The Deep Impact of ‘Taxmageddon’ On Missouri

The Heritage Foundation recently released a study illustrating the impact by state and congressional district of the forthcoming “Taxmageddon.” The U.S. economy faces a $494 billion tax increase due to the expiration of several tax cuts, including the Bush tax cuts and payroll tax cuts. Thus, the U.S. faces a massive tax increase on January 1, 2013, unless the law is changed.

The typical family faces a tax increase of $4,138. Low-income workers face an average tax increase of $1,207 while the average retiree faces an $857 increase.

As a whole, Missouri will face an additional $7,858,563,552 in increased taxes, which amounts to $2,634 per tax return. Here is the impact of the upcoming tax hikes on taxpayers in each Congressional District in Missouri:

  • Congressional District 1 (Rep. Wm. Lacy Clay): $2,338
  • Congressional District 2 (Rep. W. Todd Akin): $4,765
  • Congressional District 3 (Rep. Russ Carnahan): $2,981
  • Congressional District 4 (Rep. Vicky Hartzler): $2,009
  • Congressional District 5 (Rep. Emanuel Cleaver): $2,507
  • Congressional District 6 (Rep. Sam Graves): $2,692
  • Congressional District 7 (Rep. Billy Long): $2,317
  • Congressional District 8 (Rep. Jo Ann Emerson): $1,677
  • Congressional District 9 (Rep. Blaine Luetkemeyer): $2,424

The prospect of further tax hikes threaten to weaken an already stagnant economy. Policymakers have a diminishing window of opportunity to stave off these looming tax increases.

Great Article About Water Privatization In Kansas City

I want to highly recommend this piece by Ingram’s Jack Cashill about privatizing the water system in Kansas City. Cashill makes a number of great points, and I love the opening lines:

Somewhere in the world, I am sure, a government bureaucracy manages a utility more economically and efficiently than a private company could.

When you find that “somewhere,” you are in for a treat. For there, too, you will find unicorns, Bigfoot, pretty lasses singing “Brigadoon,” Elvis performing live, and light-rail lines that actually pay for themselves.

Kansas City has a great opportunity to work with the terrific private engineering companies in the city and with American Water to turn over management of its water and sewer systems to private entities. They can do this either through an auction (sale), through a management contract, or many other variations or combinations. I hope this issue keeps getting strong consideration in Kansas City.

Thanks to Tony’s Kansas City for the original link.

The Quality Jobs Tax Credit Program Is Not High Quality

The Missouri State Auditor recently released a report on the Missouri Quality Jobs Incentive Program and the results are not good. The audit:

(1) determined that due to weaknesses in program data, program effectiveness and efficiency could not be determined, (2) identified deficiencies in internal controls, (3) identified noncompliance with legal provisions, and (4) identified the need for improvement in management practices and procedures.

Needless to say, the auditor rated the overall performance of this program as poor. I am not really shocked that an economic development program that the state administers is run poorly. If I am surprised about governmental incompetence, I am in the wrong line of work. However, even when it is clearly demonstrated that another government-run program is not working, legislators refuse to do anything about it. It seems Ronald Reagan was right when he said the closest thing to eternal life on earth is a government program.

I know I am starting to sound like a broken record, but the state should eliminate economic development tax credits and the corporate income tax. Not only would this abolish ineffective programs like the Quality Jobs Incentive Program, it would be fairer to everybody. The government would not be in the business of picking winners and losers and it would benefit all corporations instead of a select few.

The auditor’s report is the latest in a growing pile of evidence that tax incentive programs are not working. If the state really wants to make a positive step toward renewed economic growth, it should eliminate the corporate income tax.

Is This The Best We Can Do?

In their struggle to pull Missouri out of the economic doldrums, policymakers in Jefferson City have proposed expanding a tax break for small businesses that add jobs. Now, this law is not exactly horrible. Worse things have come out of Jefferson City, such as Mamtek, but considering that Kansas is cutting income rates by a significant amount, isn’t this action a little weak in comparison?

Like it or not, Missouri competes with other states. The tax incentive situation in Kansas City is a perfect example of such competition. The excise tax situation in Illinois is another. Yet when Kansas enacts a large tax cut, Missouri expands a tax deduction. No wonder Missouri is doing so poorly economically.

The Show-Me Institute has discussed the benefits of eliminating the state’s personal income tax. My colleague Patrick Ishmael and I have argued for the state to completely eliminate the state’s corporate income tax and make up any lost revenue with the elimination of economic development tax credits. Both courses of action would benefit the state’s economy. Both ideas would provide a more robust response to the actions of our neighbors. Yet, in Jefferson City, it is business as usual.

Missouri has the chance to rev up its economic engine. In order to do so, it has to change the way it thinks about competing with other states and move toward more significant policy initiatives that will boost growth.

So Long, Missouri

Today is my last day at the Show-Me Institute. Beginning in July, I will be working for the Mackinac Center for Public Policy, Michigan’s state think tank. While I am excited to return to my home state, I will miss Missouri greatly.

Four years ago, I began at the Institute as an intern, filing hundreds of information requests for school superintendent contracts. I have been fortunate to work with talented and principled co-workers who are passionate about making Missouri a better place to live, work, and start a business. During my time in Missouri, I have learned enough about state and local government to convince me that Ron Swanson is the ideal public official.

At the state and local government level, disinterest allows for the slow deterioration of liberty. Tax credits, for example, can be a very dry subject. But because tax credits are frequently misunderstood, or even ignored, state politicians have gotten away with handing out hundreds of millions of dollars to favored individuals and businesses. Occupational licensing might sound boring, but that is a way the state can make it needlessly difficult for individuals to work.

The same disinterest applies to city government. Few pay attention to the variety of small government meetings in Saint Louis City. But those meetings are where decisions are made to limit where we can eat, limit what we can do with our homes, and limit who can purchase vacant city propertyOfficials have even paid companies to leave the state. It sounds like a plot from an episode of Desperate Housewives, but it really is true that in Saint Louis City, you can get in trouble for using the wrong trash bins.

I hope Missourians will continue to monitor their elected officials and to ask critical questions about government action. Small and petty people will use government for their small and petty means. Even if you happen to prefer lower grass height, fewer food trucks, or would like to see one building replaced with another, it is important to remember that next time, those powers may be used to accomplish something you find abhorrent.

Instead of hoping that one political party or another prevails, I prefer that government’s power to control our lives be reduced. There are a lot of great, dedicated small activist groups here, and I hope they continue (and succeed) to reduce the size of government.

I am confident that my colleagues at the Show-Me Institute will continue to fight for liberty in Missouri, and I wish them all the best.

How Many Administrators Are Needed To Run One University System?

Anyone who has spent time at a bureaucratic agency (think DMV) can attest to the frustration and wasted dollars. Bureaucratic sprawl is just as exasperating and expensive at the university level. Take, for example, the University of Missouri system, which is referred to as UM and includes University of Missouri-St. Louis (UMSL), University of Missouri-Kansas City (UMKC), Missouri University of Science and Technology, and the University of Missouri-Columbia, or Mizzou (with Mizzou referred to separately as MU).

A recent Columbia Daily Tribune article shed some light on the extent to which the administration in the UM system has grown to a quite complex and increasingly burdensome size. From the article:

“UM has a president; MU has a chancellor. UM has a vice president of academic affairs, MU has a provost in charge of academics. UM has a vice president of finance; MU has a budget director. UM has a vice president of research; MU has a vice chancellor of research. UM has a PR office as does MU.”

It is clear that there is significant overlap in duties, which adds to confusion in the system but, more importantly, accounts for unnecessary spending in a rapidly tightening budget. This example does not account for other administrations at state universities in Missouri, such as Northeast Missouri State and Truman State. If the UM system focused on cutting back on costly (not to mention superfluous) administrative expansion rather than chipping away at smaller expenditures such as the university press, they might find it easier to fit into a smaller budget in a much shorter time frame.

As I have said previously, less funding from the state government does not mean that educational quality at Missouri’s colleges and universities needs to suffer. Instead, universities should see it as an opportunity to address the bloated state of their administrations and to re-focus their goals as an educational community. Taking an ax to the beast that has become the oversized bureaucracy in the UM system may seem drastic. But it is far more effective in terms of budgetary savings than the wishy-washy goal of “focusing on strategic priorities” — a phrase that sounds as grossly bureaucratic as the board of administrators that produced it.

Lose-Lose Decision

This is a day of tremendous concern for the American people. It truly is a lose-lose decision by the U.S. Supreme Court.

For the vast majority of Americans, if you have health insurance that you like, you are either going to pay more for it or lose it. If you do not have it, you will have to buy insurance even if you do not want it or pay an excessive penalty (tax).

We are also going to add almost $2 trillion to our already staggering federal debt.

This ruling does not change the fact that the Affordable Care Act (a.k.a., Obamacare) is bad law and is going to hurt the American people. It needs to be repealed.

Thoughts On Today’s Supreme Court Decision

This morning, the U.S. Supreme Court affirmed the constitutionality of the Affordable Care Act (a.k.a., ObamaCare.) In a twist, rather than finding that the law’s mandate was constitutional under the Commerce Clause (as both the government and plaintiffs asserted) the majority determined that the government’s power to tax — here, to tax not having insurance — saved the law.

In a surprise conclusion to a constitutional showdown, Chief Justice John Roberts joined the Supreme Court’s four liberals Thursday to uphold the linchpin of President Barack Obama’s health plan, the individual mandate requiring citizens to carry insurance or pay a penalty.

By a 5-4 vote, the court held the mandate valid under Congress’ constitutional authority “to lay and collect Taxes” to provide for “the general Welfare of the United States.” The penalty for failing to carry insurance possesses “the essential feature of any tax,” producing revenue for the government, Chief Justice Roberts wrote.

It is difficult to understate the importance of this ruling, now and for the future. In the short term, the core of the Affordable Care Act stands, meaning Americans will still be subjected to one of the most coercive and leviathan government programs enacted in recent memory. Tens of millions will likely lose their current insurance plans, and young people will be especially affected by the law’s provisions. But the Court has also found that the mandate is a tax, meaning that repeal of the law could be as easy as passing a budget bill without the mandate, or the law, in it.

The long-term effects, however, are not irrelevant here. The Supreme Court also found that there was no constitutional basis for the mandate under the Commerce Clause. There are, as it turns out, limits to what the government can regulate under Article I Section 8 of the Constitution. That is a positive thing. Also, the provisions that forced states to expand their Medicaid programs were deemed impermissible under Congress’s spending power, meaning states will not have to choose between expanding their Medicaid eligibility or losing federal funding for their entire Medicaid programs. Those two findings from a policy standpoint are successes, although under the current disappointing circumstances may not seem all that apparent.

This outcome stands as a huge disappointment, but this is not over. Now the solution for turning ACA back has moved in a decidedly legislative direction. Elected officials will have plenty on their plates to consider over the next year when it comes to keeping or spiking the health care law.

After all, according to the justices, Congress enacted a gigantic tax when they implemented ObamaCare. The question now is whether Americans want to pay it.

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