Friday, April 30, 2010

Libertarians call for more finance industry freedom

Libertarian Party Executive Director Wes Benedict issued the following statement today, regarding the financial regulation legislation in Congress:

"The Libertarian Party opposes the legislation currently in Congress. Instead of removing harmful regulations that reduce competition, create winners and losers, and stifle the choices of consumers and financial firms, this legislation merely adds to that heap of regulations.

"It is remarkable that so many people have blamed the banking and financial company failures on the 'free market.' The American finance industry is probably the most regulated industry in human history. It doesn't remotely resemble a free market, and that's been true for many decades. It would be much more accurate to blame the failures on government interference.

"The 2008 TARP bailouts were strongly supported by both Republicans and Democrats. Presidential candidates Barack Obama and John McCain both supported them--Senator McCain even 'suspended his campaign' to rush back to Washington and help push through the massive bailouts. On the other hand, Libertarian presidential candidate Bob Barr firmly opposed those bailouts, and the Libertarian Party has continued to express our opposition since then.

"We're seeing the typical cycle of government regulation:

1. Add more regulations.
2. Watch the new regulations create new problems.
3. Blame the free market.
4. Go to step 1.

"The 2008 TARP bailouts were rationalized with the 'too big to fail' phantom -- the notion that if a big company goes bankrupt, then all financial activity will cease, and the world will basically end. It was one more example of government creating a 'fear of catastrophe' to get people to knuckle under to big government payouts.

"Another major problem with protective government regulation is that it gives consumers the false impression that 'everything's OK, the government will make sure you can't be hurt.' That causes consumers to stop doing their homework, and stop keeping an eye on the businesses they depend on. Then, when the government regulators fail in their job (as the SEC has repeatedly, for example), consumers get hurt much worse than they would if they had never been told the government was taking care of them.

"The problem isn't too little regulation, but too much. Banks, insurance companies, and other financial companies must be allowed to operate freely in a free market, and they must be allowed to fail. No other system will work. Heaping more regulations on top of the already enormous financial regulation pile will only lead to new problems."

Mark A. Calabria of the Cato Institute, writing in the New York Post, commented, "Far from protecting the little guy and sticking it to the fat cats, this bill keeps good, old-fashioned political patronage alive and well."

The Libertarian Party's Platform states: "We favor free-market banking, with unrestricted competition among banks and depository institutions of all types."

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Thursday, April 29, 2010

State Income Taxes Push Many Working-Poor Families Deeper Into Poverty

/PRNewswire/ -- Thirteen states taxed working-poor families deeper into poverty last year, according to a new report from the Center on Budget and Policy Priorities. In some of those states, poor families faced several hundred dollars in state income taxes -- a significant amount for a family struggling to make ends meet, the report said.

Moreover, while some states implemented tax reductions for low-income working families in 2009 (usually enacted before the recession), progress has since ground to a halt because of state budget problems. In fact, some states have enacted or are considering reductions in tax credits for low-income working families, according to a companion report.

"States' budget challenges are real, but so are the challenges that hard-working families are facing in today's tough economy," said Nicholas Johnson, director of the Center's State Fiscal Project. "States have better ways to balance their budgets than to make their tax codes tougher on low-income workers."

Some States Tax Families Well Below Poverty Line

The report found that in tax year 2009:
-- In 13 of the 42 states that levy income taxes, two-parent families of
four with incomes below the federal poverty line are liable for income
-- In 11 states, poor single-parent families of three pay income tax;
-- And 25 states impose income tax on families of four just above the
poverty line.

These findings are based on the poverty line for 2009: $21,947 for a family of four and $17,102 for a family of three. While families below the poverty line don't pay state income tax in most states, they do pay other taxes such as sales, gas, excise, and property taxes.

Some states levy income tax on working families in severe poverty. For example, Alabama, Georgia, Illinois, Montana, and Ohio tax two-parent families of four earning less than three-quarters of the poverty line ($16,460).

In some states, poor families face several hundred dollars in income tax. In 2009, for example, a two-parent family of four with income at the poverty line owed $468 in Alabama, $266 in Hawaii, and $225 in Montana, according to the report.

Recession Threatens Recent Progress

The number of states levying income tax on working-poor families of four declined from 16 in 2008 to 13 in 2009; the taxes levied by those remaining 13 states also declined. But in the face of state budget problems, this progress has ground to a halt and some states have recently taken steps to cut back their credits, according to the companion report. For example:

-- Virginia enacted a cut to its EITC that would raise taxes by $6
million on an estimated 114,000 low-income working families. (This
cut might be reversed before it takes effect.)
-- Minnesota cut back a renters' credit affecting 300,000 low- and
moderate-income households and eliminated a gas tax credit.
-- Georgia is considering eliminating $22 million in wage support for 1
million workers earning less than $20,000 per year.

Similar measures have been proposed in New Jersey, the District of Columbia, and Montgomery County, Maryland.

Raising taxes on low-income working families is not the best option for raising state revenue, the report explains. Some states are considering such measures alongside proposals to cut taxes for wealthy individuals and corporations, which likely would neither strengthen the economy nor create jobs. States would be better off maintaining their low-income tax credits -- which families spend quickly and locally, giving the economy a needed boost -- while canceling other tax cuts and raising new revenue from higher-income families and profitable corporations.

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Sunday, April 25, 2010

Secretary of State Kemp Launches Real Time State and Federal Candidate Qualifying Website

Georgia Secretary of State Brian Kemp announced today that qualifying information for Statewide, State House and Senate, and U.S. House and Senate candidates for the July 20, 2010 General Primaries will be updated in real time on the Secretary of State’s website ( Political Party qualifying will be conducted in the Georgia State Capitol from Monday, April 26 through Thursday, April 29 from 9 a.m. to 5 p.m., and on Friday, April 30 from 9 a.m. to Noon.

“It is important that we provide candidate qualifying information as quickly and accurately as possible, so Georgia voters can immediately know who is running to represent them in public office,” said Secretary Kemp. “We thank the political parties for working with the Secretary of State’s office to develop and implement this critical e-government solution.”

For additional information on political party qualifying, please contact the Georgia Republican Party at, or the Democratic Party of Georgia at

Brian Kemp was sworn in as Secretary of State in January 2010. Among the office’s wide-ranging responsibilities, the Secretary of State is charged with conducting efficient and secure elections, the registration of corporations, and the regulation of securities and professional license holders. The office also oversees the Georgia Archives and the Capitol Museum.
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Tuesday, April 20, 2010

Senate to Consider Eliminating $21 Million in Tax Credits for Poorest Georgians

The Senate Finance Committee revived a proposal yesterday that died in the House on Crossover Day -- a proposal that eliminates the refundable portion of the Low Income Tax Credit. The Senate could vote on the measure (House Bill 1198) on Wednesday or in the final legislative days next week.

Currently, taxpayers with income below $20,000 are eligible for a tax credit ranging from $5 to $26 for individuals, with additional benefits for the elderly and families with children. If the tax credit exceeds a taxpayer's income tax liability, he or she receives the remaining credit as a refund.

More than one million Georgia taxpayers claimed the Low Income Tax Credit in 2007, receiving $29 million in credits. If legislators eliminate the refundable portion of the credit, they will cut the Low Income Tax Credit by two-thirds, lowering the total credits to low-income Georgians by $21.8 million, according to the fiscal note to the bill.

At the same time, legislators have passed about a half a billion dollars in new tax breaks for corporations and the state's wealthiest individuals. HB 1023 cuts the capital gains tax in half and eliminates the corporate net worth tax ($380 million annually when fully implemented). HB 1055 eliminates the income tax on retirement income for the state's wealthiest seniors ($150 million when fully implemented). These bills await the governor's signature or veto.

Why is the Credit Refundable?

The refundable portion of the Low Income Tax Credit (the portion that exceeds income tax liability) is indended to offset some of the sales tax liability faced by low-income Georgians.

Low-income taxpayers do not have a large income tax liability. Instead, they pay substantial sales taxes because they consume a greater portion of their income than higher income residents do.

Georgians earning less than $16,000 pay 7.8 percent of their income on average in state and local sales and excise taxes; however, Georgians earning $62,000 pay 4.4 percent and those earning over $433,000 pay 0.9 percent on average. Click here for a chart on tax liability by the Institute on Taxation & Economic Policy.

In its current refundable form, the Low Income Credit offsets a small fraction of sales tax liability for low-income taxpayers, making an overwhelmingly regressive tax somewhat less so. Since relief cannot be targeted specifically to low-income taxpayers through the sales tax, it must be done through the income tax.

Are Other Tax Credits Refundable?

The Low Income Tax Credit is not the only refundable credit -- it just happens to be the only one targeted to the very lowest-income taxpayers.

Corporations doing business in Georgia can claim certain tax credits even if they have zero corporate income tax liability. These include the film tax credit, the jobs tax credit, and the headquarters tax credit. A corporation with tax credits in excess of its income tax liability is able to receive the remaining credits by taking the credits against employee payroll withholding.

Here's how it works: Employees have income withheld from their paychecks for state income taxes. That money typically flows to the state. However, if the company has tax credits and no income tax liability to use the credits against, the state allows the corporation to keep the employees' withholding payments in the amount equal to the excess tax credits.

Corporate tax credits taken against payroll withholding (the essentially refundable portion) cost $20.9 million in 2007, nearly matching the cost of the Low Income Tax Credit refunds.

"If lawmakers pursue HB 1198 because they do not believe in refundability for more than one million of Georgia's lowest-income taxpayers, then it follows that they will also need to enact legislation to correct the refundable nature of certain corporate tax credits," said Sarah Beth Gehl, deputy director of the Georgia Budget & Policy Institute.


There is no doubt about the fact that Georgia desperately needs more revenues. However, there are many logical and fair options for seeking revenues, without focusing solely on those taxpayers who have the least ability to afford a tax increase now or after the recession. "Lawmakers should seek either broad-based revenue measures or those targeted at taxpayers with the greatest ability to afford it," said Gehl. Click here for a $450 million option.

Download the Georgia Budget & Policy Institute's analysis of the proposal (which was originally in HB 1219), including a more sensible alternative, here. The Institute on Taxation and Economic Policy has an analysis of the bill as well.

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Thursday, April 15, 2010

Opinion: Governor Perdue Should Veto HB 1055 and Demand Lawmakers Pass A Clean Version

In order for Governor Perdue to maintain his record of fiscal responsibility, he should veto House Bill 1055. The legislature combined permanent tax cuts with much-needed revenue increases in HB 1055, turning the governor's fiscally responsible proposal into a last minute tax giveaway.

The final version, which passed April 14, adds to the alarming and long-term structural deficit in Georgia. In addition, this bill along with HB 1023 - which has permanent tax cuts of $380 million - could have serious negative implications for Georgia's AAA bond rating.

There is another option- an option that would allow the governor to achieve his original proposals of a temporary hospital fee and updates to user fees. House Bill 307, which contains the temporary hospital provider fee, is still viable. The governor still has an opportunity for the clean bill he desires, if lawmakers revise HB 307 to contain both revenue measures.

Lawmakers of both parties should vote for an amended version of HB 307 that contains two things - the temporary hospital provider fee and updates to user fees. However, lawmakers are not likely to pursue this sensible alternative unless the governor immediately vetoes HB 1055.

Alan Essig
Georgia Budget & Policy Institute

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Wednesday, April 14, 2010

Libertarians question Republican participation in Tea Parties

Wes Benedict, Executive Director of the Libertarian Party, issued the following statement today:

"Many Libertarians around America are planning to go to Tea Party rallies tomorrow. I also expect lots of Republican activists and politicians to be there. But frankly, I don't think those Republicans belong there. The people participating in these rallies are saying 'There's too much government spending,' but Republicans, decade after decade, have supported massive increases in government spending. During the George W. Bush administration, Republicans in Congress supported spending trillions of dollars on foreign wars, a massive Medicare expansion, and banker bailouts. Republicans doubled the budget and doubled the federal debt. Why can't the Republican Party just admit that it loves big government?

"If I thought there would be many Democrats at these rallies, I'd criticize them too. However, I think it's safe to say that they'll be few and far between.

"Many Libertarians are enthusiastic about the Tea Parties, but many are not. Many Libertarians are concerned that participating causes us to get lumped in with conservatives and Republicans. In our online poll at, 28% so far say that 'The Tea Parties have become too Republican-flavored.'

"Libertarians are often frustrated when the press characterizes us as 'right-wing' or 'conservative.' Although we certainly support reducing government spending, which most conservatives also claim to support, we differ from right-wingers on many issues: for example, we oppose foreign interventionism, support immigrant-friendly policies, oppose overreaction to terrorism, and oppose the War on Drugs.

"Libertarians are neither left-wing nor right-wing. We're in a different place on the political map, as illustrated by the popular World's Smallest Political Quiz.

"Some of the people in the tax day Tea Party crowds will be right-wingers, and some will be Libertarians. For those Tea Partiers who support Libertarian principles of very limited government spending, government tolerance on social issues, and a non-interventionist foreign policy, the Libertarian Party is ready to welcome them with open arms."

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Thursday, April 8, 2010

Obama, Congress: Fix 10 Health Care Loopholes and Repel Insurer Attempts to Undermine New Consumer Protections, Says Consumer Watchdog

/PRNewswire-USNewswire/ -- Consumer Watchdog called on President Obama and Congress in a letter sent today to fix ten problem areas in the new federal health reform law that, if not addressed, will be exploited by health insurers and drug companies looking to charge more for less health care.

Download the letter here:

In the letter sent today, Consumer Watchdog wrote:

"The enactment of broad health reform into law is, as you know, only the start of providing health coverage to all Americans at a fair price. Not only must the White House and Congress close loopholes in the newly enacted law, but the White House must also strongly repel efforts already under way by insurers and other corporate interests to undermine Department of Health and Human Services regulations while they are being written. . . .

"Key questions left unanswered in the legislation--including the scope of health benefits that insurers must provide under the new law--will be addressed over the next months and years by federal regulators. Congress must stand ready to continuously clarify and strengthen the law against efforts to nullify its broad and progressive intent. . . .

"Consumers will brook no excuses for failure by the White House or Congress to strongly defend newly won consumer protections, fill dangerous loopholes in the new law, and ward off an onslaught of well-funded lobbyists."

The ten loopholes and problem areas are (see letter at link above for more details):

* Lack of Insurer Rate Regulation. The federal law fails to adequately limit what insurers can charge American families and business owners for coverage, even though tens of millions of Americans are required to purchase private health insurance policies. Without the strongest possible review and prior approval of health insurance rates insurers will be able to raise rates nearly without limit and use rate-setting as a vehicle for continuing to cherry-pick the healthiest customers.

* Weakening of benefits. Pre-emption of stronger state benefit requirements by so-called Nationwide and Multi-state plans will threaten the survivability of the state Exchanges and eliminate key health and consumer protections in many states. This is a "race to the bottom" provision that may allow insurers to sell highly profitable bare-bones policies under the guise of cutting costs. Consumers who fall seriously ill would suffer the consequences.

* States Rights to Innovate. Under the current law, states must wait until 2017 for waivers from the federal government to use federal Medicaid, Medicare, tax subsidies and other funds to support state alternatives to the private insurance market, whether that be by adopting a state single-payer model or a state "public option." If the federal government will require all Americans to purchase private insurance by 2014 or face tax fines, then by 2014 the federal government must also give states the right to use their share of federal funds to support alternate, state-based health reform.

* Medicare Advantage pushback. Private, for-profit Medicare Advantage systems will spend hundreds of millions of dollars on glossy marketing to attract a higher percentage of healthier seniors into such plans. The result could be a lobbying coup that prevents cuts in Medicare Advantage overpayments, cripples efforts to stabilize Medicare costs and may even push traditional Medicare into an economic death spiral.

* Pharmaceutical price spiral. Pharmaceutical companies' large and unwarranted recent price increases on heavily used drugs have already eliminated any cost savings from an industry promise to "reduce" Medicare drug prices by $8 billion a year. Further Congressional action is needed to allow direct bargaining for drugs by Medicare, which is the only way to steadily curb drug prices.

* Continued rescission. The federal law allows insurers to define the terms of future coverage rescissions when customers fall seriously ill in the fine print of their policies. The law limits rescission of health policies to instances of fraud or "intentional misrepresentation," however no new regulatory oversight of rescission is provided to ensure that omissions or errors are indeed fraudulent or intentional, rather than innocent mistakes.

* No legal accountability for insurers that deny care. Patients who have health coverage paid for in part or full by employers cannot hold insurers legally accountable for denying medically necessary treatments.

* Definition of medical expenses. Consumer Watchdog has called on the Obama Administration and the Department of Health and Human Services ("HHS") to probe insurance giant WellPoint Inc. in light of a message to its investors describing how WellPoint would simply re-label administrative costs as "medical care" in response to the new health reform law. HHS must narrowly define what constitutes medical care to block gaming of the new medical loss ratio requirement by health insurers.

* Inadequate Federal Fallback. Consumer Watchdog advocates for frontline state enforcement with strong federal fallback if states fail to act. States are the local cops on the beat and can respond faster to local threats and with greater knowledge of the local market. But there should be pathways for federal regulators to become fully aware of the failure of state fraud enforcement through public intervenor groups and reporting requirements that tip federal regulators to local inaction.

* Sick kids. The ink was hardly dry on the health reform law when the insurance industry started saying that no matter what Congress thought it passed and no matter what President Obama said, they did not have provide coverage to sick children right away. The main private insurer lobbying group, Americans Health Insurance Plans, has since said it will not fight the new coverage of previously excluded children and conditions, but the provision must also be clearly stated in regulations implementing the law.

Consumer Watchdog is a nonpartisan consumer advocacy organization with offices in Washington, D.C. and Santa Monica, CA. Find us on the web at:

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