David Stokes has a recurring spot on McGraw Milhaven’s KTRS radio program.
In this appearance, Stokes and the host discuss topics such as the recent supreme court decision overturning Missouri’s legislatively imposed cap on non-economic damages in lawsuits, the cost of malpractice insurance, the back-to-school sales tax holiday, the state’s uniquely low cigarette tax rate, and the imminent primary election.
My first PhD-level course at the University of Arkansas was math for economic analysis. I entered the course with two degrees in elementary education, but the highest math course I had taken was college algebra for educators. As you can imagine, I was not prepared for the course.
I spent hours studying content that it was assumed an econ PhD student would already know and regularly received help from classmates. The most help, however, came from a former hedge fund analyst and professors at MIT. While I completed my math for economic analysis course, I also watched MIT lectures on linear algebra. I visited Khan Academy regularly to learn how to use the chain rule or product rule when finding derivatives. The videos were more effective in teaching me than my professor, because I could pause the videos, re-watch them, and practice as they played. I am sure the professor would have been quite frustrated if I demanded that he repeat what he said as much as I replayed those videos.
Recently, one of the founders of Coursera, a free online program that delivers free, high-quality college level courses to people around the world, gave a TED Talk on the ability of technology to reinvent how we deliver education (see also Salman Khan’s TED Talk).
High-quality education programs are increasingly being provided for free. There is a real opportunity for schools, especially K-12 schools, to see tremendous benefits from these programs. Imagine a high school student taking introduction to finance, while the student at the computer next to him or her takes Greek and Roman mythology. The technology is available, so what is stopping us from utilizing the power of technology to change how we educate students? Tradition and government regulation.
In higher education, distance learning has been around for a very long time. In fact, the University of London began offering degrees through a correspondence program in 1858. Modern technology is allowing the spread of distance learning programs at a rapid pace. Universities across the country are developing programs to compete in the growing online learning market. In K-12, however, traditional public schools have been much slower to adopt distance learning programs or to use technology to transform how they deliver instruction. Rather than using technology and distance learning to change how schools operate, many programs targeted at K-12 students are used to supplement traditional learning that a student’s local school offers.
One such program is the University of Missouri-Columbia’s (Mizzou) K-12 online learning program. Yesterday, the Columbia Daily Tribune reported that the program is adding additional courses for the 2012-13 school year. The university now offers 11 online courses for Missouri high school students at a cost of $350 each. This program will certainly be beneficial to many students throughout the state, but it is just one way to use technology to improve options for students.
For more information on digital learning in Missouri and how technology can help transform education, check out former Show-Me Institute Policy Analyst Audrey Spalding’s case study.
Missouri’s annual back-to-school sales tax holiday officially started last night at 12:01 a.m. Until midnight on Sunday, thousands of fashionistas, shopaholics, and back-to-school shoppers will be out in force capitalizing on the opportunity to purchase certain items without paying state sales tax.
Items exempted from the sales tax include school supplies under $50, clothes less than$100, software under $350, and computers and devices less than $3,500. There is no limit to the amount of items that can be purchased, but each item must be under the price threshold. For instance, if one purchases five shirts that are each under $100, then the discount is available for all five shirts.
This appears to be a win-win situation for everyone. Parents, students, and teachers can save money on most things that they need for the school year. And local businesses will experience an increase in sales as shoppers come over from Illinois, which is not participating in a sales tax holiday.
But as prior posts have pointed out, the sales tax holiday is far from perfect. First, it does not necessarily lead to more consumption because consumers often postpone certain purchases until the tax holiday weekend. Second, some governments, including the state, lose out on millions in revenue because people wait to purchase certain items on the tax holiday. Third, it puts some vendors within certain municipalities at a disadvantage because their cities opt out of the tax holiday, which means they still have to collect the local sales tax. Savvy consumers will shop at stores in municipalities where there is both a state and local sales tax exemption.
But do not feel bad. Go out and buy what you need. It is your money and you have the right to take advantage of the sales tax weekend. It would be great if the tax holiday led to more spending, but in tough economic times like these, I would rather see people keep more of their money than have the state waste it on some ridiculous economic development project. Just make sure you make the most out of this weekend by avoiding the cities, counties, and special districts that have opted out of the sales tax weekend.
The Missouri Record just carried an op-ed on land taxes by Prof. Joe Haslag and me regarding the choice next Tuesday in Kansas City. It is not our place to tell people how to vote — that is your decision, not ours. But it is important for people to know that this is not a revenue-neutral switch. The proposed elimination of the land tax and increase in sales tax will result in more total tax collections — at least in the short-term. Also, economists almost unanimously endorse land taxes as a way to raise public funds while limiting the economic harms that taxation creates. Anyway, we say it better in the op-ed. From the piece:
Almost every economist sees the advantage of land taxes. The general welfare calls for taxes that do the least harm in the form of affecting the quantities of goods or services that people ultimately care about. Nearly all economists agree that a land tax is one of those policies in which taxing land affects the value of the parcel, but does not affect the quantity of land. Henry George, Milton Friedman, Paul Samuelson, and Joseph Stiglitz all recognize the desirable properties associated with land taxation.
Those four famous economists come from very different angles, if labeled politically (which they would probably object to, but I digress). The Show-Me Institute has conducted analysis on the benefits of land taxation. (Please see pages 5-11 of Haslag’s study on how Kansas City can replace the E-tax.) It is poor public policy to get rid of an effective tax in favor of expanding other taxes. Why doesn’t Kansas City heed the lessons of the past and reduce more harmful taxes, like the earnings tax, in favor of increased land taxes? There is a wide body of economic research supporting that position.
The Missouri Supreme Court has ruled that the state auditor can prepare an estimate of how much a ballot initiative will cost the state. The court also ruled that the language of an initiative to raise the minimum wage from $7.25 to $8.25 is fair and sufficient, so it will be on the ballot this November. Though this initiative has been given the court’s stamp of approval, some of the language in the ballot summary is suspect and may mislead voters into believing that a minimum wage hike does not present a significant cost to the state.
Although the case raised many issues, the most interesting was the government’s cost estimate that will accompany the ballot title in November. Here, the voters must be especially diligent in their research if they want to make an informed decision. The estimate suggests that “increased state and local government wage and benefit costs resulting from this proposal will exceed $1 million annually.” This summary, which was highly contested throughout the court hearings, is technically correct — the cost will exceed $1 million — but it does not give an accurate picture of the probable cost, which may be closer to $16 million annually. How can that be? To arrive at the conclusion that the cost to the state would “exceed $1 million annually,” the auditor sent requests to 25 local public employers (such as Linn State Technical College and the City of Columbia) requesting an estimate of how much the wage increase would cost them annually. The auditor landed on the $1 million total because only seven entities responded with an actual estimate. Just seven of the hundreds of public employers in Missouri were counted to come up with this fiscal note summary. Because the auditor cannot force entities to respond with such estimates, it would not be prudent to blame that office. That being said, voters should know that the estimate they will see this November does not provide even a close estimate of the cost. In fact, the expert witness for those challenging the initiative suggested the true cost would exceed at least $16 million annually.
Remember the old adage, buyers beware? Here, it is voters beware.
The language you will see in the voting booth may suggest that Missourians will get a lot of change for a little price, when the reality is quite different.
For more information about the effects of the minimum wage, check out other Show-Me Institute publications on the subject.
The St. Louis Post-Dispatch recently published a guest commentary by Daniel C. Willingham that, among other things, decries the explosive growth in government spending and the lack of economic recovery that has followed. Willingham discusses how federal spending has exploded and the national debt has increased enormously. What does the country have to show for it? Gross Domestic Product (the output of goods and services produced by labor and property located in the United States) grew by a meager 1.5 percent last quarter and the unemployment rate is still stuck above 8 percent.
Willingham should be commended for recognizing the results of this spending binge. However, the author then advocates increasing the New Markets Tax Credit (a credit that goes to taxpayers who make a qualified equity investment into a qualified community development entity). This is going in the wrong direction. Expanding the government’s power to pick winners and losers through the tax code is not the way to move forward.
In fact, many bipartisan tax reform plans have called for moving in the opposite direction. Plans like the Simpson-Bowles Commission and Congressman Paul Ryan’s Roadmap for America’s Future call for eliminating most credits and deductions while lowering tax rates.
Missouri has issued billions of dollars in economic development tax credits and yet its economic performance has been dismal. If issuing more and more in tax credits really is the answer, Missouri should be booming. Why should the federal government follow Missouri’s example?
Show-Me Institute Executive Director Brenda Talent was a
guest
on Saint
Louis local roundtable discussion show Donnybrook on July 26, 2012.
Among the topics covered this time were: The tragic shooting in Aurora, Colorado, and what impact if any the event should have on gun policy, the recent Post-Dispatch coverage of the Clay vs Carnahan congressional race, Governor Nixon’s new television ad’s omission of his party affiliation, U.S. Olympic Team uniforms manufactured in China, and the GSA convention locating (or not) in Saint Louis.
This is not the first time that I have lamented about Missouri’s economic performance. However, the U.S. Bureau of Economic Analysis released a map that shows just how well Missouri does when compared to the rest of the country:
As you can see, Missouri is in the bottom 10 in terms of economic growth. From 2010-11, the latest year for which data is available, Missouri also ranked second to last in terms of employment growth.
What are Missouri officials doing to catch up with the rest of the country? They expanded a small business tax deduction, but compared to Kansas cutting its personal income tax rates, Missouri’s actions seem . . . underwhelming.
My colleague Patrick Ishmael and I have called for eliminating the state’s corporate income tax and replacing the lost revenue with the elimination of economic development tax credits. This would serve to both a.) make Missouri more economically competitive with other states, and b.) get Missouri out of the business of picking winners and losers. The state would also benefit from other solutions such as reforming occupational licensing.
Missouri’s economic performance has been abysmal. It needs to change course. Repeating the same things over and over again will not somehow miraculously turn the state around.
