Tax Foundation Report on Nonpayers

Posted on by Sarah Brodsky

MO Rage completely misunderstands this Tax Foundation report (link via Kansas City Prime Buzz). The report notes the rising percentage of tax filers who don’t owe any income tax, then states (emphasis mine):

A record had been set every year since 2002, as tax cuts throughout the Bush years, especially the refundable child tax credit, pushed low-to-middle income people off the tax rolls.

Here’s MO Rage’s reaction:

Shouldn’t we ALL pay at least something on our taxes, so we can keep our infrastructure and schools–everything–running?
[…]
But no, we let corporations and wealthy people, mostly, pay for tax breaks–mostly by buying their Senators–and then jockeying up the books.

MO Rage suggests we institute a minimum tax that everyone has to pay.

I don’t know how you can read a report about fewer low- to middle-income people paying taxes and conclude that the wealthy are to blame. And I wouldn’t support a tax that everyone — including homeless people earning $500 a year — has to pay. A code that doesn’t tax some people or that gives them a credit can be more efficient than other anti-poverty policies, as this op-ed about minimum wage laws explains.

Peer Effects for Teachers

Posted on by Abhi Sivasailam

In a very recent paper, “Teaching Students and Teaching Each Other: The Importance of Peer Learning for Teachers,” authors C. Kirabo Jackson and Elias Bruegmann present a case for peer effects in teacher quality. From the abstract:

Using longitudinal elementary school teacher and student data, we document that students have larger test score gains when their teachers experience improvements in the observable characteristics of their colleagues. Using within-school and within-teacher variation, we further show that a teacher’s students have larger achievement gains in math and reading when she has more effective colleagues (based on estimated value-added from an out-of-sample pre-period). Spillovers are strongest for less-experienced teachers and persist over time, and historical peer quality explains away about twenty percent of the own-teacher effect, results that suggest peer learning.

The findings appeal to our intuitions about the labor market. In manual labor, when high-capacity workers develop new methods to make production more efficient, these “technologies” are soon replicated by the rest of the labor cohort to maximize efficiency. In education, the interaction between teachers allows the “technologies” of teachers with particularly effective techniques to diffuse to lower-quality teachers.

Peer effects have long been studied at the student level: Students appear to benefit from greater heterogeneity of skills in their cohort. For those of us interested in the economics of education, this novel research on peer effects for educators is exciting news. Usually, schools seeking to improve student performance at the margin will employ a cost-based approach that can include: reducing classroom size, increasing teacher pay, or increasing per-student spending and resources. This research provides the basis for a simple qualitative adjustment: school administrators should use the evidence to more carefully match teachers to their positions in order to exploit the full benefits of the heterogeneity of teacher quality.

Licensing, the Recession, and Day Care With Love

Posted on by David Stokes

Today’s Post-Dispatch had a front-page story about the economic troubles faced in this recession by day care centers, particularly licensed day care centers. The overall article is good, but it has some issues I will get to in a moment. The article is a million times better than this terrible story in the Chicago Tribune about licensed movers, from earlier this year. The Tribune piece expressed a number of assumptions about the purported benefits of licensing. Today’s Post version bought into some of those same assumptions, but with much less frequency and less defamation of unlicensed providers. Here is how the Post puts it:

Both locally and nationally, operators of licensed and accredited day cares — centers that typically cost more because of their recognized quality standards — are taking hits as financially strapped parents find other options, usually with parents or friends or in smaller, often unlicensed arrangements.

In many places — including traditionally stable suburbs — this means more day care closures and a reduction in quality slots that adhere to regulatory standards and quality curricula.

Sure, the reporter fails to consider whether there is any evidence of the superiority of licensed day care centers, but at least doesn’t refer to the unlicensed neighborhood mom who watches three of her neighbor’s kids during the day as a “fly-by-night” operation, as the Trib would have.

The real issue here is that the licensed day cares charge more, and they are being hit the hardest as families cut back during these tough times. I hope that supporters of stricter day care licensing in Missouri read both the article and this post, so they can see how licensing raises business costs, and how consumers actually react to those price increases. If we impose the day care licensing changes that were considered during the last legislative session, and will almost certainly be brought up again, we will impose a further economic drag on Missouri families. They will then respond just as they have in this article: by using families and neighbors (often under the table) as sources for day care, and, more drastically, cutting back working hours themselves.

I don’t think any of those above options are necessarily bad alternatives to using ordinary paid day care, except for the last one when it is a matter of necessity rather than choice. Obviously, the supporters of licensing do think those options are harmful, or they would not be working hard to regulate the industry further. The state of Missouri should not dictate who families choose to watch their children. A state license is a poor substitute (and it often becomes a substitute) for doing the work necessary to make sure your child is in a safe environment.

Assuming that the day care licensing bill is introduced again, I look forward to being the children-hating jerk deep thinker who stands up to oppose it. I honestly think this legislation will accomplish nothing but raising costs for Missourians and protecting current day care centers from future competition, which is usually the point of occupational licensure in the first place. (My final caveat is to acknowledge that the supporters of this licensure are genuinely concerned about children, so this is a rare exception to that rule.)

Government Employees: The Final Frontier

Posted on by Sarah Brodsky

Britain has determined that it can no longer justify paying someone the equivalent of $73,000 a year to monitor UFO reports. It justified the position for the past 50 years, though.

I’m not surprised that the British public kept the UFO office busy for decades. Such is the human imagination, that if you ask people to report sightings of green-tailed Loch Ness monsters, someone is bound to call you and ask whether the orange-tailed kind is dangerous.

Besides, Missouri has a mountain lion response team, but no mountain lions.

Food Protectionism in Europe

Posted on by Sarah Brodsky

The Wall Street Journal reports on the strange predicament of an English village named Stilton:

The bar on producing Stilton cheese here is a curious consequence of EU efforts to protect revered local foods by limiting the geographical area where they can be made.

Here is the ponderous statute. It looks like the people of Stilton, the village, could make Stilton, the cheese — but they couldn’t market it as such, so it wouldn’t do them any good. The law also forbids them to label their cheese “Imitation Stilton” or “Stilton Style,” proof that the regulations enforce a monopoly for producers without helping consumers at all. Were the goal to protect consumers from misleading advertising or inferior products, it would be fine to label products as imitations and let consumers choose between them and the “real thing.”

As more Americans become interested in where their food comes from and in giving preference to products from certain areas, I hope the United States doesn’t model any legislation on Europe’s detrimental policy.

MoDOT, Traffic On 64/40, and the Fundamental Law of Road Congestion

Posted on by David Stokes

I have heard some complaints from people, via talk radio and message boards, that after two years and more than a half billion dollars, I-64/40 still has traffic jams at rush hour. I have news for the complainers: They could have expanded it to 10 lanes in each direction, and eventually it would still get backed up (I exaggerate, but only a bit). First, let’s all admit that we can’t properly judge the new highway’s traffic issues after only three rush hours, and this morning’s took place in poor weather. Beyond that, however, there is something called the Fundamental Law of Road Congestion. In short, as you expand capacity, which MoDOT did for part of the new project, you release latent demand that fills up that capacity.

Dr. Ken Small is one of the leading urban and transportation economists. He wrote a study for the Show-Me Institute that we thought was terrific. He’s also written extensively about road congestion. If the people of Missouri want reduced traffic jams, there is only one way to do it, and it isn’t capacity expansion. (Don’t take this as indicating a blanket opposition to capacity expansion. There are plenty of reasons that such expansion is often needed.) The only way to reduce congestion in Missouri is through pricing. If you want your roads to be “free,” you’ll get high traffic at peak times. On the other hand, if you want free-flowing traffic on highways at 5:30 p.m., the only way to do it is to charge a toll that continually adjusts pricing as demand changes.

MoDOT did an amazing job with the project, and so did the private contractors involved. But MoDOT does not control the laws of economics, and there is nothing they could have done to eliminate congestion.

More on Missouri Film Tax Credits

Posted on by Christine Harbin

When recently questioned about why he chose to film Up in the Air in St. Louis, Jason Reitman curiously didn’t say that it was because of the $4.5 million in tax credits that he received from the state of Missouri. Instead, he said that it was because of the sheer amount of vacant office space (emphasis added):

In location scouting in St. Louis and Detroit, I walked into empty building after empty building. I realized that I was surrounded by the realities of this recession.

I find this to be poignant, but for a reason different than Reitman probably intended.

Perhaps businesses could afford to staff those office buildings if Missouri weren’t redistributing their money to filmmakers and property developers via tax subsidies.

But then, Reitman would have to find other things to exploit explore than “real people who really lost their jobs.”

Hat tip to David Stokes!

See Something You Don’t Like? Call the Government!

Posted on by Sarah Brodsky

Someone in Texas had the idea to put a replica of Michelangelo’s “David” in his yard, wearing only a Santa cap. Tacky? Yes. Criminal? No. Still, the government had to get involved:

Then, parents started calling Big Spring city officials saying their children were asking why Santa was naked.

The city attorney determined that the statue did not violate any ordinances, but she called the owner anyway and asked him to put clothes on it.

If this is what happens when you erect a little replica, imagine what kind of complaints the city of Florence must get about the real statue, which is much bigger and more visible — and doesn’t even wear so much as a Santa cap.

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