Last week, Student Life, a WashU college paper, published a story about the Rams stadium. For the story, the author interviewed five WashU faculty from different disciplines. The faculty spoke nearly unanimously against using public money to fund the stadium. Here are some of the faculty’s comments, as reported in the article, the Longest Con:

“It’s really hard to see this as overall a good idea. It’s going to be very expensive…That’s not a very good way to spend government money.”—Glenn MacDonald, an economics professor in the Olin Business School

“We’ve known since the mid-’70s that sports teams don’t bring fast economic benefits, certainly nothing that offsets the kinds of credits they’re getting…Ten times a year, 12 times a year, you get a huge influx of people in, [but] that’s it.”—Sunita Parikh, an associate professor of political science

“What it does is it destroys the area so it vanquishes the blight that it identifies by just knocking everything down,” and “decimates the existing urban character.”—Michael Allen, a University College coordinator and American culture studies lecturer

“I think it’s pretty clear to anyone that spends any time here…that this town’s civic sporting identity is Cardinals first, second, third, fourth, fifth, down through 10, then Blues probably and then Rams. So they’re already the low man on the totem pole… I think it’s kind of silly that some people in cities feel like they need to measure their city by how many teams from the Big 4 leagues they have”—Noah Cohan, a recent Ph.D. and adjunct instructor in English who studies the relation of sports fandom to identity and politics,

The only WashU faculty member interviewed who supported the stadium plan, Rich Ryffel (senior lecturer of finance in the business school who helped finance the Edward Jones Dome), admitted a stadium was “not a good public investment. In other words, if the public puts in a dollar, they’re not going to get a dollar out of it.”

In other news, stadium proponents are touting the final initial design (which I guess is kind of like jumbo shrimp?) of a planned stadium. It will even have a new brew pub. Will policymakers heed the advice of experts or opt for beer and circuses? 

The post Washington University Faculty Oppose Public Dollars for Stadium; Planners Promise Brew Pub appeared first on Show-Me Institute.

Everyone knows that April’s showers bring May’s flowers. Unfortunately, it also brings Missourians’ tax bills. This year, individuals, businesses, and nonprofits will spend an estimated six billion hours complying with state and federal income taxes, according to research by The Tax Foundation. On April 15, Missourians will cough up more than $6 billion in state income taxes alone. If you happen to live in one of the thousands of households subject to the earnings tax this year, though, your bill will be even higher.

The earnings tax is a 1-percent tax levied on wages, salaries, and other earnings from all work performed in Saint Louis or Kansas City. Businesses and self-employed individuals pay an equivalent tax on net profits that averages near $1,500 per year. And in Kansas City, employers contribute an additional 0.5-percent match on their employees’ earnings. Missouri’s statutes authorize any city with more than 70,000 inhabitants to impose such a tax, yet to date only Saint Louis and Kansas City have actually elected to do so. In both cities, the individual earnings tax accounts for approximately 30 percent of general revenues.

Earnings taxes are not unique — about 25 percent of the nation’s largest cities collect them — but they have become increasingly rare in recent decades. One reason for their decline is that earnings taxes are particularly damaging to cities with significant suburban populations and small urban cores, such as Saint Louis and Kansas City, because they encourage businesses and residents to relocate out of town. Because suburban districts offer a similar range of cultural and employment opportunities as the city itself, households and businesses have little incentive to pay higher taxes solely for the benefit of a city street address.

This is true even in Missouri, where the earnings tax is relatively low in comparison to cities in other states. For example, defenders of the earnings tax often point to the fact that the 1-percent tax is lower than the 2-percent national average. In fact, among cities that levy earnings taxes, only Indianapolis has a lower rate, at 0.7 percent. And both Saint Louis and Kansas City have much lower rates than Philadelphia, which imposes a whopping 4.54-percent tax on city earnings. While these figures are comparatively promising, they mask the impact that earnings taxes have on total household wealth.

For example, consider a Missouri household with an adjusted gross income of $35,000, which is near the 2007 state median. The members of such a household would pay an additional $350 in income taxes each year simply by living or working in Saint Louis or Kansas City. While $350 may not seem like much at first glance, it has a dramatic impact when aggregated over 30 to 40 years of earnings.

Imagine that those in the above household chose to live and work in a suburb, rather than directly in Saint Louis or Kansas City. Presumably, the cost of living and employment opportunities would be similar to those that exist within the city itself. Sales and property tax rates in Missouri’s suburban districts are also similar to those that are levied in Kansas City and Saint Louis, on average. But by living in the suburbs, members of the household would no longer be subject to an annual earnings tax.

If members of this household chose to save the extra $350 they would keep each year in lower taxes, rather than spending it on increased annual consumption, their total household wealth during the following 40 years would be more than $80,000 higher than if they had paid the earnings tax each year. In other words, simply by choosing to live and work a couple miles down the road, the household’s earners would garner more than an additional $80,000 during the course of their careers.

If $80,000 still doesn’t seem like a big enough number to deter urban growth, consider a few facts. If 80,000 $1 bills were lined up end to end, they would cover the entire length of downtown Saint Louis and Kansas City, combined. That same number of $1 bills could cover the perimeter of Forest Park — nearly six miles — one and a half times. It would take most joggers nearly an hour and a half to run the length of their foregone earnings tax wealth. So much for the insignificance of one percent!

Taxes are a necessary part of urban living, but it’s important that cities adopt tax policies that encourage growth rather than driving it out of town. Earnings taxes can significantly impact a household’s lifetime earnings. In many cases, residents have chosen to “vote with their feet,” relocating to suburbs and lower tax rates. In fact, to help illustrate the incentives that varying tax rates provide, the Show-Me Institute recently released an estimator that helps Missourians compare their relative tax burdens across the state.

While Saint Louis’ and Kansas City’s metropolitan areas have continued to grow over the years, their urban cores have stagnated. Is the earnings tax really so insignificant?

Justin P. Hauke is a policy analyst at the Show-Me Institute and a graduate student at Washington University’s Olin Business School.

The post Lest We Think 1 Percent Is Small appeared first on Show-Me Institute.

Everyone knows that April’s showers bring May’s flowers. Unfortunately, it also brings Missourians’ tax bills. This year, individuals, businesses, and nonprofits will spend an estimated six billion hours complying with local, state and federal income taxes, according to research by The Tax Foundation. On April 15, Missourians will cough up more than $4 billion in net state income taxes alone. But the size of your slice of the Missouri tax pie will depend significantly on where you happen to live.

Many people assume that state and local taxes don’t vary much throughout Missouri. For statewide taxes, this is certainly true. But local taxes — particularly property and sales taxes — vary considerably from one city to the next. Missouri sales tax rates range from 4.7 percent to nearly 9 percent across the state. The disparity in local property taxes is even more dramatic, with rates differing by more than $2 per $100 of assessed property value in some parts of Saint Louis County. For a home worth $150,000, this difference would translate into an annual tax difference of about $1,000.

This suggests that sometimes moving just a few miles down the road may have a significant effect on how much of your own money you get to keep. Unfortunately, though, most people don’t have the resources to compare tax rates for cities and counties throughout the state. That’s why the Show-Me Institute created “Show-Me: The Taxes,” an easy-to-use tax estimator that provides Missourians with the ability to compare taxes as they make decisions about their finances, lifestyle, and places to live and work.

How do the differences actually impact household wallets? More than you might think.

Consider, for example, four hypothetical Missouri households: a single 25-year-old college graduate, a married couple with two young children, a single working mother with one child, and a recently retired couple living on a fixed income. By plugging these households into our estimator, we were able to compare the taxes they might expect to pay in cities across the state — assuming their financial situations would not otherwise change.

The results were surprising. For example, a 25-year-old with an annual salary of $30,000, modest student loan debt, and a shared two-bedroom apartment would pay approximately $275 less in taxes each year by moving from Saint Louis city to a nearby suburb (in this example, Maplewood). If we consider the impact of this annual tax savings over the course of a career, however, the numbers are even more remarkable. For example, investing that $275 each year and earning the historical market return could generate more than $70,000 in additional income by retirement at age 65.

The same was true for the other households we considered. A young family could save more than $700 in taxes each year by moving from Kansas City to Grain Valley — also in Jackson County. A single mother could finance more than half of her child’s tuition at the University of Missouri simply by moving a few miles down the road and saving the amount she would no longer pay in taxes each year.

Retirement provides the most dramatic illustration of the differences in local taxes. We found that a relatively low-income retired couple could save more than $1,100 in taxes each year by living in Cape Girardeau instead of Kansas City. Investing this annual tax savings in low-risk securities such as rolling certificates of deposit or annuities would increase the household’s monthly cash flow by nearly $100. This extra money could be used to help defray the cost of prescription drugs and other medical expenses, or to help finance a grandchild’s education.

Of course, the amount one saves in taxes is not the only way to measure quality of life. Clearly, there are benefits to retiring in a city where there are people you know and love, and high tax cities may offer intangible benefits that are difficult to quantify. But it’s important that Missourians be able to weigh these options when deciding where to live.

Nobody likes to pay taxes, but no matter where you live or work, some level of taxation is a certainty. Not all locations are the same, though. Small differences in tax rates can have dramatic effects on household wealth. In many cases, such differences may be enough to encourage citizens to “vote with their feet,” relocating to cities with lower tax burdens. The Show-Me Institute’s tax estimator can help Missourians quantify these benefits, so they can make informed living decisions. Are small tax differences really so insignificant?

Justin P. Hauke is a policy analyst at the Show-Me Institute and a graduate student at Washington University’s Olin Business School.

The post Be Careful Where You Live – It Might Cost You More Than You Think appeared first on Show-Me Institute.

It’s disturbing to think of nursing home abuse. Many of us have elderly family members or friends living in assisted-living facilities and naturally turn to government regulation to protect them. But before passing new legislation, it’s important to determine whether the proposed regulations will actually have the desired effect of protecting Missouri’s elderly citizens. New regulations, no matter how well-intentioned, may actually serve to decrease the overall level of care in nursing homes, while increasing costs to levels that will force many seniors to forego nursing home care altogether.

Last month, the National Senior Citizens Law Center (NSCLC) hosted news conferences designed to bring attention to what they view as the dubious quality of many of Missouri’s nursing home contracts. In a new research report, the NSCLC argues that many of these contracts violate minimum care obligations required under the federal Nursing Home Reform Act, and similar state statutes. For example, some contracts limit facilities’ responsibility for their residents’ health or personal items, or require a resident’s family or friends to accept personal financial liability for long-term care (even when costs are covered by the state). Both requirements violate federal guidelines for health facilities treating Medicaid patients.

Although unscrupulous nursing home administrators undoubtedly exist, it’s not clear whether the evaders of existing law will be any more likely to comply under new laws, such as the ones the NSCLC is proposing. For example, Missouri passed legislation in 2003 designed to make it easier to report nursing home abuses, and increase the frequency of inspections. The law was well-intentioned, imposing high fees and in some cases prison sentences for non-compliance. Yet the NSCLC’s own findings suggest the legislation has done little to address exploitation in the industry or to remedy existing levels of inadequate care. Why should we expect new legislation to bring different results?

In fact, new legislation has the potential to worsen the current situation. “Minimum care” laws, such as those being proposed, generally have two negative effects: They mandate levels of service that may not be important to actual nursing home residents and their families, driving up overall nursing home costs; and they encourage many facilities to lower their standards to the “minimum state requirement,” adversely affecting the overall level of nursing home care. So before passing new laws, it’s important to determine whether these laws are likely to create “perverse” incentives that diminish, or even supplant, good intentions.

The St. Louis Business Journal reports that Saint Louis nursing home costs are the second-lowest in the country, averaging $42,877 annually. Nationally, the average annual figure is $65,200, with costs reaching as high as $191,385 in some states. These are not small fees, and many Missouri seniors already struggle to stretch their savings to cover nursing home payments for 10 or 15 years of potential care. New regulatory burdens are likely to push these costs even higher.

Consider legislation that would require greater financial disclosure from nursing homes, and allow for 24-hour on-site inspections. This would necessitate hiring additional staff members, driving up costs. As the cost of care increases, nursing homes that have gone the extra mile by providing better service than required may be forced to cut their level of care to the state minimum in order to maintain existing profit levels. In other words, rather than using higher fees to address patient health, facilities would have to devote the money to compliance with government regulations that may not have any affect on overall quality.

A better solution for protecting consumers would be to focus on educating families of nursing home residents about the terms of their contracts and their legal rights, rather than passing the buck to bureaucrats. Many violations highlighted by the NSCLC’s study are well-publicized issues among consumer advocacy groups. Some groups also offer pro-bono legal advice to help find contracts that properly meet a family’s individual needs. The state should work to enforce existing laws, which require facilities to fully disclose the terms of their contracts and inform consumers of their legal and financial rights.

I sympathize with the NSCLC’s desire to protect nursing home residents, but passing new legislation is not the answer. Promoting consumer advocacy and raising awareness is a worthwhile goal. It’s important to provide legal aid that helps ensure families enter nursing home contracts that properly reflect their needs. But mandating minimum levels of service will only increase costs that are already inflated, while spurring an overall decreased level of care. Missouri’s elderly citizens shouldn’t be unnecessarily priced out of adequate facilities in order to satisfy misdirected good intentions.

Justin P. Hauke is a policy analyst at the Show-Me Institute and a graduate student at Washington University’s Olin Business School.

The post A Better Solution to Missouri’s Long-Term Nursing Home Care appeared first on Show-Me Institute.

When the Missouri General Assembly reconvenes in January, true education reform should be at the top of its agenda. Missourians, parents, and teachers alike have suffered from continual public school decline as the Legislature has pumped more and more money into districts. Yet increased educational spending has not improved the state’s most ineffective schools, and many of the state’s worst-performing districts are those in which per-student spending has greatly outstripped the state average.

For example, the Wellston school district spends nearly $11,000 per student each year, yet only 2.9 percent of that district’s students scored “proficient” on their Missouri Assessment Program Math exit tests. By comparison, the statewide average expenditure per student is $7,500, and the statewide proficiency rate for that exam is 42.4 percent. Additional dollars simply don’t add up to better test results.

Recognizing this, many Missourians — particularly those with children in failing schools — are calling for legislation that would grant them the opportunity to send their children to the best schools in their communities. Last fall, the Show-Me Institute published the results of a poll which asked more than 600 Missouri voters about their views on K-12 education. The collected data showed overwhelming support (especially among minority and low-income parents) for granting parents the opportunity to use their children’s public educational funding at schools of their own choosing.

But it’s not just parents who see the value of parental choice for educational reform — teachers support school choice, too. Of those surveyed who either specified that they were teachers or had a teacher in their immediate families, roughly two-thirds agreed that public schools had “a serious problem” or were “in a state of crisis.” Only 28 percent expressed favorable or neutral feelings about the quality of Missouri public schools in general, while 83 percent had favorable views of private school performance.

It’s not surprising, then, that a significant majority of this group agreed that public schools would improve if parents were allowed to choose where their children would be educated. Sixty-four percent of teachers said they would favor a program that allowed parents to use money that would have been spent at a public school, to send their children to private schools instead. A full 88 percent of teachers responded that parents, not governments, should decide which schools their children attend. Eighty-nine percent of teachers responding to the Show-Me Institute survey agreed that every child should have the same opportunity for a quality education, regardless of their parents’ financial situations.

These survey results highlight an important point: Missouri teachers, like Missouri parents in general, recognize that increased parental choice will improve education in this state, recognizing that increases in educational spending have proven to be utterly ineffective. These results are important, because the conventional wisdom (fostered by anti-choice groups such as teachers’ unions) says that teachers are against school choice.

This survey suggests widespread teacher support for the idea of school choice, however, along with a consensus that increased spending has failed to fix our faltering public schools. Missouri’s parents and teachers are demanding more educational opportunity for their children. Isn’t it time that the Legislature listened?

Justin P. Hauke is a research assistant at the Show-Me Institute, a Missouri-based think tank, and a graduate student at Washington University’s Olin Business School. Dave Roland is a policy analyst at the Show-Me Institute.

The post Missouri Teachers Voice Support for School Choice appeared first on Show-Me Institute.

Dave Roland joins us as an education policy analyst, bringing with him three years of experience as an attorney with the Institute for Justice, litigating school choice, economic liberty, and property rights cases in state and federal courts. He has undergraduate degrees in political science and Biblical studies from Abilene Christian University, and both a law degree and a master’s in theology from Vanderbilt University. Dave’s wife, Jennifer, will also be joining us as a policy analyst in a couple of weeks. She’s the former legislative affairs attorney for IJ’s Castle Coalition — but more about her later.

Also joining us as a research assistant is Justin Hauke, a graduate student at Washington University’s Olin Business School who until recently worked as a senior research associate for the St. Louis Federal Reserve. He has an undergraduate degree in economics and math from the University of Texas at Austin. Justin has been blogging here for a few days now, and we’ve already released his first op-ed. (Actually, he co-wrote an op-ed for us almost a year ago, so technically that would be his first.)

We hope to hear much more from our new staff members as they get settled in!

The post Welcome, Dave Roland and Justin Hauke! appeared first on Show-Me Institute.