Property Taxes Are Going Up

Posted on by Justin Hauke

Well, not necessarily everywhere, but cash-strapped local governments across the country seem to be pushing significant property tax increases at a record pace.

This is particularly damaging to homeowners whose homes have lost significant value during the past two years (in some places by 20 to 30 percent, according to the Case-Schiller Index) but have not yet been reassessed.

In other words, a home that was worth $200,000 when it was last assessed might now be worth only $140,000. Not only are the existing homeowners paying property taxes on a property with an assessed value higher than the market would bear, but they are also due for a tax increase. Again, however, people only seem to clamor for reassessments when their homes have declined in value — not when they have appreciated (see David’s op-ed for some thoughts on Missouri’s rollback provisions).

The Wall Street Journal has a nice little image detailing median property taxes across the country.

Tuition Tax Credits Would Be Best Solution for Autistic Students

Posted on by Sarah Brodsky

Raising kids with autism is a financial challenge. Treating the disorder, which can impair speech, social interaction, and many other forms of specialized education, is expensive because of the expertise and time involved. Health insurance might cover medications and a few hours of therapy each week, but parents have to pay for the rest on their own. Some Missouri legislators have proposed a bill that would mandate health insurance coverage for autism; another possible course of action is to leave the issue to school districts. However, both of these plans have major drawbacks. Tuition tax credit scholarships for autistic children would be a more effective policy solution.

Insurance mandates are a bad idea in general — they help only those who have insurance, and they raise premiums for everyone. Higher premiums make it less likely that the uninsured will get coverage, or that those who currently have insurance will be able to keep it. In the case of autism, though, a mandate would be particularly inappropriate. Kids with autism may need up to 30 hours each week of behavioral modification, help with social skills, music therapy, and personal attention — in other words, a special school environment. Health insurance companies are set up to pay for medical treatment — which is only one part of the services autistic kids need — not to pay tuition.

Now, no one would expect a mainstream public school to provide all these services for only one or two autistic students. That’s why there are private schools that focus exclusively on teaching autistic students. High tuition can be prohibitive, though, putting specialized private schools out of reach for all but the wealthiest parents. And with tight budgets, these private schools can’t offer scholarships to everyone who needs them. In fact, they are sometimes forced to limit the number of students they serve at any given time — the Tailor Institute in Cape Girardeau, for example, can help only six students at once. Local public schools, no matter how poorly prepared they may be to treat autism, are usually the only options available to parents.

This is not to say Missourians don’t care about autism; the state generously supports autism diagnosis and treatment. However, much of that support takes the form of grants to treatment centers that provide specific services like speech therapy and counseling. If parents aren’t fortunate enough to live in one of those rare school districts that employ autism experts as teachers, they can either pay private-school tuition or settle for the best that their assigned public school can offer. According to an estimate by the Centers for Disease Control and Prevention, one out of 150 children has some form of autism — so the lack of choices for their parents is a far-reaching problem.

Of course, getting help for autistic kids is a concern in other states as well. In some parts of the country, public school districts pay for autistic students to attend private schools. This solution works in the particular areas that have implemented it, but it would be difficult for the entire state of Missouri to adopt this policy. The percentage of students diagnosed with autism varies throughout the hundreds of school districts in the state, and such a policy would place much heavier demands on some districts’ budgets than on others.

Ohio has come up with a better solution. The state’s Autism Scholarship Program has been in place since 2004, and served 750 students during this past school year. If Missouri follows Ohio’s lead, we’ll be able to level the playing field and help all autistic students who wish to participate, regardless of their household income or insurance status. Also, a scholarship program financed through tax credits wouldn’t place excessive burdens on individual school districts.

Although the state can’t erase the difficulties of raising autistic kids, sensible policy can give all parents options that are now available only to a few. Tuition tax credits would offer help to every autistic student in Missouri, and would make dealing with this condition a little less daunting for parents.

Sarah Brodsky is a former policy analyst at the Show-Me Institute. She holds an A.B. in economics from the University of Chicago and is currently pursuing a master’s degree in statistics at Loyola University in Chicago.

 

Well, Now I’ll Start Leaving Smaller Tips

Posted on by Justin Hauke

The Missouri House of Representatives rejected a bill yesterday which would have cut the minimum wage rate for tipped restaurant employees from its current rate of $3.32 to $2.13, the same as the federal minimum wage.

When considering legislation, lawmakers should first address the following two questions: 1) Does the legislature even have the power to pass this law; and, 2) Will the law have the effect that it’s intended to have?

I would argue that most politicians don’t even consider the first question. But for the sake of argument, let’s say that they do and consider the second question. Will the higher minimum wage help or hurt restaurant employees?

The Wall Street Journal happened to profile the struggling restaurant industry the other day. Here’s what they found (emphasis added):

Adding to the pressure is a big jump in the minimum wage starting this summer, which will boost wages by 12% in some states.

That’s sent the industry into its worst slump in decades. Many chains have scaled back expansion plans or cut costs by skimping on things like extra sauce and free sour cream. Some are shuttering sites and laying off workers.

It’s tough to make the minimum wage when you don’t have a job in the first place. Studies have repeatedly found that minimum wage laws are harmful to employers and employees alike. And those that are hit the hardest are generally the least-skilled and least able to afford losing their jobs, rather than the teenager in suburbia saving up for a car. And let us also not forget that Missouri has one of the highest minimum wage rates among its state neighbors, making labor much more expensive in Missouri than, say, Tennessee.

Like everybody else, I wish that the government could be Santa Claus and magically give things out for free. But, unfortunately, they can’t be — which means that every piece of legislation has unintended consequences. In this case, it’s increased costs to a struggling industry amid a slowing economy. Are we helping or hurting restaurant employees?

Bad Schools, Good Economy?

Posted on by Sarah Brodsky

An op-ed in the New York Times brings up the question of why the U.S. economy has done so well after years of public-school decline. Here’s the conclusion:

Indeed, a consensus seems to be emerging among educational experts around the world that American schools operate within the context of an enabling environment — an open economy, strong legal and banking systems, an entrepreneurial culture — conducive to economic progress.

To put it bluntly, American students may not know as much as their counterparts around the Pacific Rim, but our society allows them to make better use of what they do know.

This op-ed makes some important points, but it’s not the whole story. Yes, America’s free markets and stable legal environment can make up (to some extent) for a poor education system. That’s not because knowledge doesn’t matter in our economy like it does in the rest of the world. Instead, the best-educated make lots of money, bringing up average income statistics. And they spend some of that money on services provided by their less-educated citizens. So, when some kids are stuck in a failing education system, it doesn’t bring down the entire economy — but it’s unfortunate for them. They’ll have to spend the rest of their lives working for the people with knowledge.

Our education system hasn’t killed the economy. Is that the best we can do? Surely our goal is to share the pleasures and opportunities of learning as widely as possible — not just to avert market collapse.

Tort Reform Has Been Great for Missouri

Posted on by David Stokes

The governor gave a series of speeches yesterday about the results of tort reform legislation that was passed in 2005. Combest has links to several articles about it. In my opinion, that legislation was the most important reform the state has made during the past 20 years, which luckily corresponds with my basic frame of reference.

Not surprisingly, the trial lawyers they quote in the article (actually, it’s the same one in each) don’t agree. And, even less surprisingly, the trial lawyers respond to facts and economics with a plea to the heart. From the article Southeast Missourian (all emphasis below is added):

Blunt said 2007 numbers were not available, but that from 2005 to 2006, average settlement costs fell nearly 14 percent, and total claims against Missouri doctors dropped by 61 percent.

Costs and claims falling is a good thing for our economy and health care system.  Let’s remember that, can we please? From the Columbia Daily-Tribune:

Dr. Jeff Thomasson, who spoke at the news conference, said that before the new law, his radiology group’s premiums rose 88 percent one year and 94 percent another year. Over the past two years, the premiums declined slightly, Thomasson said. As a result, he believes recruiting and retaining good doctors is easier.

That is extremely important. I specifically remember that during arguments I had about tort reform with trial lawyers (generally either my dad or my stepdad), they claimed doctors’ premiums would never actually go down because the entire reform was just a scam by the insurance companies, etc. (They probably said it much better than that, but that was the gist of it.) So, here we have specific evidence that tort reform legislation has lead to a decrease in insurance premiums, just as basic economics indicated it would.

From the MATA people, we get this:

Vuylsteke said the number of cases are declining because the elderly, the poor and parents of young children "can’t find lawyers to handle their cases because the lawyers can’t afford to represent them." For many lawyers, who must invest substantial costs in expert witnesses and in hours preparing for the trial, the risk simply isn’t worth it, he said.

If someone has a good case, they will find a lawyer to take that case. Guaranteed. What is being admitted to above, unintentionally, is that before tort reform many bad cases went forward because the system so favored the plaintiffs. Even in less-than-stellar cases, a St. Louis city venue alone was good enough to scare at least some type of settlement out of the defense. So now we have lower costs, lower premiums, and fewer meritless lawsuits moving forward. As I said, it’s been great for Missouri.

Charter Reform Moving Forward in Jefferson County

Posted on by David Stokes

I attended a meeting of the Jefferson County Charter Commission last night and testified before the committee about my thoughts on charter government, which we’ll put up on our website shortly. But that is not the point of this post. I just want to commend the members of the Charter Commission and the others in attendance for their dedication to their community. It was great to see people who cared deeply about their home working together to move Jefferson County forward.

Joe Ortwerth, the former county executive of St. Charles, gave an outstanding presentation about how his county went through the same process almost 20 years ago. Seeing him there gave me an opportunity to hand deliver him a copy of this op-ed about St. Charles, which he had to enjoy.

Coming From a Proud Product of Public School Education …

Posted on by Justin Hauke

This is a worthwhile read: “They love the city, but not the schools.”

People want to move into the city. Urban renewal is obvious. But the schools have to get better. Young families are moving to the suburbs because they can’t afford to pay private school tuition equal to their monthly mortgage payment. St. Louis and Kansas City must fix their public school districts. Otherwise, all their efforts at urban renewal are useless.

Not an Example of “Pro-Business” or “Pro-Market”

Posted on by Justin Hauke

Centene Corp. is in the news again. After the collapse of the Saint Louis ballpark village incentive proposal (which, in addition to $78 million in direct tax incentives, also included their very own “Centene” sales tax district), Clayton has attempted to renegotiate its own incentive package to entice the company to expand its world headquarters in Clayton’s business district (apparently everyone’s forgotten about Claytons attempt to confiscate property for Centene in 2005 through eminent domain).

One sentence in the Post-Dispatch’s coverage is worth highlighting:

State and St. Louis County officials have joined Clayton in discussions with Centene over incentives for its world headquarters expansion.

We cover corporate welfare extensively, so I won’t dwell on this issue (though you should read Dr. Joe Haslag’s recent op-ed on the topic). But I would like to make a point. I suspect that these kinds of government “incentive” shenanigans are what most people think of when they hear that someone — a politician, political party, or even a Clayton-based think-tank — is “pro-business” or "pro-market."

Enticing business through governmental handouts is not pro-business. This is crony capitalism and one of the most debased political ideologies in the world. Being “pro-business” means that you believe in creating a business environment in which property rights are well-protected, people are free to contract with one another freely and without governmental interference, and competition is encouraged. Pro-business does not mean using the government to reward or punish favored companies or industries. It does not mean using tax dollars to reward the rich and the powerful at the expense of the poor. There’s nothing "market-based" about that.

We Don’t Need No Stinkin’ Badges

Posted on by Dave Roland

As I am writing this post on Thursday afternoon, I am not officially licensed to practice law in the state of Missouri. Tomorrow, when many of you will be reading this post, I will officially be licensed to practice law in this state. In order to convince the powers that be to give me their blessing to use my lawyering skills, in February I had to take and pass an arduous and mostly useless ritual called a bar exam. The test is insanely difficult, in no small part because it requires each examinee to demonstrate memorization of a range of legal concepts that they will likely never use in their practice. For example, even though my expertise is in constitutional litigation, I had to be prepared to answer — from memory — detailed questions related to wills and estates, family law, secured transactions, and commercial paper.

As with most people who have passed a bar exam, now that a couple of months have passed, I probably couldn’t tell you much at all about those subjects without first doing some research about the question asked — which is, in fact, what attorneys tend to do in the real world! In short, my ability to earn a living in the profession for which I am trained depended on my developing a (short-lived) command of information that would be thoroughly useless to me after the exam.

All of that is to say that the idea of licensing attorneys is little more than a convoluted way of restricting the services available to consumers and bolstering the rates we are allowed to charge clients, all under the guise of "protecting the public." Well, that’s just silly and patronizing. People recognize the difference between gourmet restaurants and street hot dog vendors, and they can also recognize the difference between a white-shoe law firm whose attorneys graduated from Ivy League schools and a small-time local lawyer who went to night school so he could learn just enough to hang out his own shingle.

I’ll happily admit that there are some bad attorneys out there already, and that there would likely be more if you didn’t have to get permission from the state in order to practice. But academic credentials and a license from the state is no guarantee of quality, just as many fine, smart lawyers might have trouble passing the bar exam. In fact, the people most likely to hire a lawyer with questionable credentials are those who otherwise wouldn’t be able to afford legal representation at all. So the issue really boils down to why the state should be in a position to tell citizens that they are not permitted to choose who could best fulfill their need for legal representation.

The Post-Dispatch carried a story today that touches on this question. Attorneys from Missouri’s Office of Chief Disciplinary Counsel are trying to strip Mark Belz — an attorney with a distinguished 30-year career — of his law license because several years ago he used $175,000 of his clients’ funds for his own purposes. This is serious business, as attorneys are ethically bound never to breach their clients’ trust in this way, and those who do are almost always disbarred. But several facts make Mr. Belz’s case unique.

First off, he recognized that what he had done was wrong without being caught. He confessed, apologized, and made restitution for the funds used. Second, at the time of his wrongdoing he was suffering from bipolar disorder — an illness for which he is now being treated — and his psychiatrist has testified that he is unlikely ever to repeat such behavior. Finally, and most importantly, his clients forgave him and continued to use Mr. Belz as their attorney. To the best of my knowledge, no one is interested in pressing criminal charges.

No one, not even Mr. Belz, is contending that he is without fault. But the market provides a ready solution for situations like this, without depriving someone of their right to earn a livelihood. When any service provider, regardless of their profession, breaches the trust of a client or customer, word gets around. Potential clients or customers can discover these sorts of transgressions by exercising a little bit of diligence on their own part. Armed with such information, it should be up to the consumer rather than the government to decide whether they value the provider’s services enough to risk similar experiences.

Removing the state’s authority to exclude people from the legal profession is a market solution that would address a number of issues. Aspiring attorneys could apprentice under practicing attorneys, and thereby would not have to waste thousands of dollars and years of their lives in law schools whose courses are heavy on theory, but do little to teach students how to be lawyers. This would lower the costs of entry to the profession, relieving young attorneys of the pressure to charge high rates in order to pay off student debt. The larger pool of service providers would also result in lower-cost legal service, meaning that more people would be able to afford representation. And, most importantly, it would move us that much closer to being a society in which ordinary people are free to seek their own happiness and prosperity without first obtaining the government’s permission.

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