One of These Things is Not Like the Other...

A fundamental principle of Conservative thought is the belief that ordinary people spend their money better than the government does.  I know that sounds like a trite stump speech, but it's true.  It's not just that it's morally right to allow people to spend more of their own money, it's economically more efficient. 

When millions of people decide to invest money in a small business or stocks, buy products that they think are cool, send their kids to school, buy braces or put the money in the bank, they are acting in their own self interest and are allocating the money more efficiently than the members of the House Appropriations Committee, or a Congressional "Stimulus" team.

Of course government still needs to be funded and ordinary people aren't likely to donate money to build prisons, fund the courts, pay for CPS, DEQ or the rest of state government--some taxes are clearly necessary.  However, ordinary people are actually quite generous and will often donate to causes that they think are worthwhile.

That's why in the mid 1990s, the legislature came up with a clever plan--let people chose where a small portion of their tax dollars go by giving them a 100% credit for a modest donation.  Under current law, a single filer can donate $200 to a charity that serves the working poor and get all of the money back on his taxes.  This is a classic win/win.  Instead of hiring lobbyists, charities search for donors. 

The results can be remarkable.  In the mid 1990s, doctors and dentists from my church hooked up with a south Phoenix charity that serves the Hispanic community.  The docs donated their time and the contributions that our congregation sent to the clinic were used to buy supplies.  Government could never be that efficient.  More recently, my wife and I donate (should I say "earmark"?) our combined $400 to the Foundation for Blind Children, and they use the money to train blind adults to get back into the job market. 

Critics of the program point out two flaws:  first, there isn't much regulation on what qualifies as a "charity," so there's the potential for fraud, second, the original legislation has a technical flaw that forces contributors to refer to their 1996 tax returns--that was fine in 1997, or even 1998, but neither taxpayers or DOR keep records for 12 years, so the number is now impossible to look up. 

Rep. Yarbrough sponsored HB 2286 to tighten the requirements as well as eliminate the reference to 1996, and the bill passed the House 55 to 1. 

Then Tuesday the Senate killed it.

I won't even guess why the Democrats voted against the bill.  All of the money is spent on the working poor so it's unlikely that the funds would be appropriated to a "better" cause if they came in to state coffers.  Meanwhile, folks like St. Vincent de Paul and Catholic Social Services are left in a lurch.*

Then there are the Republicans who voted no---Allen, Gould and Harper.  What the heck?  Allen I can understand.  She's a classic "moderate" Republican who thinks she can spend your money better than you can.  Let the state keep this money and she'll run it through a committee or two and fund a call center or build a Spring Training facility in the name of "economic development." Whatever.

However, Gould and Harper surprise me.  For me, the next best thing to a tax cut is the opportunity to spend my tax dollars the way I want to spend them.  After all, I like to think of the money that I earn as "my money."  I'm selfish that way. 

I asked Harper about his no vote and got this response..."Ron and I do not believe it is the proper roll of government to be involved in charity and welfare.  Cool, maybe we should let the churches and other private charities handle that...D'oh, that's what this program does. 

Harper then went on to discuss the bill's "fiscal impact."  That's code talk for "less money for the state to spend on stuff Legislators think is cool."  That's straight out of Carolyn Allen's playbook, the moderate mantra "send us your money so we can improve your life with it."  Now I understand.

Allen, Gould and Harper--one of these things is not like the other.   But after enough time in state government they start to look the same. 

Comments

[todd]

Isn't this just the natural outcome of the "government shouldn't pick winners" argument? I mean, this incentivizes people to give money to help disabled children or low-income people - why should government dictate that they reap the benefits, right? I have no doubt that Harper would argue there should just be a straight tax reduction and then people can use it to do whatever they want - buy a new TV, pizza and beer for all their friends, whatever.

Or it could just be that Harper and Gould and simply heartless individuals.

[RsMantra]

Interesting that Mr. Yarborough would throw out a smokescreen. Now that you brought him up Greg, I hope you won't delete my post again. Rep. Yarborough made the following last year from those tax credits you push:
Salary $95,000
Legal fees $171,000 (more than all other STOs combined!)
Processing fees $427,000 (it was $24,000 until he opened his own company to deal with it...and he also fixed the place up for $150,000 charged to ACSTO)
Rent to himself $45,000 (not bad for 1100 sq. ft.)
http://www.tucsonweekly.com/tucson/ethics-101/Content?oid=1193245
So, when Mr. Harper states, "Ron and I do not believe it is the proper roll of government to be involved in charity and welfare." He might want to look in his own tent. My tax dollars are being used to increase Rep. Yarborough's welfare by close to a million dollars a year through his charity. Or, of course, maybe Jack really meant "roll" and was simply stating some sort of bread and butter issue?

[State Senator Jack Harper]

Actually Greg, the problem is that you intended to "kingdom build" with the tax credit. I want to lower taxes for all.

If you are going to do Ron Johnson's dirty work, maybe you should start lobbying for amnesty for 40 million illegal aliens as well.

[Name:]

Greg, I know you like the outcome of the law, but the fact is that the government is compelling people to...give to charity. Many people can stomach that. Not Gould and Harper. They have a kind of rigorously applied purity that really ticks some people off, including me. Sometimes.

[RsMantra]

I would love to see Mr. Harper's response to his colleauge making so much tax payer money. Sen Harper does charity begin at home? The home of the House and Senate?

[JaneAZ]

You are saying that St. Vincent de Paul will be "left in the lurch". How so? I'm not seeing anything in the bill that changes anything for a legit 501c(3), which St. Vincent del Paul is.

Link to the bill:

http://www.azleg.gov/FormatDocument.asp?inDoc=/legtext/49leg/1r/bills/hb2286h.htm

[Ann]

Could it be Arizona conservatives have their own variation on the theme of Godwin's Law? We don't need no stinkin' Nazi references, we'll just throw out an "amnesty" or "illegal alien" connection. Who cares how accurate it is or if the results are hurtful.

Harper is very good at that! Who needs the truth when you are a bully? Heaven forbid honesty or truth get in the way of his particular brand of "kingdom building"?

[ron]

"Ron and I do not believe it is the proper roll of government to be involved in charity and welfare."

Ann, Harper doesn't know the 'role' of goverment but you give him some power and he will certainly use it to 'roll' over you.

[Sen. Ron Gould]

Greg,
I would have voted yea on the bill if the money came from the DES budget. Then it would be privatizing welfare. What this bill really does is add an additional $5 million in welfare spending. Can we really afford an additional $5 million in welfare spending during a recession.

My opinion of tax credits has been consistent through out my political career and consistent with a limited government position. When we create tax credits we also create our own enemies to tax reform. I also oppose government picking winners and losers in tax policy. We need broad based tax reduction for all.

Sen. Ron Gould
Serving Arizona’s 3rd District

[todd]

This does bring up an interesting philosophical question - doesn't all tax policy create "winners and losers?"

[Sen. Ron Gould]

Not proper policy.

[todd]

I would suggest the budget just voted on which shifts tax burden from businesses to individuals homeowners did pick winners and losers.

[Sen. Ron Gould]

Todd,
you're wrong.

[NotReally believing ron]

Hey Ron, how come there are still tons of tax credits in our tax code?

How about a true bipartisan blank sheet bill to strip all of the tax credits from all the pet projects of the right and left?

That would close $500 million according to Dept. Rev.

Got guts? You have a striker ready- strip 'em all.

[todd]

Thanks Senator for the explanation.

[State Senator Jack Harper]

I guess Greg is going to get the expansion of the tax credit for his cause tomorrow. One of the Democrats made a motion to reconsider.

Tax relief for all will be further away with another hole in the tax code. A better bill to expand the economy and give people a job, rather than welfare, would be Barbara Leff's bill to reduce income tax.

[Parent X]

Senator Gould:

You stated above that "When we create tax credits we also create our own enemies to tax reform".

Senator Harper also reportedly responded with this statement: "Ron and I do not believe it is the proper roll of government to be involved in charity and welfare".

Gotcha. But I'm confused - both of you recently voted for additional tax credits under SB1001. This despite the fact that private School Tax Organization (STO) companies are already sitting on millions of dollars of unallocated tax money. Our money.

If I didn't know better, I'd say that expanding tax credits are OK in your book so long as they support your ideological position. "When we create tax credits we also create our own enemies to tax reform" rings a little hollow when you look at your voting record this last special session.

[Falcoln 9]

Greg,

Your efficiency argument extends past pure charity. An essential finding of the research behind "The Millionaire Next Door" was small business owners consuming very little of the proceeds of their business. Instead, they reinvested everything, creating the jobs that rescue the poor from poverty.

An essential part of Democrat mythology that has leading to the current debacle is the rich consuming vast quantities of wealth.

The need for this mythology has been constant over time. The so called robber barons, Vanderbilt, Carnegie, et all, actually consumed an infintesimal fraction of the wealth they created.

[Jack]

A "no" vote retained the tax credit and the requirement to retain records from 1996. Sounds like the good Senators don't mind keeping the burden on the taxpayer. Also looks like they are going to be "rolled" again.

[Ann]

So, why didn't they sweep those STO funds that are sitting there collecting interests like they did the public school carry-forward funds? I know the answer...it is just the point of it that is so unfair and, possibly, unethical.

If there are indeed millions sitting in those funds, going unused...that is scandalous! Allowing tax dollars to be deferred to private organizations that do not have an use or lose protective enforcement clause, while the state is in the hole so deep we are cutting CPS and schools,what the...? Or better yet "who" the..? To know that millions of those dollars are going to sit and earn interest for the holder to use while public entities are cutting millions...WHAT A SCAM!

[Travis]

I don't think killing this bill was furthering tax reform.

I don't think this tax credit was the undoing of tax reform.

Senators: Please tell us how THIS vote furthered tax reform or saved tax reform from being harmed. Your statements above weren't clear on that.

[Name:]

Every kid in private school because of the tuition tax credit is saving the state something like 6 to 9 thousand dollars a year. Like it or not, there is some financial sense to this tax credit hat is pretty direct.

STO funds are in held by private corporations, not state hands, via 501c3 companies. Can't be "swept" any more than they can sweep your bank account. By law they have to spend at least 90% on actual grants. If they buy ice cream with the 10%, that's perfectly legal.

[RsMantra]

Again, I would love to hear how it is ok with Mr. Harper and Mr. Gould that Rep. Yarborough is able to pull in close to a million a year of our tax dollars.

[todd]

Name, you are right that they can do what they want with the 10% as long as it does not violate other laws. But isn't it a little odd that people claim the average 9.5% of school districts' budget spent on administration is "bloat" but these STO's deserve 10% off the top for largely just moving money from one account to another?

[ParentX]

No doubt Todd.
And thanks for reinforcing my point Name...our tax dollars don't belong in private bank accounts. The $9 million plus in our tax money that is just earning interest for the STOs isn't 'saving' the state anything...and the STOs have zero accountability to the tax payers.

And...whatdaya know...Gould and Harper just voted on yet ANOTHER increase in private school corporate tax credits! http://www.azleg.gov/DocumentsForBill.asp?Bill_Number=HB2288

For those of you who are keeping track, this bill is in addition to the bonus $5 million in corporate tax credits that they passed earlier in the month.

Forgive me if I think the mini-lectures from Harper & Gould above are a bit disingenuous.

[Ellis]

Thanks for sharing that ParentX. It's getting really hard to stay on top of all the bills they are passing that take money out of the general fund.

One of my biggest problems with the STOs are that they are UNREGULATED. It is basically up to the general populace who want to donate to investigate the STO (a government sanctioned required middle man) and find out if they are legitimately using the money correctly.

http://www.arizonaeducationnetwork.com/2009/06/tax-credits/

It is despicable that Yarbrough is allowed to use the system this way. Public funds for private earnings to the tune of 7 figures annually. He was quoted as saying that this system (STOs) was "designed" to make money. Huh? Really? Where are our fiscal conservatives in office???? Why aren't they voting this down????

I am feeling very disenfranchised with my party, and daily I am shaking my head at the legislation that is being passed. It's like our party is imploding and bowing down to special interests.

Personally, if things don't change, I am hoping these people get voted out of office and get real Republicans back in office.

[Falcon 9]

Yarbrough was widely known to operate an STO before the voters elected him. His STO has been the subject of all his elections. The bottom line: Yarbrough has helped bring school choice to thousands of kids and made a better life for them at a lower cost to the taxpayer.
Why debate the issue when you can try to incite jealousy and envy?

[RsMantra]

Falcon
Just because something is legal doesn't make it right. Let's debate this fact. In 2006 Mr. Yarborough's STO paid $24,000 in processing fees. The next year he opened HYA Processing and billed the STO over fifteen times the amount, $374,000. The past year it jumped to $425,000. Now if you are a proponent of school choice than you too should be ticked at %400,000 going into his pocket rather than 100 children.
Or how about the legal fees of $170,000? The other STO's 990s show that there wasn't another with legal expenses above $5,000 with many having none. Mr. Yarborough is a lawyer and gets paid $96,000 from his STO for a forty hour week. Is the man that incompetent that he can't deal with some legal questions that may arise? Wouldn't that be a reason for his salary surpassing all other STO directors?
Please, Falcon, this isn't about envy or jealousy, it is about being stewards of the tax payer dollars. I thought the conservatives were for less taxes? Less welfare?

[Ellis]

Falcon 9...I am hardly jealous or envious. I am ticked off that my tax dollars are enriching a legislator with a clear conflict of interest in any other circumstance that the AZ Lege. And does he recuse himself from voting on these bills? Not only does he not...he introduces the legislation!

Someone out there, tell me how this isn't a violation of a 501c3 ????

[Ellis]

And by the way, Flacon 9, this isn't about "school choice." It's about greed. It's about figuring out how to work the system. It's about calling "special" sessions for "special" kids. (Honestly, if he was so concerned about these special kids, why did he vote for cuts that would have helped these kids in other departments? Because the "special kids" are a vehicle to increase his payroll before he's termed out.)

Again, where are my fiscal conservatives and why are they buying into this?!? I've looked over all Yarbrough's 990s, and it's obvious he's working the system to enrich himself at the expense of all of us tax payers.

That is my slant, Falcon. Not jealousy or enviousness...which is just asinine to even imply.

[AZMama]

http://www.morelaw.com/verdicts/case.asp?n=05-15754&s=AZ&d=39738

Parent X:

The above court case likely explains the "why" in those big time legal fees. Goldwater Institute's Clint Bolick doesn't come cheap:
http://www.goldwaterinstitute.org/aboutus/staff.aspx

Interestingly, Bolick is also with Arizona School Choice Trust...though you don't see it on his GI bio...odd. No rules, I suppose. Nothing illegal. Just, well, odd.

http://www.asct.org/ASCT_board.htm

Maybe if Yarbrough's non-profit STO wasn't so bent on circumventing the Blaine Amendment in the state constitution, those legal fees would stay well within reason. Then again, how fortunate for him that he has friends in just the right places.

Wonder if all those folks who contribute their hard earned tax credit to enrich a child's education care any that 10% is going to court.

[RsMantra]

I don't believe that ACSTO had any legal fees associated with this court case.

[AZMama]

RsMantra:

May I ask how you arrive at that conclusion? It seems hard to imagine ACSTO would be represented pro bono, when Rep. Yarbrough is not listed as legal counsel. Unless Bolick and Keller's organization(s) wade into these cases as a matter of principal, not dollars.

But that further begs the question: If those legal fees are NOT for this case (I concede that the dates appear to be off), then what would they be for, if not to further enrich Rep. Yarbrough and his partner?

It stinks. It stinks pretty damn bad.

[RsMantra]

It is obviously to further his pockets...if he has any pockets left that aren't full. I do think that the Goldwater Institute wades in as a matter of principal. Perhaps you can go over to Blog for Arizona and ask Mathew Ladner. He has been pretty good about answering questions when he becomes part of a discussion.

[RsMantra]

And now with the Republican budget, Rep. Yarborough will get a 33% tax cut!