Let us now be pleased by small victories. Actually, it’s a big victory if you live in Washington, Mo., and care about liberty. The Washington City Council has wisely chosen to end the city’s use of red light cameras. Hopefully, many more Missouri cities will make the same decision.
A online shout-out to former intern Phil for bringing this story to my attention.
When they passed Proposition C last August, Missourians demonstrated their overwhelming opposition to the federal health care reform law. They voted for freedom and against federal takeover of their health care. Although Prop C may prove to be more ceremonial than legally effective, it established the state of Missouri as a bellwether for health care reform. Just last month, a federal judge in Virginia struck down the individual mandate component. Because the health care package that President Barack Obama signed into law last year hasn’t yet been overturned, it’s important that Missourians continue fighting to restore freedom in health care.
Currently, a bipartisan group of more than 20 state attorneys general and elected officials are asking a judge in Florida to invalidate the federal health care reform law. Missourians should encourage their attorney general, Chris Koster, to join this multistate lawsuit, which resumes on Jan. 10. In my view, the precedent that Missourians set by approving Proposition C could be continued if Attorney General Chris Koster joined the lawsuit.
The following are some facts related to the lawsuit:
Missouri voters were the first to oppose this attempt by the federal government to take control over health care. As Missourians, we live in a democracy. We should have a government that represents the demonstrated wishes of Missourians in this matter, thereby advancing liberty with responsibility by promoting market solutions for health care policy.
I will discuss the effort to encourage Attorney General Koster to join the Florida lawsuit on the Mike Ferguson show on the Eagle 93.9 FM tomorrow, Jan. 6 at 5:00 p.m in Columbia. I encourage our readers to tune in or listen online.
When I was driving into work today, I heard a story on NPR about how a private company is turning a dilapidated part of the French Palace of Versailles, the Hôtel du Grand Contrôle, into a luxury hotel. According to the story:
[Deputy Administrator for the Palace of Versailles] Hautchamp says Versailles doesn’t have the $7 million it will take to restore the building, which is why it turned to Belgian hotel company Ivy International. The company will renovate the mansion and turn its 23 bedrooms into a luxury hotel.
A percentage of the profits will be paid back to the Palace of Versailles in rent. The restoration is the first in a series of commercial projects aimed at saving French monuments.
Not only is this a rare opportunity to apply knowledge from my French major in a professional capacity (it’s the plight of the liberal arts major, n’est-ce pas?), this story illustrates how practical solutions to public policy problems exist in the private sector.
Turning Versailles into a hotel will have many positive consequences. More people will be able to enjoy the building than they do in the status quo, or if it were in ruins. Additionally, taxpayers won’t be forced to pay for the restoration, nor will the restoration compete with other government programs for funds. Another positive consequence is that the building and its history will be preserved. The following quote in the article particularly illustrates this point:
“It surprised me at first,” Denise Mosset says. “But if we don’t have the money to restore it, this is better than letting it fall into ruin.”
This story is particularly relevant to Saint Louis, which has beautiful architecture, limited financial resources, and competing needs for these resources. The city of Versailles found a free-market solution to historic preservation, and the city of Saint Louis would be wise to investigate the same. Policymakers in Missouri could learn a lot from the French.
Additionally, and parenthetically, this story represents how, in free economies, individuals can improve their quality of consumption over time. In the past, Versailles was a building that could only be enjoyed by the super elite (the French monarchy). In the present, it will be enjoyed by non-elite guests every day.
I think tattoos should be treated like champagne. As many of you know, only sparkling wine from a certain part of France can legally be sold as “champagne.” Along those lines, I think that only tattoo artists born or trained on the planet of Tatooine should be allowed to refer to their work as a tattoo. For everyone else, it should just be “ink.”
Whatever it is called, Missouri wants to raise the taxes and fees on it. Not surprisingly, for those who follow this blog and know the real motivations behind occupational licensing and taxing, some current tattoo shop owners support the tax and fee increase. KOMU reports (emphasis added):
“Surprising to some, some artists think fees should go up because it will help get the people who do tattoos illegally out of the market. Dean Jones, managing owner at Living Canvas in Columbia, says the possible increase does not bother him at all.”
I love how they make a big deal in the story about shops that don’t give out after-care instructions for their “illegal” tattoos. It took me less than 10 seconds to find online all the after-care instructions you would want.
I am not opposed to all regulation of the tattoo industry. I think statewide licensing of individual artists is unnecessary, and many other tattoo regulations are absurd, but basic sanitary inspections by county health departments seems reasonable.
I have news for people who believe that a higher license fee will keep people from performing tattoo work illegally: Higher costs and increased regulation may mean that more people — not fewer — will start doing the work “illegally.”
The state should get out of the business of regulating tattoo artists, and leave public health issues to local health departments.
A regular Show-Me Daily reader alerts me to an article in the Kansas City Star reporting that the Missouri Development Finance Board recently issued $343,000 in tax credits toward a new livestock pavilion at the Missouri State Fair.
While representing the Show-Me Institute at the Missouri State Fair last August, I noticed that the state government already has a large footprint on the fairgrounds. Most notably, there is the Missouri Department of Transportation’s expansive Highway Gardens, which I have discussed previously on this blog. There were many private companies represented at the state fair (e.g., farm equipment manufacturers, RV and trailers, etc.), but they were located on a section of the fairgrounds that was comparatively compact.
To what extent is the state government crowding out private investment at the state fair? Has the state government investigated whether a private company would be willing to sponsor the livestock pavilion or the highway gardens?
Additionally, this presents a possible opportunity for tax credit stacking. Will the livestock pavilion feature cows that received qualified beef tax credits? As Thomas Duda has explained in the context of subsidizing housing developments, tax stacking contributes to the crowding out of private investment.
Furthermore, this fact from the article thoroughly disappoints me:
The board waived its normal two-presentation requirement for applicants in order to approve the State Fair project under its 2010 allotment of tax credits […].
If the government doesn’t go through its review process, what’s the point of having one at all? What attributes make a project worthy of skipping review? Are these attributes completely arbitrary and subject to political pressure?
My recent editorial, “New Year’s Resolutions for Missouri Public Policy,” ran in the St. Louis Beacon and the Joplin Globe, and was linked to by Combest.
The following are additional resolutions that didn’t make the final list. I tried to model these after resolutions that individuals commonly make for themselves. I thank my colleagues for their collaboration, and I encourage our Show-Me Daily readers to leave additional resolutions in the comments section.
Residents of Massachusetts have a special reason to celebrate the new year. Beginning Jan. 1, the state repealed its 6.25-percent sales tax on alcoholic beverages.
Liquor taxes are a kind of so-called “sin tax,” a topic that that contributors to Show-Me Daily have discussed before. The primary purpose of such taxes is to discourage behaviors that may be considered socially undesirable, and the secondary purpose is to generate revenue for the government.
Sin taxes have a marginal nature, which is illustrated in this example from Massachusetts. Liquor stores that are located close to the Massachusetts border will particularly benefit as a direct consequence of the repeal — they will experience increased sales from nonresidents. Similarly, stores that are located on the other side of the border will likely experience fewer sales. This illustrates how rational individuals tend to think on the margin, another topic that we have blogged about previously. From an interview of a liquor store owner published in the Tauton Daily Gazette:
“It wasn’t a mass exodus [when Massachusetts instituted a liquor tax]” Matias said. “You would still see Rhode Island plates in the parking lot. They just wouldn’t come as often. If you saw a guy every two weeks, now he might come once a month.” The repeal is expected to be a boost for the South End stores. An Ocean State resident is more likely to make the trek to Massachusetts now that the savings is significant.
Compared to other states, Missouri assesses some of the lowest tax rates on alcoholic beverages (and on cigarettes, too). Similar to the illustration provided by the aforementioned article, a marginally higher number of individuals purchase these products in Missouri instead of in their home states because of the difference in tax rates.
Should Missouri eliminate its tax on alcoholic beverages, too? A disadvantage of that policy change would be that state government would miss out on revenue. Massachusetts, for instance will miss out on $100 million as a consequence of eliminating its tax. However, as an advantage, stores in Missouri would experience a higher volume of sales. Policymakers are always looking for ways to encourage economic activity and job creation. Perhaps repealing the liquor tax could be a means to achieve these goals, in part.
For Christmas, my sister bought me a copy of Predictably Irrational: The Hidden Forces That Shape Our Decisions, by Dan Ariely. In addition to other topics, the author explains how social norms and market norms influence behavior differently, and that this has implications for public policy. Ariely includes a discussion the economics of gift-giving, which is a topic that I have highlighted periodically here on Show-Me Daily. From the book:
If you want to demonstrate affection, or strenghen your relationship, then giving a gift—even at the risk that it won’t be appreciated as much as you hoped—is the only way to go. […]
The point is that while gifts are financially inefficient, they are an important social lubricant. They help us make friends and create long-term relationships that can sustain us through the ups and downs of life. Sometimes, as it turns out, a waste of money can be worth a lot.
My utility for the book exceeds the $15 that my sister spent on it. For this reason, it makes up for at least part of the wealth that I likely destroyed in my gift-giving activities this year.
Year end is a time to reflect — and to think ahead. In the holiday spirit, the Show-Me Institute has compiled a list of five New Year’s resolutions for state officials, to promote better government for 2011 and beyond. Taken together, these policy changes have the potential to propel Missouri’s income and job growth into the front ranks.
First, lose weight. The Nov. 2 election showed that the overwhelming majority of Missourians (and Americans generally) want smaller, less intrusive government and reduced taxes. Missouri legislators should therefore unite to kill pork barrel spending projects and make major spending cuts.
Municipalities need to rein in runaway pension costs for city employees, including firefighters and police. They should also consider privatizing the provision of water, electrical power, and other services. The Show-Me Institute has produced a wealth of research demonstrating the benefits of privatization, which creates much-needed cash through the sale of public-owned assets and contributes to municipal revenues through the addition of new taxpaying entities in the private sector. Research shows that privately owned utilities consistently provide more efficient services than their public-sector counterparts.
Second, stop meddling in other people’s business. The Show-Me Institute has spotlighted the proliferation of needless licensing requirements that do nothing to promote public safety in businesses as different as home heating and air conditioning work (HVAC) and African hair-braiding. Such requirements are often promoted by established businesses as a means of inhibiting competition and choice.
Third, give families real school choice. Our research has consistently shown that education is improved when parents and students are given more choices and traditional public schools face greater competition from charter and virtual schools. Adjusted for inflation, we spend four times as much for education in urban areas today as in 1960, but educational achievement is no higher. Today, the Saint Louis and Kansas City school districts spend more than $15,000 per pupil — more than all but the most expensive private schools. Charter schools provide a real opportunity for poor students stuck in failing schools. They also enable teachers and administrators to innovate more freely, and force other public schools to improve their performance in order to compete successfully.
Fourth, halt the silly business of awarding specialized tax credits to favored enterprises. In one of my op-eds about the inanity of tax credits for favored industries, I pointed out that government policy should not prefer filmmaking over, say, hog farming, “simply because one is considered to be more glamorous.” Most of the local jobs created by Missouri film productions like Up In the Air were both low-wage and temporary — many lasting only a single day. Missouri should do away with its development tax credit programs, which have a record of failing to boost either income or employment — even if you do like George Clooney.
Last but not least, repeal the state income tax and replace it with a broader sales tax. The adoption of such a plan in 2011 would be the single most important step that Missouri could take to move Missouri to the front of the pack in terms of growth. The noted economist Arthur Laffer, who spoke at the Show-Me Institute in October, observed that during the past decade, the nine states without a personal income tax have “outperformed those states with the highest personal income tax rates by 26.5 percent, and have outperformed the U.S. average by 20 percent.” Even more impressive, those nine states “outperformed Missouri by a whopping 41.5 percent.” Eliminating the income tax would encourage people to work and save more, crucial factors for economic growth. A broader sales tax can also be balanced with mechanisms that would compensate those with lower incomes for any potentially regressive effects.
In the past, it has often seemed that major changes originate on the coasts and slowly make their way to the heartland. I think that flow has been reversed during the past year and a half. I believe that Missouri — and the heartland — will play a leading role in our nation’s economic recovery. We will do so through a renewed commitment to free enterprise.
Christine Harbin is a policy analyst for the Show-Me Institute, an independent think tank promoting free-market solutions for Missouri public policy.
