and I arrived home just in time to watch the President speak.

Wright was describing the scene while waiting for the President to take the stage, and since Obama was late, he tried guessing where they were at. He could see a podium, but he after listing through the typical rooms where Obama addresses the nation from the White House, he concluded that he didn’t know where they were.

Then a prep team started to arrange people in the room, standing them on tiered levels behind the podium. Finally, Obama came in, and about then I found a live stream.

To listen to him, though, you wouldn’t have known that he was addressing a national fiscal crisis that could send America’s economy into a spiral. Or that nearly every income earning American is about to a tax hike. Or that several rounds of negotiations had failed, first with Speaker John Boehner in the House, and then between Senators Harry Reid and Mitch McConnell in the Senate. You wouldn’t have been able to guess that his own Vice President had been called upon by McConnell to salvage what Reid clearly could not.

Nope. You would have thought that he was ready for a fun night of ringing in the New Year, the first of his second term.

At a time when almost everyone, but the most partisan on the political left, agrees that spending has got to be reigned if the deficit is going to be cut, Obama came to the stage and mocked his opponents, mocked Congress, and warned that raising taxes on the wealthy was only the beginning.

Every time he discussed a deal, Obama called for a “balanced” deal, by which he means that tax hikes must be included.

And I want to make clear that any agreement we have to deal with these automatic spending cuts that are being threatened for next month, those also have to be balanced, because, remember, my principle always has been let’s do things in a balanced, responsible way. And that means the revenues have to be part of the equation in turning off the sequester and eliminating these automatic spending cuts, as well as spending cuts.

Now, the same is true for anyfuture deficit agreement. Obviously we’re going to have to do more to reduce our debt and our deficit. I’m willing to do more, but it’s going to have to be balanced. We’re going to have do it in a balanced responsible way.

In other words, being “responsible” and “balanced” means raising tax rates. Say what you will about taxes, and I think there are fair arguments to be made both ways about their effect on the economy, Obama’s sole solution seems to be increasing tax rates without any discussion of what spending he’s willing to decrease in order to prevent the federal debt from growing.

And even the President’s own bean counters agree that raising taxes will not stop the deficit and federal debt from growing.

In fact, he all but sounded like he was trying to scuttle negotiations that were taking place across town to force tax hikes on all Americans, all so he can point at the Republican controlled House of Representatives and say: “See? See what they did? You can’t trust them.”

What he did say, after blaming the failure to reach a grand deal on the fiscal cliff on Congress, was that we should

Keep in mind that just last month Republicans in Congress said they would never agree to raise tax rates on the wealthiest Americans. Obviously, the agreement that’s currently discussed would raise those rates, and raise them permanently.

That’s not the diplomacy of a deal maker or a leader. That’s just petty snubbing. Why would any Republican want to compromise when they know they’re going to have it stuck in their face before they can even pen the agreement on paper?

After spending most of his speech acting like he wanted negotiations to fail, Obama closed by joking about staying in DC for New Years, and the obviously supporting audience laughed, again.  Obama made an appeal to get past politics, then, all but ignoring that he had spent the previous ten minutes playing politics:

But the — the people who are with me here today, the people who are watching at home, they need our leaders in Congress to succeed. They need us — they need us to all stay focused on them. Not on politics. Not on, you know, special interests. They need to be focused on families, students, grandmas, you know, folks who are out there working really, really hard, and are just looking for a fair shot, and some reward for that hard work. They expect our leaders to succeed on their behalf. So do I.

It was strange, surreal, and odd, and even Doug Wright commented as such as the speech, to an adoring crowd, ended.

The campaign is over, Mr. President. It’s time to start acting like a leader, not like a guy who just won class president of the local high school. Leading doesn’t happen by demanding what you want and making fun of people who oppose you. It happens by treating them with grace and respect, seeking compromise, and recognizing their interests are as important as your own.  Like you, they are trying to do what’s best for America, and just because you see the course differently is no reason to demean and deride from the bully pulpit of the Presidency.

Our problem isn’t the taxes, but the spending

“Spending car” by Mike Lester

Is it time for Republicans trying to avert the fiscal cliff to give up on protecting the Bush tax cuts for the wealthy in exchange for entitlement reform?

Maybe, says former Senator Bob Bennett in an opinion piece in the Deseret News.

President Barack Obama wants to raise revenue by increasing taxes on households earning more than $250,000. The financial arguments for his position are weak — there aren’t enough such households to have a big impact on the debt — but he will prevail because all he has to do to get his way is nothing.

No deal, and taxes go up automatically on Jan. 1, giving him what he wants for the rich. Then on Jan. 2, he can propose that Congress immediately pass a law putting rates back down for the non-rich. If Republicans don’t pass it and there is a new recession, he will claim that it was their fault.

Maybe a better question would be: do Republicans still have a choice?

In many respects, the debate over taxes–raise them on the rich! Lower on the poor! Middle class! Get rid of deductions! Close loopholes! Reform the tax code!–is important, but really misses the point of what is behind the fiscal problems our country is facing. At the root of it all, the problem isn’t the tax code–though I’m all for reforming it, simplifying it, and making it more flat–the problem is that we are spending more than we are paying in taxes.

Let me repeat that with some emphasis: we are spending more than we are paying in taxes.  It’s a national problem carried and caused by each and every American. It isn’t about the rich–who are paying more and more–or the poor–who aren’t paying at all, but are more reliant on the government than ever before: it’s about all of us.

  • The Democrats: “Raise taxes on the wealthy!” comes the hue and cry from the Left, regardless of the fact that taxes cannot be raised high enough to avert future fiscal crises. In fact, they may aggravate them. No matter how many times the left side of the political spectrum tries to attack the wealthy, to say that they are not paying their fair share, the fact is that the wealthy are paying an increasingly large percentage of all taxes received by the federal government.  As I’ve noted in an earlier post, the 1950s, which saw record high tax rates on the very wealthy, also saw the wealthy supporting only 27% of the government’s budget. Today, the wealthy support 51% of the federal budget.
  • The Republicans: “No tax hikes!” is a great slogan, and indeed, Republicans are right that taxes slow the economy and hurt entrepreneurs, employers, and families. But they can’t fight tax growth with one hand, and spend more with the other.  One of the major mistakes of Republicans during the George W. Bush Administration was the passage of Medicare Part D, a massive expansion of government spending without corresponding revenues (also known as “taxes”). It didn’t help that we decided to invade and occupy Iraq and Afghanistan at the same time. My point is that you can’t fight taxes and create spending at the same time and expect the books to balance at the end of the day.
  • And the rest of us Americans: Like it or not, whether you are political or not, whether you voted  or not, you too are part of the problem. Our culture’s changing priorities is a part of the problem. Think about your own spending and lifestyle habits:  do you go to the emergency room instead of the physician? Do your lifestyle choices keep you healthy and physically fit? Did you take a job–any job–during the recession, and then, when it wasn’t enough to pay the rent or put food on the table, seek help from family, church, or charity first, before seeking government aid?  Are you saving for your retirement or are you expecting that Social Security and Medicare will provide for you in your “golden” years? And to the wealthy: do you give to a lobbying group that assures your industry gets sweet-heart deals, tax carve-outs and deductions, or protection from competition? For all of us: do you make an effort to be aware of the effect local elected officials actions will have on your home, neighborhood, city, or state?

In large part, I believe that the growth of the mountain of debt our country faces in the coming decades is not merely the fault of politicians in Washington, D.C., but also the result of changes in American culture where we demand more, and more, and give less, less not to our country, but to our neighbors and to our communities. As we fail to prepare and practice self-reliance and interdependence with our neighbors, we hand government bureaucrats more responsibility for things that would have, just a generation ago, been handled by neighbors helping one another.

The costs of Medicare, Medicaid and Social Security are among the heaviest that our country will need to burden in the coming decades, but reforming them is the work of politicians, and work that they can feasibly accomplish. The long-term future of American prosperity depends on it.

On the other hand, the effects that are created by an American culture that creates people that ask “what can my country do for me?” is an effect that can be deterred only by asking “what you can do for your country.” And that question can only be answer by some serious introspection–and personal change.

Are you overtaxed? Do you know how much you pay?

Do Americans dramatically underestimate“ taxes? Not only do more than half of Americans believe they are overtaxed, it turns out that many of us don’t even realize that our employer pays more taxes on top of our payroll deductions.  In other words, many Americans don’t realize that your employer is paying an extra price for every worker, money that might otherwise be spent wages, R&D, employee benefits, or investment. I’m just sayin’…

Two interesting polls for your consideration:

  • 56% believe they are over taxed.  A March 9th “national telephone survey [found] that 56% of Likely U.S. Voters believe America is overtaxed.”  The survey also found that only one in three Americans were ok with their taxes, while another 12% were unsure.
  • 46% are unaware that employers pay matching taxes for payroll deductions. While Americans may think they are overtaxed, an August 8th survey found that many of those same American may not realize how much employers pay in addition to every dollar employees are taxed. “A new Rasmussen Reports national telephone survey shows that only 54% of American Adults recognize that employers pay more taxes on top of the wages paid to an employee.”
As they say on NBC, “the more you know…”

[Rasmussen Reports]

Hitting the Limit: A Financial Argument for Limiting Government [Contributor]

Tyler Lees is a conservative engineer and train nerd from Midvale, Utah.You can follow him on Twitter as @ThePacificSlope. After he and I discussed on Twitter the necessity of establishing priorities for government in order to cut spending, I invited Tyler to share his view on the topic in a format longer than Twitter’s 140 characters. The following are his thoughts.

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taxes

taxes (Photo credit: 401(K) 2012)

I believe that there is a practical limit to how big government can get, irrespective of ideological points of view. Let me explain.

There is a real limit on how much a government can permanently spend. Taxes can only be raised so much and only so much debt can be incurred before the amount of revenue a government can raise tapers off. Where those points are can often be determined only after they have been reached. Just because we want something more, does not mean we can have it.

Taxes can only be raised to a certain point before the increases cease to yield significant gains in revenue. (This is the much-debated, much maligned, but holding firm concept known as the Laffer curve.) The reason for this is that taxes pull money out of private hands and place that money in the public till. The money will not go to expansion of business, repayment of debt, investment in new equipment or research and development,or, on the personal level, to where you—the individual taxpayer–want to spend it. The more taxes rise, the less cash businesses and individuals have to spend on their priorities, and with the effect that economic growth is reduced.

Debt is the second way governments can raise cash for their needs, but the amount of debt a government can accrue is also limited – in much the same you and I are. You can only borrow as much money as someone is willing to lend you. And that debt has to be paid back, eventually. The financial problems we are seeing in Europe is due to the loss of creditors confidence (and in the case of Greece, confirmation) that the Euro zone nations can honor their debts.

How about an example to demonstrate – what if a nation finds itself in an emergency (such as a war or natural disaster), and has to spend more than it can bring in? Looking at the United States in World War Two, the national debt rose  to the equivalent of over 110% of GDP by 1945 as the nation mobilized for war and put ten percent of the population in uniform. This,despite rates of taxation that might have seen communists up in arms. However, there was little, if any, protest because, and this is the key,the emergency ended, along with the high levels of borrowing. The need for budget-busting expenditures ended with the war, and taxes remained at high levels only long enough to pay down the national debt. A gross oversimplification, perhaps, but not inaccurate

In 2011, the United States national debt again exceeded 100% of GDP. The difference is that only a small portion of the debt over-run can be classed as temporary – most are a permanent part of the budget, items that will not end with an emergency or a cease-fire.

When our future obligations to Medicare, Social Security, and national health insurance (aka “Obamacare”) are factored in, expenditures will continue to grow.  As the baby boomers retire those expenses will grow faster than our ability to tax and borrow.

The budget will have to be cut, and we will have to make major changes to Social Security, Medicare, and the national health insurance plan to stay viable. This will happen – we can either do so voluntarily, now, or have it forced upon us when no one will let us borrow any more. “Austerity” will seem kind compared to the choices that will be forced upon us when the money runs out.

Our beliefs and principles can only guide what our priorities should be going forward.

Should the rich pay more taxes (than they already do)?

What is your “fair share” of taxes?

President Obama’s plan to balancing the budget, if I don’t mistake it, is to raise taxes on the wealthy. His argument is that the wealthy are not paying their fair share of taxes. If they were, we could pay down our debt and put our fiscal house in order.

As I’ve cited before, this is the crux of his “You didn’t build that” speech, an attack on successful Americans everywhere.

“There are a lot of wealthy, successful Americans who agree with me because they want to give something back,” he said in a speech in Roanoke, Va., that set off dueling campaign ads. “Look, if you’ve been successful, you didn’t get there on your own.”

Private opinions can disagree, though, and they do. Says Joseph Thordike, a tax historian to the Wall Street Journal:

“Who’s right: Obama or Romney? Both. Or neither,” says Joseph Thorndike, a tax historian. “When it comes to taxing the rich, there is no single, objectively correct answer. You can talk all you want about asking rich people to pay ‘their fair’ share,’ but don’t kid yourself. You’re just trying to turn private opinions into public policy.”

“I’m struck” he adds, “how the facts can be used selectively by either side.”

[Emphasis added]

If where the “fair share” line is up to private opinion, what does it say about President Obama’s opinion that, when the economy is struggling and unemployment is high, he wants to take wealth out of our country to balance the debt? Wouldn’t it be better to grow the economy and lower the cost of government? Why would we soak the rich–most of them owners of businesses and investors in businesses–at the very time capital is most needed to grow business and expand?

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INTERLUDE

I recall, in an election past, attending a fundraiser for a candidate for President. The candidate himself was there, and though I was only there to help (hand out name tags, direct traffic, etc), I shook his hand and got a picture with him.  While a good man and a patriot, he was not the person supported for the party nomination. However, he could be the next president of the United States and that, I thought, was cool.

The fundraiser was small–probably less than a hundred donors–and was held in one of those spacious homes up on Salt Lake Valley’s bench. The door knobs were probably worth more than my undergraduate education, and the chandelier might have funded law school. A stairway lifted out of the main room where the donors were gathered and the candidate climbed up a few steps to speak. Among other things, he said something that has stuck with me:

“This sure is a nice place,” he said, and donors chuckled at the understatement. “In fact, it’s part of why I am running for President. My opponent wants to take this away and spread out the wealth. I’m running because I think everyone in America should have a place like this.  But you don’t get a place like this by taking it away from those who have earned it.”

Hyperbole or rhetoric, or both, fast forward now a few years, or more, and we find ourselves with a President who appears increasingly out of touch with the reality of what it takes to increase wealth, and that’s what it’s all about, right? Increasing wealth?

We’re not talking just about the level of unemployment, though that’s a great indicator. We’re talking about our national wealth–as a country and as individuals.  Whether we are talking about how much debt the federal government is carrying or the average wealth of Americans, the high and lingering level of unemployment (anywhere between 12 and 23 million people, depending whether you include underemployed and those who have stopped looking, and whether you say it’s 8.3% or 8.254% unemployment) is a mark that our country is not growing.

In fact, economic growth was at only 1.5% from April to June. That’s abysmal. Even while the rest of the world is picking up, last year the US growth at only 1.7%, while China grew at 9.2% and India at 7.2%. Lest you blame it on cheap labor available to those developing countries, note that even Canada grew at 2.5% last year and Germany at 3.1%. If we’re going to turn the economy around, we’ve got to start growing again.  Growth won’t happen by taking the fruits of success away from those who earned them.

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TAXES OVER TIME

David Wessel, in the same article that cites Thorndike above, makes a few salient points: How much are the successful (‘wealthy” in President Obama’s parlance)  paying in taxes now in comparison with past years?

  • The top 5%, top 1% and top 0.1% of Americans have been getting a bigger slice of all the income and paying a growing share of federal taxes,  and the corollary: the share of taxes paid by the bottom 40% of the population has been shrinking along with their share of income..

As my friend “Steve” would argue, the gap between the rich and the poor (or the rich and the middle-class) is getting bigger. Granted. But so is the share of taxes paid by the rich, too.

From Ronald Reagan to Barack Obama, the tax code has been tweaked and the economy has had its ups and downs, and the share of federal taxes paid by the top 5% and the top 1% has risen faster than their share of income:

In the 1980s, the top 5% averaged 22.6% of income and paid 28.5% of taxes.

In the 1990s, the top 5% averaged 25.3% of income and paid 34.3% of taxes

In the 2000s, the top 5% averaged 28.4% of the income and paid 40.3% of the taxes.

Do you see a pattern?

  • Average tax rates have come down for everyone. On average, the tax bite on the rich is bigger—except for those whose income mainly comes from capital gains and dividends.
Everyone is paying fewer taxes, but the wealthy are giving a bigger share of their income to the government. It’s why we call our tax system “graduated.” The higher on the income scale, the more taxes you pay, while the on the bottom (as much as half of Americans) pay almost no income taxes (though they pay a relatively higher share in sales tax…but that’s another story).

In 2011, according to the Tax Policy Center, about 46% of households didn’t pay any U.S. income taxes, a proportion swollen because so many have seen paychecks shrink or evaporate. But even in the better years of the mid-2000s, roughly 40% of households didn’t pay any federal income tax.

  • The tax system narrows the gap between economic winners and losers, but not enough to stop the gap from widening.

Our tax system does provide a safety net to those who do not succeed, but not as much as the Obama campaign wants it to.  Narrowing the gap is not enough, though; the Obama Presidency is aiming to eliminate it, not by lifting up the bottom, but by redistributing the property held by the top to those below them.

Unfortunately, we’re saddled with a President who is more concerned with a healthcare solution that will increase our taxes than an economic solution that will increase wealth so we can afford health care. It’s no unlike killing the golden goose to feed your family instead of just selling the golden eggs.

Golden eggs or rotten eggs, the question about fairness of taxes comes down to opinion resolvable only by a “show of hands.”

The Obamacare saga encourages political dishonesty [Contributor]

[Benjamin Lusty is a lawyer and an occasional contributor to Publius Online]

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Political dissemblance over the nature of taxes and regulatory architecture looms as an inevitably dark truth of post-Obamacare government.  Through the tortuous legislative course of Obamacare’s genesis, Democrats continually denied that the individual mandate was a tax, the heaviest word in America’s political lexicon.  Instead, the mandate was a “penalty,” or a “shared responsibility payment.”  (A chillingly Orwellian turn-of-phrase).  The Democrats knew that truth in taxation would slay Obamacare and scuttle their century-long obsession with state-directed flu shots and hip replacements.  So they prevaricated.  What do congressmen call a law that amends the Internal Revenue Code, is enforced by the Internal Revenue Service, and forces families to pay up to 2.5% of their incomes into the federal treasury?  Anything but a tax.

Unless you’re in court—there, any word will do.

Federal judges are not elected, and the politicians who voted for the law did not appear to defend themselves.  That task fell to elite lawyers who parsed language with forensic care, while insulated from the heat of constituents’ calls, donors’ demands, and lobbyists’ lists.  Those lawyers were high partisans engaged in definitive legal warfare.  Of necessity, they adopted the tactics of expediency:  prevail at all cost and regardless of any incongruity between the facts of the legal case and those of the political case.  When the stakes are command of an entire industry, and control over 16% of the economy, a favorable outcome justifies all political carnage.

Partisan achievement of controversial policy goals, however, is not the purpose of representative government.  Instead, representative government seeks consensus and accommodation of divergent political aspirations.  It only works when legislative process affords principled dissenters all reasonable opportunities to prevail on the merits.  This is impossible, however, when the agents of government cannot even agree to the meaning of the words they use to engage that process.  When a law is a “tax” for constitutional purposes, but a “penalty” for political purposes, the terms of the debate shift underfoot, confounding the discipline that elective politics is supposed to instill.

Some may counter that this is mere wrestling over words, and that the mechanisms of the law are unchanged by the language used to describe it.  But this begs the question over whether it is desirable for officials to tell constituents one thing and judges another.  Is it really acceptable for politicians to soothe the masses while winking to the legal elites who patrol the boundaries of the political system?  Besides, in its essence, government is simply words.  The miracle of self government by words, however, cannot continue if the words themselves are subject to abuse.

In result, Justice Roberts’ opinion sanctioned deception.  President Obama told the public that Obamacare was not a tax, but he told the court that it was.  The outcome of the affair is that “by-any-means” legislation is entrenched in our government, our constitution, and our political reality.  Now, neither political party has any real incentive to discuss tax policy honestly.

By any measure, Obamacare is the most expansive legislation in at least two generations.  It fundamentally alters the relationship between the federal government, the states, and the people.  It significantly amends the tax code, creates a new class of liabilities, and pours every man, woman, and child into a new, mandated, order of economic transaction.  It should not have passed the scrutiny of all three branches of the federal government through variable solipsism.  It should have been subject to the most exacting standards of honesty, procedural fairness, criticism, and consistency.  It was not.  It is the wreckage of political expediency, and the leading edge of continual obfuscation and cynicism.  Repeal may spare us bad policy, but not bad politics.

 

When the government picks winners, the applicants might already be losers

By the time lobbyists in Washington, D.C. (or at any of the state capitols  or local city governments across the country) convince lawmakers that a subsidy is needed for a particular industry, it might just be that the company is already taking a turn for the worse, says a new study.

The researchers looked at some $5 billion in spending from 1998 to 2008 in their study that will be published in the fall. Their findings showed that on average, the more a company shelled out for government affairs and political interests at the federal level, the worse it performed financially.

“If you look at most of the literature on business management and strategy, the implication is that these investments really pay off,” Doug Schuler, study co-author and professor of business and public policy at Rice, told Reuters.

“But we found a really persistent negative relationship” between political activity and market performance, he said.

The research also found that in terms of return on sales, higher political spending on average had either marginally negative, or statistically insignificant impacts.

The only exception? About 10 percent of the companies surveyed did better only when they were already highly regulated.

This isn’t just a problem for the federal government, either. When local and state governments shell out money to prop up a “pet industry,” the government must, of necessity, take from Peter to give to Paul. Every RDA, loan guarantee, or special tax treatment is just another way of propping up a private company at tax payer’s expense. It’s called “picking winners,” because the government is essentially guessing that this company is going to work, pay back the money, and the government will come out on top.

Unfortunately, more often than not (if not nine times out of ten) the government–city, state, or federal–picks that winner not based on market success but on lobbyist donations. As a result, often dubious enterprises are propped up beyond their useful life by taxpayer money, money that is frequently lost from productive use.

Want an example? The most glaring is Solyndra, mentioned above. Touted as a green energy company, in 2009 the Obama Administration provided it with $535 million in loan guarantees. Additionally, the California government gave it $25.1 million in tax breaks. Then, on August 31, 2011, Solyndra declared bankruptcy, laying off 1100 workers. Ouch.

Closer to home, you might look at UTOPIA, a consortium of 11 Utah cities that have formed to compete with the private sector to provide telecom services and a dubious project that, if it worked, would provide very high-speed internet to participating customers in participating cities across Utah. While not a company, it acts as one and has been set up by government to compete with private companies. There are those, such as myself, who do not believe government should subsidize competition with the private sector.  Further UTOPIA’s ongoing problem is that it requires participant cities to foot the initial cost of building the network until sufficient customers can be attracted to repay the costs. So far, the project has run over budget and has been unable to attract enough customers to meet targets. In fact, from 2010 to 2011, it started to lose customers. The cost was just too high for people to pay when sufficient internet bandwidth is available from private companies.

Inability to gain customers is one thing, and there are those that argue that UTOPIA has begun to gain customers, but regardless  UTOPIA has consistently been required to rely upon taxpayers to balance its budget when it has failed to meet its stated goals.  As the Utah Taxpayer’s Association  argues, after so many repeated failures to meet promises, perhaps local governments would face up and end the pain:

UTOPIA, and its enablers on the city councils in UTOPIA’s member cities, have heard these concerns repeatedly. Many even agree that these arguments should have persuaded their predecessors in the city  governments to not venture down this path at all. However, they feel compelled to pony up more money, to make sure taxpayers don’t lose the money already committed to back UTOPIA’s bonds. Unfortunately, that money is already gone.

Rather than cut their losses, though, and move on, cities continue to throw good money after bad.  Take West Valley City, for example. In 2010, to match its obligations to UTOPIA and help cover UTOPIA’s shortfall, In the 2011 budget year,

To cover their $3.5 million UTOPIA bill, West Valley City is proposing an 18% property tax increase. While West Valley City officials insist that the property tax increase is unrelated to the UTOPIA bill, it is no coincidence that the exact amount of revenue generated from the property tax increase is $3.5 million.

The tax increase would amount to $70.44 on the average home valued at $185,000 and $128.16 for businesses of the same value. West Valley City already has the second highest property tax burden in the state.

That budget passed, and West Valley residents, whether they use UTOPIA or not, saw an 18% increase in their taxes.  And guess what–UTOPIA seems to fit all the characteristics of a subsidized company that the market wouldn’t support otherwise.

Maybe it’s time to choose leaders who won’t subsidize private business and use the government to compete with the market?  Even the Chinese can make a city look good by pouring enough money into it. Just look at the Olympics. That doesn’t mean the economy will do better because of it.

Helping a company, or competing with a company using taxpayer dollars, only removes from the market resources that the market would have otherwise, and more efficiently, used to create more competitive products.

In Solyndra’s case, the Obama Administration picked the company they thought would last. They were wrong.

In UTOPIA’s case, eleven cities have opted to create a product that the private sector was unwilling to support on it’s own. If the private sector won’t support it, why should the government?

[MSN] [UTA]

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