by Peter Bearse

When might our yearning for simplicity lead us astray? – When dealing with the economy. We see this happening now with schemes for tax reform. We recognize that current tax arrangements have become mind-numbingly complex and rather unfair. So we seek a simple tax. Enter Steve Forbes with a “Flat Tax.” Never mind that it fails to address the root of our economy’s failings. Never mind that it’s just another income tax with which Congress can play its social engineering via tax incentives’ games. It’s flat; and since, according to Tom Friedman, the economic world is also “flat,” flat must be good.

And so we have the all three Republican candidates for Congress in the 1st C.D. competing on flatness -- on how quickly and strongly they recommended the Flat Tax. Unfortunately, they’re informed by ideology, not economic understanding. Why would a Flat Tax be good for the economy? What basic economic problem would it help to solve? What good would it do besides providing less business for accountants, lawyers and H.R. Block?

The major source of our economic problems is that we have been living far beyond our means. Savings have been very low and sometimes negative (dis-saving). Consumption has been unsustainably high. We have financed higher spending by drawing down equity in our major asset, our homes. Our trade deficit has been consistently negative, with imports far higher than exports. Our federal deficit has ballooned. Private debt has risen like the flames of a house afire. China and oil exporting countries have supported our excess spending by buying our country’s debt – to the extent that their “Sovereign Investment Funds” are buying our industry. How does a Flat tax address these problems? It doesn’t. It is simply a simple-minded, politically inoffensive expedient.

What would help us get a grip on our economic future? – a Consumption Tax [CT], otherwise (though somewhat misleadingly) called a “national sales tax.” As you can tell from the name, it taxes spending on consumption, not income, savings or investment. Thus, by its very nature, it provides disincentives to excess consumption and positive incentives for higher savings, investment and earnings.It is not nearly as simple as a Flat Tax. Members of Congress can still try to play games with it to favor some interests over others. Yet, it’s better than the current income tax and the proposed Flat Tax in its ability to help us strengthen and rebuild our economy.

Another advantage is that the CT would force our government to live within its means. This is because calculations show that a “reasonable” CT rate (say, 7-12%) would not generate enough revenue to finance the U.S. government at its current, excessive rate of expenditure. So what!, says this economist. It’s about time that Washington has to live within its means. To the extent that this is deemed to be a serious issue, we can consider another so-called tax which is not a tax but a fee on undesirable pollutants – a “Carbon Tax”. This would, in turn, be better than the highly touted “cap and trade” arrangements to reduce carbon emissions and fight global warming. But this calls for more discussion.

PETER BEARSE, Ph.D.
International Consulting Economist
March 16, 2008

By Ed Mosca

Last year, Gov. John Lynch proposed a constitutional amendment that wrote most of the mandates of the Claremont/Londonderry cases into the State Constitution. It read as follows:

“In fulfillment of the duty to cherish public schools set forth in the preceding article, the general court shall define an adequate education, regularly determine the total statewide cost thereof, fund, with state monies, not less than fifty percent of the total statewide cost of an adequate education each year and maintain standards of accountability. The general court shall have the authority to distribute the funds in the manner that it determines to best promote an equal opportunity for an adequate education for every child in the public schools, provided that the general court shall distribute some state aid to every school district.”

This year, Lynch is supporting an amendment, CACR 34, which undoes most of Claremont/Londonderry. It reads as follows:

“In fulfillment of the state's duties set forth in the preceding article, the General Court shall have the authority and responsibility to reasonably define the content of an adequate public education and to distribute state funds for public education in the manner that it reasonably determines to alleviate local disparities.”

Gone are the mandates that the Legislature has to determine the cost of an adequate education, pay for it with state taxes and maintain “standards of accountability,” all subject to the strictest standard of judicial review. Instead, the Legislature only has to define an adequate education and provide state funding in a manner to alleviate local disparities. Moreover, the drafters apparently intend these legislative determinations to be subject to the minimum standard of judicial review.

Some have suggested that CACR 34 implicitly leaves in place the mandates that the Legislature, subject to strict scrutiny judicial review, must determine the cost of an adequate education and pay for it with state taxes because it does not expressly address these matters. However, the words, “[i]n fulfillment of the state’s duties” at the beginning of the amendment make it clear that the Legislature only has to do what follows.

“Tweaking” the amendment by adding requirements that the Legislature determine the cost of the adequate education it defines and that commits the Legislature to paying for a specific share of those costs albeit subject only to the minimum level of judicial review, as has been suggested, is not just unnecessary; it is a step in the wrong direction. The Legislature should have the flexibility to set education funding based on the reality that the education budget is just part of a larger budget and that the taxpayers are not bottomless pits of money.

During the 2006 campaign, Lynch argued that an amendment like CACR 34 would “abandon our responsibility to our kids” and result in “a race to the bottom.” What explains Lynch’s about face? The most likely explanation is that he and his advisers have concluded that CACR 34 is their last, best chance to avoid getting trapped between the proverbial rock and a hard place.

The $3,460.00 per pupil cost of an adequate education that a legislative committee recently came up with in response to the Supreme Court’s most recent education funding decision doesn’t pass the straight-face test. It is little more than one-third of average per pupil spending in 2005-2006. If the Court were to rule that the cost is two-thirds of the average, which is entirely possible, then the State’s obligation under Claremont/Londonderry would be around $1.3 billion. At three-fourths, which also is entirely possible, the number is about $1.5 billion.

So unless an amendment passes, the alternatives may well come down to either an income tax or stand up to the Court. Both are fraught with risks for Lynch. If he goes with the former, he will have to convince the anti-income tax voters, which presumably still constitute a majority of the electorate, to blame the Court not him. Not an easy sell. If the latter, he will lose his base.

Lynch’s biggest challenge will be to convince his own Party to support CACR 34, which puts him in sort of the same position John Kerry was in explaining his position on funding the Iraq war: I was actually against CACR 34 before I was for it.

by Jane Aitken

Once again it is that time of year when NH residents will attend town meetings, school meetings, and deliberative sessions to decide how their tax dollars will be spent. They will make decisions about the education of their children. Since we in NH cherish our right to local control, I present to you three things to be wary of during these discussions.

There will likely be present operatives from a group going by the name of "Granite State Fair Tax Coalition". They may be offering any number of "resolutions" for approval in the form of warrant articles.

First, just who is GSFTC? Do not let the NH-sounding name fool you into thinking these are locals. If you examine the list of supporting groups, you will see among them are the New Hampshire/Vermont District Unitarian-Universalist Societies, and their political action arm, Faithful Democracy New Hampshire UUA.

Visiting any of these "church" websites will reveal nothing more than a politically-oriented agenda dedicated not to the worship of God, but to the promotion of the goals of the United Nations.

If you check the Universalist Unitarian Action Network's website at:

http://www.uuactionnetworknh.org/index.php?option=com_content&task=blogcategory&id=16&Itemid=31

you will see that their main priorities are "state tax equality" (income tax), "access to health care" (socialized medicine) and "addressing global warming" (UN carbon tax).

These citizens petitioned warrant articles may contain resolutions calling for our candidates for State Representative, State Senator, and Governor to reject the local "Taxpayers Pledge". This is an attempt to demonize the taking of the pledge by our fiscally responsible legislators to reject any broadbased new tax and to make way for a new state tax on our income. The article may even include the consideration of an income tax or be amended to include it.

However, the reasoning behind this action seems purely psychological and simply a means to change the mindset, since freedom of speech dictates that one's right to take the pledge cannot be legislated away. Candidates can and will continue to take it if they expect to be elected.

In fact, Senator Obama has recently proposed a bill that would effectively be a global tax:

http://www.gopusa.com/commentary/ckincaid/2008/ck_02131.shtml

Finally, rarer but starting to make some inroads, on the school side, there may be propositions to investigate expensive "international education" curriculae in the form of something called "IB". These are politically motivated programs devised by the United Nations and centered out of Geneva, Switzerland, geared more toward the acclimation students as early as the age of 3 into the role of "global citizens" subject to the rules of "global government" as laid out by UN documents such as the UDHR, Earth Charter, and Agenda 21.

Like the Goals 2000 and the NCLB Acts before it, IB schools attempt to instill an early acceptance of these UN "world government" standards and defies local control. These teachings about governmental loyalties are directly contrary to our US Constitutional government and our country's national sovereignty. These programs seem more about restructuring society and changing attitudes, than educating, and their founders are very up front about it. Even the tests children take would be graded in Geneva.

The principles in the aforementioned UN documents undermine the founding principles of the United States, the main one being that human rights, such as the right to life, liberty, and property, are inherent and inalienable, and must be protected by government, as is stated in our Declaration of Independence. The UDHR on the other hand, states exactly as follows: "These rights and freedoms may in no case be exercised contrary to the purposes and principles of the United Nations." [article 29, paragraph 3]. The view of human rights held by the United States is the foundation of liberty. The view of the United Nations is the foundation of totalitarianism.