Horrible, No Good, Very Bad Sales Tax Holidays

Posted on by Sarah Brodsky

This policy is egregious enough to warrant another reference to Judith Viorst.

When I argue with people about tax holidays, I usually say something abstract about “economic distortion” and their eyes glaze over. But now I have a concrete example of the harm that tax holidays do:

This will be the 5th time the Show me state has participated in the holiday although nearly 200 cities and over 50 counties have decided not to participate in the event.

The people in the counties that aren’t participating can still buy school supplies without paying taxes — if they drive far enough. Parents decide whether the extra gas costs will be lower than the retail savings — and, if the answer is yes, they make an extra-long trip. They’re going out of their way and using lots of gas in response to arbitrary rules, not because school supplies are naturally more plentiful in the participating counties. If a legislator gave a speech encouraging his constituents to drive far away to buy something they could easily get close to home, everyone would think he (or she) was crazy. But when you call it a “holiday,” it sounds more legitimate, when in fact it’s just a state mandate to waste gasoline. It’s sort of like an ethanol mandate, except not even the corn growers benefit from this one.

Tax Holidays: Love ‘Em, Hate ‘Em? You Decide!

Posted on by Patrick Eckelkamp

For those in Missouri, it’s that time of year again. The Cardinals are fighting for the playoffs, the Royals are fighting to stay out of last place, the temperature and humidity are becoming too high, and it’s a tax holiday weekend! Yes, this is the weekend where all parents with school aged children will flock to the nearest big box store, desperate to cash in on the no-sales-tax weekend during which they will probably end up spending more money then they intended. But who cares? NO TAXES!

The validity of these types of tax holidays has long been debated on this blog, with both sides offering convincing arguments. Personally, I don’t mind the tax holidays. I don’t like taxes in any form, and any time I can get rid of them, I am happy. I know some people will take a more complicated viewpoint that the tax holiday is just distorting regular consumer behavior, and I agree, but I just don’t mind it happening this weekend. The net effects, one way or another, will probably be so minuscule that there will be no real impact on the economy.

Of course, I would favor lower taxes year-round, but for now, I will take what I can get. This argument has sparked uproar in the office, and I suspect several related blog posts will follow this one. I realize that this sales tax holiday is really nothing more than a gimmick conjured up by legislatures, and I guess they found a sucker.

Lobbying for More Government

Posted on by David Stokes

There is a brief post in Prime Buzz today about the decision by the KC City Council to renew its lobbyist contract. This is an issue that has long bothered me, and I want to direct your attention to the second comment in that Prime Buzz post. I do not believe it is proper for one level of government to hire people to lobby another level of government. That is the job of elected officials and staff, not outside lobbyists. People who represent Saint Louis or Kansas City in Jefferson City or Washington, D.C., are supposed to look out for their interests at those levels (and by “interests,” I don’t mean bringing home the pork spending).

People who represent these areas at the county seat or in city hall are supposed to follow state or national issues, and bring items to the attention of other officials if changes need to be made. Spending additional taxpayer dollars to lobby other levels of government for more money is offensive and should be stopped. In a small way, it contributes to the neverending growth of government and its constant expansion into every realm of our lives.

For the Ladies (All 105 of Them)

Posted on by Audrey Spalding

Paul, Bill, David, Steve, Michael. It’s not an exhaustive list, but those are some of the most common superintendent names. “Mary” shows up much less often.

In fact, nearly 79 percent* of Missouri superintendents are male.

Though it’s getting better, it’s a sad fact that men tend to earn higher salaries than equally qualified women. It’s a sad fact that there are more men in leadership positions than women.

But in school districts, where superintendents tend to come from the ranks of teachers and administrators, this is shocking. It’s not just that a large majority of Missouri superintendents are male. It’s that a large majority of superintendents are male while a large majority of school district employees are female. According to the National Center of Education Information, 82 percent of all teachers in the United States were female in 2005.

Continue reading “For the Ladies (All 105 of Them)”

Corn Contention

Posted on by Dan Grana

Today, the Post-Dispatch editors chastised the leading Republican gubernatorial candidates for turning the Missouri ethanol mandate into a major campaign issue. The editors may well be correct that “the mandate makes very little difference in the bank accounts of drivers, grocery shoppers, or even farmers.” However, contention over the mandate might provide a worthy outlet for opinions about larger issues, such as the government’s involvement in ethanol production and the appropriateness of direct intervention into other markets.

As a practical matter, the future of the current ethanol mandate will not have a large effect on the commodity prices Missourians face. Our study, which was a narrowly focused rebuttal of another study, estimates a considerable, but not overwhelming, price tag of $29 per Missouri driver per year. The P-D suggests that “for drivers, there’s probably only a tiny savings.” Regardless of whether the mandate is a net positive or net negative, we both agree that the effect is relatively small. After all, the legislation only touches statewide consumption of globally traded commodities in the event that their associated market prices are lower than those of conventional gas.

Even so, the current discussion is anything but frivolous. The ethanol savings figures given by the Missouri Corn Merchandising Council are patently false. Further, the use of coercive intervention into a fully functional market raises legitimate doubts. The Republican candidates obliviously feel that they can effectively offer different shades of conservatism through a real — although perhaps not earth shattering — debate. Whether their attempts to differentiate themselves will pay off remains to be seen, but we can’t blame them for trying.

Turning Your Money Against You

Posted on by Dave Roland

As a link from this website has previously shown, Missouri Citizens for Property Rights gathered more than 400,000 signatures in its effort to give Missourians the opportunity to end eminent domain abuse this November by passing two proposed amendments.

Concerned that the amendments’ adoption would cut off their ability to give away their citizens’ homes and businesses to commercial developers, some cities are now setting aside taxpayer dollars to try to prevent the vote from happening. This is every bit as outrageous as school districts gambling millions of dollars in taxpayer funds in an effort to get billions of dollars in taxpayer funds. You should consider doing a little research to find out whether your local officials are using your money against you in a similar way.

Bonds Away in Saint Louis County

Posted on by David Stokes

According to the Post-Dispatch, St. Louis County is considering a $120 million bond issue to address infrastructure needs. This comes as the county’s Blue Ribbon Capitol Investment Commission is supposed to wrap up its findings and issue a report shortly. My main question is whether or not another shoe will drop. Sure, it is a big bond issue, but St. Louis County has a great deal of bond capacity capable of being used — it is currently just using about 3 percent of its allowable bonding. If this bond issue is the primary way they are going to address these infrastructure issues — like a new Family Courts building, for instance — then this should be a good plan. If an additional tax hike proposal comes down the chute in a few months (on top of the Metro tax proposal), I won’t necessarily feel this way.

For your reading pleasure, here is a copy of the testimony I provided to the Blue Ribbon Commission about these issues last month (ignore the date on the page, that’s just when we finally got around to putting it online).

Ethanol, Millhaven, and Me

Posted on by David Stokes

I appeared on the McGraw Millhaven Show Monday to discuss a number of items, but for the point of this post I will limit it to our case study about ethanol. The Missouri Corn Growers Association appeared on the show yesterday to give their side of the issue, which is what debate is all about. I was unable to listen in yesterday as I was driving to Kennett (damn, the Bootheel is far away!) to give a presentation about another topic. Dapper Dan the intern, however, listened carefully and gave me detailed notes about the corn growers’ appearance, so that I could respond via this blog.

The corn grower’s rep, Gary Marshall, (not that Garry Marshall) achnowledged that E-10 ethanol gasoline has reduced fuel efficiency. He said that our estimate of a 2.5-percent reduction was too high, though, for much of the gas. He also speculated that no Missourian finds a decline in mileage, which I will further speculate is wrong, and point my valued readers here and here. The most important thing is that they admit they did a study claiming cost savings by E-10 gas and did not account for the reduced fuel efficiency. The study that the MCMC commissioned is not sound public policy research — it’s propaganda.

Next, the interview got into a canard that the ethanol industry likes to use in regard to the ethanol subsidy. The reasoning goes that we should logically ignore the subsidy, because the oil industry is subsidized, too (which it is), so they cancel each other out. Is that correct? No. Let’s go to the ultimate authority on this, the Energy Information Administration with the U.S. Dept. of Energy. Just last year, they released a report about the subsidy amounts provided to the overall energy industry. The 2007 value of the Volumetric Ethanol Excise Tax Credit was just less than $3 billion dollars ($2,990,000, to be exact; figure on page 21). Let’s compare this with oil. The federal subsidies for ALL natural gas and oil prodiction (much more than just automobile fuels) was just more than $2 billion ($2,090,000, to be exact — page 23). That is almost a billion dollars more in subsidies for ethanol alone than for the entire oil and natural gas industry combined, which, again, includes home heating oil, gas for your car, etc. Now consider that the oil and gas industry dwarfs the ethanol industry, and it is inescapable that one industry (ethanol) is MUCH MORE HEAVILY SUBSIDIZED than the other industry (traditional oil and gas).

Now, to be fair, you might say we should have incorporated the lower oil subsidies into our case study analysis. But our study never stated that oil and gas didn’t get subsidies. It refuted the calculations used in the MCMC study by insisting that they don’t get to claim the 51-cent-per-gallon subsidy as savings for Missourians, as though taxpayers didn’t pay for that subsidy in the first place. The oil and gas subsidies, small and non-distortionary as they are, were fully included in the cited gas prices used by ethanol supporters in their claims to save us money.

There is much more to consider here, but this post is already too long. I have nothing against ethanol. I dislike the subsidy, in the form of the tax credit, in the same way I dislike all agricultural subsidies. But most other agricultural subsidies are not forced upon me via mandate, like E-10 gas is. It is the combination of mandating a subsidized product that I dislike, and I like it even less when supporters of the dictate use poorly reasoned and flawed studies to tell me it’s a good thing.

P.S. — I hope you all get just how ridiculously clever the title of this post is!

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