Funding for K-12 public education is an important issue, especially now. The state’s school funding formula is underfunded and federal support for education is likely to decline in the next year. Show-Me Institute education policy analyst, James V. Shuls, discusses this topic on Missouri Viewpoints with Mike Ferguson. So what is the answer to Missouri’s education funding problems? According to Shuls, “The answer can’t always be more.” Rather, the state and school districts need to begin to rethink how we deliver education.
Missouri House Bill Would Tax ‘Violent Video Games’
When I was in high school, I played a game called “Counter-Strike,” a first-person shooter game that allowed you and your friends to play each other online. It was riotous fun, and years and millions of gamers later, the first-person shooter genre is still going strong.
That is why I think there will be significant interest in a piece of legislation filed today that would levy “upon sales of all violent video games an excise tax based on the gross receipts or gross proceeds of each sale at a rate of one percent.” Last year, in Oklahoma, legislator William Fourkiller (yes, that is his real name) introduced a similar piece of legislation, and it appears the Missouri legislation uses a fair amount of that bill’s language. For instance, a “violent video game” in the Missouri bill is defined as “a video or computer game that has received a rating from the Entertainment Software Rating Board of Teen, Mature, or Adult Only” — identical to the Oklahoma proposal.
Of course, as most video game players know, E.S.R.B. ratings do not deal only with “violence” but with language, sexual matter, content dealing with drugs and alcohol, gambling and many other factors. As Reason noted with Oklahoma’s proposal:
In other words, Teen-rated games like The Sims, Dance Central, or Guitar Hero would be included in the tax, even though they’re non-violent.
Clearly, the law is poorly crafted. And of course, that does not even begin to address the First Amendment problem of taxing the content of speech in the way this proposal would. When asked about Oklahoma’s proposal, the Entertainment Software Association found the move to be “misguided.”
“We are disappointed that even in the wake of an overwhelming decision in the United States Supreme Court finding proposals such as this to be patently unconstitutional, there are those who still try to attack video games with outdated notions of our industry,” said ESA’s Dan Hewitt in a statement provided to Gamasutra.
Indeed. Singling out speech in video games for special taxation is likely unconstitutional, and especially here in Missouri, our policymakers should know better.
Extra Health Levy In Kansas City A(nother) Tax Too Far
Last Tuesday, I was quoted in the Kansas City Star regarding whether Kansas City should renew a temporary health levy that voters initially approved in 2005. The levy is a property tax meant to help pay for indigent care in the city and generates about $15 million in revenue each year — most of which goes to Truman Medical Center. As one of the tax’s main beneficiaries, it is not surprising that Truman has already started the campaign to extend the tax beyond its 2014 expiration, working behind the scenes with the city council to grease the skids of the tax’s extension.
How controversial is the tax? By Kansas City standards, more controversial than most. Early last year, The Star‘s Yael Abouhalkah asked readers in an editorial, “How tough is it to kill a tax in Kansas City?” His case in point: the “temporary” health levy now up for renewal. Kansas City is one of the highest-taxed cities in the country. If the extra health levy is allowed to expire, it would be a small but important step for the city to get back along the path of tax sanity. Whether city officials will support its expiration is another matter.
But for its part, The Star‘s editorial board is not convinced the tax should be renewed, and I have to agree. Many Kansas City families’ budgets will already be tighter in 2013 than they were last year, especially with the uptick in the payroll tax, which Washington’s “fiscal cliff” deal did not address. Who is looking out for them? And is the renewal of this tax the best use of tax money for a city that is already heavily taxed? To their immense credit, Kansas City’s citizens have made the city one of the most philanthropic. It would be better to rely on the demonstrated generosity of individual Kansas Citians to support Truman’s programs rather than to force Kansas City’s families into subsidizing Truman’s programs through taxation, particularly during these difficult economic times.
We can all agree that fundamental health care reform must come to the region and to the country, but this tax and the federal Affordable Care Act do not get us there. Missourians need free market-based health care solutions that deliver power to the patient, not the government, and we need to actually get treatment costs down for everyone through the power of competition. The extra health levy does not fix our health care problem. It just papers it over.
McGraw Milhaven – David Stokes on KTRS
David Stokes has a recurring spot on McGraw Milhaven’s KTRS radio program. In this appearance, Stokes and the host discuss topics such as Stokes’ role as a member of the Electoral College, how someone becomes such an elector, the actual process of voting for electors, why the Electoral College exists, and what freedom electors have to vote as the wish.
Missouri Gets D- In Education Policies
“Currently, Missouri’s education policies do not prioritize great teaching, empowering parents with quality choices, or allocating resources wisely to raise student achievement.” That is the opening statement of the State Policy Report Card for Missouri, which an organization called Students First produced. The report card gives Missouri a grade of D- for its education policies, ranking Missouri 34th among the states and District of Columbia.
The report is not an evaluation of Missouri’s performance; rather, it is an evaluation of state policies. Of course, to evaluate a policy, you must have a position. As the organization’s name indicates, Students First’s position is that school policies should be aligned to accomplish what is best for students.
From a liberty perspective, I agree with many of the reforms suggested in the report card, including:
Tenure Reform: In Missouri, teachers earn tenure after five years. At that point, it becomes very difficult to remove low-performing teachers from the classroom. Teacher retention should be based on quality, not solely on seniority.
School Choice: Most Missouri students have few options for their education. Charter schools are not authorized to open throughout the state unless the local school district approves one, and many families cannot afford private schools. Missouri needs to expand charter options and enable families to utilize the many great private schools that are serving students.
School Grading: As we witnessed with the reaccreditation of the Saint Louis Public Schools, Missouri’s district grading system is weak and provides little useful information to parents. An A-F grading system at the school level would equip parents with the information they need to make informed choices.
Portable Pensions: Did you know that if you teach in Saint Louis County and then take a job in the Saint Louis Public School District, you will lose a great deal of your pension wealth? The same is true for Kansas City. The state has three pension systems set up for teachers, making it costly for teachers to move across sectors. Moreover, the pensions are not tied directly to an individual’s contributions.
Students First is correct, Missouri’s policies are not focused on what is best for students; rather, most of our policies are focused on adults.
Lowering the Boom: Louisiana Looks to End Its Corporate and Personal Income Taxes
Big news breaking in the Big Easy. Last night, Louisiana Gov. Bobby Jindal announced that he will pursue tax reform in the next session that includes the elimination of the state’s personal and corporate income taxes.
Republican Governor Bobby Jindal said on Thursday he wants to eliminate all Louisiana personal and corporate income taxes to simplify the state’s tax code and make it more friendly to business.
The governor did not release details of his proposal, but his office released a statement confirming that the taxes are targets of a broader tax reform plan.
“Our goal is to eliminate all personal income tax and all corporate income tax in a revenue neutral manner,” Jindal said in the statement. . . .
Political analyst John Maginnis, who on Thursday reported in his email newsletter LaPolitics Weekly that Jindal will propose balancing the tax loss by raising the sales tax, now at 4 percent, said the strategy fits with the governor’s interest in keeping a high national profile.
My colleague Michael Rathbone and I have beaten the drum consistently about eliminating the corporate income tax in Missouri, which is a light lift compared to Jindal’s plan. Income taxes are among the most destructive in terms of economic growth, and the corporate income tax is arguably the worst. Instead of nickel ante reforms, Jindal is going full boat here and pursuing a policy that will make Louisiana a haven for workers and companies. Paired with Jindal’s school reforms, which include some of the same school vouchers James Shuls has discussed on our blog, Louisiana is emerging as a leader in the battle for forward-looking, pro-market reform.
Talk is cheap, even in Jindal’s case — we will see soon enough if something actually gets passed — but I think there is reason to believe we are seeing a sort of “American Growth Corridor” developing here that is extending from the Gulf of Mexico to the Great Lakes. But for Jindal’s huge announcement, this blog post probably would have been about Wisconsin Gov. Scott Walker’s own announcement yesterday that he will propose phased-in personal income tax cuts this year for his state. Last month, Nebraska Gov. Dave Heineman told business leaders that he wants to eliminate the state’s corporate income tax, just a year after modestly lowering the state’s personal income tax. Last year, Kansas eliminated its taxation on pass-through income. And Oklahoma is still looking to cut its tax on personal income this year.
So, Missouri policymakers . . . what are we going to do here? Bueller? Bueller?
Shrewsbury TIF Is Dead – For Now
Last night, I testified before the St. Louis County TIF (Tax Increment Financing) Commission about the proposed TIF plan for a Walmart in Shrewsbury. There was a very large turnout and numerous people chose to speak. The majority of the speakers were opposed to the TIF (and opposed to the Walmart, though I am just against the TIF), but there is no denying there were plenty of speakers in favor of it. (My guess is 60 percent opposed to 40 percent in favor, unlike Ellisville last year, where it was probably 80-20 against that TIF.)
This is not meant to sound corny, but no matter how you feel about the TIF, it was impressive to see so many people at the meeting participating in their local government.
After all the testimony, the commission rejected (via a tied 6-6 vote) a compromise proposal from the Affton School District that would have capped the property tax funds that the TIF captures at 50 percent — the same as sales taxes. That is not a bad idea, and I commend the school district’s reps for trying to find common ground. However, my guess is that the rest of the board voted it down because that change would have only been advisory to the city while the full TIF would have gone forward with a “yes” recommendation. That means the Shrewsbury Board of Aldermen could have ignored the change and then passed the TIF anyway with just a simple majority.
Next, the commission voted on the primary TIF proposal to give the developer a $15 million subsidy ($11.25 million in TIF and $3.75 million in Transportation Development District or Community Improvement District funding). The commission voted this down 9-3, with only the Shrewsbury-appointed commissioners in favor. Now, in order to pass the TIF, the Shrewsbury Board of Aldermen needs a two-thirds majority vote in favor, which by all accounts, it has. So it goes.
The TIF is dead. Long live the TIF!
It was a good night to see a bad idea defeated. Unfortunately, the celebration is short-lived, as it will likely pass the next test.
P.S. Thanks to McGraw Milhaven for posting the testimony video to YouTube.
Missouri Shall Cut No Tax Credit Before Its Time
My attempts to seem cultured and refined — and to impress my betters — often lead me to resort to pretending that I am some kind of amateur sommelier. Now, I know almost nothing about wine. It comes from grapes, right? However, I do know that no matter how much I might actually like wine — and given current events, I tend to like wine a lot — the state should not be subsidizing the industry.
This is not the first time I have written about the state subsidizing the wine industry. My first (self-given) award-winning post dealt with the Missouri Wine & Grape Board. Now, I am training my attention on the Wine Producers and Grape Growers Tax Credit. In fiscal year 2012, the state issued more than $100,000 in these credits and wine producers are worried that lawmakers will cut the program due to state revenue shortages.
I am all for a flourishing wine industry in the state. I love going to Hermann for Oktoberfest. However, I do not think a tax credit is necessary for wineries to succeed. Mount Pleasant Winery, St. James Winery, and Stone Hill Winery are among the largest wineries in the state. Mount Pleasant reopened in 1966, St. James was founded in 1970, and Stone Hill has been in the hands of its current owners since 1965. The Wine and Grape Tax Credit was created in 1999. These wineries managed to stay in business for decades without the assistance of this tax credit. Going even further back, Missouri had the second-largest wine industry in the country before Prohibition.
I truly want the wine industry in Missouri to succeed yet I do not want the government to subsidize it. Let wine consumers support our wine industry, not taxpayers.
January Book Club Recap – The Cambist and Lord Iron
Last night, the Show-Me Institute hosted our first book club meeting of the new year. The reading we discussed was a short story by Daniel Abraham called “The Cambist and Lord Iron: A Fairy Tale of Economics.” The story is available free online and conveys some important economics lessons that are not often covered in fiction, such as the idea that valuation is determined by exchange, and that trade creates wealth. It is a short and fun read, and because of our recent changes in book club, I wanted to pick something that had both of those qualities for our first meeting.
Our discussion started with introductions around the table. Among our 10 attendees, some have been attending book club regularly for years, some have come in the past and had not attended in a while, and one person had never attended. Former Show-Me Institute intern Mary Chism gave a synopsis of the story for the few people who had not read it. Next, I gave a brief summary of the history of intellectuals’ views on the concept of value, from Aristotle’s “value for use”/”value for exchange” dichotomy, to the Labor Theory of Value, to the modern marginalist conception of value, attributable to Alfred Marshall.
We then started addressing the discussion questions I had prepared in advance (with Mary’s help). Leading from those questions, here are some of the topics we discussed:
- Whether anything can be exchanged for anything else
- The how and why of international currency exchange
- Government policy relating to the supply of money and exchange rates
- Whether sweatshop laborers, especially children, are making a free choice to work where they do
- The opportunity cost of reckless behavior
- Risk aversion and diminishing marginal utility of income
- A question from one attendee: “When a participant in a market has more resources, how does that affect that party’s ability to make beneficial exchanges?”
Some topics were discussed on an introductory level and others on a very high level. Many questions were asked and much knowledge shared. In addition to the lively discussion of economics and such, we talked about what our next reading selection should be and when we should meet again. The respective decisions were Hayek’s “The Road to Serfdom” and Wed., Feb. 20. If you are interested in the book or related topics, stop by our office at 7 p.m. on that evening for pizza, soda, and interesting discussion. See ya there!
