Just in time for Tax Day (a day when flags should be be flown at half staff to mourn the income we lose to government bureaucracy), the Hoover Institution has released a fascinating history of taxes in America.

Think filing taxes is a pain?  No kidding.

According to one source, the current tax code and its associated regulations “contain almost 5.6 million words–seven times as many words as the Bible.” One website that provides access to the tax code and its related documents notes that the complete tax code is 24 megabytes in size and, if printed 60 lines to the page, would fill more than 7,500 letter-size pages.

Contempt for the current tax system is rampant. In The Flat Tax, Hall and Rabushka note that President Jimmy Carter stated that the income tax was “a disgrace to the human race.” President George W. Bush commented that “the tax code is a complicated mess. You realize, it’s a million pages long.” Even Albert Einstein once quipped, “The hardest thing in the world to understand is the income tax.”

France is planning to push forward plans for a common EU company tax base during its six-month term at the bloc’s chair, starting in July.

“It has been going on for a long time but this is one issue that we are determined to push,” French economy minister Christine Lagarde told reporters on Monday (7 April), following a tax forum organised by the European Commission.

The corporate tax base idea has been advocated by EU tax commissioner Laszlo Kovacs as a way to simplify cross-border business and cut red tape for European companies by setting up a single system for calculating taxes across the 27 member states.

But it has been so far strongly opposed by a bunch of countries, mainly the UK, Ireland, Estonia, Lithuania and Slovakia. They fear such a common tax base would be the first step towards harmonisation of tax rates, an area defended by EU states on national sovereignty grounds.

But both Paris and the EU executive deny this assumption. “Whether you have 12 percent in Ireland, or 33 percent in France, or 15 percent in Germany is irrelevant,” argued Ms Lagarde.

“What matters is what is the ultimate taxation paid by companies. That depends on two things, the tax rate and the basis. Agreeing on the basis would be extremely positive. So we will push for that,” she added.

The commission has set up a special working group which includes national experts to work on calculations of a base which would be acceptable by all countries. Brussels is also awaiting results of an impact assessment study before it tables concrete legislation.

Tax-related issues need to be agreed by unanimity but Mr Kovacs argues the corporate tax base could be kicked off and function even without the group of states which are opposed to the model.

Still, some commission officials suggest presentation of the plan by Brussels has been delayed until the second part of the year due to fears it could negatively influence the referendum on the EU’s new Lisbon treaty in Ireland, scheduled for 12 June.

Doubts over green taxes
Meanwhile, the incoming French presidency is still also hoping to make headway with its joint initiative with Britain on the introduction of reduced VAT rates for energy efficient products, such as light bulbs or refrigerators.

While EU leaders asked the commission to look into the matter at their March summit, several states expressed objections to the idea, with the commission also doubtful about its chances to push it through.

“While in principle everybody would agree, then you run into the issue of what is green and what is not green,” Ms Lagarde admitted, adding: “What is a green product today and what is a green product tomorrow?”

Apart from such technical complications, Mr Kovacs said some countries favour other types of instruments for supporting energy-saving products.

“I think the essence of the French-British proposal is to promote environmentally friendly and energy saving materials, products and appliances. We do agree with that. What is technically the best solution is another question,” the commissioner said.

Also speaking at the tax forum, EU industry commissioner Gunter Verheugen announced he would introduce some basic rules and criteria for all products to prove they are energy-efficient and become eligible for tax incentives.

Energy for tomorrow – BED-12(08)/HB3064/SB2986 creating special tax credit for taxpayers with less that $20K AGI who install solar water heater or other renewable energy system. This would result in refund from the state for those with no tax liability; creates new Energy Division within DBEDT funded with $1.6million for four positions in governor’s FY2009 budget; calls for establishment of Chair in power generation and distribution at UH college of engineering, setting aside $2 million for funding to be matched by private sources; clarifies that the public benefits fund created in 2006 to encourage energy conservation not be subjected to legislative fund raids and managed outside the state treasury; and bill to expand the definition of renewable energy producer to include growers and producers of organic materials used primarily for production of biofuels or other fuels (no bill number).

NOTE: Hawaii state gas taxes shown as 16-cents but does not include 4.712% GETax on retail price of gasoline, an additional16-cents ($3.35 x 0.04712) or $0.32 total makes Hawaii’s taxes among the highest on gasoline.

Lingle-Aiona Initiatives 2008, recently published in the Honolulu Advertiser are available on-line using this link. This post relates to increasing affordable housing opportunities, one of 14 initiative areas contained in the document. Some initiatives are recycled or continued from prior years. Stay tuned to see how the bills/initiatives progress.

Increasing affordable housing opportunities - AGS-01(08)/HB3035/SB2957 allowing for state projects to begin with having the full amount of capital cost funding on hand at the beginning of the project; BED-08(08)/HB3060/SB2982 allowing the Hawaii Community Development Authority to resell fee simple interest in reserved housing units; BED-01(08)/HB3057/SB2979 permanently requiring 50

5 of the conveyance tax go to Rental Housing Trust Fund to build more affordable rental units; Extend $7.5 million annual tax credit expiring 5/31/09 to 5/31/10. Still pending – bill to authorize $100 million in additional revenue bonds for Hula Mae Multi-Family program (new and rehab affordable rentals)

At this time the tax credit has not been extended past the end of 2008, but it seems likely it will be.

Currently wind power represents just less than 1% of all power generated in the United States according to the US Energy Information Administration.

Read the article by clicking here

Reducing the cost of living – tax relief (Proposed Ohana Tax Reduction Act of 2008 consisting of tax credits for adult and child care costs; Retirement with Dignity Tax Relief Act of 2008; Aging in Place Tax Credit; Constitutional Rebate; HI529 Hawaii College Savings Plan Enhancement; and Reduction on Cell Phone Bills)

Read the article from the Honolulu Advertiser here

The following is a statement from Steve Stanek, managing editor of Budget & Tax News and research fellow at The Heartland Institute. You may quote from this statement or contact Stanek directly at 815/385-5602, stanek@heartland.org.

“There’s a saying: ‘If it ain’t broke, don’t fix it.’ After listening to President Bush, government officials, and various members of Congress call for a short-term ‘economic stimulus,’ I suggest an addendum: ‘If it might be broke, don’t break it for sure.’

“That could happen to the economy if the federal government heeds one or more of the calls for an economic stimulus.

“President Bush on Friday announced a proposal (without much detail) for about $150 billion in tax incentives for businesses and individuals. Candidates hoping to win their party’s nomination for president later this year, and congressional leaders of both major political parties, also have been calling for government action ranging from tax rebates to increased food stamp and unemployment insurance benefits.

“Problems with all these stimulus proposals include:

* “Disagreement among economists and government officials over the true state of the economy. No one can say for sure if the economy is in recession or will soon slide into recession, or how deep the recession, which might not occur, might be or might last.

* “The impossibility of quickly enacting anything. A stimulus could not possibly be approved until this spring at the earliest. The impact of any tax cuts would take months more to work their way into the economy. If the economy is in recession or soon slips into one, it could be pulling itself out of recession by the time the effects of the stimulus are felt. This could result in inflation, which carries its own set of economic problems.

* “The temporary nature of short-term stimuli. Tax cuts are the one sure way to stimulate the economy, but serious cuts paired with corresponding reductions in the bloated federal spending budget are the only reliable way to do it. One-time tax breaks and rebates soon expire, sending tax burdens back up, which could dampen economic activity as things get rolling if the stimulus actually works and is timed correctly.

* “The insignificant size of the proposals. Any tax cut is better than none, but even if President Bush gets his full stimulus package, it amounts to just 1 percent of gross domestic product (the value of all goods and services produced each year). That’s like saying we’ll get $1 for every $100 we spend. Is that likely to make people run out and spend lots more money? Only real cuts in federal taxes and spending will help.

* “Lack of fiscal discipline. Because virtually no one in power has seriously talked about cutting government spending to provide stimulus funds, the government will need to borrow the money. That means we will pay the bill later, with interest.

“Rather than a temporary short-term stimulus, lawmakers should rein in federal spending and approve long-term tax reductions that apply to everyone, not just to people in certain income brackets as some have proposed. In this way, businesses and individuals could plan with confidence how to earn, spend, save, and invest their funds. The last thing any investor wants is uncertainty, and this applies to the middle-income worker who’s thinking of buying or selling a car or house as much as it applies to the manager of a multibillion-dollar corporation considering opening a new office or expanding an existing facility.

“The more certainty businesses and individuals have, the more willing they will be to handle their money in ways that keep the economy growing.

“Enacting tiny, temporary tax cuts and thinking we’ve solved our economic problems is not a smart solution. It’s the economic equivalent of fool’s gold.”

For more information about The Heartland Institute, please contact Harriette Johnson, media relations manager, at hjohnson@heartland.org or 312/377-4000.

By LARRY SANDLER

Plans for a Milwaukee-area commuter rail line have been put on hold, amid continuing disagreement over how to fund the trains and the region’s public buses.

The deadlock has highlighted a split between the area’s business leaders and their usual Republican allies. Major business groups have been pushing for public transit improvements to ensure workers can reach jobs, but GOP legislators and county executives have balked at adding or raising taxes.

One possible solution is state legislation that would allow local governments to hold binding referendums on whether to form regional transit authorities paid for by local sales taxes. Meeting by conference call, the Southeastern Wisconsin Regional Transit Authority voiced support Monday for the basic premise of that legislation – which remains in draft form – but raised questions about how some provisions would apply to this area.

RTA Chairman Karl Ostby said it would be better for the authority to come up with its own comprehensive plan for how the region’s public buses and trains should be run and how they should be weaned off the property tax. Current law requires such recommendations be sent to the Legislature and Gov. Jim Doyle by Nov. 15, but Ostby is pushing to complete the plan within the next few months.

The RTA has been planning the KRM Commuter Link, a $200 million train line that would connect Kenosha, Racine, Milwaukee and the southern suburbs for workers, students and shoppers. Passengers could transfer to Chicago’s Metra commuter trains at the Kenosha station or ride shuttle buses from the Cudahy station to Mitchell International Airport.

Planners had hoped the line could be running by 2010. That would give commuters a way to avoid driving through the construction zone that will stretch from Milwaukee’s south side to the Illinois border during the rebuilding of the Mitchell Interchange and the north-south portion of I-94, a $1.9 billion project that starts next year.

But reaching the 2010 target is unlikely now. With no deal in sight on how to pay for the trains, the RTA voted last month to put its application for federal aid on hold.

If a funding deal comes together this year, trains could be running by 2012, said Ken Yunker, deputy director of the Southeastern Wisconsin Regional Planning Commission. That would still be in time for part of the I-94 reconstruction, which would last through 2016.

Finding funding source
Nationwide, sales taxes are the most common way of paying for commuter rail and light rail lines. But when the RTA ran into political opposition to a local sales tax for both trains and buses, it asked the Legislature to authorize a $13-a-car increase in the three-county rental car tax, from $2 to $15, for trains alone. Lawmakers refused.

The rental car tax drew opposition from Milwaukee aldermen and county supervisors, who wanted a revenue source that also could rescue the troubled Milwaukee County Transit System from a funding crisis that threatens to trigger a 35% service cut by 2010.

Business leaders support both the KRM and improved bus funding. The Metropolitan Milwaukee Association of Commerce’s board supports a transit sales tax that would be tied to a property tax cut.

Regionally, “business leaders see a need to invest in growing the economy,” through transit improvements already in place in other major cities, association President Tim Sheehy said.

In general, Democratic mayors, county executives and legislators have been more open to a transit sales tax than their Republican counterparts. As the Wisconsin Alliance of Cities developed its proposed transit authority legislation, GOP lawmakers insisted the taxing bodies be created by referendum, not by elected officials.

Much of the opposition to KRM is based in western Racine County.

West of I-94, Racine County residents think they wouldn’t ride the train and wouldn’t benefit from it, although economic growth in the city of Racine could help the countywide tax base, Racine Mayor Gary Becker and Racine County Executive Bill McReynolds said. Sales tax opposition also is strong in the county, McReynolds said.

The Alliance of Cities legislation could allow voting by municipalities, rather than counties, to form a new transit authority that might exclude western Racine County. But that approach would be problematic for the RTA, particularly if a community along the KRM line voted against joining the new authority, Ostby said.