November 28, 2005

Senator Chafee’s $700-per-Household Tax Burden

Carroll Andrew Morse

A direct mail message from the National Republican Senatorial Committee is announcing that “Steve Laffey and higher taxes go hand-in-hand”. Sourcing a Projo article dated January 29, 2003, the mailing states that...

Laffey’s tax increase amounted to $490 more in property taxes for a home valued at $150,000.
The strategy is that of a pre-emptive strike; 2003 just happens to be the year that Senator Lincoln Chafee helped impose a tax burden on the American people of $700 more per taxpaying household than was proposed by the President.

At the start of 2003, President Bush proposed a $726,000,000,000 tax cut to occur over 10 years. To win the support of enough liberal and moderate Republicans to become law, the tax cut had to be rolled back to $330,000,000,000. Here’s the description of the original proposal and the bill that passed from a (unfortunately not-online) May 23, 2003 Associated Press story written by Alan Fram…

Congress gave its final approval Friday to $330 billion in new tax cuts for families, investors and businesses, handing President Bush a victory despite sharply curtailing his plan for lifting the economy from its knees….

Though less than half the $726 billion in tax reductions through 2013 Bush initially proposed, approval marked a significant personal victory for the president.

Had Chafee and a few other Republicans gone along with the President’s original proposal, taxes would have been reduced by an additional $396,000,000,000.

The US Census Bureau estimates that there are approximately 112,000,000 households in the United States. However, not all households in the US pay federal income tax. The National Taxpayers Union reports about 50% of taxpayers pay 96.5% of federal income tax. For this analysis, we’ll assume that the income tax burden and therefore tax increases and tax cuts are spread out over 50% of (56,000,000) American households.

The $396,000,000,000 difference between the President’s proposal and the approved tax cut comes out to approximately $7,000 in additional taxes per taxpaying household. Spread out over 10 years, that comes out to $700 per household per year.

Is the issue really this simple? Probably not. But if the NRSC and the Chafee campaign want to confine the debate to who has favored higher taxes without discussing why tax increases are necessary or what additional revenues paid for, then the number to keep in mind when reading NRSC direct mail is that Senator Chafee was a key player in imposing an additional tax burden of $700 per taxpaying household in 2003.

UPDATE:

Commentor RI Fan suggests that the figure of $700 per taxable household doesn’t account for wide possible variations in income levels & taxes paid.

Assuming that it is distributed similarly to the existing tax rates reported by the National Taxpayers Union, this is how the $396,000,000,000 in taxation imposed by Senator Chafee and the Republican liberals will break down across different income scales…

Income of $295,000 or more $12,000 per household in additional tax
Income between $130,000-$295,000 $1,800 per household in additional tax
Income between $95,000-$130,000 $810 per household in additional tax
Income between $57,000-$95,000 $420 per household in additional tax
Income between $29,000-$57,000 $180 per household in additional tax
Income $29,000 or less $24 per household in additional tax
A good number of Cranston residents paying $490 in additional property taxes on $150,000 homes probably also have incomes in the 50K-60K-70K range. Congress' refusal to pass the President's tax cut in 2003 probably cost Cranstonians about the same amount of money as did the property tax increase. You just can’t pay for $396,000,000,000 in taxation in a nation of 112,000,000 households without either confiscatory rates at the top of the scale or taking a big bite out of the middle class.

Methodology:

1. Convert the NTU 2003 tax table to a differential table.
The top 1% of taxpayers pay 34.27% of the federal income tax.
The next 4% of taxpayers pay 20.09% of the federal income tax.
The next 5% of taxpayers pay 11.48% of the FIT.
The next 15% of taxpayers pay18.04% of the FIT.
The next 25% of taxpayers pay 12.66% of the FIT.
The final 50% of taxpayers pay 3.46% of the FIT.

2. Multiply the taxpayer percentage by 112,000,000 total households. Multiply the percentage of tax by $396,000,000,000 of taxation. If tax cuts are distributed proportionally to what people are already paying,
The top 1.12M households pay an additional $135,709,200,000.
The next 4.48M households pay an additional $79,556,400,000.
The next 5.60M households pay an additional $45,460,800,000.
The next 16.8M households pay an additional $71,438,400,000.
The next 28.0M households pay an additional $50,133,600,000.
The final 56.0M households pay an additional $13,701,600,000.

3. Divide amount by the number of households to get the 10-year amount per-household. Divide by 10 to get the per-year amount.

Comments, although monitored, are not necessarily representative of the views Anchor Rising's contributors or approved by them. We reserve the right to delete or modify comments for any reason.

This is a weak posting. I understand your attempt, but to argue that because the tax CUT that Chafee voted for was less than the PROPOSED cut Bush asked for, amounts to a tax increase is simply intellectually dishonest.

I am not a full supporter of Sen. Chafee, and I have not made up my mind regarding the primary, but Mayor Laffey actually DID raise taxes three times.

Further, your math is simply BAD in this analysis. As I am sure you know, the top 50% of tax payers reaches from the billionaires at the top to teachers and secretaries at the bottom portion of the top 50%. As you could imagine, the exponential difference between those at the bottom of that spectrum is quite significant from those at the top - or even those that make $200,000+. To illustrate that, just look at the statistics for the top 10% of household earners, who pay even more of proportional burden than the top 50%.

Bottom line: Chafee didn't vote FOR a tax increase. You should make that clear in your posting. Laffey, on the other hand DID raise taxes THREE TIMES, which for some families amounted to well over the $490 quoted by the NRSC. In fact, the current median home price on the market in Cranston is over $250,000 (different from selling price) NOT the $150,000 run by the NRSC, and the $700 figure you use for criticizing Chafee.

The only way we are going to maintain control of our Senate seat is if we have an honest debate about REAL issues. I do not condone the NRSC ads, but I also do not think it's accurate for you to frame a vote against a 700,000,000,000 tax cut as a tax INCREASE, or try to liken it to what was a clear tax increase in Cranston (which I believe WAS neccessary)

Thay Laffey raised taxes is a fact. There is no defense for that. WHY he did it is where the NRSC falls down. They don't have a good answer for that, or for what clearly the saving grace for Cranston. THAT is where the NRSC should be challenged. And you shouldn't waste your energy trying to frame Chafee's record for what it is not.

Posted by: ri fan at November 28, 2005 9:15 AM

>>>This is a weak posting. I understand your attempt, but to argue that because the tax CUT that Chafee voted for was less than the PROPOSED cut Bush asked for, amounts to a tax increase is simply intellectually dishonest.

It is no more intellectually dishonest than the Democrats' perrenial charges that Republicans "slashed" Medicare (and other "critical government services") by reducing a proposed rate of increase, though still increasing in actual terms.

And the stuff about Bush's tax cuts is all diversionary smoke and mirrors anyway.

ULTIMATELY, ANY INCREASE IN THE FEDERAL BUDGET IS AN INCREASE IN TAXES - the only variables being whether the increase is in "real terms" (i.e., above the rate of inflation) and whether the budget is balanced (i.e., whether some or all of the current budget will be paid for with current and/or future tax streams).

Posted by: Tom W at November 28, 2005 10:33 AM

RI Fan,

1. I don’t subscribe to the government-owns-all-income theory of taxation. $490 in higher property taxes is $490 out of your pocket that you are not able to spend as you choose because of a decision by the government. And $700 in blocked tax cuts is $700 out of your pocket that you are not able to spend as you choose because of a decision by the government.

2. The taxation-per-household metric is a metric frequently used by the Heritage Foundation for tax policy analysis. We can’t let our Federal officials hide behind the complexity of the tax code and the mind-numbing size of the total numbers to imply that an additional $396,000,000,000 in taxation will only affect “other people”.

3. You are right, however, that I should have used all of the data available to me. Rather than simply breaking the results out by above-or-below the 50th percentile, when I get a chance later today, I’ll use the NTU breakdowns to estimate the effect of additional taxation in different income ranges.

4. We are always in favor of a real debate about the future rather than dwelling on the past here at Anchor Rising. Senator Chafee, Mayor Laffey, and other Rhode Island officials should always consider this a place where they can present the details of their policies and proposals for frank discussion. Here’s a suggested place for Rhode Island’s Republican Senate candidates to start: What do you plan to do about the alternative minimum tax?

Posted by: Andrew at November 28, 2005 10:40 AM

The added problem with Laffey's tax plan is that it built up a 20 million dollar surplus which will most likely be eaten up by union contracts, primarily the school's. Unless you are going to remain mayor forever and hold onto a surplus with an iron fist, I don't think it is wise to build up such a huge surplus. It just gives the unions a well-stocked candy store to raid. I realize the surplus helped improve our bond rating, but I bet that a 5 mill surplus would have been sufficient to do that. If it were up to me, I would do a tax rebate with half that surplus.

Posted by: citizenjane at November 28, 2005 12:36 PM

Speaking of union contracts... While mayor laffey was so "brave" in tackling the crossing guards, he has left the Cranston Police contract to dangle until he leaves office. Why? Maybe he's afraid of going up against a union that carries a great deal of public support and political fire-power.

Yes, the crossing guard situation was an example of government waste, but if he were a true champion against union interests and so concerned with us here in Cranston, then why not tackle the Police contract while he still is able to do something about it, rather than letting it pass on to the next (probably democratic) administration?

Posted by: cranston money man at November 28, 2005 1:14 PM

Laffey led the fight to raise taxes on multiple occassions. Chafee voted against a tax cut. Those are the facts.

You can argue about why Laffey did what he did or why Chafee did what he did, depending upon who you support, but it doesn't change the fact that Laffey raised taxes several times and Chafee voted against a tax cut.

Beginning any defense of this posting with the phrase "it is no more intellectually dishonest than the perrenial charges that the Republicans' slashed Medicare.." doesn't really defend this posting. If the GOP begins to say "we're just as honest as the Democrats", I think we're in trouble...

Posted by: Anthony at November 28, 2005 1:26 PM

Andrew,

Far be it from me to offer a good day's work to you, as I am sure that I have gained much more from Anchor Rising than I could ever contribute, however this is exactly the type of data that i think illustrates your point as it should be argued. Otherwise, I feel that we would be no better than the dems who have made careers out of misleading citizens.

With that said, I will still disagree with you on the single point that a vote against a tax cut is equivelant to a vote for a tax increase. By that logic, a vote against a proposal that would eliminate ALL taxes would be the same as a vote FOR an additional increase.

As a conservative, I am a firm believer in personal responsibility. I am also a believer in private industry and the free market. However, I also am of the thought that government is best suited to tackle those jobs that 1. are not profitable or desirable to business and 2. need to be addressed. It is my belief in personal responsibility and civic duty that leads me to take issue with your premise.

While I believe that the president's original tax program would have resulted in an even stronger economic turn-around than we have already seen, I cannot in good conscience make the argument that Chafee voted to raise taxes. He simply didn't. Laffey did. Three times. I know it's only a matter of how you frame the issue in your mind, but for me, I cannot follow your thought-process beyond chafee voting against the tax cuts. If that isn't strong enough for you to go to war for Laffey with, then I suggest moving on to other issues where Chafee has let his base down.

Posted by: ri fan at November 28, 2005 8:20 PM

Andrew,

Far be it from me to offer a good day's work to you, as I am sure that I have gained much more from Anchor Rising than I could ever contribute, however this is exactly the type of data that i think illustrates your point as it should be argued. Otherwise, I feel that we would be no better than the dems who have made careers out of misleading citizens.

With that said, I will still disagree with you on the single point that a vote against a tax cut is equivelant to a vote for a tax increase. By that logic, a vote against a proposal that would eliminate ALL taxes would be the same as a vote FOR an additional increase.

As a conservative, I am a firm believer in personal responsibility. I am also a believer in private industry and the free market. However, I also am of the thought that government is best suited to tackle those jobs that 1. are not profitable or desirable to business and 2. need to be addressed. It is my belief in personal responsibility and civic duty that leads me to take issue with your premise.

While I believe that the president's original tax program would have resulted in an even stronger economic turn-around than we have already seen, I cannot in good conscience make the argument that Chafee voted to raise taxes. He simply didn't. Laffey did. Three times. I know it's only a matter of how you frame the issue in your mind, but for me, I cannot follow your thought-process beyond chafee voting against the tax cuts. If that isn't strong enough for you to go to war for Laffey with, then I suggest moving on to other issues where Chafee has let his base down.

Posted by: ri fan at November 28, 2005 8:20 PM

>>Beginning any defense of this posting with the phrase "it is no more intellectually dishonest than the perrenial charges that the Republicans' slashed Medicare.." doesn't really defend this posting. If the GOP begins to say "we're just as honest as the Democrats", I think we're in trouble...

Anthony:

I wasn't defending the post so much as pointing out some hypocrisy.

And the GOP is in trouble. It is not a conservative party. It is not a principled party. It is an incumbent-protection party; as is the Democrat Partys - except that the Democrat Party does retain some principles and is willing to fight for them. Problem is, their principle(s) are socialism.

Posted by: Tom W at November 28, 2005 8:54 PM

I am going to disagree with Tom, if only on a technicality. The Republican Party IS a conservative party -- upwards of 80% of "Republicans" nationwide consider themselves to be "conservative."

However, the leadership of the Republican Party at the national, as well as the state level in our case, is not only NOT conservative, but in many cases, they are not even necessarily "moderate." The acronym "RINO" comes to mind. Roughly 1/3 of the RNC for instance, consider themselves to be conservative on economic and social issues. They are all too willing to sacrifice "principle" for political expediency -- essentially say what it takes to get power, and then once they have it, hold on for dear life.

They mainly gain their influence within the GOP by buying access. There is a very strong correlation between large contributions, and power within the party structure. Sadly, it's not any better in the other party.

I would encourage people like Tom not to give up on the GOP, in spite itself sometimes. The platform of the party is a wonderful document. The problem is that without people of principle, they are just words on paper. We need to hold our elected officials accountable to it.

Posted by: Will at November 30, 2005 1:33 AM

Will, in order for the Republican Party to advance a conservative agenda, it must have the majority. That means Republican Party must be able to attract 51% of American voters.

Recognizing that fewer than 51% of American voters self-identify as "conservative", the national GOP needs to be able to embrace those moderates who fall slightly to the right of center. If it can't get 51%, the GOP would become obsolete.

I also don't feel the GOP is an "incumbent-protection" party. If given a choice between a viable conservative Republican and a viable liberal Republican, the party will usually stick with the viable conservative. The key word is "viable".

Incumbents do benefit from the ability to raise money, usually have higher name recognition and so forth. They're usually more viable.

In RI, moderate Republicans have made for stronger candidates (speaking in terms of win/loss records, not issue strength).

The solution is to reach out to conservative Democrats who would be Republicans in any other state and let them know it's OK to be a Republican. Eventually, the party can build up a solid base and eventually begin electing conservative Republicans. Until Republican voter registration increases, it will be difficult to elect conservative.

You just need to lay the foundation before you start to build the house.

Posted by: Anthony at November 30, 2005 12:15 PM

Say what you will, but Sen. Chafee is our best hope and the best candidate. HEre is an article I recently read and will share with you

Re: The Real Steve Laffey

Date: October 21, 2005

National Republican Senate leaders as well as Governor Donald Carcieri (R-RI) have all strongly endorsed Senator Chafee for re-election next year, along with a clear majority of local Republican officials across the State.

Despite this, Mayor Stephen Laffey is challenging the Senator in September’s GOP primary. Mr. Laffey has flip-flopped on key issues since announcing his candidacy and throughout his time as Mayor of Cranston, where he has left Cranston home owners struggling under the highest tax rates in Rhode Island.

Political Philosophy:

Mr. Laffey has alternately claimed to be a social conservative, a populist, and a Republican in the mold of Ronald Reagan. Research into his legislative record and public statements suggests that Mr. Laffey is a conservative only when it’s convenient and has taken contradictory positions on important issues when he thought it was politically expedient.

Shortly after announcing his campaign, Laffey said: “When you say the word ‘conservative,’ I don’t even know what that means.” (Providence Journal, 09/16/05).
Taxes:

Mr. Laffey has said: “My position on taxes is this: I think all in government should be working to reduce the tax burden on hardworking Americans. That’s the property tax, the income tax and the sales tax.” (Providence Journal, 09/16/05)

One of Laffey’s first moves as Mayor was to levy a supplemental tax that hiked taxes by 12.8%. (Providence Journal, 1/29/03)
In his first budget, Laffey proposed a 3.9% tax increase. (Providence Journal, 4/1/03)
A year later, Mr. Laffey proposed his third tax increase in 15 months - an additional tax hike of 4.5%. (Providence Journal, 3/31/04)
After this barrage of Laffey tax increases, Cranston residents have been saddled with highest property taxes in Rhode Island. (“FY 2005 Property Tax Burdens in Rhode Island,” Table 7, Rhode Island Public Expenditure Council, February 2005)

Abortion:

When asked whether it would have been better to let each state decide on abortion, Laffey stated “It’s {Roe v. Wade} settled law…So let it go.” (Providence Journal, 9/29/05)

Laffey has said that he believes that Sen. Hillary Clinton’s positions on abortion are “reasonable.” (Providence Journal, 05/20/05)
Party Affiliation:

Laffey contributed money to the campaigns of Democratic Jim Cooper’s Senate race in Tennessee and to Jesse Jackson, Jr. (D-Il.) (opensecrets.org)

In his first television ad called “Mess” and on his website, Laffey claims he wants to be Senator “because Washington is a mess and neither the Republicans nor the Democrats are doing a thing about it.” (electlaffey.com)
Mr. Laffey’s campaign spokesperson has called the Republican Senate leadership, “…comfortable do-nothing Senators supporting comfortable do-nothing incumbents.” (electlaffey.com)
In his announcement speech, Mr. Laffey stated, “when it comes to taxpayer rip-offs and special interest deals, there's not a bit of difference between the Republicans and Democrats.” (electlaffey.com)
Civil Unions:

In a radio interview, Mr. Laffey said he is in favor of civil unions. (B-101 FM)

Transportation and Energy:

Laffey has blamed Republican leadership in Washington for making us dependent on foreign oil claiming, “Someone needs to say to these Washington politicians that ENOUGH IS ENOUGH…Someone needs to stand up and fight when the oil companies get huge subsidies while we do nothing to reduce our dependence on foreign oil.” (electlaffey.com)
In his television advertisement, Mr. Laffey states, “We’ve got record gas prices and what are the Washington politicians doing? They give billions to the big oil companies and keep us dependent on the Middle East.” (electlaffey.com)
Soon after his ad began running, press reports detailed that Laffey drives two gas guzzling SUVs – one of which is paid for by the city of Cranston. (Providence Journal, 09/19/05)

Posted by: caswell cooke, Jr at December 4, 2005 10:12 AM