Chick This Out
I like this very good story about this very good website by a couple of "capitalist chicks." Thanks to InstaPundit for the link.

Assault on the Truth
The Tennessean continues its assault on the truth with a story suggesting that a small number of pro-income tax demonstrators managed to "prevent" anti-income tax protesters and radio talk show hosts from coming downtown. The truth: the radio talk show hosts didn't organize a protest yesterday. And The Tennessean either knows this or simply decided not to find out the real facts because their version better fits their agenda of (falsely) portraying support for the income tax as rising.

Incidentally, it's worth noting that, according to the Tennessean, the rally yesterday sponsored by the state employee's union managed to draw only about 150 people despite offering free lunch and free musical entertainment by a band - in Nashville, no less, where most any free concert downtown attracts thousands. And, it should be noted, despite the presence of about 20,000 state employees within a four-block radius. If anything, this is evidence that there is little support for the income tax among state workers.

The Associated Press also carries a biased account that implies the lack of anti-income tax protesters indicates dwindling opposition to the income tax.

Another Day, Another Spin
Today's Tennessean story on the latest in the state budget/ tax battle is full of oddites.

It accidentally reveals that the Naifeh income tax wouldn't raise $1.1 billion in new revenue anually, but instead a whopping $2.5 billion in extra revenue per year. The paper, which previously has used the $1.1 billion figure, merely reports the new figure without acknowledging the change - or commenting on the fact that the state currently raises less than $7.5 billion per year in tax revenue, so Naifeh's tax represents an astounding 30 percent increase in taxation in one year.

Meanwhile, Gov. Sundquist is quoted as saying the state's budget crisis is "the most serious problem since the War Between the States." The Great Depression and a few other problems notwithstanding.

Also, Rep. Frank Buck reportedly declined to answer a question about the CATS II budget plan and whether its multitude of tax increases would affect people's purchasing habits. Or, as The Tennessean phrased it, "whether people would make fewer purchases with so many new taxes." Hmmm. I don't recall them asking if the income tax would cause people to make fewer purchases or otherwise harm the state's economy.

And Sen. Jim Kyle wins the award for the day's best ironic statement, when he condemned the CATS II plan as potentially "the largest tax increase in the history of the state." Kyle is a supporter of the Naifeh income tax plan, which would increase taxes nearly three times as much as the CATS plan.

The Tennessean Makes Up Its Mind:
June 23, 2002 headline: Down to one week, and one budget solution
"There is one week left, and there's only one solution on the table."
June 24, 2002 headline: So many budget options, so little time
"Lawmakers have a spectrum of options but little time to decide."

Robbing Peter to Pay Paul?
Some are wailing that the no-new-taxes budget (formerly known as the DOGS budget) being considered by state legislators would cut $325 million from K-12 education. But even The Tennessean admits today its merely a matter of whether the money goes directly to schools or gets filtered through local bureaucracies first: The no-new-revenue budget "originally included $325 million in K-12 education cuts. Those may not be necessary if lawmakers are successful in shifting tax money sent to local governments to fund education." Translation: if the state doesn't send the money to the cities and counties, it will send it directly to the schools.

Plans du Jour
The NFIB's Rob Ikard provides a good outline of the current tax plans being discussed at the state legislature, including the revised CATS budget and Sen. David Fowler's laundry list of higher taxes. Ikard notes that Fowler "has abandoned his confusing plan to raise taxes and hold a referendum on the income tax."

The Opposite Direction...
North Carolina considers abolishing income tax.
Former North Carolina congressman Mark Sanford has made it into a run-off election to be the Republican nominee for governor. Sanford, once considered a long-shot, is running on a platform that includes the abolition of the state income tax and the promotion of educational choice. He also favors school choice and even has commented he might home-school his kids in the governor's mansion, according to National Review.

The Club for Growth is backing Sanford. Stephen Moore, head of The Club for Growth, says, "Sanford is a potential superstar and we don't have a lot of them in the governor's offices right now." We Tennesseans know exactly what he means. The Club for Growth, incidentally, recently named Tennessee Gov. Don Sundquist its award winner for the RINO Award, ("Republican in Name Only"), for his repeated attempt to impose a state income tax. "There is nothing that hurts the pro-economic growth cause more than Republicans who promise to hold the line on taxes during the campaign, then get in office and try to raise taxes," the organization said.

For more on Sanford and his plan to abolish the state income tax, which has been endorsed by dozens of economists, Click Here to read my March 28 column in the Nashville City Paper. Some 53 economists, including two who teach at state universities in Tennessee, endorsed Sanford's income tax-elimination plan, saying: "while all types of taxes harm economic growth, the income tax causes the most economic damage per-dollar-collected."

To read the full report on South Carolina Republican candidate for governor Mark Sanford's plan to abolish the state's income tax, Plan to abolish state income tax earns applause from 53 economists, Click Here.

Islamikazes
Regular readers know I rarely write about the war. But this piece in the Toronto Star is a gruesome must-read if you want to truly understand the horror and the sheer cowardice of Palestinian suicide bombers - and why they must be stopped at any cost. Thanks to Andrew Sullivan for the link - and for coining the wonderful new term for terrorist suicide bombers: Islamikazes.

Bias Watch
Our hometown daily paper ain't the only biased fish-wrapper out there. While we're subjected to slanted stories on the state's budget mess and the state income tax, the New York Times is repeatedly crying wolf over global warming. TechCentralStation.com takes down the Times in this story showing how the paper uses false stats to publish misleading scare stories.

We're Not Alone, Part 2...
...they're ignoring the will of the people too.
Voters in Nevada overwhelmingly passed an amendment to their state constitution in 1990 expressly forbidding an income tax. But a task force assigned to come up with new ways to enlarge state government revenues has broached the idea of imposing an income tax anyway, according to this story from Thursday's Las Vegas Review-Journal. One member of the tax task force is Brian Greenspun, president and editor of the Las Vegas Sun newspaper. No bias problem there, right? He's pushing an income tax. Newspapers are on a long list of items in Nevada that are exempt from Nevada's sales tax. Hmm. Newspapers in Tennessee are exempt from our sales tax. So an obviously biased newspaper editor is pushing for the state to levy an unconstitutional income tax while his newspaper luxuriates in tax exemptions. Gee. Sounds like home.

Even more like here: the paper reports that "one of the problems facing the task force is no agreement exists on whether the state needs $100 million or $1 billion more a year." And, naturally, the Nevada State Education Association supports an income tax.

We're Not Alone...
...they're just handling it better.
Maine has a revenue shortfall. Maine has an income tax. Maine has a governor willing to reduce spending. According to this story in the Bangor Daily News, one way the state will reduce spending is by giving all state workers 3 extra days of unpaid time off. In other words, a tiny pay cut plus a three-day vacation. The furlough will save the state the same amount of money as permanently laying off 100 workers. Perhaps Tennessee's governor should consider a brief furlough of state employees rather than wholesale layoffs.

Cruzing for Bias
Note The Tennessean's subtle bias in its story today about a Senate vote to use reserve funds to balance this year's budget shortfall. Saying the Senate "made no progress" on passing a budget for fiscal year 2002-03, the story by Bonna de la Cruz reports on Sen. Doug Jackson unveiling the new version of his compromise "CATS" budget, which avoids both an income tax and significant budget cuts, but includes comments only from detractors of that plan. Pro-income tax Sen. Bob Rochelle calls it "political posturing," a business lobbyist slams its corporate tax increases, and a liberal lobbyist who favors the income tax and a variety of higher government spending criticizes its temporary sales tax increase. Perhaps we should ask the reporter, Bonna de la Cruz why her story had no comments or quotes from lawmakers or lobbyists who favor portions or all of the CATS plan.

Former state representative David Coffey has a much better analysis of the various budget options - and the possible political power play underway to use the Supreme Court to force a state income tax - in his essay today at TaxFreeTennessee.com.


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Seattle: Trummel Case Update
Paul Trummel is a free man now that he knuckled under to an abusive Washington State judge and removed from his web site information that he had published, as is his right under the First Amendment.

(Friday A.M. Update: According to the AP story carried by today's Seattle Times, Trummel's lawyer had this to say: "He had a choice between pulling it and being put in jail by a judge who doesn't understand some of the fundamental precepts of constitutional law.")

Trummel is an old man and one can hardly blame him for not wanting to spend another three or four months in jail. Sadly, Judge James Doerty has gotten away with an egregious violation of this man's constitutional rights.

The FreePaulTrummel.com website has posted a through evisceration of the judge's recent ruling in the Trummel case - and compares it with the much more reasoned and sane ruling offered by another Seattle judge in another case, Kirkland v. Sheehan, also involving the publication of personal information on a website by a freelance critic.

Notes the author of the FreePaulTrummel.com web site: "Comparison between the ruling re Sheehan and Doerty's off-the-cuff rant from the bench re Trummel, reveals a shocking difference in judicial tone and grasp of the principles involved. Doerty's opinion is totally lacking in legal citation except in the most casual and vague way. The Sheehan ruling is characterized by a firm and well-founded legal logic, complete with citations of specific and relevant US Constitutional Law and the relevant law of the State of Washington and other states."

Well said.

Interestingly, after word of Trummel's unconstitutional incarceration spread across the Internet, a number of people posted messages on the judge's campaign website "guestbook" condemning the judge's action. One person even posted on the judge's site the very information that the judge ordered Trummel remove from his own. The guestbook feature has now been removed from the judge's web site.

The information Trummel was ordered to take down from his site is provided on this site in order that the judge's unconstitutional order not succeed in denying Paul Trummel his First Amendment rights. Trummel, meanwhile, is appealing the judge's order, arguing that he has both a First Amendment right and a right under the state of Washington's public information disclosure law, to publish the information. (This story from the Associated Press fails to mention that the information Trummel was ordered to remove from his site is information available freely under the state of Washington's open public records law.)

To express your opinion to the Seattle papers on the Trummel case, send emails to:

Seattle Times: opinion@seattletimes.com
Seattle Post-Intelligencer: editpage@seattlepi.com

Judge Doerty deserves a whole lot of email explaining to him the First Amendment.
jim.doerty@jdoerty.com or
james.doerty@metrokc.gov

Bredesen IDs the Real Budget Problem
Phil Bredesen, the leading Democrat candidate for governor, made the following comments on the income tax, spending, and Gov. Sundquist's fiscal mismanagement, on Teddy Bart's Round Table radio forum Thursday morning:

"I don't think a new tax, I don't think an income tax is the right answer to the problems we've had. I think it's important to recognize that we are not alone in this set of shortfalls we've got. There are 46 of the 50 states are having problems - and we don't even have a particularly serious one compared to most of the other states out there, because states that are dependent on an income tax have had a lot sharper fall off in their revenues than we have here in Tennessee. What's happened is, I think the governor has made a fundamental error, which is to spend money before he had it.

"The last couple of years we've seen much greater growth in the budgets of the state of Tennessee. We're No. 2 in the country in terms of the increases that are being proposed. That's okay when times are good. I just think its a bad mistake to spend money before you have it. I think what the governor should have done if he wants to do some new things is to describe what those are, put a tax on the table, and if it passes go ahead and do them. That's what I tried to do as mayor. But this notion of spend the money and keep the spending up and the way that it's been and force us into this corner that we're in now I just think it's bad stewardship of the government."

No candidate has made a clearer statement outlining the real cause of the budget 'crisis' than has Phil Bredesen.

To hear all of Bredesen's comments - which are uniformly excellent - Click Here. You'll need an audio player such as Windows Media Player.

Bias by the Numbers
Today's Tennessean says the number of anti-income tax protestors has fallen sharply compared to last month. Don't believe it - the paper has fabricated numbers to make its case.

Today's Tennessean story by Christian Bottorff and Edith Wright claims: "Last month, as many as 800 anti-tax demonstrators showed up for rallies in front of the Capitol. Yesterday, the anti-tax crowd numbered about 130 at the peak."

But last month the paper downplayed the number of tax protestors, reporting on May 23 that there were about 300 protestors.

300 is not 800.

The headline on today's story, Pro-tax crowd gains in number, gives away the paper's bias: the paper intended to make it appear support for the income tax is surging while opposition is falling. But its claim that yesterday's pro-income tax crowd of a few hundred people was larger than previous pro-income tax demonstrations is itself a lie. According to the Knoxville News-Sentinel, "more than 2,000 teachers" participated in a pro-tax reform rally May 1 at the state capital.

Memphis Considers Illegal City Income Tax...
...and the C-A reporter blows the story
According to this story in today's Memphis Commercial-Appeal newspaper, some Memphis city council members want the city to institute a payroll tax on the incomes of people who work in the city. Reporter Blake Fontenay mentions that a similar proposal a few years ago went nowhere after "questions were raised .. about whether the state Constitution gives cities the power to adopt payroll taxes." Fontenay says if a payroll tax was constitutional, "the city would probably require permission from state lawmakers in order to adopt one."

Fontenay is ill-informed and apparently unwilling to do a little extra work to make his story accurate. In addition to reporting from statements by pro-payroll tax city officials and old news clips, he ought to have opened the Tennessee constitution, available online here, and also in the back of the Tennessee Blue Book that no doubt rests in the library of the Memphis Commercial-Appeal, and turned to Article 11, Section 9.

A section in Article 11, Section 9, of the state Constitution expressly forbids cities from taxing incomes. It says: "The General Assembly SHALL NOT authorize any municipality to tax incomes, estates or inheritances, or to impose any other tax not authorized by Sections 28 or 29 of Article 2 of this Constitution."

Incidentally, that provision also means that Article 2, Sections 28 and 29, do not authorize the General Assembly to tax incomes, either.

NFIB: No on Income Tax, CATS' Biz Tax Increases
The Tennessee division of the National Federation of Independent Business weighs in on the proposed income tax. NFIB's Tennessee membership is against the proposed income tax and opposed to the increased business taxes in the CATS budget plan, including increasing the corporate excise tax, extending the Hall tax to capital gains, and increasing fees on commercial trailers, according to this most recent legislative update from NFIB/Tennessee state director Rob Ikard. The update seems to lean toward the "confusing" Fowler plan that would either raise the sales tax or impose an income tax depending on the results of a referendum. Ikard notes that Fowler's plan "at least does offer a mechanism by which the people can decide whether they would be subjected to a tax on personal income."

Envy Drives the Income Tax
Ever wonder why many who favor the creation of a Tennessee state income tax try hard to convince you to support it because while you might pay a little more, "the rich" will pay a LOT more? Why would they think you would be motivated to give up a little of your own money in order to help make someone else poorer? Why do they attempt to make you so envious of people wealthier than you that you'd be willing the give up more of your own hard-earned money?

Consider this story from Reason that reports on a study by a pair of British economists that suggests envy comes naturally. The data indicates that envy drives socialistic economics, which includes redistributionist tax policies such as the income tax.

The research by economists Daniel Zizzo of Oxford University and Andrew Oswald of Warwick University found that people are willing to pay money to reduce other people's incomes. They set up an experiment in which groups of four subjects were given nearly equal amounts of money to play a computerized gambling game. During the game, two of the players were given extra cash, and all players knew it. When the gambling game ended, each player was offered the chance to spend his own money to anonymously "burn" some of the cash won by his fellow participants. Lowering someone else's cash stash didn't make a player richer - in fact, it cost money to reduce someone else's holdings.

The shocking finding: nearly two-thirds of players "happily paid for the privilege of impoverishing their fellow participants." The economists say the data is "strong evidence" of envy-driven thinking.

Comments Reason: "Apparently, it matters a great deal whether people believe that others deserve their good fortune. If they don’t believe they do, then less well-off people will further impoverish themselves to bring the rich bastards down a peg or two. Perhaps the opposition in the Senate to eliminating the death tax on estates over $625,000 can be traced to the sense that trust fund heirs are undeserving.

"Socialists often claim that capitalism is based on humanity’s worst impulses, greed and selfishness, despite the fact that people who live in societies that participate in markets tend to be more generous and cooperative than those who don’t. Oswald and Zizzo’s research suggests that socialists who believe that their ideology appeals to humanity’s better instincts have it backwards. Envy is behind the leveling spirit of socialism."

Undeniably, it is also a prime motivation for the proponents of the income tax.

No Alternative?
Let's hope Frank Cagle is wrong this time. Cagle predicts the ultimate end-game of the income tax proponents is having the state lose the lawsuit filed by pro-income tax attorney Lewis Donelson, so the court will order a billion or so more dollars to equalize teacher pay statewide, prompting legislators to come back into session after the August primaries and pass the income tax.

Writing about the CATS budget, Cagle says the sponsors "have put it forward to say a solution exists short of an income tax and shutting down the government."

"It's not a good proposal. There is no such thing as a good proposal to get out of the mess that's been created over the last three years. Created by Gov. Don Sundquist, who hasn't submitted a balanced budget in three years. Created by Speaker Jimmy Naifeh and Sen. Bob Rochelle," says Cagle, predicting the leadership will find a way to kill it. "Sundquist, Naifeh and Rochelle are making sure that there is no alternative."

Random Notes
The tax calculator referred to in a WSMV news story Monday night is located at TNTaxRevolt.org and at TaxFreeTennessee.com. Use it to find out just how much the stealth tax increase feature built into the Naifeh Income Tax plan would raise your taxes automatically in the coming years. ... Support our advertiser! HobbsOnline offers tax-free shopping for any of your vitamin/nutritional supplement, personal care and fine skin care needs. For tax-free shopping, Click Here. Thanks for your support.

Negating Naifeh
House Speaker Jimmy Naifeh's whiny op-ed published by Nashville City Paper Tuesday is Swiss Cheese-like in its truth content: full of holes. Too many to discuss. Here's one particularly bad section, loaded with half-truths, lies and conflicts of logic:

First, over the last 20 years, we have dramatically shifted our purchasing away from the purchase of goods, which are taxable, to the purchase of services, which are not taxed. Second, under federal law, most purchases made over the Internet are not subject to state sales tax; it is estimated that Internet sales are costing us over $300 million annually in tax growth. So why not tax services? The largest areas of services not taxed are for health care and construction spending. To most people, taxing health care services is morally objectionable. Taxing construction just adds to the cost of housing, making it more difficult for people to buy a new house or for businesses to expand.

Now, the facts:
1. Over the past several years, Naifeh and his compadres have failed to adjust the sales tax to reflect the modern economy's shift to the purchase of more services, and even outright passed big exemptions for special interests that cost the state more than $2 billion a year at the current state sales tax rate. The state could easily lower the tax rate and expand the sales tax base, creating a fairer and more eonomically appropriate tax code. But Naifeh and his pals get too much money from special-interest lobbyists for that to happen.

2. The claim that the state is losing $300 million a year in tax revenue due to online commerce is widely reported but its academic foundation is weak - a rush-job "study" by pro-income tax economist Dr. Bill Fox at the University of Tennessee-Knoxville based on wildly inflated predictions of the growth of ecommerce that were made before the Internet boom went bust. The $300 million is beyond dubious. It equals the state's annual tax take from about 20 or 21 major shopping malls. If the state is losing that much sales tax revenue to ecommerce, that means the equivalent of the annual sales volume of every mall in Nashville, Memphis, Knoxville, Chattanooga - plus a few more shifted from the malls to the Internet. Yet Tennessee has seen new malls opening in recent years, and none have closed. Fox's prediction of huge e-commerce sales tax losses for Tennessee and other states simply has not come true, but Naifeh peddles the lie like it is a fact. (For a more thorough debunking of the $300 million claim that Fox made and Naifeh is parroting, Click Here.

3. Naifeh whines that "taxing construction just adds to the cost of housing, making it more difficult for people to buy a new house or for businesses to expand." But, of course, taxing people's incomes makes it more difficult for them to buy houses or anything else, while businesses won't be needing to do as much expanding once government sucks an additional $1.2 billion out of the state's economy every year.

The Real Story
Thanks to Dennis Ferrier at WSMV for his excellent story on last night's 6 p.m. newscast on the hidden tax increase built into the Naifeh income tax plan. If you're looking for the tax calculator Ferrier described, visit TaxFreeTennessee.com or TNTaxRevolt.org. Congrats also to Ferrier and WSMV colleague Lindsay Hudson who are marrying later this month in Scotland.

Seattle First Amendment Case Update - UPDATED!
Good news: The Seattle judge who imprisoned an old man for refusing to remove stuff he legally published on his website has let the old man out of jail after 3.5 months. Bad news: Paul Trummel is still under a court order to take down the information, which the judge finds offensive. The judge has ruled that Trummel has no First Amendment rights because he is not a paid journalist, though First Amendment scholars agree the rights of free speech are for everyone. The Seattle Post-Intelligencer, which has endorsed the judge for re-election, covers the Trummel case today, apparently for the first time (based on a search of the paper's online archives.) For more information on the Trummel case, Click Here and Click Here.

UPDATE! You gotta love the subversive ingenuity of this: Someone has posted on the judge's campaign website the very same information that the judge has given Paul Trummel until Friday to remove from Trummel's site if he wishes to avoid being returned to jail. Just visit the judge's "guestbook" and scroll down to the post by "Digital Angel" listing names and contact info for the administratiors and board of directors of the government-subsidized retirement home where Trummel lived before the judge tossed him into the slammer. That's the information the judge wants removed from the site. Now it's on his own site.

Naifeh Tax Plan Calculator
There is a hidden automatic tax increase built into the income tax proposed by House Speaker Jimmy Naifeh and up for a vote Wednesday in the state legislature. As people get raises to offset the rising cost of living, their purchasing power remains the same but they will pay a higher percentage of their income in taxes to state under Naifeh's income tax plan. Under the Naifeh plan, the average Tennessean's tax burden could rise 17 times faster than their income over the next 20 years.

The Naifeh income tax raises itself automatically - and at a tremendous rate - and it happens even if the legislature does not vote to raise the tax rate.

For example, a single mom making $24,000 would pay nothing under the Naifeh plan in the first year, but 15 years from now if her income rises 3 percent per year to offset inflation, she'll be paying over $600 a year, and in 19 years she'll be paying over $800. And a couple with two kids making $45,000 would see their tax bill quadruple to over $2,000.

You can calculate the effect of the hidden tax increase on your finances by using this handy Naifeh income tax calculator, located on the web at TNTaxRevolt.org and at TaxFreeTennessee.com.

For more information on the hidden tax increase in Naifeh plan, Click Here.

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Predictable Claptrap
Today's Tennessean editorial says the middle-ground CATS budget is a better alternative than the no-new-taxes budget, but is still urging passage of House Speaker Jimmy Naifeh's unconstitutional income tax instead.

The editorial is filled with contradictions. It rails against the state's "obscenely high" sales tax, but ignores its own role in creating that high sales tax by pushing a decade ago for passage of the "Better Education Program," which required a half-cent sales tax increase. The BEP has produced no measureable improvement in the quality of education in the state, despite its multi-billion-dollar cost to taxpayers, but the paper doesn't urge making BEP work before we shovel a few billion more dollars into it.

And though the paper believes people pay "obscenely high" taxes, it editorializes in favor of raising taxes by $1.2 billion dollars via an income tax (coupled with a temporary and small decrease in the sales tax for a very limited number of items).

The editorial asks: "If lawmakers are willing to raise revenue by $807 million, as Buck and Jackson say their bill would for a one-year fix, why not go the extra mile with Naifeh's plan, which represents a long-term solution?

The answer is this: Because the Naifeh plan is illegal. It violates the state constitution and three different unanimous state Supreme Court rulings.

The paper also declares: "Taxpayers are sick of the mess and the uncertainty it has meant for every state program."

Actually, no. Taxpayers are sick of the budget mess alright, but poll after poll shows taxpayers' main priority is preventing a state income tax, not protecting the fiscal health of "state programs." If only The Tennessean cared as much about the financial well-being of the average hard-working person in Tennessee as it does about adding a billions to the bureaucracy's bloated budget. And they're sick of liberal newspapers that constantly urge government to raise taxes on ordinary people, and tax their incomes, but will fight any attempt to extend the sales tax to the sale of advertising that provides The Tennessean its income.

Lies... or just grossly uninformed?
Jack Faris, president of the National Federation of Independent Business, had this to say recently about the death tax:

"Of course, I expect to hear a lot of the same old class-warfare rhetoric as this debate continues, but the simple fact remains that when the death tax is repealed, it will be replaced with a capital gains tax!

"Anybody who claims that billionaires will get off scot-free is either grossly uninformed or intentionally spreading false information. Instead of forcing small families to sell part or all of their businesses to pay a tax on death, what's wrong with simply taxing the voluntary sale of assets? That way, the decision to sell property can be based on sound business judgment, not an unfair tax bill from Washington."

Just who is spreading the same old class-warfare rhetoric and the false information that ending the death tax will let billionaires off scot-free? Oh yeah. Around here, it's The Tennessean.

Committee To Oppose Income Tax Legislators
I just received this press release announcing the formation of Tennessee Citizens for Accountable Government, a political action committee created to help elect anti-income tax candidates to the state legislature. The PAC will help registered and write-in candidates.

Here is the text of the press release:

The people of Tennessee say they do not want a state income tax, but it appears that some legislators are not getting the message. Believing that elected state representatives should be accountable to the people they represent -rather than the media, the governor or other politicians -Tennessee Citizens for Accountable Government, a political action committee, has been formed to oppose legislators that vote to impose a state income tax on the people of Tennessee.

"The voice of the people of Tennessee is quite clear to us on this issue- For some reason our representatives seem unable or unwilling to listen. We are providing a vehicle where those who are against the income tax can be heard. We want to hold our elected officials accountable for the positions they take, . said Randy Kozak, spokesman for the group.

The General Assembly is in session on June 19, when another attempt will be made to pass an income tax. "We will be watching carefully on June 19. It is our intent to oppose those who vote for e state income tax in the upcoming elections, especially those who have changed their positions and those who are unopposed in the fall elections. Some legislators seem to hear better at election time."

Among its plans, Tennessee Citizens for Accountable Government intends to facilitate and support write-in candidates where necessary. Some legislators are hoping the lack of an opponent will allow them to vote for an income tax without affecting their re-election.

In addition to Kozak, other board members of Tennessee Citizens for Accountable Government are Mark Arnold, Mike Bishop, Bernie Butler, Joey Cromer and Bruce Williams. "We are all members of the business community who share a concern for the future of our state and an interest in this income tax issue," said Kozak.

Anyone interested in suggesting possible write-in candidates or making a pledge to the effort can call 931-486-2430 or send a check. to: Tennessee Citizens for Accountable Government, P.O. Box 1198, Spring Hill, TN 37174

To contact Randy Kozak, call 931-486-2430.

Something from Nothing
Class envy oozes from The Tennessean's editorial today opposing permanent cuts in the death tax.

The paper argues against making the cuts - part of President Bush's tax package passed last summer - permanent. Under current law, the tax is virtually phased out over 10 years and then, whammo, reverts to its original and punitive 2001 rate. The House of Representatives passed a law making the tax cut permanent, but the Democrat-led Senate has so far refused to follow suit.

The Tennessean characterizes the House vote as a vote to "take $740 billion from U.S. coffers, giving it to an elite group — the children of the ultra-wealthy."

Of course, the opposite is true. Making the tax cut permanent would not "take" money from the U.S. treasury because it would never be there in the first place. You can't take something from nothing. And the paper's crack about "giving it to ... the children of the ultra-wealthy" is pure demagoguery. By making the estate tax reform permanent, government would not be giving money to anyone. An estate is given by the parents who earned it to their children, who in many cases suffered through years of having one or both parents work long hours to build a business worth handing down. Such children have surely earned their inheritances.

The paper's insistence that ending the estate tax amounts to government "giving" money to anyone reflects an untrue notion that it is the government that creates wealth. The only time the government ever gives any money to someone it must first take it from someone else.

By failing to make estate tax reform permanent, it is the Senate that favors taking $740 billion - taking it away from the families that earned it.

Billboard Unfair to Bredesen
The Tennessee Republican Party should immediately take down the billboard it erected in Nashville that lies about a comment Democrat Phil Bredesen made three years ago about the income tax. Bredesen, a leading candidate for governor, did not say an income tax is a "better" way to raise revenue than a sales tax, as the billboard alleges.

Here is what Bredesen said in an interview with The Tennessean in August 1979, republished today as part of their coverage of the billboard dispute: ''I think an income tax for raising the same amount of money is a fairer way to do it than a property or a sales tax."

Bredesen, who has taken a strong and unwavering position against the income tax during this current campaign, is being accused of being secretly in favor of an income tax. But a close examination of his statement doesn't support that view. Bredesen was discussing the state's budget situation, in which Gov. Sundquist was pushing for an income tax not only to fill a small projected shortfall but also to raise hundreds of millions of dollars of additional revenue and greatly expand government spending. Bredesen's comments were partially intended to explain that if the tax code was reformed the change should be revenue-neutral. But he did use the word "fairer" in conjunction with the income tax.

It is clear from the context that Bredesen was not endorsing an income tax. And he is right - theoretically speaking, a properly designed income tax would be fairer than the state's current patchwork sales tax with all of its special-interest exemptions. A low flat income tax that applied to the first dollar of income, had no exemptions or deductions - and included a strong cap on the tax rate and the growth of government spending - would be a fairer tax code than the one we have now. I outlined just such a plan in two columns published August 23, and August 30, by the Nashville City Paper. (See also: this item, which provides more information and links to a valuable study on the positive effect a hard cap on spending and tax rates has had on Colorado's fiscal health.)

But if legislators tried to pass such a reform plan, even one that reduced revenue, I would still oppose it on the grounds that it wasn't constitutional. If such a plan is ever proposed, it must be done so via a constitutional convention or constitutional amendment.

Bredesen is right when he says that, theoretically, an income tax can be fairer than the sales tax. The billboard should come down.

Rochelle Demagogues on TennCare
Sen. Bob Rochelle tells a lie and Memphis Commercial-Appeal 'reporter' Paula Wade believes it. In a story about the resignation of TennCare director Mark Reynolds - TennCare's seventh director in eight years - Rochelle claims TennCare will not survive without the income tax. Says Rochelle: "It's true that unless we find the votes for a true tax solution TennCare will not survive..."

Actually, it's not true. The CATS budget and revenue proposal funds TennCare without an income tax. Rochelle knows this. Paula Wade knows this. But the lie went unchallenged into print anyway.

NFIB Seeks Action on CATS
Rob Ikard, Tennessee director for the National Federation of Independent Business, is looking for NFIB members' opinions on the CATS budget. Ikard's initial report on the CATS budget proposal mentions that previous polling of NFIB members in Tennessee found opposition to one component in the CATS plan: increasing the corporate excise tax rate to 6.75 percent from its current 6 percent.

Ikard comments on the pros and cons of the CATS plan: "The plan certainly raises some business taxes (commercial trailers, excise tax increase, alcohol and tobacco, vending machines). It does not, however, establish an income tax or extend the sales tax to services, two detrimental measures that have been proposed this year."

Ikard urges NFIB members to contact their legislators (whose contact info including email addresses and fax numbers are available on the General Assembly's website) and asks that NFIB members copy him on their communications with legislators. "Having not balloted this specific plan, I need some feedback from our members on how the CATS plan will affect Tennessee's small businesses," says Ikard. His email is Rob.Ikard@NFIB.org and his fax number is 615.874.5267.

TaxFreeTennessee.com has a good list of contact info for state representatives here and state senators here.

Tennessean Aims to Tame CATS
The Tennessean's story today on the CATS budget proposal bemoans a variety of new taxes and tax increases in the CATS budget - but the paper curiously fails to mention that many of those same new or increased taxes are also part of the Naifeh income tax plan which the paper has endlessly promoted. It's understandable why The Tennessean feels it has to trash the CATS plan - the paper has long described the budget debate as a battle between the Income Tax, which is always portrayed as "good," versus the DOGS budget, portrayed as "bad" because it would slash all sorts of programs. The arrival of the middle-ground CATS budget proposal undercuts the paper's us-vs.-them approach and puts its pro-income tax, pro-big-government agenda at risk. Today's coverage of the CATS budget is just one more example of how the paper slants its coverage to push the income tax.

Random Notes
The Nashville Scene is in favor of curbing your ability to protest the income tax. Note also the attempt to stir up class envy against radio talk host Steve Gill. In other words, the usual tripe from a predictably liberal and pathetically lame rag.

... Regular HobbsOnline reader Gail Keasling forwarded me an email she received from state Rep. Bobby Wood, who wrote: We are in the midst of a recession. Thirty nine other States have had to reduce their spending, twenty two dipped into their rainy day fund, twenty six ordered across the board spending cuts, eleven laid off employees and most of them combined the above. Not Tennessee. We were allowed only two options: a $l.2 billion tax increase in a time of recession or the DOGS budget, which would pull the plug and turn off the lights on State services. I cannot live with either of these options, Now there is a third, and you can pull it up on www.catsbudget.com. That I feel is a reasonable middle ground, and one that I will vote for.

Woods' comments and others from sensible legislators seeking a compromise have put a chill down the spine of Gov. Don "Spend Spend Spend" Sundquist, House Speaker Jimmy "We Vote 'Til I Get My Way" Naifeh, Sen. Bob "Work is a Taxable Privilege" Rochelle, and the rest of the pro-income tax crowd.

... And finally, Rapmaster thanks me and South Knox Bubba for our coverage of the tax and budget battle. Rapmaster, you're welcome.

CATS Notes
There is a very likable feature in the CATS budget: some of the new taxes in the plan would expire after one year, a feature "aimed at shifting the budget impasse to the next governor and legislature." While "temporary taxes" tend to become permanent in Tennessee, this one-year-expiration feature has the benefit of providing the next governor - Phil Bredesen, Van Hilleary or one of lesser candidates - the opportunity to prove their campaign contention that bad management and too much spending by the current administration has created the fiscal crisis.

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New Budget Proposal Lacks Income Tax
Sen. Doug Jackson has proposed a "middle ground" budget that spares K-12 and higher education from budget cuts but doesn't impose an unconstitutional income tax on the people of Tennessee. There's a lot to like in the "Continuing Adequate Taxes and Services," a/k/a "CATS" budget, and a few things to dislike.

Things to like:
- It spends $500 million less than the governor’s proposed 2002-2003 budget
- It avoids creating a new layer of taxation via an income tax.
- It doesn't raise the state sales tax.

Things not to like:
- It raises $806.8 million in additional revenue via a patchwork of increases to existing taxes

Some of the tax increases are hard to argue against. It makes no sense, for example, that taxes on alcohol haven't been raised in 31 years. The rising price of wine, etc., over the past three decades has not been reflected in higher tax collections because alcohol taxes are levied on a per-unit measure rather than on the purchase price. It also makes no sense to continue the sales tax exemption on vending machine sales. Those two changes in the CATS budget would raise a combined $222.8 million.

But other tax increases are less palatable. A $100 annual fee on commercial trailers would raise $47 million, but at the expense of businesses and trucking industry employees. Raising the local option sales tax rate to a uniform 2.75 percent in cities and counties that are below that rate would raise $249 million, but drive up the cost of shopping for many Tennesseans. Increasing the business excise tax from 6 percent to 6.75 percent would raise $75 million, but harm businesses and workers by reducing the company profits needed to fund business expansion, raises, benefits, etc. Removing the single-article cap on sales taxes would raise $213 million, but at great cost to people who buy cars and other big-ticket items, for example.

Of prime political consideration is whether the legislature is more or less likely to pass an income tax if the CATS budget appears to be an alternative. Without CATS, the legislature is being asked to chose between an income tax the massive spending cuts of the "Downsizing Ongoing Government Services" (DOGS) budget. While there is not yet majority support for the unconstitutional income tax, it is clear to even the casual observer that the majority of the legislature would like to see revenue and spending increased.

Conservatives who prefer no tax increases at all and don't like government spending to increase won't like the CATS budget. But supporting it may be our best hope for avoiding an income tax. If by failing to support the CATS budget we push the legislature to adopt an income tax, we will have won a battle.... and lost the war. If so, then our side must support the middle-ground approach offered by the author and bipartisan sponsors of the CATS budget, while working to decrease the CATS budget's tax increases and increase the spending cuts.

The Bias Surplus
As expected, The Tennessean downplays the good news in its report on the May revenue numbers.

The story focuses heavily on taxes in which revenue is "down," but selectively choses whether to focus on the May collections or total collections for the fiscal year in cases where revenue from a specific tax was UP in May but still down for the year, or vice versa.

"Sales and use tax collections, considered a reliable barometer of the state's economy, amounted to $385.7 million last month, DOWN about $3.91 million from May a year ago," the paper reports. But sales tax revenue is UP for the year. The Tennessean ignores this.

"Collection of taxes on mixed drinks, beer, wine, liquor and cigarettes were DOWN from May a year ago," The Tennessean reports, listing the percentage by which each of those taxes is "down." But collection of taxes on tobacco, beer, mixed drinks and alcoholic beverages are UP for the entire fiscal year. The Tennessean ignores this.

"Tobacco tax collections amounted to $6.8 million," says The Tennessean. That's true for the year, but revenue was UP in May. The Tennessean ignores this.

Just how biased is The Tennessean? In reporting the latest revenue numbers - which show $11.9 million in unexpected revenue growth, the word "down" appears four times as often in the story as the word "up." The net effect is a "news" story carefully designed to convey the false impression that total tax collections are still falling. But the truth is, May revenue included a $11.9 million surplus, and the state's shortfall fell by $11.9 million as the recovering economy begins to show up in the tax revenue.

Tennessee is on pace to have its second-best year ever for tax collections. No amount of distortion by The Tennessean can change that fact.

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Seattle Update
My coverage of the case of the Seattle man jailed by a judge in violation of his First Amendment rights is having an impact on the judge's re-election campaign website. I noticed some visitors to HobbsOnline have been referred here from a link on the judge's web site, specifically his guest book, where a growing number of people are posting comments critical of the judge. For more on the Seattle case, scroll down.

Gill Nails It
Talk radio host Steve Gill has published an excellent essay, States with income tax feeling pain, looking at a report by the National Conference of State Legislatures, two other associations representing state policymakers, and the Nelson A. Rockefeller Institute of Government, which finds that states with income taxes are suffering big deficits. The report got little attention from the mainstream press. Why? "The report cuts against the mainstream media's pitch that an income tax is more reliable than sales taxes. They don't want you to get the truth, since it might derail the income tax push," notes Gill.

According to the survey, individual income tax payments to states fell 21 percent in April and for the first four months of 2002, state income tax collections were down 14 percent from the same period last year. The astute will note that sales tax revenue in Tennessee is up slightly this fiscal year. An income tax, far from solving Tennessee's budget crisis, would make it worse.

Near-Record Revenues
Amid all the talk of "shortfalls" and "deficits," one fact remains curiously omitted from mainstream press coverage of the Tennessee budge debate: Tennessee tax revenue this current fiscal year will be the second-highest ever, and come close to matching the record revenue total set last year.

While the final numbers won't be in for three more months, the state has collected $6,168 billion in total tax revenues in the first 10 months of the year. That's $616.8 million per month, which is $4 million more per month than the state collected just two years ago - and puts Tennessee on pace to collect $7.4 billion in revenue this year.

That would be more than the $7.34 billion the state collected in fiscal year 1999-2000, just two years ago. That, incidentally, was the first year Tennessee tax revenue ever topped $7 billion.

Last year, FY 2000-01, the state collected a record $7.63 billion.

This year, Tennessee is on pace to once again top $7 billion in tax revenue and at the very least Tennessee will, when the books are closed on this current fiscal year, have enjoyed its second-best year ever for tax collections.

With the economy recovering in the nation and across Tennessee, it is not impossible that revenue in the last two months of the fiscal year could improve on the $616.8 million per month average so far this year and push the total toward last year's record.

The fact that revenue is off a bit compared to last year's record is not a major shock. As everyone knows, Tennessee and the nation have endured a mild economic slump. The good news for Tennessee taxpayers: all that mumbo jumbo about the tax code being obsolete is pure malarkey. Ignore the games the administration plays comparing actual revenue to fuzzy "estimates" - the state's tax code provided a record revenue last year. And this year, despite the economic slump, it will provide the second best revenue total in the state's history.

The tax code is healthy. It's the spending code that needs reformed.

State Enjoys May Revenue Surplus
Tennessee taxpayers provided the state of Tennessee an unexpected windfall of nearly $12 million in surplus tax revenue in May, according to the May revenue totals released in the last hour by the Gov. Don Sundquist administration. The May revenue numbers reflect economic activity (sales, etc) in April.

The state collected $592.5 million in taxes in May, which is $6.4 million than it collected in May 2001 - and $11.9 million more than was estimated in the budget for the month.

That means the revenue shortfall shrank by $11.9 million in May, and with two months left in the fiscal year, Tennessee's shortfall is down to $364.1 million, which is well below the $450 million to $475 million doomsday figure being bandied about by the Sundquist administration.

Here is the June 11 press release on the May revenue numbers:

On an accrual basis May is the tenth month in the 2001-2002 fiscal year. Department of Revenue tax collections were $592.5 million, an increase of $6.4 million or 1.10% over last year.

Revenues were $11.9 million more than the budgeted estimates, Finance and Administration Commissioner C. Warren Neel announced today. The general fund had an overcollection of $5.8 million and the four other funds overcollected by $6.1 million for the month.

Sales tax collections decreased by 1.00% in May which is $3.6 million less than the estimate. For the year sales tax collections have increased only $649,000 or 0.02%. The budgeted increase was 3.07%.

Franchise and excise taxes combined were $33.3 million for the month, a decrease of $348,000 or -1.03% for the month. Collections were $1.6 million less than the estimate.

For the month inheritance tax overcollected by $6.1 million and privilege taxes by $4.8 million.

Gasoline taxes and motor vehicle registrations were $6.5 million more than the budgeted estimates of $89.3 million.

Year-to-date collections for ten months are $364.1 million less than the budgeted estimates for all funds and $335 million less than the general fund estimate.

The budgeted revenue estimates are based upon the State Funding Board's consensus recommendation adopted by the first session of the 102nd General Assembly in June of last year.

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Soft Thinking
The Tennessean thinks the Federal Election Commission's new regulations for enforcing new campaign finance reform rules on so-called "soft money" donations don't go far enough to curb free speech and is urging the FEC be reformed. The Tennessean's editorial board apparently hasn't realized yet that the soft-money ban itself is a toothless law.

As regular readers of HobbsOnline have known since April 25, the McCain-Feingold finance reform law has a very large loophole in it, as commentator Mickey Kaus revealed here on kausfiles. In a nutshell, McCain-Feingold regulates soft-money donations and campaign spending by corporations but says nothing about unincorporated groups and limited liability corporations, or LLCs.

Wrote Kaus: It turns out the new law's ban on last-minute ads only applies to corporations. True, most nonprofit "advocacy" groups - such as the Sierra Club and the ACLU - are corporations. But ... they don't have to be. It's perfectly possible to form a simple unincorporated association and still get nonprofit tax status. (You just have to show that your articles and bylaws meet IRS requirements.) And if you're not incorporated, then McCain-Feingold's ad ban doesn't apply.

If the editorial writers at The Tennessean are aware of the loophole, their editorial doesn't let on. The editorial whines that while campaign finance reform aims to stop the national political parties from funneling "soft-money" to candidates, the FEC's regulations will would allow state parties to put soft money into campaign ads that attack or support federal candidates. "It's the very sort of action the soft-money ban was supposed to stop," the Tennessean says. But the law wasn't written that way. The Tennessean, in effect, is urging the FEC to overstep its authority and write new law. The Tennessean's editorial also belittles a legitimate challenge to the constitutionality of the soft-money ban under the First Amendment.

This is not the first time the paper has blown it in an editorial on a crucial constitutional question.

A Classic Hit
As the Tennessee budget stalemate drags on, those who favor creation of a state income tax regularly trot out the "we're losing sales tax revenue to untaxed Internet sales" argument. Too bad it's not based in fact. Here's an oldie but a goody from the HobbsOnline archives.

Missing the Point
F. Jacques, a resident of Council House, the Seattle low-income retirement home where Paul Trummel lived before a judge tossed him in prison for refusing to remove something he said on his website, emailed me a long screed describing Trummel's bizarre behavior and criticizing those who defend him.

Jacques alleges journalists are covering the Trummel case "without any concern for the truth or ethical principles" and bemoans the fact that "even the venerable New York Times joined the band wagon."

He claims the press coverage of the Trummel case "is inevitably an opportunistic, shallow and fleeting defense of the freedom of the press." and calls it a "patently absurd suggestion" that "anyone with a Press Card IS a journalist."

Jacques concludes: "Absolving Paul Trummel's behavior simply because he pretends to be a journalist is unpardonable. Frivolous intellectual vanity."

Sadly, Jacques misses the whole point.

Indeed, Paul Trummel may be crazy and he may have harassed people at Council House. He may be a liar. He might not be or ever have been a "journalist" in any professional sense.

So what? He is still entitled to the rights granted by the First Amendment, rights that are for all residents of the United States, not just those who have a press card or get a paycheck from a media organization.

Judge Doerty has wronged Mr. Trummel twice. First, he ordered him to remove from his website what appears to be constitutionally protected speech. Then he imprisoned him for not complying. Even worse, the judge justified his actions by making the specious claim that First Amendment rights are only for paid journalists.

I don't defend Mr. Trummel because I am or because he claims to be a journalist. I defend Mr. Trummel precisely because he isn't a paid journalist. The judge's order makes it clear that if Mr. Trummel could prove he indeed was a paid journalist, he would not be in prison nor be under court order to remove certain things from his web site.

Unlike Judge Doerty, I believe the First Amendment is for all who live under the U.S. Constitution, whether they get a paycheck from a media organization or not.

And, unlike Mr. Jacques, I can't stomach the notion that a judge should be allowed to imprison a person whose speech the judge finds objectionable.
___
To learn more about the case, scroll down and read my previous posts, and also visit the Free Paul Trummel web site.

To express your opinion to the Seattle papers on the Trummel case, send emails to:

Seattle Times: opinion@seattletimes.com
Seattle Post-Intelligencer: editpage@seattlepi.com

Judge Doerty probably could use a few more emails before June 17, when the Trummel incarceration is set for court review. He has two email addresses:
jim.doerty@jdoerty.com or
james.doerty@metrokc.gov

Letters
A Seattle reader, Jack William Bell, has forwarded me a copy of a letter he has sent to King County Superior Court Judge James Doerty expressing his concerns about the jailing of freelance journalist Paul Trummel for refusing to take back something he wrote on his website.

Bell urges the judge to set Mr. Trummel free and "redress the harm already done to the Constitution and to this man."

"Clearly he is no saint, but he is protected by the same Constitution as the rest of us and any attempt to trample his rights affect mine as well," Bell continues. "You have already damaged yourself as a judge in my eyes sir. I do not believe I can ever vote for you with a clear concience.

"I would rather have a hundred Paul Trummels free in this world calling themselves 'journalists', or even 'private citizens with a grudge', than one judge willing to sacrifice the rights our forefathers died to secure us because an old reprobate dares to defy him."

Well said, Mr. Bell.

To learn more about the case, scroll down and read my previous posts, and also visit the Free Paul Trummel web site.

To express your opinion to the Seattle papers on the Trummel case, send emails to:

Seattle Times: opinion@seattletimes.com
Seattle Post-Intelligencer: editpage@seattlepi.com

Judge Doerty probably could use a few more emails before June 17, when the Trummel incarceration is set for court review. He has two email addresses:
jim.doerty@jdoerty.com or
james.doerty@metrokc.gov

More on the Trummel Case
Apparently, James Doerty, the Seattle judge who is keeping an old man named Paul Trummel behind bars for refusing to take back something he said on his web site, is campaigning to keep his seat in the fall election.

Also, there is a Free Paul Trummel web site.

Yesterday's Seattle Times has a good story on the Trummel case. It's worth reading. Here are some excerpts:

The Reporters Committee for Freedom of the Press in Washington, D.C., the National Union of Journalists in London and Reporters Sans Frontières of France also have questioned whether Trummel is in jail for offensive, but constitutionally protected, web-site content.

"Our concern is that he's being punished for speech on the Internet that should be protected," said Lucy Dalglish, executive director of the Reporters Committee for Freedom of the Press.

In ordering Trummel to stop harassing people at Council House, the judge wrote, "It is my finding specifically that his claim to be a journalist is a bogus claim. ... He is not employed by anyone but himself. There is no publisher involved. There is merely the misguided use of an obviously well-developed talent to write."

Joe Harkins, a New York writer who created the Free Paul Trummel web site, said Doerty's ruling "totally ignores the fact that First Amendment rights are not reserved solely for journalists working for a publication but are the single most basic right guaranteed every person in the USA."

A quick search of the Post-Intelligencer's archives via its web site turned up no stories on the Trummel case, though it did turn up the paper's endorsement of Doerty (published months before he jailed Trummel). The P-I also recently published this rather ironic story in which Doerty ordered the King County Sheriff's Office to pay more than $13,000 in legal fees for two men the Sheriff's Office sued rather than disclose the last names and ranks of its deputies - information the men were posting on the Internet. The men are entitled to the information under the state's Public Disclosure Act.

To express your opinion to the Seattle papers on the Trummel case, send emails to:

Seattle Times: opinion@seattletimes.com
Seattle Post-Intelligencer: editpage@seattlepi.com

The Freedom Forum, a leading First Amendment/free press foundation, is carrying the Associated Press version of the Trummel story on its website, here. (Full disclosure: my father-in-law is chairman of the Freedom Forum.)

Tidbits from the AP story: Trummel's lawyers say he was in jail for 63 days before Judge Doerty appointed a lawyer to represent him. Trummel's incarceration is set for court review June 17. Judge Doerty probably could use a few more emails before then. He has two email addresses:
jim.doerty@jdoerty.com or
james.doerty@metrokc.gov

The Seattle Clause
In Seattle, a 70-year-old man is now imprisoned in solitary confinement for something he said. A judge has kept Paul Trummel in prison for more than three months because Trummel refuses to delete certain materials from his online newsletter. The story, which I told you about on this site a few weeks ago, is finally getting wide coverage via this AP story.

Trummel was jailed indefinitely on Feb. 27 for violating an anti-harassment order by King County Superior Court Judge James A. Doerty. Doerty ruled in April 2001 that Trummel had been abusive and stalked residents and administrators at Council House, a low-income retirement home in Seattle where Trummel formerly lived. The judge ordered Trummel to remove from the website personal data on employees at Council House, and imposed fines of $100 a day for failing to comply. He later limited Trummel's phone privileges and put him in solitary confinement.

Doerty has said Trummel doesn't have First Amendment rights because he is not a paid journalist. Either there is a little-known "Seattle Clause" in the First Amendment or Doerty is an idiot and a proto-fascist. I think it's the latter. You can email him and tell him so - and urge him to free Trummel and restore his First Amendment rights - by sending email to: james.doerty@metrokc.gov.

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All I can say is, Amen
The WaPo - that's the Washington Post in case you don't know - reported Thursday that Amtrak is on the verge of a financial train wreck.

Now, as Nashvillians know, a certain Nashville congressman wants to spend hundreds of millions of dollars to get Amtrak service from Nashville to Atlanta. Rep. Bob Clement has been trying to get Congress to appropriate the bucks for years. Now Clement is running for the U.S. Senate, where he will have more power to try to make such fiscal lunacy happen.

Before you vote for Rep. Clement, please read this lovely essay from Megan McArdle.

Here's an excerpt:

Amtrak is precisely the kind of public-private Great Society partnership that 70's business was all about. After all, the important thing is not that this system is bloated, expensive, and immune to the prodding of common sense; the important thing is that the people who work for Amtrak need jobs, and there are people who need the trains to get from one place to another, and it doesn't matter that it would be cheaper to buy an economy car for every single previous Amtrak rider, because automobiles are tools of the devil. Rail transportation's the wave of the future, dude. Sustainable development is groovy.

Rail isn't even profitable where rail is supposed to work; the subway in New York loses moderate amounts of money (and is perennially starved for capital development funds that could improve New York's transportation picture); the commuter rail system loses a lot. And that's in the most densely populated area of the United States. How in hell is rail supposed to work in Nebraska?

Shutter it. Sell of the Boston-Washington line to a company that can actually operate it with a profit and without dumb politicians making sure that the trains go to every idiot whistle stop installed 100 years ago. Give the rest to the freight companies, or tourism companies, or anyone else who wants 'em. But for Gosh sakes, stop wasting our money trying to bring back the good old days of 1910.

Amen.

The Explosive Tax
Jimmy Hogan has done some invaluable calculations on the effect of wage inflation on people's tax burden under the Naifeh income tax plan.

The conclusion: while the average individual or family's wages are treading water, getting pay raises to offset inflation, more of their income is subject to taxation each year as their income rises above the standard deduction. Over 20 years, if the average individual sees a 100 percent increase in wages, their tax burden will rise 1,732 percent.

A family making $35,000 this year would pay $90 in taxes under the Naifeh plan, but would pay $1,648.92 in taxes in 2022, even though their income would have increased only enough to offset inflation. In other words, while their income doesn't rise more than inflation, their tax burden soars under the Naifeh plan because wage inflation pushes more of their income above the tax plan's exemption level, making it subject to the 4.5 percent tax.

"No politician has to stand up and ask for a tax increase to make this happen," comments Hogan. "Once instituted this tax raises itself at a tremendous rate. It's no wonder the state government is drooling over such an increase. This tax is not just elastic - it's explosive."

Under the Naifeh plan, the average Tennessean's tax burden could rise 17 times faster than their income over the next 20 years. Explosive is one good word for it. Unconsionable, unacceptable and insane are others.

For another look at the effect of wage inflation on people's tax burdens under the Naifeh plan, scroll down or click here to read my recent post, The Automatic Tax Increase.

A good sign?
The Knoxville News-Sentinel reports here that Gov. Sundquist is suddenly out stumping for business tax reform.

The paper says: Closing business tax loopholes to generate state revenue is still high on the Republican governor's tax reform agenda, but he said any legislative action on the issue this year is uncertain.

You'll remember that three years ago Gov. Sundquist launched his second term in office with a political head-fake: he proposed a business tax reform plan (designed to raise hundreds of millions more dollars) and then almost instantly dropped it in favor of pushing an income tax. Sundquist hasn't pushed business tax reform for three years. And now the state House is just three votes away from passing an income tax. So why, all of the sudden, is the guv suddenly back to pushing business tax reform? I've got a few theories.

Theory #1: Legacy. Although the governor wants the revenue from an income tax, he doesn't like the thought that it will be the biggest part of his legacy - and that if it passes, he'll go down in history as its prime author and will forever be unpopular. So, he's suddenly out pushing business tax reform again in order to camoflage his role in the income tax. If the legislature passes it, he'll claim he was never really for the income tax, but the legislature passed it instead of agreeing to business tax reform.

Theory #2: Game Over. They don't have the votes for the income tax in the House or Senate, and the governor knows it, so he is pushing business tax reform knowing it has no chance either, but at least this way whatever happens - severe budget cuts, an unpopular sales tax increase or some other plan - he won't be blamed for it.

Theory #3: Blame Business. Business will oppose his business tax reform plan, so business will be blamed for the income tax if it happens.

I'm guessing it is Theory #2. If you've got thoughts or a different plausible theory, email it to me and you might just see it published here.

The Fix is In
South Knox Bubba is on target with this very creative (and loooooong) post regarding TennCare reform, the budget, taxes, Gov. Sundquist, etc. The first part of it, questioning whether we might want to wait 'n see if the the miraculous TennCare fix really does fix it, echoes what I said a few posts below ("Expensive Strings Attached"). One question: Just who is South Knox Bubba?

The Automatic Tax Increase
A study of the cost of living in Tennessee by research economists at the University of Washington finds that a family of four that gets no government subsidies must earn $37,670 to make ends meet in Nashville-Davidson County, reports this story in today's Tennessean. Naturally, the study is being hyped as another reason we need a state income tax.

But under the income tax plan proposed by House Speaker Jimmy Naifeh, that family of four - let's call them the "Smiths" - would pay taxes on some of their income. A couple with two dependents, the first $33,000 of the Smith's income would be exempt (until a future legislature inevitably lowers the exemption). The Smiths would thus pay $210.15 more in taxes they don't currently pay.

Sure, they'd get a small and no-doubt temporary decrease in the sales tax on a very small portion of their grocery bill. But each year as the Smiths get cost-of-living raises to offset inflation, more of their income would be subject to the income tax.

After four years of 3-percent raises - with inflation running at about 3 percent - the Smiths' annual income would be $42,397, though their purchasing power would remain unchanged. But under the Naifeh plan, the Smiths would now make $9,397 in taxable income above the $33,000 exemption, and their tax bill would have doubled to $422.86.

An income tax would cost the Smiths - and most every other hard-working Tennessee taxpayer - progressively more each and every year even as peoples' paychecks grow but so does the cost of the basic necessities of life. That's a hidden tax increase that is driven by inflation and doesn't require legislators to risk public wrath by voting for a tax increase.

It is how an income tax - even a flat-rate income tax - funds the endless expansion of government.

And that's even if the legislature doesn't pass a "temporary" increase in the income tax rate "for the children."

But, hey, at least state government would have more money to spend. After filtering that money through the wasteful bureaucracy, it might even have some left to pay for giving the Smiths some sort of government benefit or subsidy. But many families like the Smiths would rather keep their own money and spend it they way they see fit, than have it taken away by a government and then used to make them dependent on that government.

Want to calculate the hidden tax increase Naifeh plans for you? First, subtract your exemption amount from your current income. For a single person, that's $15,000. It's $30,000 for a couple and $1,500 per dependent child. The remaining amount is your taxable income. Multiply it by .045 to get your tax bill.

Next, take your current income and multiply it by 1.03, simulating a 3 percent raise. Do that four more times to calculate your income five years from now. Subtract your exemption and then multiply the remaining amount by .045 to see your higher tax bill in the fifth year of the Naifeh plan.

A single person's $25,000 salary would rise to $28,981 in five years, and their tax bill would rise from $450 in the first year to $629 in year five.

Now you know why big-spending liberals like Naifeh and Sen. Bob Rochelle so desperately desire an income tax: because it raises people's taxes automatically.

Plea for Support
We are seeking financial support to launch and maintain a web site dedicated to monitoring Tennessee news media for bias and inaccurate reporting. The proposed web site will use the Internet to rapidly gather and publicize examples of media bias, document and refute factual errors, and expose conflicts-of-interest and hidden agendas that often color the 'news' and can have an adverse impact on public policy.

The web site would monitor both print and broadcast media. The site will require monthly financial support in the hundreds of dollars, partly for operations and partly for publicizing its existence.

Similar web sites now monitor the hidden agendas and inaccuracies of such papers as the New York Times, the Los Angeles Times and many others, and provide readers a powerful tool to assess whether what they are reading or hearing in the dominant press is accurate and unbiased. If you wish to support this project, please contact me at the email link in the "about this site" box. In addition, this site you are now reading is reaching a fast-growing readership but remains in need of a small amount of increased financial support. The "about this site" box explains how you can support it. Thank you.

Another lie bites the dust
In this editorial, Bartholomew Sullivan, an 'unbiased' regional reporter for the Memphis Commercial-Appeal argues in favor of not just an income tax but a progressive income tax (one that levies higher tax rates on people with higher incomes) claiming that rich people oughta pay more because they get more benefit from government.

He puts it this way: "The rich get more of the benefits of government ... and should be expected to pay more for it."

It sounds good but it isn't true, according to this great report from Mike Krause, senior fellow at the Independence Institute:

"In 1999, the top 5% of earners (which includes many high wage earners) accounted for 34% of the reported adjusted gross incomes but paid 55.5% of all federal personal income taxes and consumed the fewest government services.

Expensive Strings Attached
The Tennessean breathlessly editorializes that the just-approved reform of TennCare "buries" the "whipping boy" of the budget stalemate and that "lawmakers who have insisted that TennCare reform must precede tax reform have just lost they're (sic) last excuse."

Not hardly.

Not only does the paper make an error of basic grammar, it skirts the whole truth of the reform-TennCare-first point of view.

TennCare remains the biggest single cause for budgetary concern. True, the reform means TennCare is being split into three programs, and there will be sliding-scale premiums and co-pays for some enrollees based on their income. Yes, the state will have more flexibility to alter eligibility requirements and benefits for TennCare enrollees who aren't eligible for Medicaid, potentially saving money.

Those are all good.

But the much-ballyhooed reform plan does nothing to address the epidemic of mismanagement and bureaucratic eye-winking at fraud and abuse that has plagued TennCare since its inception.

Merely splitting TennCare into three programs won't address TennCare's lack of consistent and effective enrollee eligibility verification. It won't change the fact that tens of thousands of people are on the program despite being ineligible because they live out of state or have other health coverage. It doesn't change the fact that for eight years Tennesseans have shelled out tax dollars to pay HMOs for health care for dead people, millionaires and out-of-state freeloaders.

Nor does the reform change the overall TennCare dynamic that has the program always seeking more money from the taxpayers. The reforms mean the legislature now may alter the level of benefits for the non-Medicaid-eligible portion of TennCare enrollees by altering the appropriation - but the pressure will remain for higher spending and more generous benefits. The Tennessean editorial itself accidentally admits this: "If lawmakers decide down the road to cut TennCare funding, they'll not only hurt recipients who could be covered, they'll also hurt the doctors, clinics and hospitals who will be put in the position of either providing free care or turning patients away."

As the Tennessean says, the reform means a "healthy increase" in federal funding for TennCare, but the paper damages its own credibility by ignoring reality and tossing up the "it's free money" canard:

Says the Tennessean: "Since the federal government pays about two-thirds of the cost of TennCare, every dollar the state doesn't fund will take another two dollars out of the state's health-care system."

Looked at another way, that's an acknowledgement that federal largesse for TennCare comes attached to an expensive string: Every $2 Uncle Sam provides must be matched by $1 from Tennessee taxpayers. More federal dollars for TennCare means more tax dollars from Tennesseans too. So every dollar of federal money we don't commit to taking is one less dollar that must be taken from some hard-working Tennessean who is already struggling to pay her bills.

But, then, the Tennessean has never shown as much concern for protecting the tight budgets of the average hard-working Tennessee taxpayer as it does for padding the ever-more-bloated budget of the state bureaucracy.

A state income tax and $1.4 billion more of your money remains firmly in the crosshairs of legislative leaders and the big-government cheerleaders at 1100 Broadway. Which explains why the paper's editorial board is so eager to hoodwink readers into believing the latest TennCare reform has completely fixed the program, even though it really hasn't.

What I said.
I can't resist a little gloating - read this story from USA Today and then remember what I said here four days ago.

Excerpts from USA Today story:

"As much as they grumble about traffic congestion, pollution and road rage, many Americans leading hectic lifestyles sheepishly admit that they find peace and relaxation commuting alone. For many, it's the only time they have to read (by listening to books on tape), enjoy music they like, catch up on the news, smoke without being chastised or make personal phone calls in total privacy."

"The idea that people like to commute horrifies clean-air activists who want people out of their cars and into mass transit — or at least into carpools."

Part of what I said:

The story's snarky comments about each minute in a car being "wasted time" is simply hogwash from liberal elitists who can't stand the thought that someone somewhere is going to work today without riding on some dirty, government-subsidized mass transit boondoggle (except themselves, of course.)

Yeah!

IT is not a cure-all
The next time you hear some pro-income tax person claim - or read some biased newspaper explain in an allegedly "unbiased" news account - just how an income tax will protect the state from shortfalls during economic slumps, quote them from this USA Today story, which convincingly demolishes the notion that an income tax is the cure-all for deficits.

Fact is, states with income taxes are suffering massive deficits because of the recession, and a big reason is the fall of the inflated stock market that sharply reduced capital gains income. The reality is, as the economy rebounds, consumer purchasing will be its driving force and revenue from the sales tax is likely to rebound faster than income tax revenue. Consumer spending will rebound ahead of employment - hence, the sales tax will show recovery ahead of taxes on employment such as the income tax.

The USA Today story undermines the idea that those who favor Tennessee having an income tax do so for any other reason than providing government an additional $1.4 billion to spend this year.

Oh. Now I get it
This explains it all quite well.