Lawmakers will consider a recommendation when they return in January to raise the gasoline tax by 5.5 cents, from 16.75 cents to 22.25 cents a gallon, along with a financial doom-and-gloom message from state Department of Transportation Secretary Buck Limehouse.

Limehouse told lawmakers in a letter he sent Monday that funding is the agency’s biggest challenge. The state gasoline tax pays for road improvements and construction, safety upgrades as well as bridge replacement. That cash is used to pull down federal highway dollars.

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Winston Churchill once moaned about the long, dishonourable tradition in politics that sees commerce as a cow to be milked or a dangerous tiger to be shot. Businesses are the generators of the wealth on which incomes, taxation and all else depends; “the strong horse that pulls the whole cart”, as Churchill put it. No sane leader of a country would want businesspeople to think that he was against them, especially at a time when confidence is essential for the recovery.

From this perspective, Barack Obama already has a lot to answer for. A president who does so little to counter the idea that he dislikes business is, self-evidently, a worryingly negligent chief executive. No matter that other Western politicians have publicly played with populism more dangerously, from France’s “laissez-faire is dead” president, Nicolas Sarkozy, to Britain’s “capitalism kills competition” business secretary, Vince Cable (see article); no matter that talk on the American right about Mr Obama being a socialist is rot; no matter that Wall Street’s woes are largely of its own making. The evidence that American business thinks the president does not understand Main Street is mounting

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The first major conference on health policy I ever attended, organized by The National Journal in Washington sometime in the late 1970s, focused on the rising cost of health care, which then absorbed close to 8 percent of gross domestic product and was threatening the unimaginable: to claim 10 percent or more of G.D.P.

Governors, senators, members of Congress, business executives, the heads of trade associations and leaders of unions representing health care workers made presentations, and all of them agreed that the growth of health care spending had to be curbed -”“ by what now is called “bending the cost curve….”

Over the decades, the mission has been a failure, naturally….

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It is a very scary picture.

Read or listen to it all. There were a lot of things of which I didn’t think–KSH.

Every gallon of gasoline you pump would cost you 5.5 cents more.

You’d pay 19 cents more each month to run the water from your tap.

The medicines you take to treat your illnesses would cost an additional 88 cents a month.

Turning on the lights and the television would help run up an additional 79 cents a month on the electricity bill for the typical South Carolina household.

You would have to open your wallets for new taxes at the grocery store and get used to paying for sales taxes on more of the services you buy, such as home pest control treatment, pampering at the beauty salon and a storage unit to stash your stuff.

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2) Payroll tax cut is not a bad idea for stimulus, but U.S. has longer-term job and growth problem that needs to be addressed.

3) Payroll tax cut for $400 billion in early 2009 would have been better than Obama’s $862 billion plan.

4) Any short-term tax cut should be coupled with long-term deficit reduction plan.

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It’s church versus state in a local taxation battle.

Episcopal church officials say the property tax assessment on land next to Holy Apostles Church on the Oneida Indian Reservation is unlawful because it’s designated a cemetery.

Village of Hobart assessor Mike Denor says 23 acres that have a 2010 property tax obligation of about $600 are mostly woods, and even calling it a cemetery “is kind of a stretch.”

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Despite years of talk by Democrats and Republicans about the need to control spending, farm out work to private businesses and make government finances more transparent, the opposite has occurred.

Rather than becoming leaner, the state work force increased by 7.1 percent since 2005 — outpacing Oregon’s population growth.

The number of top state employees earning more than $100,000 a year more than doubled during the past decade.

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The consequences of doing nothing would be painful. But they would be far less harmful than the consequences of an unconditioned federal bailout, which would mean massive new fiscal commitments at the federal level.

Unfortunately, leaders in Illinois and elsewhere are now talking quietly about the possibility of a federal bailout. Such speculation undermines state and local efforts to reform pension systems or make other hard choices. Why agonize over unpopular budget cuts or tax increases if the feds will ride to the rescue?

Bailing out state pensions would be astronomically expensive. According to a Pew Foundation estimate this year, the total unfunded liabilities of the 50 states’ pension funds amounted to about $1 trillion in 2008. Another recent study, by Josh Rauh of Northwestern and Robert Novy-Marx of the Chicago Booth School of Business, estimated that the unfunded liability was closer to $3 trillion. Adding the liabilities of municipal pension funds makes the total even larger.

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One problem that dogged Japan during its lost decade was a stop-and-go fiscal policy in which stimulus packages were administered in an “on again, off again” fashion and taxes were lowered and then raised. There is a risk that the U.S. could fall into this trap in an effort to strike a balance between short-term fiscal support and long-term budget integrity.

This strongly suggests that congressional leaders of both parties should embrace a pro-growth fiscal reform that would help to create long-run fiscal stability and foster certainty about future tax rates. With the 2001-2003 tax cuts set to expire at the end of 2010, the time is now to move ahead with broad-based reform.

A good starting point would be the bipartisan Wyden-Gregg tax reform bill. This bill is not incredibly bold, but is probably the best we could do in the current environment and is much better than the current tax code.

Wyden-Gregg would be revenue-neutral; it would simplify the tax code by reducing the number of personal income tax brackets to three from six and would do so without raising marginal income tax rates.

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Across-the-board cuts in state spending are all but certain this year despite $540 million in federal aid approved by Congress earlier this week.

Gov. Chris Gregoire said Thursday that tax collections in June and July were about $125 million below projections.

And she expects the state revenue forecast next month will predict more declines ahead.

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The Charleston County School Board decided Monday night to scale back its request to voters and ask them to approve a six-year, one-penny sales tax increase to pay for construction projects.

Board members had planned to put an eight-year sales tax increase on voters’ ballots in November, but a lack of business community support and revised revenue figures led them to reduce it by two years. The six-year tax would generate an estimated $75 million per year for a total of $450 million.

The money would go toward building 14 new schools, renovating four schools, acquiring land in three developments, conducting seismic evaluations of six buildings, creating design plans for one school and improving existing schools’ athletic facilities.

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In 1995, the federal government, led by the Liberal Party, passed the most important budget in three generations. Federal spending was reduced almost 10% over two years and federal employment was slashed 14%. By 1998, the federal government was in surplus and reducing the nearly $650 billion national debt. Provincial governments similarly focused on eliminating deficits by paring spending and reducing debt, and then they started to offer tax relief.

All government spending peaked at 53% of Canadian GDP in 1992 and fell steadily to just under 40% by 2008. (Government spending in the U.S. was 38.8% of GDP that year.) The recession has caused government spending to increase in both countries. But if present trends continue, within two or three years Canada will have a smaller government as a share of its economy than the U.S.

Canadian taxes have also come down at the federal and provincial level. They were reduced with the stated goal of improving incentives for work effort, savings, investment and entrepreneurship.

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There’s a class war coming to the world of government pensions.

The haves are retirees who were once state or municipal workers. Their seemingly guaranteed and ever-escalating monthly pension benefits are breaking budgets nationwide.

The have-nots are taxpayers who don’t have generous pensions. Their 401(k)s or individual retirement accounts have taken a real beating in recent years and are not guaranteed. And soon, many of those people will be paying higher taxes or getting fewer state services as their states put more money aside to cover those pension checks.

At stake is at least $1 trillion. That’s trillion, with a “t,” as in titanic and terrifying.

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The County School Board will ask voters this fall to support an eight-year, one-penny sales tax increase that would generate at least $500 million for construction projects.

The money would cover at least 16 new school buildings, two whole school renovations and comprehensive athletic complexes for three areas of the county. The big question now is whether voters will vote in favor of the tax.

If they don’t, county residents instead would see their property taxes increase to pay for the rebuilding of five schools with seismic problems — Buist Academy, Charleston Progressive Academy, James Simons Elementary, Memminger Elementary and Sullivan’s Island Elementary — but none of the district’s other building needs would be addressed. The eight-year tax includes those projects as well as a number of others, and property taxes would not be raised.

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Four decades of experience suggests the only way to wean the nation off its ruinous oil addiction is prices that go up and stay up. And, although it’s a political non-starter for now, the simplest and best way to achieve that is to gradually raise the federal gasoline tax, now 18.4 cents a gallon, where it has been since 1993.

The arguments for a gas-tax increase are no less compelling for their familiarity. Higher taxes would produce substantial revenues ”” roughly $1 billion a year for every extra penny in tax ”” that could be used to fix roads and reduce the budget deficit. They would make fuel-efficient cars more attractive.

Ultimately, higher taxes could help drive alternative technologies that would slow the flow of money to finance some of the world’s worst regimes and multinational oil companies, such as BP.

Whether increasing the gas tax would reduce the need for drilling in environmentally sensitive areas such as the Gulf depends on worldwide demand for oil, which is being driven upward by the rising economies of China and India. But those countries have their own efforts to curb gasoline use, and reducing consumption in the USA, the world’s top oil consumer, is essential.

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Oregon government stands at the edge of a financial chasm as precarious as any in its 151-year history, hemmed in by the global recession, questionable spending decisions and a budget-draining combo of skyrocketing expenses and sluggish growth.

Consider this sobering fact: State expenses, including payroll, health and retirement benefits, and debt payments, are slated to rise by nearly $4 billion over the next two years — a 26 percent jump. During the same period, however, revenues to pay those expenses are expected to increase by a little less than $2 billion, or about 14 percent — and that assumes a return to a robust economy.

Oregon simply can’t keep up.

Lacking a substantial tax increase, which appears unlikely, the state won’t have the money to offer the same level of services, pay and benefits to the same number of people.

The state has faced tough times before, but this crisis is a game changer, economists and political leaders agree. Past budgetary tricks, such as borrowing or sweeping money from other state funds, won’t cut it.

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And how might we pay for such absurd obligations? Here’s Cembalest:

* By 2020, the average EU country would need to raise its tax rate to 55 percent of national income to pay promised benefits
* The U.S. could fund its shortfall by doubling the 15.3 percent payroll tax on employers and employees (forever)
* Alternatively, the U.S. could reduce discretionary spending by 80%, on things like education, defense and environmental protection. Why so high? There’s not enough discretionary spending left (the OMB estimates that mandatory spending will make up 71% of government expenditures by 2016)
* Of course, the other option would be the printing press (inflation), which would be worse given how much would be needed

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South Carolina consumers would pay more for food, water, electricity and prescriptions in exchange for a lower overall sales tax rate under a tax revision proposal given preliminary approval Wednesday.

And the proposed sales tax increases don’t stop at necessities. The state’s Tax Realignment Commission recommends that the state for the first time charge sales taxes on digital purchases from online stores, such as iTunes and Amazon.com, and pay more to buy a car as part of a massive makeover of the way the state collects taxes.

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The lowest bracket for the personal income tax, for instance, moves up 50% ”” to 15% from 10%. The next lowest bracket ”” 25% ”” will rise to 28%, and the old 28% bracket will be 31%. At the higher end, the 33% bracket is pushed to 36% and the 35% bracket becomes 39.6%.

But the damage doesn’t stop there.

The marriage penalty also makes a comeback, and the capital gains tax will jump 33% ”” to 20% from 15%. The tax on dividends will go all the way from 15% to 39.6% ”” a 164% increase….
The HSA Withdrawal Tax Hike. “This provision of ObamaCare,” according to ATR, “increases the additional tax on nonmedical early withdrawals from an HSA from 10% to 20%, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10%.”

Brand Name Drug Tax. Makers and importers of brand-name drugs will be liable for a tax of $2.5 billion in 2011. The tax goes to $3 billion a year from 2012 to 2016, then $3.5 billion in 2017 and $4.2 billion in 2018. Beginning in 2019 it falls to $2.8 billion and stays there. And who pays the new drug tax? Patients, in the form of higher prices.

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After more than a year of work and two weeks of negotiations, lawmakers early Friday finished melding different versions of Wall Street reform.

The final bill won’t be ready for a few days, but here’s CNNMoney.com’s breakdown of key provisions that aim to protect consumers, prevent firms from getting too big to fail and crack down on risky bets that leave taxpayers on the hook.

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This raises an intriguing question: To what extent should we view the future versions of ourselves as different people from ourselves today?

To be sure, most parents have no trouble restricting a child’s decisions on the grounds that doing so is in the young person’s best interest. Few teenagers are farsighted enough to fully incorporate the interests of their future selves when making decisions. As parents, we hope that someday our grown-up children will be grateful for our current restrictions on their behavior.

But people do not suddenly mature at the age of 18, when society deems us “adults.” There is always an adolescent lurking inside us, feeling the pull of instant gratification and too easily ignoring the long-run effects of our decisions. Taxes on items with short-run benefits and long-run costs tell our current selves to take into account the welfare of our future selves.

IF this is indeed the best argument for “sin” taxes, as I believe it is, we are led to vexing questions of political philosophy: To what extent should we use the power of the state to protect us from ourselves? If we go down that route, where do we stop?

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The idea of a tax on financial transactions championed by France and Germany is unlikely to gain much traction at the next meeting of leaders of the world’s 20 largest countries because it faces opposition both within the European Union as well as from countries such as the U.S. and Canada.

French President Nicolas Sarkozy Thursday said the EU will propose a tax on financial transactions to the G-20 when it gathers at the end of next week in Toronto, stressing that France and Germany would work together to make this a “major issue” and are even ready to implement it without the support of others.

Sarkozy didn’t specify, however, what the proceeds of such a tax would be used for, but France has said in the past it favors using it to fund efforts to control climate change, foster innovation or fight poverty. Germany, on the other hand, sees such a tax as a way to curb speculation….

A person close to the IMF said the report to be submitted to G-20 leaders next week will mention the idea of a financial transaction tax, while making clear it isn’t the best way to make the banking sector cover the cost of future crises or to limit systemic vulnerabilities. The report will also point out the concern that the cost of such a tax would be passed on to clients, and that it doesn’t necessarily target the riskiest types of trades.

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The popular tax break for mortgage interest, once considered untouchable, is falling under the scrutiny of policymakers and economic experts seeking ways to close huge deficits.

Although Congress last year rejected the White House’s proposed cut to the amount wealthier taxpayers can deduct for home mortgage interest payments, the administration included it again in its 2010 budget ”” saying it could save $208 billion over the next decade.

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Having counted on Washington for money that may not be delivered, at least 30 states will have to close larger-than-anticipated shortfalls in the coming fiscal year unless Congress passes a six-month extension of increased federal spending on Medicaid.

Governors and state lawmakers, already facing some of the toughest budgets since the Great Depression, said the repercussions would extend far beyond health care, forcing them to make deep cuts to education, social services and public safety.

Gov. Edward G. Rendell of Pennsylvania, for instance, penciled $850 million in federal Medicaid assistance into the revenue side of his state’s ledger, reducing its projected shortfall to $1.2 billion. The only way to compensate for the loss, he said in an interview, would be to lay off at least 20,000 government workers, including teachers and police officers, at a time when the state is starting to add jobs.

“It would actually kill everything the stimulus has done,” said Mr. Rendell, a Democrat. “It would be enormously destructive.”

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The Internal Revenue Service is drafting guidance that could require employers with religious affiliations to warn workers when their pensions have lost their federal safety net.

Over the past decade, more than 100 employers, including hospitals, schools, nursing homes, charities and other nonprofits, have converted their pension plans to “church plans,” a largely unregulated category of pensions that generally cover clergy and lay employees of churches and synagogues.

Church plans are exempt from federal pension rules, including those that require employers to fund the plans and insure them with the Pension Benefit Guaranty Corp., or PBGC, a federal agency that pays the benefits if a pension plan runs out of money.

“They said: ‘Hallelujah, I’m a church plan,’ and no longer have to meet funding requirements, or pay premiums, said Andrew Zuckerman, the IRS’s acting director of employee plans, at a meeting for pension groups this year.

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In a May 21 ruling, U.S. District Judge William Shubb stated that “plaintiffs have alleged sufficient facts which, if accepted as true, `leave open the possibility’ that … Section 107 goes too far in aiding and subsidizing religion by providing ministers and churches with tangible financial benefits not allowed secular employers and employees.”

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Thousands of Rhode Island income-tax refunds are being delayed longer than previously reported because of state cash-flow problems.

Overall, the state has delayed payment of about 53,000 individual income-tax refunds ”” totaling about $36.3 million ”” to make sure it has enough money to pay off state borrowings that come due in June, said Paul L. Dion, chief of the state Office of Revenue Analysis.

When the issue first arose earlier this month, state officials said they were delaying payment of refunds by about three weeks after the returns were processed. As of Tuesday, however, the delay had grown to between four and six weeks, state officials acknowledged.

Normally, when a tax return is processed, it takes the state several days to issue a refund on a return that was filed electronically, a week or so for a return that was filed on paper, state Tax Administrator David M. Sullivan said.

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The level of U.S. debt has reached a point at which economic growth traditionally begins to slow, a bipartisan fiscal commission making recommendations to the White House and Congress was told Wednesday.

The gross U.S. debt is approaching a level equivalent to 90 percent of the country’s gross domestic product, the level at which growth has historically declined, said Carmen Reinhart, a University of Maryland economist.

When gross debt hits 90 percent of GDP, Reinhart told the commission during a hearing in the Capitol, growth “deteriorates markedly.” Median growth rates fall by 1 percent, and average growth rates fall “considerably more,” she said.

Reinhart said the commission shouldn’t wait to put in place a plan to rein in deficits.

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