Lessons Learned - Or Not?

“History in par, repeats itself”. I’m sure Mr. Kuhlman would be pleased to know that I was listening and learning in his World History class in high school. It is to our detriment that Congress and the old and new administrations have not learned the same.

In 1939, the Secretary of the Treasury under President Franklin D. Roosevelt, Henry Morgenthau, acknowledged after 10 years of economic depression and slightly fewer than that of the New Deal, “We have tried spending money. We are spending more than we have ever spent before and it does not work… After eight years of this Administration we have just as much unemployment as when we started . . . . And an enormous debt to boot!”

The numbers are enormous, so large that it is difficult comprehend their magnitude. An additional federal stimulus package that could top $1,000,000,000,000 – that’s a trillion – is now under consideration in Washington. The predominant thought is that government can spend us out of recession, but at what cost?

The Great Depression years, which were also the years of the New Deal, where not times of plenty. Unemployment remained stubbornly high ranging from 15% to 25%. Prices and wages were falling, not growing. The response was more government programs which crowded out private enterprise and elongated the pain.

The New Deal resulted in more government, higher taxes, and less Liberty. It hurt businesses, especially small businesses, stifled innovation, drove competition from the marketplace, dictated how to buy and sell chickens, and wreaked havoc with our monetary policy with global consequences.

History in par, repeats itself and today America looks at the black and white images of the Great Depression/New Deal Era and I have to ask – Why would we want to go back?

The New Deal Era saw the top marginal tax rates go from 25% to 79% with corporate income taxes increasing from 12% to 24% (today they are 35% - the highest in the world). There were also excess profits taxes – sound familiar? – and undistributed profits taxes, taxes on dividends and new payroll taxes, aka, Social Security.

The New Deal simply reallocated money from the private sector to the public sector. The New Deal sought to create “work”, instead of family supporting jobs that create “wealth”. It effectively took resources from one part of our economy to redistribute them to another leading to a planned economy – an economy where oligarchs rule and the citizenry suffers. America is a land of opportunity, not a land of subsistence.

As it stands today, the federal stimulus package has about $550 billion in new spending and $275 billion in tax relief. This spending includes $79 billion to bailout states that made bad decisions (Missouri was not one of them), $87 billion to states to pay for Medicaid – a program they can’t afford anyway, only $30 billion for highway infrastructure, and billions more for a cadre of government expansions.

We know what works. Broad based permanent tax relief works. Money should stay with the people who earn it. It inspires them to innovate further, take more business risks, creates more jobs which, in turn, creates more wealth.

Doesn’t the Preamble of our U.S. Constitution begin “We the People” and sets out to define why we “ordain”-ed and “establish”-ed the Constitution stating among those reasons that it was to “…secure the blessings of liberty to ourselves and our posterity”? Or has Washington relegated you and me to become Sumner’s “Forgotten Man”?

Shouldn’t Congress, the Federal Reserve, and the Executive branch seek solutions to empower individual liberty, instead of dictating individual actions? Shouldn’t they leverage American’s ingenuity and rugged individualism to help solve our problems, instead of harnessing our insecurity to fundamentally alter each American’s relationship with the State?

As we move forward in 2009, we must be mindful that 1939 was not a pinnacle of successes for government “solutions”. No government program can replace, or replicate, the American will to succeed. Government does not innovate, people do, government does not create jobs, people do, unshackle them from repressive tax policies and burdensome regulations and we will succeed.

The resiliency of the U.S. Constitution and the American people who are hard working, honest, and devoted to their families and communities will ultimately bring us out of these economic times in spite of what takes place in Washington, DC. Where Washington has faith in itself, I have faith in the American people, in other words, the Forgotten Man lest we forget that, “…he works, he votes, generally he prays – but he always pays…”

Rep. Doug Ervin Selected to Chair House Small Business Committee

JEFFERSON CITY – House Speaker Ron Richard, R-Joplin, today selected Rep. Doug Ervin, R-Kearney, to serve as chair of the House Small Business Committee for the 95th General Assembly. Rep. Ervin also served as chair of the committee for the 93rd and 94th General Assemblies.

“Rep. Ervin has done an outstanding job in leading this committee during the course of the last four years. He is the only choice to continue to serve as chair and I have every confidence in his abilities,” said Speaker Richard. “Our small businesses are the lifeblood of Missouri’s economy and we must do everything we can to ensure they are given every opportunity to grow and thrive. I know Doug will be a strong voice for Missouri small businesses as his committee addresses the issues they face.

The House Small Business Committee considers and reports upon bills and matters referred to it relating to the establishment, growth, development, expansion, retention and operations of small businesses in the State. As chair of the committee, Rep. Ervin will preside over committee hearings and be responsible for all legislation referred to the committee.

“It’s an honor to be able to continue my service as chair of this committee and I thank Speaker Richard for the opportunity,” said Rep. Ervin. “During this current economic downturn, it is vital that we find ways to promote job creation and provide opportunities for our small businesses to grow and expand. I look forward to working with the members of my committee to address the issues faced by our small business owners as we work to revitalize our economy.”

In addition to his chairmanship responsibilities, Rep. Ervin was selected as the Vice-Chair of the Special Committee on Children and families. He was also appointed to the Healthcare Transformation Committee and Ways and Means.

The Healthcare Transformation committee is tasked with covering such issues as consumerism in health care, transparency, health banking, the role of information technology in health care, patient safety, and examining the cost drivers in health care.

The Ways and Means committee is a new assignment and one that I am particularly looking forward to. This committee considers bills and all matters relating to taxes, tax credits, revenue and public debt, and the administration of the taxation and revenue laws.

Opening Day

Today, the First Session of the 95th General Assembly was convened and I am looking forward to tackling the challenges before us on your behalf. It is also with great regret that I inform you that yesterday, January 6th, the U.S. Congress also convened to work tirelessly on their behalf.

At the beginning of each new General Assembly which occurs every two years, the first order of business after the legislators are sworn in is the election of a new Speaker of the House. I am very pleased to have supported and voted for Rep. Ron Richard from Joplin to this important post. He takes this position at a challenging time in Missouri and our Nation.

While Congress has frittered away opportunity after opportunity and readies our descendants for untold trillions of dollars in debt to a seemingly endless line of special interests representing about every industry our Nation has to offer, Speaker Richard outlined a new vision.

Instead of rewarding the poor decisions of individual business leaders and lining the pockets of favored industries under the guise of “the greater good”, the Republican majority in the Missouri House recognizes that the bedrock of the economy, the bedrock of every community, is you and your family. So, today Speaker Richard outlined a four point plan known as the Family Recovery Plan.

The Family Recovery Plan starts with continued efforts to make Missouri a job-friendly state. We recognize that the oldest social program known to man is a family supporting job. This plan calls for a modest tax cut that will keep more of your hard-earned dollars in your pocket where they belong. The plan pursues free-market solutions to promote ownership, better access, affordability, and privacy in health care while making it more transparent and ensuring that it is free of the waste, fraud, and abuse that has plagued it in the past. Finally, this plan will explore ways to promote the development of our alternative energy sources such as clean coal, wind farms, hydroelectric, and nuclear power.

The Family Recovery Plan is essential to provide Missourians with the assistance they need during these tough economic times. The plan, along with sound budget planning, will be the cornerstone on which our legislative successes will be built. It is time for government to quit trying to pick winners and losers. Where our federal government has failed to act, the Missouri House will remain committed to seeking solutions to the problems faced by Missourians from all walks of life.

Feel Good Economics

Apparently, Congress is unaware of the economy that you and I live in. Just yesterday (March 13, 2008) Congress passed a non-binding budget resolution that ends the tax cuts from earlier this decade to pay for questionable pork barrel projects (which poses another question: why can’t Congress do anything for the people of this land that IS binding?).

Since when do tax increases help a struggling economy? How can Congress talk about economic “stimulus” packages out of one side of their mouth and job killing tax increases out of the other? Why does Congress want us to believe that a one-time tax rebate is good for us, but a permanent tax cut it is not? Is Congress more concerned with central planning of the economy, than the prosperity of its citizens?

Missouri’s constitution does not allow for deficit spending and requires the General Assembly to pass a balanced budget each and every year for the protection of taxpayers. Unfortunately, we have no such protection from Congress.

Politicians in Washington have opted for a politically expedient “stimulus” package that will do little, if anything, to stimulate the economy, but may be enough to stimulate their re-election campaigns. When the rebate becomes available, take it – it may be the only thing you’ll get from Congress, unless you have a personal “earmark”.

What is a state to do?

The General Assembly is already working on legislation to curb illegal immigration – a job that belongs to the federal government. The General Assembly is working to provide better access and affordability in our health care markets, but the federal government has put up barriers that stifle innovation and our ability to do so. The General Assembly is working to improve public education, but again the federal No Child Left Behind Act has too many strings attached.

Once again, what is a state to do? How can Missouri compete on the national and global playing field when Washington fails?

To add insult to injury, an old adage tells us that high tax rates don’t redistribute income as much as they redistribute people. In the next census, it is expected that Missouri will lose a congressional seat. These seats are apportioned by population and this would indicate that Missouri is not growing as fast as other states. This loss of a congressional seat will reduce Missouri’s representation and ability to influence Washington.

Where do people go? Over 20,000 people a day are relocating from one state to another. Americans are leaving the Northeast and the Midwest in favor of Southern and Western states. While a number of factors come into play like climate, quality of life, and housing prices to name a few, it is also true that taxes are a motivating factor.

Of the 12 top states netting new residents, eight of them do not have a state income tax. Those on the Left would tell us that people are willing to pay more taxes to get better government services, but the migration patterns strongly suggest otherwise. Interestingly, the people who tend to be the most mobile tend to be the most educated and motivated, or to put it bluntly, are taxpayers – tax them too much and they may not be here in the future to tax at all.

Missouri should take steps to reverse this trend by reducing our state income tax burden. One proposal (HB1340) would phase in the full deductibility of our federal income tax liability from our state income taxes. There is also a bill (HB2112) which requires the state to develop a way to replace the state income tax with a state sales tax. Another proposal, to be introduced by the end of the month, will reduce the top state income tax by up to 15% providing real tax relief for Missourians, especially the middle class.

These proposals are intended to allow people keep more of their own money, to allow them to make decisions for themselves and their families, to give individuals more liberty in their consumption, savings, and debt retirement.

By contrast, House Democrats have introduced a bill (HB2131) this year that will deny citizens more liberty in their consumption, savings, and debt retirement. This bill increases income taxes by up to 50% for middle class families in a time when families need to keep more of their hard-earned income, not less. Apparently, some believe government knows how best to spend your money than you do.

If we continue to ignore the long-term benefits of lower taxes and instead, embrace the “feel good economics” of Washington where Americans are baited into a $600 tax rebate check while imposing a tax increase roughly twice that size, not only will Missouri continue lose representation in Washington, but the individual liberty of each Missourian will be eroded. Let’s be thankful, as Will Rogers observed that we are not getting all of the government we are paying for.

Property Taxes

“Milk the cow, but do not pull off the udder,” or so goes an old Greek proverb so goes the experience of property owners throughout Missouri.

No one disputes the necessary evil of taxes to fund vital public services that range from fire and police protection, to water and sewer service, to funding schools to educate the next generation. Tax paying citizens deserve that our local political subdivisions do their level best to be stewards of these tax dollars making sure that each dollar that is collected is spent wisely and the greatest value possible is received in return. A system of equitable taxation, open books, and accountability are essential for good and sound government.

It is difficult to find a region in our great state, especially in the suburban areas, where property owners are not struggling to meet the financial burden that results from the ever-increasing property values and the corresponding increase their property tax burden. In some counties in Missouri, assessed values increased by an average of 22% between 2005 and 2007. Such increases touch every family, but its harshest impact is felt by those on fixed incomes.

To add insult to injury, our assessed valuations trail the home market resulting in valuations that may not accurately reflect the market price of a home. While Missouri is feeling the pinch of dropping median home prices, we are much better off than some parts of the country. Property taxes remain a local issue, but these striking increases call for action at the state level and property tax reform is a top priority this session.

The Missouri Senate has passed a bill that mandates tax rate rollbacks by all political subdivisions in reassessment years (SB711). These rollbacks are intended to protect property owners from sharp tax rate increases and prevent windfall revenues by taxing entities in reassessment years.

The bill also allows the ability for taxpayers to pay their property taxes in installments to prevent the “shock” of lump sum tax payments at year-end during the holiday season. Current law already allows counties to opt for quarterly installments, so this bill will require counties to provide taxpayers an estimate of their tax liability in the spring.

Citizens should never be liable for the errors of government, but in Clay County citizens are held liable for penalties and interest even when an error is made by the county. Unfortunately, our county collector will not make any exceptions and citizens are not prone to go to court, or are unaware of that alternative to prove their innocence. In either case, the taxpayer should not have to bear the burden of legal fees and the hassle of a lawsuit, because the county is unwilling to admit fault and waive the penalties and interest. This bill, and a companion House bill (HB1958) which I have co-sponsored, prohibits the imposition of penalties and interest where there is clear and convincing evidence that a county made an error in the determination of taxes owed by a taxpayer.

The Missouri House is considering an increase in the income cap for property tax relief known as the circuit breaker (HB1321). The program is currently available to seniors and disabled individuals who make $27,500. This bill would raise the cap to $32,500 for a single person and $36,500 for a married couple while increasing the maximum tax credit from $750 to $800.

Another bill under consideration by the House (HJR59) is a constitutional amendment exempting Missouri citizens on active military duty from paying personal property taxes.

Property tax reform is a very complex issue. Radio-television personality Arthur Godfrey proclaimed, “I'm proud to be paying taxes in the United States. The only thing is - I could be just as proud for half the money.” The best humor is always rooted in truth. We should demand accountability in the usage of our tax dollars and we deserve an open and accurate assessment process that prevents government from taking advantage of them.