Growing up in Grand Rapids, Mich. Aaron Schutte saw first-hand America’s manufacturing industries gradually erode as globalization and recessions took their toll on his community. In part because of a federal tax policy he believes cripples American industry. Now as the national grassroots coordinator for Americans for Fair Taxation, he organizes volunteer efforts in all 50 states with the focus of changing America’s tax system to a consumption-based tax.
“A lot of people at home were left without work when jobs moved overseas,” said Schutte. “I did my research on the Fair Tax, and I said to myself, ‘This makes too much sense not to work.’”
The Fair Tax plan calls for the elimination of the federal income tax and replacing it with a 23 percent national sales tax on all goods and services, and would simplify the tax code. According to fairtax.org, if the system was to be implemented it could raise $2.5 trillion, or nearly $360 billion more, than the system it would replace. It would also eliminate the need for the massive Internal Revenue Service and its $82 billion operating expense, according to Fair Tax.
The Fair Tax would work with state agencies that collect state sales taxes and would only build on current state laws, according to Schutte. As part of the plan, a federal tax bureau would need to be established to oversee state compliance and to audit the states if necessary he said. According to Fair Tax this bureau could perform its functions with only 5 percent of the current IRS budget.
“You have over 72,000 pages of tax code that just tells people how to send their money to Washington,” Schutte said. “ You would wipe out the $400 million Americans spend annually just to figure out their income taxes. This would be a fair, progressive tax that would greatly expand the economy.”
According to the World Bank roughly 70 percent of the U.S. Gross Domestic Product (GDP), is derived from household consumption of goods and services. A consumption tax would make the tax base every single final purchase of a good or service in the economy, which is something done millions of times a day. Schutte said that instead of citizens trying to navigate and comprehend the thousands of pages of tax code, the Fair Tax is visible and simple. Consumers only pay taxes on the goods they buy and keep their income tax dollars in their pocket.
Revenue neutrality in the tax system was a hot-button issue in the past election. This would not be a concern with a consumption tax. For people living in poverty, the Fair Tax includes provisions that would allow them to buy items of necessity like food and medicine tax-free. According to Fair Tax this would come in the form of a monthly “prebate,” which would allow citizens to spend up to the poverty line without paying the 23 percent national tax. If they spend twice as much as the poverty line consumers would pay an 11 percent rate for items and a 15 percent rate for items bought at three times the poverty line and so on.
In practice however, the use of a national consumption tax leaves many unanswered questions that would probably not be resolved until implementation. For small business owners like Joamil Rodriguez, there remains a degree of skepticism in changing the status quo of taxes. His shoe-store, Laced, located in the South End of Boston, is registered with the IRS as a sole-proprietorship. That means his income earned from his business is taxed as his standard income. He believes a national sales tax structure would create a disincentive for consumers to buy.
“I honestly think with the way things are if you have to add a penny to the price of anything you’re hurting everyone,” said Rodriguez. “My consumer looks forward to what is in their income tax return, and not so much the money they are paying back. A lot of families and businesses are tapped out after Christmas, and they need that return to go spend on consumer products.”
Rodriguez is not alone with this sentiment, but on the macro-economic level some economists and politicians are raising sustainability concerns regarding the current tax system.
Currently, according to Fair Tax, there are 70 members of the House of Representatives and eight senators who co-sponsor the Fair Tax plan, in addition to the sponsors Rep. Rob Woodall and Sen. Saxby Chambliss, both Georgia Republicans.
With a small but dedicated political support, is now the time to have a serious talk about serious tax reform? According to Boston-based tax attorney, Edward DeFranceschi of DeFranceschi & Klemm, P.C., now may be as good a time as ever with the looming “fiscal cliff” in addition to the Bush tax cuts scheduled to expire at the end of the year.
“The bottom line is that the current tax system doesn’t generate sufficient revenue to pay for what we need. We get a dollar-and-a-half of government and we pay a dollar for it,” he said. “Collections are at a historic low in terms of the amount that taxes take out of our society. Now we have another opportunity to deal with the Bush tax rates, which you have to remember, 90 percent of the tax cuts went to the top 10 percent of the people. Not everybody can be middle class.”
The United States owns over a $16 trillion national debt, and is running an annual budget deficit of $1 trillion according to Congressional Budget Office. Part of President Obama’s plan that got him re-elected included raising tax rates for top income earners as a means of increasing revenue. But with fewer and fewer taxes getting paid, the equity issue has gone so far that it has made more and more people doubt the current system.
“There is a big string of thought that has gone on for awhile driving the Fair Tax people is that the income tax had to have an amendment added and it’s not in the original intention of the Constitution,” said Doug Kellogg, communications director of the National Taxpayers Union. “Aside, from just the economic damage of an income tax system and the invasiveness the IRS sort of exercises over people to this point, it’s just a better constitutional fit to have a national sales tax.”
Although this would be a departure from 99 years of a progressive income tax, the time may be now more than ever because politics in Washington are interfering with the harsh financial realities the country is facing. The Simpson-Bowles report found multiple layers of, “backdoor spending hidden in the tax code,” as a result of loopholes costing an estimated $1 trillion in uncollected revenue. This is because the government is attempting to appear as though it is spending less money because new government spending must be approved in the annual budget.
The government spending money is the same as the government granting a “tax exemption” to a private entity for a determined amount of money. The only difference between the two is that once a tax exemption has been granted it becomes permanent tax law and does not require an annual budget vote, according to a report on Fareed Zakaria’s program GPS. So, in return for favorable tax exemptions corporations, lobbyists and special interests will donate funds to the cooperative politicians’ re-election campaigns.
The other strong case for a consumption tax is that most modern economies have adopted some form of a consumption tax. According to the United States Council for International Business (USCIB), 70 countries and 26 territories including the likes of China, Canada, Germany, Great Britain and many others use some form of consumption taxes or Value-Added Tax (VAT). A VAT is a different form of a consumption tax in which at each stage on the supply chain that adds value to a product, a flat tax rate is factored into the price each time the product is sold, including the final sale of the good.
“If you were to start a country from scratch and you were trying to create a perfect tax policy, a value-added tax may be better than many of the other taxes. It’s better than taxes on production and innovation because those taxes can discourage those things,” said Barbara Anderson, executive director of Massachusetts-based Citizens for Limited Taxation. “So, a tax on consumption is on the consumer end; they have a choice whether or not to consume certain things.”
Any possible change to consumption tax would cause an initial shock to the American economy. In the long run it may be a more sustainable way for the government to tax society.
“Part of the problem with 2008 economic collapse was that it showed that Americans don’t save enough and that we are perfectly content burying ourselves in debt.” said Cameron Eide, a double major in economics and international affairs at Northeastern University. “This way the government taxes you for what you buy and nothing more. If you don’t want to get taxed, don’t buy as much.”
The tax reform issue certainly will not solve itself. That is why concerned citizens like Schutte of Fair Tax are challenging 99 years of conventional thinking that comes with the income tax. And with an annual trillion-dollar deficit, it may be time to try something new.
“We want taxation to be open and visible, and that is what the Fair Tax does,” Schutte said. “Our system taxes in a way that does not compress the economy and keeps everything open. It is a simple pay as you go system for individuals.”
New Hampshire’s Statehouse. Home to one of the largest legislative bodies in the world.
New Hampshire state Rep. Patty Lovejoy faced an uphill battle in her re-election bid for a seat that represents a handful of towns on the state’s seacoast. This time she was running not only against a worthy challenger but also the wave of money he was riding on into the fight.
“The amount of influence that big money has had in this election is just criminal,” Lovejoy, a Democrat said. “Americans for Prosperity and the Koch brothers, made two full-color, glossy mailings against me. The idea that the Koch brothers could care what happens in one out of 400 races in the New Hampshire House to me is mind-boggling.”
Americans for Prosperity is a conservative advocacy group that donated more than $33 million to Republican causes in this election cycle, according to Open Secrets, a website for the Center of Responsive Politics. The Koch brothers’ other organizations spent over $400 million on Republican campaigns according to Politico.
In contrast to the money arrayed against her, Patty Lovejoy is a stay-at-home mom who has put one child through college and has one more still in school.
She also served on her local school board before being elected to the state House of Representatives in 2010.
This is the world of American Politics. The notion of the collective wills of the people being reflected in the officials they elect to serve them is to say the least, in question. Instead it is being replaced by a price tag for the powerful to buy favorable policies. This made even easier after the Supreme Court ruled in the Citizens United case, which put no limits on the funding corporations could give to political activist groups, just as long as the companies did not give them directly to a candidate.
“A lot of people get caught up on how the spending is determining the election. But the more important aspect is, the spending is determining the policy outcome before the candidate comes into office,” said Tyler Creighton of Common Cause. Common Cause is public advocacy group that aims to introduce a constitutional amendment that would deny corporations constitutional rights and would allow Congress and the states to place limits on campaign spending.
“Because of the Citizens United decision the candidates increasingly have to be aware that lots of money could come in against them if they take positions on the wrong sides of issues,” Creighton said. “Moreover, in order secure expenditures on their on cap they are required to take certain positions to obtain that funding.”
Lovejoy has seen this come to life with initiatives that were passed in the New Hampshire House and eventually killed in the Senate. These initiatives included five separate gun-restriction issues in the past two years. According to Lovejoy, these initiatives included the right carry a gun in a courtroom, the right for students at public universities to keep firearms on campus without registering them, the right to carry a concealed weapon inside Manchester’s Verizon Wireless Arena, the right to carry a concealed weapon regardless if the individual had a criminal record or were mentally ill and the right to carry loaded weapons in cars.
“The very first day of session two years ago we actually had to vote to see if we would allow guns on the floor of the Statehouse,” said Lovejoy. “My son called me and says ‘Mom this is ridiculous, one day someone is going to get killed over a game of beer-pong.’”
During the second presidential debate President Obama was asked what he would do to curb gun violence in wake of the Colorado theater shooting, and he raised the idea of re-introducing an assault weapons ban. In fact however, in the very state of Colorado where a gunman killed 12 people with an AR-15 assault rifle he bought legally, the Republican congressmen Mike Coffman and Scott Tipton just won their re-election bids. According to Open Secrets, along the way they accepted $4,950 and $4,500 respectively from a National Rifle Association PAC. This was on the higher end of the individual contributions ranging from $100 to almost $1,000 according to Open Secrets.
In a state that has seen more than its share of gun violence, the thought of two of their own congressmen accepting money from a group that strives to make it easier for anyone to obtain a gun is unsettling. Officially, Coffman believes current gun laws are satisfactory and Tipton has voted recently to extend rights for concealed carrying across state lines with registration, according to Project Vote Smart, a database designed to inform voters on where their candidates stand on issues.
“I think these organizations have contributed to our campaigns more because of the shooting. They know we are more sensitive to the violence here,” said Maureen Quinlan, a third-year journalism major at Northeastern, and resident of Boulder, Colorado.
According to Fox News, this election resulted in the first billion-dollar campaign in American history with money pouring in for both sides of the aisle. The increasing flow of money into political campaigns has concerned many people that the American democratic process is up for sale to the highest bidder.
“This decision has lead to corporations contributing unlimited funds to secure their interests,” said Dylan Jenks, a third-year political science major at Northeastern. “This is ultimately a major contributing factor to the increasing polarization of the political parties.”
This means that major corporations can donate to any independent group that has one issue as its focus, be it a super PAC or political advocacy group. These groups will then turn around and donate these funds to various public outreach and advocacy campaigns at both state and national levels, and this amount is only increasing, said Dr. Derigan Silver of Denver University.
“Citizens United and subsequent decisions made it possible for some groups to collect unlimited funds so long as those funds are used for independent expenditures, but left in place limits on contributions given directly to politicians,” the political journalism professor said. “You are actually put in a place where outside groups have more money to spend than politicians themselves.”
The issue of campaign financing will not go away overnight, but more and more Americans are becoming aware of their current situation. Creighton believes that in coming elections the focus of these super PACs and political advocacy groups will turn directly to the state elections If this continues the results would have devastating consequences on American citizens according to Creighton.
“It’s important to remember the state and local elections because I think Citizens United and super PACs are larger impact in these races because they are mostly unnoticed,” he said. “Also, the candidates in these races are not raising huge amounts of money, so $100,000 injected into a town councilor race would be huge.”
The current political climate after Citizens United will leave everyday people who answer the call of public office because they want what is best for their communities, question if they will still be heard with all the money that will flood into their elections in the future. For legislators like Lovejoy, they are left with the concern that money will prevail over what is best for their constituents.
“At this rate this will not stop until organizations like these have practically bought control in every state,” she said. “It is permeating every level of government.”
The Boston Celtics will play a familiar role for the upcoming 2012-2013 NBA season: the old guard that no team wants to play a long playoff series against.
There are some new faces on the Green this year, and General Manager Danny Ainge has assembled a deeper team on paper that many believe can give the defending champion Miami Heat a run for their money in the playoffs.
“[Guard] Jason Terry and the return of [forward] Jeff Green were the biggest moves this offseason,” said Jay Pinsonnault, a 1996 graduate of Northeastern and former co-op student with the team. “Terry basically takes the place of Ray Allen as the legitimate outside threat, while the athleticism and skills of Green provides [Coach] Doc Rivers with another scoring option off the bench.”
After the aging Celtics came up short in a hard-fought seven-game series in the Eastern Conference Finals against the Heat, there were many questions surrounding how the team would be built going forward. The team selected college stand-outs forward Jared Sullinger from Ohio State University and center Fab Melo from Syracuse University in the 2012 draft back in June.
After the draft the Celtics signaled to the rest of the league they were making another run at a title by re-signing team centerpiece Kevin Garnett to a three-year deal that will most likely take him to the end of his career. Between Garnett, team captain Paul Pierce and the dynamic young point guard, Rajon Rondo, the Celtics will try to compensate for losing all-time three-point shot king Ray Allen in the offseason to the Heat. But Dover, New Hampshire’s WTSN-AM 1270 sports-talk show host Justin McIsaac believes Rondo is key to a successful season for Boston.
“Rondo has to continue emerge as the leader of this team. As far as Rondo goes, they go,” he said. “It will also come down to a couple of breaks like which team stays healthy. Pierce is not a spring chicken and neither is Garnett, so Doc needs to limit their minutes and keep them healthy for the playoffs.”
The Celtics will face increased competition from their Atlantic Division rivals who are anxious to end Boston’s five-year dominance of the division. The new Brooklyn Nets have vastly improved with the addition of Joe Johnson, and the Philadelphia 76ers now boast one of the best centers in the game, Andrew Bynum, according to Pinsonnault. Although Bynum is once again battling knee issues
“The Celtics are still the team to beat,” he said. “Yes their division got better but so did the Green with the additions of Terry, Courtney Lee and Darko [Milicic].”
This new depth has Boston’s fans excited for things to come.
“They definitely became a stronger and deeper team that will be fun to watch,” Northeastern student and lifelong Celtics fan, Sam Zorfas, a political science major at Northeastern 2015, said. “I think you’ll see Pierce, Garnett and Terry not rack up a lot of minutes in the regular season if they want a shot at a title.”
Sink or swim this season, the Celtics will be in the conversation for a championship, but may come up short to the Miami Heat again in the Easter Conference Finals said Pinsonnault. Regardless, fans like Zorfas feel more secure now than at the conclusion of last season because the team has a strong core moving forward as it transitions out of the “New Big 3” era.
“They have a really good core of young guys, and free agents will want to come play with Rondo,” he said. “The Celtics succeed because they play as a team and these young guys will learn from Pierce and Garnett and eventually grasp what makes this team so successful.”
In a city that prides itself in its history and turn-of-the-century buildings, Cambridge may soon be losing one of its elder residents.
On Oct. 4, the city historical commission in a 7-0 vote designated the house at 26-28 Vineyard St. as a “building of historical significance,” but that may not be enough to save the structure from being torn down. The house, built in the 1800’s is beginning to show signs of deterioration and according to architect Jookun Lim of Cambridge, it may be too costly to restore.
“When my client bought the property, we did not know tearing down the current building and constructing a new building was a possibility,” he said after the meeting.
Under a city ordinance there is a delay in all demolition projects if the building is more than 50 years old. Then, the historical commission votes to decide if the building has historical significance. If the commission members find it to be the case the project is delayed six months and until all permits for the replacement building have been approved. The commission members can also recommend a building to be considered for landmark status but that vote was not made Thursday. If no action is taken by the city in the six-month period the owner can go ahead and tear down the building.
“Significant is defined by the ordinance very broadly,” said Chairman William King. “It could be anything of individual significance or part of a development like an awning on a building. This house meets the criteria since it is preferably preserved.”
An Irish immigrant, Patrick Quigley, built the house back in the 1862. He was part of the original developers of the Auburn Hills subdivision in Watertown. Quigley and his relatives had bought numerous plots of land when the subdivision was settled in 1848.
In 1966 the owner, James Hazard, built an addition on the side of building. Recently, before Lim’s client, Gonzalo Artigas, bought the property this past summer, the house was used as a rental property.
“Preferably preserved,” is also a general term that in essence means the building is still standing and, if not barely up to safety codes, could be compliant with codes at a reasonable cost. But according to Lim, the house is in a state of disrepair, and needs plenty of work to be brought up to code because the building was almost condemned by the city two years ago. Lim said he would also have to rebuild the stairs.
“The ceilings were very low and I would have to raise the floor for any project,” he said. “After a while it felt like I’d be designing a building inside of a building, and thought it might be more cost effective to take down the building.”
Lim and Artigas presented a design for a contemporary two-unit town house at the meeting. The two units would be constructed next to each other in a staggered design. The property is located near the corner with May Street, and the neighborhood is composed mostly of colonial-era homes.
“I think this design will be different for the neighborhood but that isn’t necessarily a bad thing,” said vice-chairman Bruce Irving. “We just need a more concrete design we all like.”
The two units would be joined in the middle because city law requires that buildings with more than one living unit must be one continuous structure.
However, members of the historical commission did not take issue with the newness of Lim’s design. They did take issue with his lack of a specific design for him to get approval from the commission, which would have by-passed the six month delay.
“What you have here is the beginning of the process, and we are here tonight to show you that we will work with you in that process,” said commission member Chandra Harrington.
Fran Bonacci, a neighborhood resident, was open to the idea of having a more modern-looking home on the street.
“I came here tonight just to better understand what their ideas for the property were,” she said after the meeting. “It’s a nice neighborhood and it’s not within the historic district, so they are not going to have to adhere to as many restrictions.”
According to King the commission will most likely not pursue making the house a landmark, and Lim claims he already has a head start on the project but may wait it out.
“I already have the design for the building done,” he said after the meeting. “We talked to a lawyer and he advised us just to wait the six months because if we come back to them with a design before then, they can pick it apart.”
Sports talk radio host, Justin McIsaac, knows a restless fan base when he sees it, and with impending uncertainty over their team’s manager, Red Sox’ fans are buzzing.
Host of “McIsaac on Sports,” a weekly sports talk show on WTSN-AM 1270 in Dover, N.H., McIsaac said that Red Sox manager, Bobby Valentine, has been put in a no-win situation by the organization. The players have not put their best effort forward this season on the field, and Valentine has been neutered by upper-management when it came to holding the players accountable according to McIsaac.
“It’s complex, because it’s not his fault his team has played so bad, and every time he tried to exercise his authority one of his players would run upstairs to tell [general manager Ben] Cherington,” said McIsaac. “However, he has done a horrible job with what he has been given and he must go for the sake of reviving the team. ”
The Red Sox will suffer their first losing season since 1997, when they went 78-84, and members of Red Sox nation and some media members agree the failure of this team will ultimately fall on Valentine’s head.
“In Boston the manager’s job is just as important off the field as it is on the field,” said Frank Coppola, sports editor of the Portsmouth (N.H.) Herald. “As far as eliminating distractions, getting the most out of his roster and dealing with the media, I think he has been a complete failure.”
After 10 years out of Major League Baseball, Valentine was brought to Boston to clean up a toxic clubhouse. Some fans and media members questioned the move as an attempt to gain publicity when the team was not spending money on new players to fix the team.
“I was really surprised when he was hired because it struck me as more of a flair move by the team,” said Michael Dumont, 43, of Derry, N.H. “He has to be fired because he had his chance this year, and he lost control of the team early.”
With a 69-90 record, the 2012 season has been a disaster. And some fans blame Valentine for disrupting any chance of the team putting last year behind them. Most of McIsaac’s callers are in agreement that Valentine was not the sole reason for the team’s failure, but they acknowledge the Red Sox need to go in a different direction.
“The general feeling is, the record isn’t his fault, but he did not solve any issues on the team,” said McIsaac. “He could come across as clueless at times.”
On the players’ end, the Red Sox’ hopes for a rebound year hinged upon pitchers Josh Beckett and Jon Lester being top-flight starters, and they fell far short. In fact, before Beckett was shipped out to the Dodgers he had compiled a 5-11 record and possessed an earned run average north of six. Lester was not much better, going 4-7 in the first half of the season with an ERA worse than Beckett’s, topping off at seven. The hitters never got in any kind of rhythm, and the team never got on track. Valentine’s supporters would argue that this was a flawed team that any manager would fail in.
“This city does not understand Bobby Valentine, and the Red Sox aren’t the team for him,” Lewis Raibley, 21, a civil engineering major at Northeastern said. “I’m from New York, and he did a good job turning the Mets around. I do not think he was the right guy for the Boston job, but if the Red Sox were going to hire him they had to let Bobby Valentine be Bobby Valentine.”
Valentine may soon find himself sharing the same fate as his predecessor in being the scapegoat for the failure of the baseball team on the field.
“He has created too many distractions,” said Coppola. “Francona did so well managing all the distractions, especially with guys like Manny Ramirez in that locker room. On the field Valentine has done fine, but in Boston you have to do more than that.”
Some think this hectic situation represents the dysfunction that permeates the organization. For example, only four players on the roster attended team icon Johnny Pesky’s funeral back in late August in Swapscott, Mass. the day after the team came home from a road-trip.
“This problem starts at the top with [Team President] Larry Lucchino. The organization leaked information about Francona’s personal life on his way out the door,” Jon Campbell, a double major in Asian studies and sports management at the University Colorado and former Red Sox tour guide, said. “[Owner] John Henry is rarely ever in Boston because he spends all his time fixing his Liverpool soccer team, and Lucchino has done more harm to the team.”
The circus surrounding the Red Sox will stay in town for a while whether or not Valentine comes back. And if there is a new manager, fans like Dumont know the Red Sox need more than a coach to reverse their course.
“I think the team will be completely different next year,” he said. “It’s an ebb and flow with all of the teams in this town and right now the Red Sox are down — and it is by their own hand.”
My adventure to Boston City Hall to find some public records began like most trips around Boston, by being stuck on the Green Line. We had to have been stopped at Boylston for a good 15 minutes.
Finally, I arrived at City Hall around three, a half-hour later than I thought I would get there. Thankfully, I already had some experience navigating the complex back when I had to pay a parking ticket, though I think I may be a sap for paying it.
My first stop was the assessing office to look up my apartment’s property value. I was struggling a little bit to find my property because it was not popping up in the online system. That was when Faye Yee behind the counter was able to assist me, and it turned out it was registered in the system with the adjoining property next door under that house’s number.
My building is owned by Jason Savage, of Savage Properties, and in 2012 it had a building value of $762,700 and the assessed value was $933,000. My story idea would be to look into Savage Properties and see how many properties they own and what share of the student housing market they have. The next stop was the tax service window, which was a little more natural for me because I had paid my ticket at a window that was similar a year ago. There I was assisted by Meredith Weenick, who gave me the tax receipt for the building. Last November Savage paid $7,844.66 in taxes for the property and for 2013 the estimated first tax payment was $3,922.33.
My last stop was the voting office, which if I had to pick was the most intimidating. It was a wide-open room and a woman, who kind of resembled a Rottweiler of sorts, was sitting at a small table when I walked in. Originally, wanted to look up my good friend’s sister’s voting record who lives in Cambridge, but she did not have a voting record. So it turned out the woman at the table did not have the personality of a Rottweiler and she already had the Mayor Menino’s voting record printed out and gave me a copy. And sure enough before I felt like I was just getting started at City Hall I had finished my inquiry after a half-hour, and then it was back on the Green Line for a long ride home.