Texas And Taxes: Time To Set The Record Straight

Texas Gov. Rick Perry released an ad (paid for by TexasOne, a public-private partnership aimed at economic development outreach) in Missouri touting Texas’ business-friendly climate and criticizing Missouri Gov. Jay Nixon for vetoing a tax cut. In some quarters, this has not been well received. Missouri Secretary of State Jason Kander criticized Perry for trying to entice Missouri companies to move to Texas. However, if all Missouri can do to respond to Texas is write strongly worded letters, then we’ve already lost the economic development battle. It is time for real reform, and mirroring Texas isn’t a bad way to go about it.

It’s true that Texas faced a serious budget shortfall after a recession hit. So did many states. However, Texas has managed to climb out of the hole it was in. Now, according to the Texas comptroller, Texas is looking at an $8.8 billion surplus. Even after making up for much of the cuts imposed by earlier budgets, Texas is still looking at a surplus. Texas also has significant assets in its “Rainy Day” fund. According to the Tax Foundation, Texas’ “Rainy Day” fund is 18.58 percent of general spending compared to 3.28 percent for Missouri.

Nixon and liberal advocacy groups such as the Missouri Budget Project worry about effects an income tax cut will have on education. Yet Texas, without an income tax, performs just as well as Missouri on a variety of education metrics.

Income taxes are among the most economically damaging taxes a state can impose. The Show-Me Institute has published research on how Missouri could eliminate the state income tax, or for the less bold, eliminate just the corporate income tax. Maybe instead of letters, Missouri can try real reform.

Time For A Game Of ‘UNION… OR… TEA PARTY!’

The rules of the game are pretty simple. I give you a statement, and you tell me whether it came from a union or the Tea Party.

Here we go.

Question 1: Who said the following – a union, or the Tea Party?

[F]or two years we have sought from the Administration and Congress interpretations to the ACA [Affordable Care Act] that merely allows us keep the health plans we currently have: nothing more, nothing less. No special treatment. …

Question 2: Union … or … Tea Party?

[T]he unintended consequences of the ACA will lead to the destruction of the 40 hour work week, higher taxes …

Question 3: Union … or … Tea Party?

[T]he Congress and the Administration have demonstrated they have the authority and power to make dozens of other corrections to the ACA, including taking care of big business and well-paid Congressional staff members…

And Question 4: Is this a union … or the Tea Party?

[T]hat [this group urges] Congress and President Obama to undertake immediate changes to the implementation and regulation of the ACA.

If you answered “Tea Party” to all of these, you would be … completely wrong. The statements come from a resolution that the Nevada chapter of the AFL-CIO passed last week “Urging the President and Congress to Uphold Their Promise for Unions to Keep their Current Healthcare Plans Under the Affordable Care Act (ACA).”

As it turns out, even if union members like their plans, they may not get to keep them, thanks to provisions in the ACA that incentivize employers to dump some workers into the exchanges rather than provide them health benefits. Indeed, union health care benefits are a big reason many members join a union in the first place; without the robust health benefits that the union negotiates, union membership would become considerably less valuable and paying union dues would become less attractive to union members. Less union power means fewer union members means less union power … you get the picture. Let’s just say unions should have read the bill more closely before they supported it.

But at least it seems like we’re all in agreement on one thing: it’s time to reopen the law. The question now is, when will the obstructionism in Washington, D.C., end so real health care reform can begin? How long will Americans, union and non-union, have to stomach the ACA before the ACA’s architects concede they made a lot of mistakes and that the law needs to be overhauled? Stay tuned.

Tear Down The Wall Between Public Dollars And Private Schools

As first appearing in the Education News on August 14, 2013:

Growing up in one of the most dangerous neighborhoods of Saint Louis a decade ago, Korey Stewart-Glaze knew where he went to school mattered. Korey’s neighborhood high school is a dropout factory; fewer than half of the students graduate on time. If he had attended that school, he says “I might have fallen in with the wrong crowd and be in jail or dead today.” That was the fate for many of his friends, but that would not be his fate. At a key moment in his life, Korey’s path was altered. His story can teach us a valuable lesson about what it means to provide a great public education to all students.

Rather than continue on in the traditional public schools, Korey’s family scraped together enough money to send him to a school that would put him on a different path, De La Salle Middle School at St. Matthew’s. He then earned a scholarship to a well-regarded private high school and went on to graduate from Westminster College in Fulton, Mo., in 2012.

Korey’s decision to attend De La Salle proved to be very beneficial for him — and for the public at large. We all benefit every time our schools — public or private — succeed in turning children into motivated and productive citizens. Yet, for some reason, we have constructed a Great Wall that absolutely prohibits public funds from going to private schools to support the education of children whose parents cannot afford to pay tuition. In essence, we have decided that only government-run schools are capable of providing public education. This just is not so. No such wall exists in higher education, where students can use publicly subsidized loans to attend private schools.

Noted economist Milton Friedman regularly argued that government funding of education does not necessitate government provision of education. Echoing this sentiment, former Arizona Superintendent of Public Instruction Lisa Graham-Keegan wrote in 2000, “If we want to save the public schools, we mustn’t confuse the ideal of public education — that every child has the right to a good K-12 education at public expense — with any particular system, including the one we’ve got.” The system “we’ve got” is not public education, it is just that — a system. Public education should not mean assigning students to a specific type of school, regardless of quality, but rather that we provide access to a quality education, regardless of the type of school delivering that education.

Our traditional public schools are filled with thousands of Koreys. Some are trapped in failing schools. Some are in good schools that simply are not meeting their needs. Our narrow definition of public education prevents more students like Korey from receiving the education they deserve.

It is time to tear down the long-standing wall between public dollars and private schools so that more students like Korey can benefit from the increased educational options it would bring. Private schools should be enlisted into the cause of providing publicly financed education. Many private schools could do that very well.

James V. Shuls, Ph.D., is the education policy analyst at the Show-Me Institute, which promotes market solutions for Missouri public policy.

Meet Me In Saint Louie, Louie! Meet Me At CPAC (on Sept. 28)

I am happy to announce that on Sept. 28, I will be part of a panel discussion at CPAC St. Louis titled “How Americans Are Changing ZIP Codes for Good Tax Codes.” Among the many topics we’ll discuss: my assertion that Missouri is at the heart of a Midwestern growth corridor, a fact that offers both an opportunity and a threat to the Show-Me State’s economic future. Joining me on the panel are:

  • Ted Dabrowski, vice president of Policy, Illinois Policy Institute
  • Jonathan Williams, director of the Tax and Fiscal Policy Task Force, American Legislative Exchange Council
  • The Honorable Larry Parman, Oklahoma Secretary of State
  • Travis Brown, author of How Money Walks, who will also serve as our moderator

Our talk is tentatively scheduled to begin at 11:45 a.m., following speeches from former U.S. Sen. Rick Santorum and current Texas Gov. Rick Perry. Suffice to say, if you want to get a good seat . . . you may want to arrive early. And if the formal schedule changes between now and then, I will update this post with the new details.

It should be a fantastic event. I would be utterly delighted to meet our readers, so if you have time that day, I’d encourage you to register and attend our event. You can sign up for the conference here.

About Those Aviation Department Funds…

We’re told time and again that aviation funds cannot be used for a city’s own financial needs. Federal law is clear on this. The Show-Me Institute has mentioned this, as have the leaders of the Kansas City mayor’s advisory group on Kansas City International Airport (MCI).

As with many of the arguments in favor of building a new $1.2 billion terminal, it’s true . . . sort of.

In July and August of 2010, the Kansas City Aviation Department gave $10.2 million to the city of Kansas City in the form of an interdepartmental loan with an interest rate of 3 percent. The initial Memorandum of Understanding (MOU) indicated the loan was “for the use by Finance in connection with the historical liabilities associated with various TIF [Tax Increment Financing] projects” and would be paid back by July 1, 2013. Not surprisingly, the city later renegotiated and the debt won’t be fully paid until 2017, at the earliest.

The Federal Aviation Administration (FAA) says that such loans are legal as long as they are at the prevailing rate of interest (see page 7,720 of the Federal Register). The 3 percent the city is paying is within the prevailing rate of interest.

What is troubling is that the loan from the Aviation Department was going to cover TIF payments the city couldn’t otherwise afford to make. In other words, Kansas City is borrowing money from the airport, with interest, to cover losses it incurred in tax abatements to things such as the Power & Light District. (Gamblers Anonymous includes this activity as one of many signs of addiction.)

A $1.2 billion new terminal will upset an already out-of-balance apple cart. Consider the following:

Not only is building a new terminal a bad idea on its merits, but it puts at risk a source of money the city is using to cover losses on all its other bad ideas. Worse yet, a new terminal may turn the Aviation Department from a source of funds for the city to another drain on resources.

Show-Me Institute Hosts First Freedom Celebration

We hope you will join us for the Show-Me Institute’s first Freedom Celebration at 6:30 p.m. on Fri., Sept. 27 at the Log Cabin Club in Saint Louis. U.S. Sen. Mike Lee (R-Utah) will join us for a special reception to benefit the Show-Me Institute. The cost to attend is $250 per person.

Sen. Lee calls ObamaCare a “train wreck” and is leading the campaign to “defund” the program. He is a real champion of the kinds of policies that are needed to break through the current mess in Washington, D.C., and get America — and Missouri — growing again. Sen. Lee currently serves on the Energy and Natural Resources, Joint Economic, Armed Services, and Judiciary Committees in the U.S. Senate. Intelligent and thoughtful in his presentation, he is highly sought after by the likes of Chris Wallace and others in the media to address issues ranging from U.S. energy and defense policies to economics and our nation’s founding constitutional principles.

We invite you to attend this important event and help advance liberty in Missouri. For more information and to register online, please click here. All proceeds will benefit the Show-Me Institute, a 501(c)(3) organization.

Banner Year For Charter Schools

I’m not sure I would call myself a prophet. I’m sure many of my predictions don’t come true. For instance, I was sure A-Trak and Tommy Trash would win best cinematography at Sunday night’s VMAs for their amazing display of dominoes in their song “Tuna Melt.” However, when it comes to charter school performance, my forecast a year ago was spot on.

The coming year should be a banner year for charter schools throughout the state. With the closure of the Imagine schools and the steady improvement of existing charter schools, I expect to see significant gains in overall charter performance in 2013.

For the first time in Missouri, the performance of charter schools surpassed the performance of the nearby school districts in math and language arts. As you can see from the graphs below, charter schools continue to show steady improvement in both subjects.

This steady improvement should not come as a shock for two reasons.

1. We have known for years that Missouri charter schools are producing significantly larger learning gains than the urban districts. Just a couple months ago, the Center for Research on Education Outcomes (CREDO) at Stanford University released a report indicating that students in Missouri charter schools learn approximately three weeks more material in reading and an extra month’s worth of material in math than their counterparts in the surrounding district schools.

2. Not only are Missouri charter schools producing larger learning gains, the bad charter schools are closing. That is the beauty of charter schools — when a school doesn’t perform, it closes.

This was a banner year for charter schools in Missouri. No predictions for next year, but I certainly hope the progress will continue.

Percent of Students Scoring Proficient or Advanced: English Language Arts

2009-2013 charter school performance ELA

Percent of Students Scoring Proficient or Advanced: Mathematics

2009-2013 charter school performance math

(These graphs were completed using student achievement data at the district level from the Missouri Department of Elementary and Secondary Education (DESE).)

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