Private School Choice Provides More Options Close to Home

Posted on by James V. Shuls

“School choice may work in Saint Louis and Kansas City, but it won’t impact most students in the rest of Missouri.” I hear that a lot. On its face, the argument seems reasonable. There just aren’t that many private schools. They’re too far away. Missouri is not populated densely enough to support a substantial supply of private schools outside of Saint Louis and Kansas City.

The only problem with that interpretation is that it isn’t true.

So says a new report from the Brookings Institution that analyzes the percentage of students in each state who might reasonably benefit from a school choice program. For their analysis, the authors of the study map out where students live relative to schools and report the percentage of students with one or more school options (traditional public, public charter, or private school) within a five-mile and ten-mile radius.  

The authors found that 73 percent of Missouri students have one or more private schools within five miles of where they live. The authors argue that these students could potentially benefit from a private school choice program. By contrast, only 65 percent of students have multiple options operated by their district within five miles (and thus could benefit from an intra-district choice program) and only 54 percent of students have non-district options within that radius (and could thus benefit from an inter-district program.)

As we think about the students in Normandy and Riverview Gardens who ride buses more than 30 miles as part of the inter-district transfer program, it is easy to see how a private option would allow these students to remain closer to home during the school day.

But it’s not just there that school choice can help. As the cold hard numbers tell us, there are many more students within reasonable reach of private schools than most people think. These options should not be dismissed out of hand.

Private school choice programs may not provide choices to all students, but they will expand options for a great many. From a policy standpoint and from a moral standpoint, they are worth exploring. 

Nebraska Pressing Hard for Historic Income Tax Relief

Posted on by Patrick Ishmael

This week Nebaraska legislators rolled out a significant tax reform package that should get the attention of development-minded Missouri legislators—a reform that I would characterize as comprehensive tax relief. The Nebraska proposal touches on several areas of the state’s tax code, but its main focus is ultimately on the income tax. The Platte Institute’s got the details.

For the first time in many years, the Revenue Committee has advanced a comprehensive vision for tax reform in Nebraska.  Legislative Bill 461,[i] the Nebraska Taxpayer Reform Act, reins in high property and income taxes on families, farmers, and businesses across the state.
 
While a reduction in personal and corporate income tax rates and an increase in the Earned Income Tax Credit would come as a relief for many, opponents are concerned whether the state will have the revenue to pay for core government functions such as education, criminal justice, and road maintenance.  However, through the use of revenue “triggers,” LB461 is designed to prevent tax cuts from taking place unless ample revenue is also available to fund government services.
 

There are a lot of details to unpack here, but the short version is still pretty short.

  • As Platte highlights, the bill here makes liberal use of revenue triggers for tax cuts to become effective. If that sounds familiar to longtime readers, it’s because Missouri adopted a similar apporach when it passed its tax cut three years ago. Legislators’ decision to simultaneously reform some tax incentives to help pay for the cuts deserves particular recognition, given our longstanding support of such innovations here in Missouri.
  • When fully phased in, Nebraska’s top personal income tax rate would drop to 5.99% from 6.84%. Importantly, the overall tax rate for income below $29,000 would fall as well, further reducing taxpayers’ exposure. The bill would also increase the state’s earned income tax credit, a policy idea we have talked about many times before.
  • The bill would reduce Nebraska’s top corporate income tax rate from 7.81% to 5.99%. Missouri’s current corporate rate is 6.25%.
  • Finally, the bill would also change elements of the state’s property tax practices, including how agricultural land is valued. You can find some of our longstanding research on property tax issues here.

When discussing objectives of tax reform, there are obviously lots of approaches and ends that one could promote. But if growth is the objective, then going after income taxes has to be front and center in any reform plan. The approach being taken in Nebraska is an appropriate and gradual one to promote economic growth—an approach that could probably be taken good deal further and still be eminently responsible.

Nebraska’s tax reform push should give Missouri’s state legislators some pause as they generally twiddle their thumbs in 2017. Kudos to the Cornhuskers for spending the political capital necessary to advance these important reforms.

Trinity Lutheran Has Its Day in Court

Posted on by Michael Q. McShane

The U.S. Supreme Court heard oral arguments in Trinity Lutheran v. Comer yesterday. We’ve covered this case extensively, and even though on April 13 the governor reversed the policy that sparked the case, arguments went forward as planned.

It is usually ill-advised to try to divine the ultimate outcome from oral arguments, but it was hard not to see a majority of the justices making arguments and asking questions favorable to Trinity.

Justice Kagan, in particular, seemed to articulate a position in favor of Trinity multiple times. First, she remarked:

But here’s the thing. There’s a constitutional principle. It’s as strong as any constitutional principle that there is, that when we have a program of funding—and here we’re funding playground surfaces—that everybody is entitled to—to that particular funding, whether or not they exercise a constitutional right; in other words, here, whether or not they are a religious institution doing religious things. As long as you’re using the money for playground services, you’re not disentitled from that program because you’re a religious institution doing religious things. And I would have thought that that’s a pretty strong principle in our constitutional law.

Later, she even went further, responding to the state’s attorney’s argument that reimbursing Trinity would amount to an endorsement of or entanglement with the school:

I don’t mean to say that those are not valid interests. But it does seem as though this is a clear burden—looked at that way, this is a clear burden on a constitutional right. And then your interests have to rise to an extremely high level.

She continued,

It’s a burden on a constitutional right, in other words, because people of a certain religious status are being prevented from competing in the same way everybody else is for a neutral benefit.

These statements, along with tough lines of questioning to the attorney representing the state from Justices Alito, Breyer, Gorsuch, Kennedy, and Chief Justice Roberts, showed just how difficult it might be for the state to show that reimbursing a religious preschool for scrap tires for their playground would excessively entangle it with a religion. If that is excessive entanglement, several justices pointed out, just about anything that the state would do, from providing police and fire protection to administering public health programs to students, would be illegal in Missouri.

Again, we don’t want to read too much into yesterday’s arguments, but the questions were encouraging. We will know the ultimate opinion of the court by the time it recesses at the end of June.

How Much Can Saint Louis Taxpayers Take?

Posted on by Graham Renz

Saint Louis is beating out cities like New York, Los Angeles, and San Francisco in one very important respect. No, it’s not in job creation, economic growth, or public safety. Saint Louis is on the rise in a very different respect.

The Gateway City is now home to the 13th-highest base sales tax rate of all major U.S. cities. Yes, Saint Louis has a higher sales tax rate than New York City (9%), Los Angeles (9%), and San Francisco (8.75%).

With city voters’ approval of Proposition 1—a half-percent sales tax for MetroLink expansion and other “economic development” projects—the base sales tax rate in Saint Louis will rise to 9.179 percent from 8.679 percent. While that might not sound like much, those nickels and dimes add up for families struggling to make ends meet. For instance, if the median city household spends 10 percent of its income on goods in the city, the recent hike amounts to more than $175 in extra taxes annually. Perhaps wealthy denizens of the Central West End can afford that burden, but many in less affluent parts of the city cannot.

Unfortunately, the city’s base sales tax doesn’t even tell the whole story. Saint Louis is littered with dozens of shadowy special taxing districts, such as transportation development districts (TDDs) and community improvement districts (CIDs), that charge sales taxes of their own. TDDs and CIDs can each charge up to a one-percent sales tax. When you stack a TDD and CID on top of one Saint Louis’s base sales tax, you could be paying more than 11 percent in sales tax! Add on the city’s 1.5-percent restaurant tax, and diners in the city will soon be paying more than 12 percent in taxes on their purchases.

Some cities have high sales tax rates to compensate for low property or income taxes. For instance, in certain southern cities, policymakers have decided to fund public services through consumption taxes (e.g., sales taxes) rather than property or income taxes. But Saint Louis doesn’t have low property taxes to compensate for, and it has both an earnings tax and a payroll tax! Sure, the city only collects property taxes on 60% of real property by value, but that’s in part because the city owns tens of thousands of properties and has engaged in decades of generous tax giveaways. None of Saint Louis taxes is low.

Is the additional tax resulting from the passage of Prop 1 at least worth it? Almost certainly not. The North–South MetroLink line it’s slated to fund won’t be built, even in the best-case scenario, for at least a decade. Assuming the route is eventually built though, promises that it will lead to economic revitalization don’t align with past experience. After two decades to work its magic, light rail has utterly failed to keep people and jobs downtown or spur the ever-elusive “transit-oriented development.” In reality, the approval of Prop 1 simply means that those who can least afford the burden of extra taxes will pay for a luxury amenity designed to lure wealthy suburbanites out of their cars.

While there is no sales tax “ceiling,” voters will only put up with so much, and residents and businesses can only afford so much. Before policymakers propose another pie-in-the-sky project, they should consider if the taxpayer piggybank they’ve grown accustomed to raiding will always be there.

Great Schools are Great News

Posted on by Michael Q. McShane

Kristen Taketa of the Post-Dispatch published a great story earlier this week about Mason Elementary in Clifton Heights. Mason is a high-performing, diverse school that parents, students, and teachers love. I highly recommend reading the whole thing, especially if you need a shot of good news in sea of negative stories from around the country and world.

I have a few reactions to this story.

  1. We want more great schools, point blank, period. Running a successful school, no matter where you are, is hard going. If that school is urban, suburban, or rural; if it is traditional public, public charter or private; if it is religious or secular—we should be happy when it succeeds. Mason Elementary’s story should give us joy.
  2. My ultimate goal is to see multiple vibrant school sectors in Missouri. I want awesome traditional public schools. I want awesome charter schools. I want awesome private schools, and I want parents to have the freedom to choose between them without sanction or stigma. If the best choice for a family is their local traditional public school, terrific. If they prefer a charter, great. I want school choice policies to level the playing field and put families first.
  3. Choice allows parents to find the educational option that best fits the needs of their child and their family. Some folks want to go to school in their neighborhood, some folks want to get out of their neighborhood, some folks don’t care either way. There isn’t one right or wrong answer, it comes down to people’s preferences. And that is OK. Mason families are making a choice, and we should support that.
  4. Can we put to rest this stubborn myth that school choice is the death of traditional public schools? Given some of the rhetoric around charter schooling in particular (my colleague James Shuls debunks a recent example here), you would think that if a charter school came to town, a school like Mason would be doomed.  Saint Louis has one of the highest market-shares of charter schools in the nation, and yet here is Mason, thriving. Maybe folks should update their assumptions.

Kudos to the P-D for highlighting this story. Let’s continue working together to create more schools like Mason across sectors and across the state.

Will the Supreme Court Strike Down the Blaine Amendment?

Posted on by Michael Q. McShane

The U.S. Supreme Court hears arguments on Wednesday in Trinity Lutheran v. Comer. The case involves Trinity Lutheran’s application to a state (Missouri) program that reimburses organizations for the purchase of recycled tires that are used to resurface playgrounds like the one at Trinity Lutheran’s school. But the church’s application was rejected on the grounds that Missouri’s Blaine Amendment does not allow the state to provide support to religious institutions. Click above to watch the video; Show-Me Institute Director of Education Policy Michael McShane’s essay on the case is available here.

Economic Development Policies Still Failing

Posted on by Patrick Tuohey

Steve Rose may not care what the research tells us, but the research is mounting. Studies by UNC-Chapel Hill, the St. Louis Development Corporation and now the Upjohn Institute for Employment Research all confirm that economic development subsidies just don’t work.

Using data from 47 cities in 33 states over the course of 26 years (1990 to 2015) the Upjohn study confirmed what Show-Me Institute analysts have been arguing for years: economic development incentives do not grow the economy, create jobs, or boost tax revenue. In his 2017 paper, Upjohn author Tim Bartik concludes (page 116),

The existing research on incentives is that in some cases they can affect business location decisions, but that in many cases they are excessively costly and may not have the promised effects. The new research suggests that much of this consensus is justified.

None of this will surprise frequent readers of this blog. Politicians may like attend ribbon-cuttings and crow about creating jobs, but little of this actually pans out. Instead, cities and states end up hollowing out their tax base, collecting ever less for important services such as public schools, libraries and mental health funds. Simply taxing money out of the economy and then turning around and spending it doesn’t grow the economic pie! The new study confirmed as much:

Incentives are still far too broadly provided to many firms that do not pay high wages, do not provide many jobs, and are unlikely to have research spinoffs. Too many incentives excessively sacrifice the long-term tax base of state and local economies. Too many incentives are refundable and without real budget limits.

The 33 states that Upjohn considered account for 92 percent of the U.S. gross domestic product, and the 45 industries it analyzed account for 91 percent of U.S. labor compensation. Kansas City has undertaken its own analysis, of sorts, of its economic development policies, but has hired a trade group of development financiers to do the work. Seriously.

Politicians and those aligned with wealthy developers may not like or care about the research—but it’s becoming increasingly difficult to wave it off and pretend it doesn’t exist.

U.S. Supreme Court to Weigh In on Playground Dispute

Posted on by Michael Q. McShane

Trinity Lutheran v. Comer is a court case with humble origins. It started with officials at Trinity Lutheran School in Columbia, Missouri, who wanted to replace the gravel surface of the school’s playground with something more forgiving. Accordingly, Trinity applied to a state-run program whereby organizations can be reimbursed for the purchase of recycled tires that can be used to make a softer playground surface. If you think this story sounds simple, think again. On April 19, the U.S. Supreme Court will hear arguments in a case that involves the separation of church and state as well as the ways in which the government and groups with a religious affiliation can cooperate for the public good. This surprisingly complicated and potentially far-reaching case is the topic of a new essay by Show-Me Institute Director of Education Policy Michael McShane, which you can read here. 

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