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Political: Sequester Will Make Locals Raise Taxes

From the Politico:

Sequester has local leaders mulling tax increases

By STEVEN SLOAN and RACHAEL BADE | March 19, 2013

Congress is being blamed for another round of tax increases — just not in Washington.

Hey, we thought that everyone wanted tax increases. Isn’t that what the Politico and the rest of the mainstream media always tell us?

To keep their budgets in order, local officials across the country — many of whom don’t have the luxury of running deficits — say a dysfunctional Congress is forcing them to resort to the type of tax increases that Republicans, in particular, so fiercely oppose.

The tension between local budget crunchers and Washington lawmakers is on full display this month thanks to the sequester. The inability of Congress to agree on a plan to avert $85 billion in spending cuts that kicked in March 1 will slow the flow of federal dollars to city and county governments, many of which are already grappling with cuts in state assistance.

This is just the Politico still trying to monger fear about the sequester.

And never mind that there are no cuts, just a 1% reduction in the increase in spending. Also notice that nowhere in this entire article does the Politico ever give one specific example of a sequester cut that will cost the local governments any money. Remember, ‘safety net’ programs, such as Medicaid, has been exempted.

Some of the hard-hit jurisdictions are obvious. Residents in Fairfax County, Va., which is home to defense contractors and thousands of federal employees, are being warned that property taxes could rise by an average of $262 later this year because of fallout from the sequester.

“It’s a result of just the uncertainty of sequestration,” Sharon Bulova, the chairwoman of the Fairfax County Board of Supervisors, told POLITICO. “The indecision is what is killing us.”

There is nothing obvious about this. Are we supposed to believe that ‘furloughs’ of government workers, who will eventually be paid for their time off, are going to cut local tax revenues so much they are going to have to increase property taxes?

But this isn’t just a Beltway-area conundrum.

Reduced federal funding for health and social services is sparking a debate in Linn County, Iowa — which includes Cedar Rapids — over whether property taxes should go up next year.

More hogwash. Why should a 1% reduction in the growth of these ‘health and social services’ have any effect on the local tax base? The people receiving them don’t pay taxes anyway.

It’s not unusual for local officials to look at theatrics in Washington with disdain. But the sequester is exacerbating frustrations at the local level that Congress consistently avoids tough decisions, leaving county and city officials to clean up the mess.

What mess? Name one mess.

In Bartlett, Tenn., a town of about 55,000 just northeast of Memphis, Mayor Keith McDonald told POLITICO that he’s holding off telling his constituents they won’t face a tax increase in the coming year — as he likes to do each winter — because of the sequester sting.

“We’re still waiting to see the actual impact to our community,” he said in an interview. “It’s going to be a choice between raising taxes or cutting services.” …

In other words, this Mayor is thinking they might have to raise taxes if there is some impact. But there is no reason there should be any impact.

Some localities are already putting the finishing touches on their budgets, meaning that any tax increases they’re considering wouldn’t take effect until 2014 at the earliest. That’s going to require some tricky politicking to explain to voters why the sequester — which few people understand and even fewer will remember next year — is triggering a tax hike.

“By the time we do this, no one will be remembering sequestration,” said Linn County’s Langston. “It’s very difficult to go back and say, ‘Hey, remember sequestration?’”

In other words, nobody will even remember the sequester when it comes time to vote in 2014.

And here is some more fear mongering about the sequester from the Politico:

Sequestration: Cuts are already threatening House seats

By DARREN SAMUELSOHN | March 19, 2013

BELLEVILLE, Ill. — Rep. Bill Enyart might be a Democrat and Rep. Rodney Davis a Republican, but the two rookie lawmakers in Southern Illinois share one fear.

Sequestration could cost them their seats…

But runaway debt and increasing taxes and a stalled economy won’t.

Enyart and Davis are three months into their new jobs — representing next-door districts — and constituents already are blaming them for not doing enough to stop the automatic spending cuts.

This week, 4,500 civilian workers at nearby Scott Air Force Base will receive furlough notices — a troubling reminder for Davis, who won his seat last fall by just 1,002 votes.

Enyart’s no better off: He pledged to protect Scott during his 2012 campaign, but at last weekend’s St. Patrick’s Day parade in his hometown of Belleville, several people shouted, “Stop the sequester!” as he walked by tossing green beads to children.

“Certainly, in my district, we’re in crisis stage,” Enyart told POLITICO after marching in the parade.

This tale of two districts is a reminder for some in Washington who still think about sequester as an abstract political fight. On the ground, the cuts are real — and so are the political consequences…

This piece from the Politico is meant to scare the Republicans in the House. Even though they just told us that voters will not even remember the sequester when it comes time to vote in 2014.

This article was posted by Steve Gilbert on Tuesday, March 19th, 2013. Comments are currently closed.

3 Responses to “Political: Sequester Will Make Locals Raise Taxes”

  1. captstubby

    The New York Times

    March 16, 2013
    The Real Spending Problem
    By THE EDITORIAL BOARD
    The budget fight in Washington, which entered a new round last week as Senate Democrats and House Republicans introduced dueling plans, is usually cast as a contest between raising taxes and cutting spending. In fact, the taxes-versus-spending distinction is largely meaningless.

    Each year, the government doles out tax breaks worth $1.1 trillion. That is more than the cost of Medicare and Medicaid combined. It is more than Social Security. It tops the defense budget, and it tops the budget for nondefense discretionary programs, which include most everything else.

    Tax breaks work like spending. Giving a deduction for certain activities, like homeownership or retirement savings, is the same as writing a government check to subsidize those activities. Functionally, they mimic entitlements. Like Medicare, Medicaid and Social Security, they are available, year in and year out, in full, to all who qualify. Yet in budget talks, Republicans ignore tax entitlements, which flow mostly to high-income taxpayers, while pushing to cut Medicare, Medicaid and Social Security.

    President Obama and Congressional Democrats have rightly asserted that tax breaks are ripe for cuts that could raise revenue without hurting most taxpayers. One method, as presented in the Senate Democratic plan, is to convert tax deductions, which increase in value as income rises, to tax credits, which would provide benefits more broadly and evenly among low-, middle- and high-income households.

    Tax deductions, however, are only one kind of tax break. Many others take the form of arrangements that allow wealthy taxpayers to either escape tax entirely on specific transactions or to defer it indefinitely.

    Democratic budget proposals have targeted some tax shelters. solutions are needed to replace the automatic budget cuts, many tactics are indefensible and should be ended, including:

    CARRIED INTEREST This loophole lets private equity partners pay tax on most of their income at a top rate of 20 percent, versus a top rate of 39.6 percent for other high-income professionals. It drains the Treasury of $13.4 billion a decade,
    NINE-FIGURE I.R.A.’S Remember Mitt Romney’s $100 million I.R.A? Private equity partners apparently build up vast tax-deferred accounts by claiming that the equity interests transferred to such accounts from, say, their firms’ buyout targets are not worth much. No one knows how much tax is avoided this way.
    ‘LIKE KIND’ EXCHANGES As reported in The Times by David Kocieniewski, this tax break was enacted some 90 years ago to help farmers sell land and horses without owing tax, as long as they used the proceeds to buy new farm assets. Today, it is used by wealthy individuals and big companies to avoid tax on the sale of art, vacation homes, rental properties, oil wells, commercial real estate and thoroughbred horses, among other transactions. Government estimates say this costs about $3 billion a year, but industry data suggest the amount could be far higher.

    The list goes on.What remains of the estate tax is beset with tax dodges. Even golf courses are entitled to a special tax break of their own: some $50 million a year is granted to owners who donate golf courses to conservation trusts, ostensibly to benefit the public — though the public good in private courses is dubious.

    In this time of ill-advised budget cuts, there are surely better ways to spend that money. For $50 million, 6,000 children could attend Head Start next year.

    just thought you would want to know by saving and investing you money worked for, you are responsible for americas kids going hungry.
    shame on you.

    • This entire assessment of the tax code is based on one premise that is absolutely wrong. It assumes that all money belongs to the government. If that is the way things really are, then we all should just go on unemployment and welfare now. We should sit at home, collect our government checks, smoke dope, play video games, and eventually open our wrists because no matter what happens, we will never HAVE anything, and the only measure of our worth will be the government’s. And who wants to live in THAT world?

  2. captstubby

    maybe they already thought of that,
    and buried in Obama Care is a provision to open Suicide centers like in the movie Soylent Green.

    great food,

    good flick,
    and then bingo,

    a green candy bar.


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