In 2012, James Whitford founded the True Charity Initiative to advance nationally the cause of privately-funded effective charity at the most local level. His work has appeared in Heritage Foundation’s Index of Culture and Opportunity, Patrick Henry College’s Newsmaker Series, World, The Christian Post, and The Hill.
Should You Pay the Earnings Tax in Wildwood?
At a mayoral candidate forum last week hosted by the St. Louis Business-Journal, the topic of the St. Louis earnings tax came up for discussion. There were several important points made in the talk (as shared in this article in the Business-Journal). Unfortunately, most of the points, (but not all) were erroneous.
Expanding the one percent earnings tax to include St. Louis County was proposed by one of the candidates at the forum. Can the earnings tax be extended to St. Louis County? The short answer is no. Proposition A, passed by voters in 2010, disallows earnings taxes in cities other than St. Louis and Kansas City. So, no, Chesterfield can’t impose an earnings tax even if it wanted to (and I’m pretty sure it doesn’t). State law can always be changed—as Proposition A itself did—but as it is now establishing an earnings tax in St. Louis County is not allowed.
In fairness to the candidate who discussed expanding it, she was aware of that. She discussed making earnings tax expansion a part of the currently stalled Board of Freeholders process (the Board of Freeholders is the entity considering changes to the relationship between the city and county). Could it happen that way? That is possible. If the Board of Freeholders suggested merging St. Louis City and St. Louis County into one unified city, and if voters approved that proposal, then it is possible that the current exemption allowing an earnings tax in the City of St. Louis could be applied to the new, unified city.
Short of a full reunification, could the Board of Freeholders simply choose to enact an earnings tax in St. Louis County as part of any new governmental plan? Again, perhaps. The state constitution states that the new plan:
shall become the organic law of the territory therein defined, and shall take the place of and supersede all laws, charter provisions and ordinances inconsistent therewith relating to said territory.
But a new Board of Freeholders charter won’t be able to just pass any new rule it wants in conflict with statewide rules on local governments. For example, the Board of Freeholders can’t decide that the new region will tax a retail merchant’s inventory or the car of a disabled former POW. There are limits on what can be passed. So would a county earnings tax be allowed in this situation? It would simply depend on how Proposition A is interpreted. The only thing I am comfortable predicting is that litigation would result, and the courts would decide the question.
All of this leaves aside the fact that expanding the earnings tax to St. Louis County is a bad idea in and of itself. More to come on this issue, including a post on the part of the article where I agree with the candidates.
Homeschooling in Missouri Nearly Doubled in 2020
Last week, the U.S. Census Bureau released the results of its Household Pulse Survey, an effort by the government to understand the impact of the coronavirus on American households. The survey, conducted periodically since the pandemic started, asks questions about work, school, and a host of other issues.
One of the most interesting questions the Census Bureau asked concerns homeschooling. Surveys from EdChoice and others have found huge bumps in the favorability of homeschooling during the pandemic, but have those opinions translated into parents actually taking the leap and homeschooling their children?
According to the Pulse Survey, yes. Yes they have. When asked in late April and early May of 2020, 5.4 percent of American families responded that they were homeschooling their children. By late September and early October, that number had more than doubled to 11.1 percent. And just to be sure, the Census Bureau made clear in its questioning that “homeschooling” meant homeschooling, not simply students working remotely while still enrolled in their traditional school.
The Census Bureau broke down the findings by state, and in Missouri the percentage of families homeschooling nearly doubled, from 5.9 percent in the spring of 2020 to 10.9 percent in the fall. That means that more than 1 in 10 Missouri school children were homeschooled at that time.
The survey also found fascinating trends related to race, with huge increases in homeschooling from Black families (from 3.3 percent in the spring of 2020 to 16.1 percent in the fall), and Hispanic families as well (from 6.2 percent in the spring of 2020 to 12.1 percent in the fall). In fact, expressed as a percentage of all families, homeschooling is now more popular among Black and Hispanic families than among White families, only 9.7 percent of whom were homeschooling in the fall of 2020.
If these trends hold, they represent a sea change in the educational landscape of Missouri and America writ large. We’ll be watching for later iterations of the survey to see if they do.
The Biden Infrastructure Bungle
Following on the heels of its $1.9 trillion stimulus bill, the Biden administration just unveiled another multitrillion-dollar spending plan, this time notionally aimed at fixing America’s infrastructure needs. Unfortunately, the “American Jobs Plan” is just as much a misnomer as the “American Rescue Plan,” in that it does more to push liberal political goals than to light a fire under the economic recovery or long-term growth.
America’s infrastructure needs are genuine and significant. Investment in basic infrastructure (power, transportation, water supply, etc.) has failed or barely kept up with depreciation, leaving the country with an aging infrastructure stock with dwindling years of remaining service life. Moreover, although the United States spends roughly the same on infrastructure as it did in 1956 in inflation-adjusted per capita terms, it gets less bang for the buck today. In particular, the cost per mile of interstate construction has more than tripled in inflation-adjusted terms since the 1960s.
This combination of flat spending and rising costs means less actual new infrastructure. Worse yet, costs vary widely across states. From 1956 to 1993, high-cost states spent more than $8.8 million more per mile of interstate than low-cost states, and $3.3 million of this differential is due to factors under policymaker control. Thus, rather than measuring the ambition of a bill by the sticker shock of its price tag, a superior metric is to evaluate the quantity and quality of infrastructure it is likely to produce and what spillovers it will generate for economic productivity. On both counts, the Biden Administration’s plan falls far short.
First, the composition of spending in the bill appears not to have gone through any credible cost–benefit analysis to determine where best to allocate scarce (or not so scarce, given the size of the bill) dollars. For example, the American Society of Civil Engineers reports that 20 percent of the more than 4 million miles of roads in the United States are in poor condition; the same report estimates a nearly $800 billion backlog of maintenance and repair needs. Why, then, does only 5 percent of the bill (see Figure 1) go to roads and bridges, only promising to fix 20,000 miles worth of road? Moreover, why spend nearly the same amount on public transportation even though only 5 percent of people rely on it to get to work? The bill also includes Medicaid expansion of home and community-based services (HCBS) masquerading as “infrastructure.” The administration every right to make its case for a “care economy” agenda, but simply calling it infrastructure to piggyback off of the popularity of spending on roads and bridges does not make it so.
Figure 1
Secondly, and more egregiously, the American Jobs Plan’s prevailing wage, project labor agreement, and PRO Act provisions are a huge giveaway to unions that would likely raise costs, reduce growth, tilt the playing field, and overturn the will of voters in states that passed right-to-work laws to safeguard worker freedoms. The practical effect of these measures will be to reduce the number of infrastructure projects that can get completed for a given amount of spending and to needlessly harm economic performance through the elimination of worker freedom protections.
Lastly, the Biden plan partly finances the eye-popping $2.3 trillion price tag by raising the corporate income tax, thereby undermining the very competitiveness that infrastructure investment is supposed to enhance. Even the administration tacitly admits the harm such a tax hike will cause for the economy, offering only to beg other countries to raise their own taxes to prevent them from attracting companies looking for friendlier business environments in what the Biden administration misleadingly calls a “race to the bottom.” It’s hard to imagine any countries taking us up on the offer. In all fairness, the American Jobs Plan does promise workers whose jobs are displaced counseling and case management services, though many will unsurprisingly prefer to keep their job instead.
In sum, America’s infrastructure could use a jolt of investment, but the spending priorities in the bill are off target and in many cases unrelated to true infrastructure. The bill is littered with union giveaways that will raise costs and reduce the quantity of new infrastructure that could otherwise be produced, and the promised corporate tax hikes counteract the same economic growth that infrastructure spending aims to ignite. But it’s not too late. The Biden administration should learn from previous mistakes, when the Obama stimulus failed to improve the nation’s highways, and instead refocus on a pro-growth and fiscally responsible approach to solving America’s pressing infrastructure needs.
St. Louis City’s Earnings Tax Is Not the Lowest in the Country
The earnings tax was one topic of conversation during a recent forum for St. Louis mayoral candidates. During the forum, one candidate claimed that St. Louis has the lowest earnings tax rate in the country. This claim was made while discussing a possible expansion of the earnings tax to St. Louis County. No matter how you look at it, the claim that St. Louis has the lowest earnings tax rate in the country is false.
Most cities in the United States, including most large cities, do not have any form of local income tax. As of 2019, there are only 17 states with local income tax jurisdictions and only 19 of the country’s 100 most populous cities have some form of local income tax. This means that thousands of cities (including comparable large cities such as Chicago, Omaha, and Nashville) have a lower earnings tax than St. Louis city—their earnings tax is 0 percent!
Even if we’re just looking at the jurisdictions with local income taxes, St. Louis still doesn’t have the lowest rate. Many jurisdictions in Indiana, Kentucky, and Ohio have rates below 1 percent. In Colorado, Aurora, Greenwood Village, and Sheridan have monthly local income taxes of $3.00 or less on those that make over $500 per month, which is a 0.6 percent local income tax at most. Clearly, St. Louis does not have the lowest rate among local income taxes.
Objectively, 1 percent is not all that high, and a few large cities with local income taxes have slightly higher rates. But the earnings taxes in St. Louis City and Kansas City are certainly not the lowest in the country and they are definitely not negligibly low. The additional 1 percent that Kansas City and St. Louis city residents and workers pay creates real negative effects for these cities. The local income tax in Missouri’s two largest cities is higher than those in hundreds of other cities in Missouri and thousands of cities across the country, making our largest cities less competitive while also taking money away from our hard-working citizens. That’s not a false claim.
Medicaid Expansion Brings Missouri to a Constitutional Crossroads
Missouri’s House Budget Committee took a historic step this week by voting down the bill that would fund Medicaid expansion. Writers across the state were quick to lambaste the legislature for “denying the will of the voters,” but there is much more to the story.
When Missourians voted on Medicaid expansion this past August, they were told the initiative would save the state billions of dollars. I wrote repeatedly at the time about how wrong those estimates would prove to be; expansion was then approved by a narrow margin.
With Medicaid expansion set to go into effect in a few months and Missouri’s Legislature now putting together next year’s budget, the true price tag for Medicaid expansion has finally come into focus. The state’s most recent estimates suggest that the first year will require more than $1.5 billion in new spending, which includes a significant portion of federal funding and a state share of approximately $100 million. Where will the legislature find these funds? Instead of searching for the money elsewhere in the budget, the House Budget Committee is questioning whether they need to fund expansion at all.
Of course, Missouri voters did approve the petition to expand Medicaid eligibility, but the issue is whether the constitutional amendment requires the legislature to come up with the funds. Our state’s constitution, like the U.S. Constitution, gives the legislature the “power of the purse”—the responsibility of authorizing all state spending. The constitution also provides that amendments cannot impose a new cost without outlining how that cost would be paid for. Unfortunately, the Medicaid expansion amendment, which will have an enormous cost, included no such funding mechanism.
The House Budget Committee’s stance is that without such a mechanism, the legislature is under no obligation to include funding for Medicaid expansion in next year’s budget. The committee’s move is just the first step of many if the legislature wants to avoid appropriating the funds necessary for expansion. But if the eventual budget does not include funding for expansion, the issue would probably be challenged in court.
While discussions on this topic are just beginning and will likely continue for the remainder of this legislative session, it’s important to recognize what’s happening here. There are legitimate constitutional questions being asked here, and despite what you may hear, this is about more than simply the politics of Medicaid expansion.
Almost Heaven
West Virginia is a beautiful state with a reputation problem. Along with gorgeous mountains and phenomenal outdoor amenities like golf, kayaking, mountain climbing, and skiing, it’s also close to major metropolitan areas and the coast. But it is also home to countless broken Appalachian communities. These communities suffer from poverty, low employment, and low education. There’s now some good news on the horizon for these communities.
The West Virginia Legislature just passed a sweeping school choice bill. The bill allows 90 percent of West Virginia children to receive $4,600 in an education scholarship account (ESA). These ESAs can be used for private school tuition, tutoring, education therapies, or homeschool curriculum. If the governor signs this bill, it could be a game changer.
West Virginia’s governor also announced a plan to eliminate the state income tax. The plan will be paid for in a combination of ways, including raising sales taxes, raising consumption taxes on alcohol, and reducing or eliminating tax breaks for the oil and gas industry.
All of the sudden, West Virginia, which has had a declining population since the 1950s, could look pretty attractive to young families who aren’t thrilled with the West Virginia public schools and would prefer to DIY their own plan. It’s going to look pretty attractive to high-income earners who can now work from anywhere. And it’s going to look pretty attractive to active folks who value a small-town atmosphere with a low cost of living. These are groups that can engage with their communities and help solve entrenched social problems. These are groups that Missouri would be wise to pursue.
Missouri also has great amenities. We have delightful small towns, beautiful state parks, Lake of the Ozarks, and Branson. Unfortunately, too many legislators from these very same areas are solidly against school choice in any form. They need the support of teachers to get elected and that, so far, has meant standing firm for the status quo and only the status quo. The fact that the young people who do go off to college often don’t return must not be considered. The fact that young families aren’t gravitating to these communities is seemingly being ignored. The fact that knowledge workers will go to states like West Virginia, Colorado, or Florida must not be a threat.
We keep this attitude at our peril. Post-pandemic, many people are thinking long and hard about where and how they want to live. Missouri should be setting itself up to be as attractive as possible.
Some St. Louis School Districts Are Responding to Parents
Apparently, parents like options, and school districts like keeping students. What a concept. This past year has forced public school districts to realize that some—but not all—students excel when they can learn virtually. Other students are more successful when they learn in person. One size does not, in fact, fit all.
Nationally, there are several indicators that learning remotely works for a lot of families. The number of homeschooled students doubled this year. An NPR/Ipsos poll found that nearly 30 percent of families were considering sticking with virtual learning next year. Another tracking poll found that 45 percent of parents want a virtual and in-person hybrid approach next year.
Missouri families who prefer virtual learning have the option of enrolling in the Missouri Course Access and Virtual School Program. But their assigned public school district has to cover their cost. It’s not surprising, therefore, that several school districts in the St. Louis region are going to continue their virtual programs for students who want them. One local superintendent was quoted as saying that extending virtual learning programs will “prevent” students from leaving for the statewide program. Not exactly—parents can still choose either. In fact, a poll of Missouri parents in December found that nearly a quarter graded their children’s remote learning experience as a “D” or an “F.” Regardless, districts are apparently feeling a little heat from the competition.
As the dust settles from the great COVID education disruption, we will discover more about how the experience affected families and learning. I suspect that traditional public school districts will be forced to recognize that the power shift from school administrators to parents is not going to reverse itself any time soon.
Who Will Speak For the Family Businesses They Shut Down?
Late last night and into the wee hours of today, the Missouri Senate debated a bill that sought to rein in many of the local government COVID excesses of the last year, including requiring local elected officials to vote on whether entire classes of businesses should be closed for extended periods of time. After hours of filibuster, the bill failed—with several members of the majority party voting against the measure.
I have to say I am disturbed. During last night’s debate, the conversation seemed to make it clear that some senators have more common cause with local political officials than they do with the people who elected them. The role of the legislature isn’t to simply defend bad local decisions. The role of the legislature is to defend constituents—the people who elected them in the first place—against bad local decisions.
Keep in mind it wasn’t long ago that the state stopped local officials from banning plastic bags. The state was also okay with stopping local officials from hiking their minimum wages locally, for fear of the business-destroying effects the higher wage requirement might have.
But straight up banning entire categories of legal businesses from operating for indeterminate periods of time?
The state senate is A-OK with that.
How excruciatingly unserious.
State elected officials are elected by the public, not by local bureaucrats, and it’s the interests of those regular Missourians that the legislature is duty-bound to prioritize. State officials need to realize now, not later, that they are elected to be a check on local officials. Their job is not to rubber stamp business-destroying decisions simply because a local official did it. Their job is to fight those decisions and protect their constituents from them.
