State Supreme Court upholds 2011 redistricting maps

Nearly a year after hearing arguments on appeal, the N.C. Supreme Court today ruled that the legislative and congressional district maps drawn by the 2011 General Assembly satisfied the state and federal constitutions, ending a bitter fight led by a host of civil-rights organizations and left-leaning advocacy groups.

In a press release, Sen. Bob Rucho, R-Mecklenburg, and Rep. David Lewis, R-Harnett, who chair the two General Assembly chambers’ redistricting panels, said:

“Today’s decision confirms that our redistricting process and maps are what we have said all along: fair and legal.

“We are proud to have broken the cycle set by previous legislatures that repeatedly saw their maps tossed out by the courts as illegal. We hope today’s decision will finally put to rest the hyperpartisan rhetoric parroted by our opponents out of political spite.”

That final wish isn’t happening. The plaintiffs say they will ask the U.S. Supreme Court to review the decision for a possible appeal.

Justice Bob Edmunds wrote the majority opinion, joined by Chief Justice Mark Martin and associate justices Barbara Jackson and Paul Newby. Justices Cheri Beasley and Robin Hudson concurred with part of the opinion and dissented in part. Justice Bob Hunter did not participate in the consideraton of the case or the opinion (text here).

WSJ’s Henninger asks: Who’s the real stupid party?

Daniel Henninger of the Wall Street Journal devotes a “Wonder Land” column to a reconsideration of an old political insult.

A constant of political life has been that there is only one “stupid party” in America—the Republican Party. Then one day you get out of bed, look out the window and what do you see? Democrats. The Democrats are turning themselves into the new stupid party of American politics.

In the liberal pundits’ telling, Republicans are the party of the yahoo heartland, the anti-abortion religious right and the anti-government tea party. The stupid party.

Of course this is a caricature. Besides, none of this bad-mouthing matters unless too many average voters conclude that a weird political fringe now represents the party’s core.

Which brings us to the Draft Elizabeth Warren movement.

Last week more than 300 former Obama staffers signed an open letter urging the famous Harvard Law School professor to run in 2016. Days earlier, two big progressive groups, and Democracy for America, also pressed the first-term Massachusetts senator to seek the party’s presidential nomination.

The implicit logic of the Draft Warren movement is that after eight years of the Obama presidency, the American people want to move . . . further left.

However intriguing that proposition, the real problem for the political pros behind Draft Warren or even the Ready for Hillary super PAC is that the Democratic left’s high-publicity wing insists on doing stupid things in public that turn off more voters than they turn on.

Costs associated with taxes

David Allen at the Heritage Foundation examines for the Daily Signal the costs associated with taxes.

In addition to the direct burden imposed by the taxes themselves, Americans face compliance costs, as well as costs in the form of revenue loss during the IRS’ tax collection process. Pete Sepp, president of the National Taxpayers Union; Jason Fichtner, a senior research fellow at the Mercatus Center at George Mason University; and Dan Mastromarco, a partner at the Mastromarco Firm described at an event at the Heritage Foundation in November how the current tax code imposes costs on taxpayers in three key areas:

• Accounting Costs. Under the United States’ voluntary compliance tax system, it is the individual taxpayer’s responsibility to determine his income tax liability and meet filing requirements. Given the complexity of the existing tax code, many Americans either purchase tax preparation software or hire a third party to assist them during this process. According to a 2013 study by the Mercatus Center, the vast majority of Americans pay for assistance with the accounting process.

Opportunity costs must also be considered- the Taxpayer Advocate Servicer found that Americans spent 6.1 billion hours in 2010 completing IRS forms and filing returns. Even if taxpayers’ time were monetized at the low value of $10 per hour, that still leaves a cost of $61 billion per year. …

… • Tax Gap (revenue loss). The U.S. tax code is extraordinarily long and complex. According to the Taxpayer Advocate Servicer report, it is nearly 4 million words long. When printed, the IRS’ guidance explaining the income tax stands more than 1 foot tall.

As if the task of navigating through countless pages of dense legal jargon wasn’t formidable enough, consider this: on average, the U.S. tax code changes every day.

The incomprehensibility of the tax code leads to predictable results: American taxpayers frequently fail to file returns on time, fail to pay reported taxes on time, or innocently underreport the amount of tax they owe. Collectively, this leads to a substantial difference between taxes owed and taxes paid on time, creating a form of revenue loss known as the tax gap. The size of the net tax gap is roughly $452 billion (in 2012 dollars).
• Deadweight loss (economic cost). Taxes further impose costs by distorting economic decision making, namely how individuals choose to spend and save. Economists call this deadweight loss. It can be thought of as all of the foregone economic transactions that would have occurred in the absence of the tax. This includes all of the products and services not purchased and investments not made.

Deadweight loss is an implicit cost of taxation that slows economic growth. Although it is more difficult to calculate, estimates of this lost economic growth range from $148 billion to $609 billion.

Even if we use the lower-end estimates from above, the combined loss from these three sources is still a staggering $667 billion. When compared against the IRS’ gross collection amount of $2.855 trillion in 2013, this number indicates that, out of every $100 collected, over $23 was lost. When we bring in the higher-end estimates, the loss soars to an enormous $1.439 trillion. This equates to roughly $50 being lost for every $100 collected.

The answer involves reforming the tax code, focusing on basic principles like the ones outlined by Roy Cordato in 2009.

Cordato urges lawmakers to adopt the “liberty principle” as they consider tax reform. “The liberty principle stands in direct opposition to the redistributionist principle,” he said. “The redistributionist principle says the more people earn, the greater proportion of their income should be paid in taxes. There’s no relation to the benefits received from taxes.”

“In stark contrast, the liberty principle focuses on minimizing the extent to which the tax system interferes with individual freedom or the ‘pursuit of happiness,'” Cordato added. “This liberty principle is consistent with the North Carolina Constitution. Article I, Section I of that document lists our inalienable rights, including the enjoyment of the fruits of our own labor.”

Boosting prosperity and freedom requires a tax system that emphasizes “neutrality and simplicity,” Cordato said. “By neutrality, we mean tax policy should strive neither to penalize nor favor taxpayers’ decisions about how much time to work versus pursuing leisure activities, how much money to save or invest versus how much to spend, what kinds of goods and services to purchase, and what kinds of investments to make.”

One positive unintended consequence of Congress’ unwillingness to pass a regular budget

As Sean Lengell reports for the Washington Examiner, lawmakers seem less interested these days in securing one job that used to be coveted on Capitol Hill.

Republican leaders this week named four incoming freshmen to the Senate Appropriations Committee — another sign the historically powerful panel is losing relevance and appeal among lawmakers.

A spot on the Senate Appropriations Committee used to be a highly coveted assignment that would take years to earn. Not anymore, as the once-routine practice of Congress passing annual spending bills has given way in recent years to last-minute mega “omnibus” bills or “continuing resolutions” that essentially freeze spending.

The process, which was repeated Saturday when lawmakers passed a $1.1 trillion measure to fund most federal agencies through September, in part has diminished the role of appropriators.

“For many decades, the appropriations committees were among the most desirable places to serve. … They were leadership panels that served as guardians of taxpayer money, keeping it from being wasted,” said Norm Ornstein, a congressional expert with the American Enterprise Institute, a Washington think tank.

“But now the panels are all pain and no gain — managing painful cuts in almost all programs amid deep partisan and ideological divisions over priorities. The luster is gone.”

If only the rest of Congress could lose its “luster” as well. Then we could rethink Peter Schweizer‘s recommendation to “throw them all out.”

Vermont dumps single-payer health care plan

Sarah Hurtubise reports for the Daily Caller on Vermont’s decision to scrap its plan for single-payer health care.

Vermont Gov. Peter Shumlin is canceling his dream plan to create a single-payer health system in the state, he announced Wednesday.

“I am not going to undermine the hope of achieving critically important health care reforms for this state by pushing prematurely for single payer when it is not the right time for Vermont,” Shumlin said in a statement Wednesday. “In my judgment, now is not the right time to ask our legislature to take the step of passing a financing plan for Green Mountain Care.”

The problem is, of course, how to pay for it. Even while plans were moving forward for a 2017 launch of the single-payer system, to be called Green Mountain Care, Shumlin had held off on releasing a plan for how to pay for the system, waiting until his announcement Wednesday.

Tax hikes required to pay for the system would include a 11.5 percent payroll tax as well as an additional income tax ranging all the way up to 9.5 percent. Shumlin admitted that in the current climate, such a precipitous hike would be disastrous for Vermont’s economy. …

… Shumlin’s office released a slideshow with more details about financing for the plan which fell through. The state had been anticipating $267 million in federal funding to revamp its system, courtesy of a 2013 Obamacare waiver — but the current estimate has fallen to $106 million. Vermont also overestimated by $150 million in federal Medicaid funding.

But beyond federal funding, the report also admits that the single-payer system won’t save money as Vermont officials had planned. While both previous reports on Green Mountain Care had assumed “hundreds of millions of dollars” in savings in the very first year of operation, Shumlin’s office is now admitting that’s “not practical to achieve.”

This weekend on Carolina Journal Radio

As state lawmakers and the McCrory administration continue to debate the future of North Carolina’s Medicaid program, Katherine Restrepo offers suggestions about potential positive reforms. That’s a highlight of the next edition of Carolina Journal Radio.

Christie Herrera of the Florida-based Foundation for Government Accountability discusses a new poll that suggests N.C. officials could pay a political price if they vote to expand Medicaid. Rep. Rick Glazier, D-Cumberland, discusses the importance of civility in politics.

Jenna Ashley Robinson explains some ways in which higher education outperforms K-12 public education in allowing market forces to work. And you’ll hear legislative debate about the N.C. Department of Transportation’s plans for dealing with fracking operations that could start next year.

New Carolina Journal Online features

This week’s Carolina Journal Online Friday interview features Donna Martinez’s conversation with Jane Shaw of the Pope Center for Higher Education Policy about potential reforms within the UNC system.

Jon Ham’s Daily Journal laments news media’s decisions to ignore important news.

GAO: State and local government budgets in trouble

According to a new U.S. Government Accountability Office (GAO) report, state and local governments are going to have a tough time making ends meet.  GAO researchers wrote,

One way of measuring the long-term fiscal challenges faced by the state and local government sector is through a measure known as the “fiscal gap.” The fiscal gap is an estimate of the action needed today and maintained for each year going forward to achieve fiscal balance during the next 50 years. We measured the gap as the amount of the spending reductions needed to prevent negative operating balances. As shown in figure 2, under our simulation, state and local sector expenditures rise considerably as a percentage of GDP during the simulation time frame. We calculated that closing the fiscal gap would require action to be taken today and maintained for each year equivalent to an 18 percent reduction in the state and local government sector’s current expenditures. Closing the fiscal gap through revenue increases would require action of similar magnitude through increases in state and local tax revenues. More likely, closing the fiscal gap would involve some combination of both expenditure reductions and revenue increases.

Got that?  In order for state and local governments to close their projected “fiscal gap” or deficit, they will have to reduce spending or raise taxes by 18 percent, starting today and ending never.

By the way, massive increases in health-related costs, which show no signs of slowing, are the primary cause of the fiscal gap.