Today, the Show-Me Institute joined with organizations throughout the nation in celebrating the life and legacy of economist Milton Friedman.

Friedman was both a groundbreaking theoretical economist and a tireless advocate for freedom, and the world is a better place today than it would have been without his influence.

If you’d like to learn more about Milton Friedman, his rigorous scholarship, and his passion for liberty, a good place to start is his classic book Capitalism and Freedom. The Idea Channel is also streaming every episode of his excellent PBS series Free to Choose for free!

Read, watch, and learn.

Via Mr. Combest, the Kansas City Star reports that Jackson County, Missouri (that’s Kansas City and suburbs, for you St. Louisans who have never been west of Party Cove) will be laying off employees in order to balance its budget for the upcoming fiscal year. Jackson County Executive Mike Sanders deserves credit for making the tough decisions to cut employees, and by extension the size of county government, instead of trying to raise taxes. I don’t mean to treat lightly the situation for the county employees who are losing their jobs, but Mr. Sanders’ first responsibility is to the taxpayers, not the government workers. As someone who has himself been laid off from a government job, I feel comfortable saying that.

I have long admired the overall government setup in Jackson County, as compared to St. Louis County.  It has far fewer suburbs (I think it’s 18, as opposed to 91), which are much larger, on average, than in St. Louis. That leads to much less duplication of services. St. Louis County could learn from that.

Bill McClellan has been tremendous with his last two columns in the Post-Dispatch about the Missouri Supreme Court opening and the Missouri non-partisan court plan. Two months ago, I blogged some suggestions for improvements to the court plan, which I think (hope) are worth revisiting. I think the non-partisan court plan should be kept, but the most important change it needs is to make the governor’s selections coincide with the term of the governor, rather than the current six-year staggered term. As I wrote in May, the number of governor appointments should also be increased by one to equal the number of lawyers and judges on each commission. With those changes, I think problems with the current set-up could be well-addressed.

According to the Springfield News-Leader, officials are touting the economic benefits of September’s "Tour of Missouri" bicycle race:

Out of a budget of $2.8 million that includes participation by sponsors and host communities, it’s estimated state spending will come to $1 million for the race.

That money is tourism investment, and it’s unfair to claim it is being diverted from areas such as child health care, Bennett said.

I don’t doubt this race was planned with good intentions, but I don’t think the race-as-investment strategy has solid economic grounding. The race will undoubtedly bring money into Missouri, but the concentrated gains probably won’t be worth the diffuse cost to taxpayers.

Continue reading "A Bicycle Built for Tourism" »

An article in the Post-Dispatch describes the enthusiasm with which high school students across the country are responding to online summer school courses:

Students taking classes online can submit their assignments in e-mails, "talk" to teachers through instant messages, and interact with other students in online discussion groups.

Some students and parents say online classes make learning easier.

"These online classes have been a blessing," said Carol Meerschaert, whose 16-year-old daughter, Claire, has an attention deficit disorder.

The Missouri Virtual Instruction Program will begin offering summer school courses in 2009, and it will charge tuition. It probably makes sense to charge tuition for high-demand subjects, but I don’t see the point of the rigid distinctions MoVIP is drawing between school-year and summer-school courses. One of the possible advantages of online education is that students can begin and finish coursework whenever they want, working at their own pace.

The Department of Education Reform at the University of Arkansas has released a new working paper that finds an increased availability of school choice in a given community results in parents who are better informed about their children’s schools and educations. It may seem like an obvious point, but in the social sciences, truth is often counterintuitive — so the more data and rigorous analysis that exists, the better.

From the abstract:

Theories of school choice suggest that parents need to and can make informed decisions that will tend to situate their students in appropriate schools. School choice, in a sense, brings elements of participatory democracy into the world of compulsory education, and thus brings the same potential benefits and problems that have long challenged democratic theorists. Increasing choices to parents may give them an incentive to raise their information levels about the schools their children attend. Akin to the information gathering of consumers in a marketplace, choice parents should have more reasons to gather more information about their schools than parents without options. Alternatively, a lack of any increase in information levels amongst school choosers would suggest that despite the increased incentives to gather information, having choices per se is not sufficient to overcome the costs of information gathering.

To test whether the availability of school choice increases parent information about schools, we analyze data from the second year experimental evaluation of the Washington Scholarship Fund, a privately-funded partial-tuition voucher program. We find that presenting parents with choices does lead to higher levels of accurate school-based information on measures of important school characteristics. Specifically, parents in the school choice treatment group provided responses that more closely matched the school-reported data about school size and class size than did parents of control group members.

And from the conclusion:

Since accurate information is important for consumers to make effective choices, these results are generally consistent with the claims made by school choice supporters that low-income inner-city parents can and will become informed educational consumers. That, alone, is a significant finding.

An article in today’s Columbia Missourian discusses Al Sharpton’s solution for reducing the gap between blacks and whites when it comes to health care services … universal health care:

Universal health care to me is the only way you are going to bridge
the gap to guarantee all Americans health care, Sharpton said. The
gap between black and white in health care in some areas is
three-to-one in terms of services. The only way you are going to do
that communally is with a universal health care plan that makes it all
an even playing field. Unless that gap is closed, it will never be one
truly American entity.

Health care in the African-American community is not as up to par as it is in the white community. But universal health care would bring everyone down to the same level. That won’t solve the problems in health care for anyone. As we have stated before at the Show-Me Institute, the U.S. health care system hasn’t been developed along free-market lines for decades.

The way to truly raise health care standards across the board is to open the market to everyone — not just a few HMOs, and especially not with the government maintaining centralized control of health care decisions. Pamela Hardin, first vice president of the Columbia branch of the NAACP, makes a great point that’s applicable not only to African-Americans, but to everyone:

It is the responsibility of citizens to educate themselves on health care programs.

Maurice earlier referenced the Joplin Globe’s editorial on toll roads in Missouri. I wish to add my thoughts. The Globe writes:

Missourians have eschewed toll roads for much the same reason. They don’t relish paying again at a toll gate for something for which their gasoline taxes have already paid.

Wrong, wrong, wrong! The Globe could not be more wrong. It is illegal to put tolls on roads that were built with gas tax dollars. Any new transportation plan for Missouri, which I hope includes tolls, would only be able to put those tolls on new highways, or new lanes added to existing highways. You can not just take I-70 and turn it into a toll road after it was built with gas taxes. Tolled interstate highways in other states, such as Oklahoma, were either built as toll roads, or turnpikes, before the interstate highway system was created, or were built afterward using toll financing instead of gas taxes. I just wanted to make that clear for everyone. 

Following on the heels of Barack Obama’s declaration earlier this month that he would support some form of merit pay for teachers in public schools, Michael Bloomberg has voiced his support as well:

Supporters, like Bloomberg, say bonuses for teachers who improve student achievement would reward effective work and attract strong people to the job. But some opponents, including many teachers unions, worry about the idea of gauging teachers based on a narrow factor like standardized tests.

U.S. teachers are typically paid on a system that rewards seniority, with an average starting salary of around $31,000.

Bloomberg said some critics believe that offering financial incentives to teachers somehow diminishes their altruistic motives — an idea he denounced as "ridiculous."

"We should be offering teachers and principals incentives not only to take the toughest assignments, and to fill special needs, but also to get the best possible results from their students," he said.

Support by politicians like Obama and Bloomberg helps demonstrate that using market mechanisms to improve public schools isn’t a party- or ideology-based issue. People simply want the schools to work, so their kids can learn. Ignoring market-based solutions is a recipe for continued failure.

In an editorial published late last night, the Joplin Globe argues against instituting tolls on Missouri highways. The piece points out that Missouri voters have rejected toll roads twice in the past, and that residents in adjacent Oklahoma have been soured on toll roads:

Oklahoma is a big turnpike state. A few years ago,
56 percent of Oklahomans responding to a statewide survey said they
would happily do away with tolls, and more than half were willing to
use state-lottery revenues for that purpose. Of course, state lottery
money wound up being earmarked for public and higher education. But the
fact is that Oklahomans were tired of forever being required to plop
down $3.50 to drive from Tulsa to Joplin or Tulsa to Oklahoma City.

The editorial suggests that Missouri could raise funds for transportation infrastructure instead by increasing the motor fuel tax for a period of time, or increasing vehicle and license fees.

Now, I understand that people may not like the idea of paying $2 or $3 every time they travel up and down I-70 or I-44. For example, I go to school in Illinois, and every time I drive to Chicago I’m annoyed by the tolls on I-88 as much as the next driver. But the money collected helps improve highways, and does it at the expense of the people and businesses that use those roads the most. Raising motor fuel taxes or increasing license fees would affect motorists who don’t use the highway at all — a far less justifiable fundraising base.

Also, I like the idea of having a guy like Little John collecting tolls on I-70.

An article in today’s St. Joesph News-Press reports that Kansans are upset about Missouri eliminating a tax deduction that non-residents received in the past:

A highly
publicized Social Security tax cut for Missourians that Gov. Matt Blunt
recently signed into law also nixed a real-estate tax deduction for
non-residents — essentially increasing Missouri taxes for people who
work here but live out of state.

Because of this, Kansas lawmakers might launch a counterattack by passing a law that would restrict Kansas non-residents from the same benefit. Yet, all of this hullabaloo really results in not much of a tax increase at all for the average Kansans who works in Missouri:

[T]he more than
1,400 neighboring Kansas residents who commute to Buchanan County may
pay more taxes to the state of Missouri next year, but they should
break even after paying their Kansas taxes, explained Gerald Williams,
a certified public accountant with Sumner, Carter, Hardy, Rich and Co.
in St. Joseph.

Mr. Williams on Tuesday provided to the
News-Press calculations from multiple mock filing scenarios for Kansas
he figured under the new law.

"In most instances, it makes no
difference," he said. "You may pay more to Missouri and less to Kansas,
but when you add them together, it’s the same amount, out of pocket."

Kansas
has a higher tax rate, but also provides a credit to Kansans for income
taxes they pay out of state, which offsets the higher taxes in
Missouri, he explained.

Kansas residents who don’t itemize their
deductions will see no difference, while other filers can expect little
or no change. In rare instances, he found filers could pay between $40
to $50 more than in prior years.

So Kansans will not really be affected by the ending of these tax breaks. The Kansas politicians who are making this an issue sound like the residents of Shelbyville, getting upset at Springfield for getting the upper hand, preventing them from having the lemon tree they desire.

In today’s St. Louis Post-Dispatch, an article discusses the re-introduction of emissions tests at private repair shops starting Sept. 4. Nearly 600 auto shops are already signed up to be allowed to perform the tests. The goal is to make the process easier for motorists:

For the past seven years, most Missouri motorists have had to make two
stops to have their biennial safety and emissions tests. That will
change on Sept. 4, when Missouri shifts the emissions tests from a
dozen contractor-run test centers back to private repair shops.

Combining the two tests at a single place is a great idea. It offers motorists time-saving convenience by reducing the number of required stops, and helps eliminate the infamously long wait times at emissions test centers. Now I wish I had waited to buy my car in September, so I could have taken advantage of this.

article in today’s Columbia Daily-Tribune profiles a taxpayer who’s taking action, getting involved in the process by which the Missouri Housing Development Commission (MHDC) issues tax credits to develop affordable housing in Missouri. The man, Greg Young, began by questioning why the MHDC gave such a big tax credit to a Springfield project:

Young focused on a $4 million housing project in Springfield that
was financed with $11 million in state and federal tax credits for
historic buildings and low-income housing.
After doing the math, Young concluded taxpayers were providing more
than $300,000 for each of the 32 apartments in the rental housing
project.

Young saw this as a waste of tax dollars and looked into why the MHDC was appropriating so much money. He discovered that the state does not audit much of the money received by housing developers, outside of independent audits paid for by developers.

Young has begun studying economics on his own, and requesting MHDC documents through the Sunshine Law. He goes to their meetings and asks questions about why the commission’s ineffective largesse. The state could use more of this type of active citizenship.

State Treasurer Sarah Steelman, an MHDC member, appreiciates what he is doing:

He is a citizen who has taken an interest in the commission and who
hopefully wants to make it a better program, said state Treasurer
Sarah Steelman, who was MHDC chairwoman when Young made his statement. I’ve always had the opinion you never want to deter people from taking
an interest in what government is doing.

There should be more citizens like Young, Steelman said.

The political system needs people like Greg Young. Taxpayers often don’t know where their money is being spent, and even when they do, many just complain and move on. Young went a step further and decided to take action. If more citizens did that, government would be more responsive to citizens’ needs. I congratulate Mr. Young and hope he keeps up the good fight.

I just wanted to add my thoughts to Maurice’s post on transportation development districts. I don’t disagree with anything he said, but want to state that TDDs are a good way to pay for road improvements around new developments that would not otherwise happen. Developers already have to pay into the county road trust fund when they do projects that require road improvements, so it is not as if they get off scot-free. I agree, TDDs could use more accountability, but there is a way for people to find out what the sales tax rates are where they are shopping — they can look at their receipt.

Good article today in the Post-Dispatch, via Combest, of course, about a proposal by Metro and St. Louis County to put a sales tax increase on the ballot to fund expansion of MetroLink and shore up Metro’s current finances. I have written about this proposal before. I will probably vote for it, as I live near MetroLink, my wife uses it regularly to commute to work, and I ride MetroLink or the bus about once a week. If I didn’t live so close to it, I don’t know how I would vote. I do predict its defeat, though, at the polls — probably by a wide margin. I am not saying that is what I want, just that it’s my prediction. A 1/2-cent increase is enough to make people stop and think, unlike those 1/8-cent increases you get all the time to fund police pensions, or expand storm water controls, or any of about a dozen other reasons. 

But we here at the Show-Me Institute are not about politics, we are about policy. So as this issue moves forward, I can promise you we will come out with detailed information on the proposal — not whether or not it will pass. To start with, I recommend the various studies the Reason Foundation has done on light rail. They are more opposed, in general, to light rail than I, but they have a number of great studies on this subject, and their opinions are backed by solid research. Here is a concise letter to the editor from my friend Len Gilroy, with Reason, that makes a good argument for Houston, his hometown.

One thing we agree on is the absolute necessity of Metro trying to work more closely with private corporations through public-private partnerships to serve the needs of the greater St. Louis area. And yes, I know the attached link is about roads, but PPPs can work for transit, too.

In the St. Louis Post-Dispatch, an article discusses a state audit that shows Transportation Development Districts (TDDs) are taking money without knowing where it is spent. TDDs are created to raise money, by means of a special sales tax, to fix roadways and other traffic needs in areas where new developments are being built. It sounds harmless enough, but the public is often kept in the dark on TDD operations:

The audits say taxes are raised without a public vote and little
government oversight. Montee said the previous audit recommended
various changes in the law to improve the process, but that legislators
have done little to address the concerns.

TDDs and their governing boards are created by court order, sometimes instigated by the petitions of developers. From there, the tax rate is approved by the board. Limited input from the public, or from officials outside the TDD process, has led to a lack of oversight on how the money is spent, and the actual amount of the tax:

She [Montee] found a variety of problems, such as competitive bids for the work
not being done properly or at all; districts charging a higher sales
tax rate than authorized; and a lack of documentation proving the right
amount was paid to reimburse developers for their costs. In one
instance, the developer’s costs were counted twice.

This audit follows up on one conducted by the auditor’s office on TDDs last year. Hopefully, these findings will spur changes in the law that increase accountability. Most importantly, there should be public input to make sure taxpayers are aware of the tax rates that affect them.

A letter to the editor in yesterday’s Columbia Tribune claims Gov. Blunt needs to repent for cutting Medicaid:

With a reported $320 million surplus in our state budget, it’s time for
Gov. Matt Blunt to repent for his sins against the disabled, elderly
and low-income citizens of Missouri and right this terrible wrong.

In 2005, Missouri faced a growing budget deficit and a Medicaid system that was costing far more than it should. The state couldn’t bust its budget or sacrifice transportation, schools, and other essential things in order to cover Medicaid expenditures. Just because Missouri now has a surplus is no reason for the state to fall into the same trap that caused the deficit in the first place. Fiscal solvency doesn’t last if we squander every windfall on programs that aren’t sustainable.

Only by opening up the health care market and moving away from the third-party providers that raise prices for everybody can we provide quality health care for all. The solution lies not in the bureaucracy and centralized control of government, but in the efficiency and accountability of the private sector.

An op-ed for the St. Louis Post-Dispatch points out the flaws that Sen. Michael Gibbons needs to address in his efforts to reform the property tax system in Missouri next year. These range from cases of both over- and under-assessment of property in some counties, to the fact that there are different techniques for assessing property, which causes disparities in the amount people pay. There are many signs that the current system has failed Missouri taxpayers.

Property taxes have a huge effect not only on our pocketbooks, but also on how school districts receive state aid:

Such variations obviously are unfair, especially when it comes to
school funding. The state’s complicated formula for calculating the
funding of public schools is based on the wealth of a school district
as measured by its property assessments in 2004. The lower the assessed
value, the more state funding a district receives.

Sen. Gibbons is on the right path in calling for property tax reform. The system is riddled with mistakes that have been known for years, and cannot be overlooked any longer. Missourians want to know that they are being taxed fairly and honestly, and to make sure that they are paying no more than their fair share to their localities.

In the St. Louis Post-Dispatch today, an article discusses efforts by the Today and Tomorrow Educational Foundation to fund 100 scholarships, worth $2,000 each, to low-income city students who would like to attend parochial schools:

Foundation leaders are aiming to steer students away from troubled St.
Louis public schools immediately. They also hope to bolster enrollment
at Catholic and Lutheran schools in the city, many of which are
struggling to fill empty desks.

The program would give 100 children $2,000 each year for nine years, paying half to two-thirds of school tuition, Catholic school and foundation officials said Monday.

The program is a win-win for both parents and the parochial schools. It is great for parents who can’t afford to send their children to parochial schools because of prohibitive costs, and great for parochial schools who are having trouble increasing enrollment. Judging by the recent state of the Saint Louis public schools, I assume that these scholarships will be snapped up quickly, giving parents the option of sending their children to better schools.

Over the weekend, Fired Up! Missouri offered a succinct comparison:

Here is a case study in priorities.

There are 121,000 kids without health insurance in Missouri.

And Matt Blunt and Peter Kinder are spending $1 million dollars on… a bike race.

Of course, I agree that health care is a critical priority for the Missouri government — even though Fired Up! is unlikely to agree with me that the best way to get people the care they actually need is through providing tax incentives for individual policies and eliminating red tape that gums up the workings of the market.

Fired Up! is right on the money, though, that a bike race is a ridiculous government expenditure. There may be many good reasons for a prominent race in Missouri — prestige, tourism, competition with neighboring states —— but, as economist Frédéric Bastiat would have pointed out, every action has both effects that are obvious and effects that are hidden. An exciting race is an effect that we can see, but every dollar taken from taxpayers to spend on a bicycle race is a dollar that can’t go toward filling up a gas tank, buying groceries, taking a child to piano lessons, or, say, buying a bicycle —— all effects that we can’t see.

Thanks to the diffuse costs and concentrated benefits of special interest politics, these hidden effects go almost entirely unnoticed by the general public. But a $1 million expenditure that seems measly in political terms is actually a huge aggregate amount, sucked from the economy and redistributed to politically favored recipients. Frankly, a state-sponsored bicycle race is a bad idea for the same reason that HB 327 was a bad idea —— government spending on favored economic ventures makes everybody else a little bit poorer.

A short time ago, Maurice wrote about how a proposal to dramatically increase the cigarette tax in Illinois might drive Illinois smokers to buy their cancer sticks in Missouri. This article reminded me about how Bill McClellan used to write in the Post about the experiences he would have buying liquor on Sundays in Illinois, before Missouri allowed Sunday sales in the mid-’90s. And then it hit me — we need an area between the two states, sort of a duty-free, local-tax demilitarized zone, where residents can go to experience the best of both states at the same time.

Seriously, join me as I go with this idea for a bit. What are the tax/entertainment benefits of Illinois that Missouri residents cross the river to get? Let’s get the obvious out of the way here: Illinois gives you gambling like they have it in Vegas (no $2 entrance fee, no loss limits, no charge for drinks), strip clubs and horse racing. Next, if you are a Missourian lucky enough to have an office or close friends or family in Illinois, you can register your car there and avoid Missouri’s automobile property tax. Ticket scalping is also legal in Illinois, although that, like Sunday liquor sales, appears to be coming to Missouri. Finally, they have later bar closing hours, although asking a question like that at Pop’s suddenly gets very existential. (How can a bar never close???)

What benefits does Missouri offer Illinois residents? For the most part, it’s the lower taxes on gas and cigarettes that Illinois residents get here. We have a tax of 17 cents per pack and per gallon, both, while in the Land of Lincoln it’s 98 cents per pack and 32.5 per gallon. Missouri also has a lower sales tax in general than Illinois, although if you add in the local St. Louis sales taxes, I think the comparison evens out. Neither state has a bottle deposit law like Michigan, but it’s safe to say Missouri will be the last state in America to pass that, so we’ll count that for us.

So I suggest we declare the middle hundred yards or so of the Eads bridge an area within both states, under control of an appointed, multi-state board like Metro, where the lower taxes and more permissive limits of either state apply. The area would need a gas station, a convenience store, a bar, a state revenue office that could serve both states, and a UPS store for your auto registration, and a Post Office Box. The bar would close late and sell packages-to-go, the gas would be cheap — the smokes, too — and it would all be a short walk to the Casino Queen, if that is how you like to spend your property tax savings. I intend to talk to the governors of both states about this, just as soon as I sober up.

P.S. — I was only joking about having to sober up.

According to an article in the St. Louis Post-Dispatch, Illinois may be looking to increase its cigarette tax to pay for health care:

State leaders are quietly exploring the possibility of doubling
Illinois’ cigarette tax to almost $2 a pack in an effort to fund Gov.
Rod Blagojevich’s universal health care plan.

Missouri’s cigarette tax would remain at 17 cents, the lowest in the nation. There is really a two-fold lesson here. One, instead of trying to tax an decreasingly popular lifestyle to provide health care for everyone, open health care to the free market. Two, this will lead many Illinois residents to border states like Missouri in the search for cheaper cigarettes. In my view, let them come. The welcome mat is out for Illinois.

An editorial in the St. Louis Post-Dispatch today discusses the findings of one person who is rummaging through the purchases of state officials. Of the billions of dollars of spending, here are a couple of interesting things that they, and I, are wondering why the state purchased:

What did the taxpayers get for the $950 in prizes for the Missouri
Horseshoe Pitchers Association? And what’s the story on the $9 spent
for shoe repair at Albert’s Shoe Repair? Whose shoes were they, and why
was the state picking up the tab?

The editorial also points out how troublesome it is that we can see where the purchases were made, but little else. There are no details of what exactly was bought, or what the exact purpose was. The website is a great step toward accountability, as I explained in an earlier blog entry, but hopefully, as time goes on, the system will provide greater detail about government expenditures.

P.S. The state of Missouri spent $5,615.15 at Imo’s in the last fiscal year. That’s a whole lot of pizza and toasted ravioli.

St. Louis County is proceeding (agenda item # 28) with the takeover of Conway Road in response to Westwood’s insane idea of jamming up alternate traffic routes during I-64 construction for a million other county residents, in order to benefit 284. Westwood village chairman Frederick Berger is quoted in the Post-Dispatch:

"I continue to think the county does not have the right to take over Conway Road," Berger said.

If this was just a politician grandstanding, that would be one thing. But he also serves as the village attorney, and as such is supposed to know the law. And that law, again according to the Post:

"County code and state law authorize the council to designate any road within St. Louis County as part of its arterial road system, regardless of city boundaries or opposition."

So he is completely wrong. End of argument. The article goes on to describe how other cities (Ladue, Frontenac, Creve Couer) objected to earlier county road takeover plans to handle I-64 construction and were able to come to an agreement with the county without a takeover. That is true, but what is left out is that the county got everything it wanted from the munis as part of those discussions. The threat to just take over the road and do whatever the county wants is very real, and there is no realistic municipality counter.

Westwood should drop this selfish idea of putting up gates during construction to screw everyone else. Then, and only then, should the county drop its takeover plans. I live in U. City. During MetroLink construction, we lost the use of the Forest Park Parkway for three years. Everyone has to sacrifice a little during these major construction projects. It is a part of democracy, and also just basic decency.

An article in today’s Southeast Missourian talks about a report that ranks Missouri teacher preparation at the bottom in the United States:

Missouri received low marks — C’s and D’s — in its regulations
dealing with quality, licensing and evaluation of teachers, state
governance of teacher preparation programs, alternate routes to teacher
certification and preparation of special education teachers.

The report criticizes the academic courses that education majors take, the fact that teachers are evaluated every other year rather than every year, and that the route to alternative certification is too burdensome — especially for people who want to transition from other careers to become teachers. There is some room to reform teacher education in Missouri, and it’s time to review how we train teachers here to make sure they have the skills necessary to teach children in the 21st century.

It was announced yesterday that Rep. Carl Bearden is resigning from the Missouri House. As a person who wants to see the education system improve, it’s a sad day to know that someone who fought for parents and students to have more options will leave the place where he could have made changes. I think this quote sums up his beliefs (courtesy of the Columbia Tribune):

"The educational establishment seems to have this opinion that unless
it’s your idea, or unless it’s blessed by you, no one outside of
education is smart enough to disagree. It almost comes across as, ‘How
dare you, as a non-educator, question or challenge what we think?’ That
attitude is growing very thin in this building."

Bearden didn’t make many friends in the public school system in Missouri, but it’s difficult to make friends in the establishment when you fight for reform. Good luck in whatever you do, Rep. Bearden.

John Hancock at MissouriPulse.com reports that Pork Busters miscalculated in its appropriations ranking of Sen. Claire McCaskill, which Maurice commented on yesterday:

Good news for Sen. Claire McCaskill. The government watchdogs at Pork Busters made an error. In a new report, Pork Busters mistakenly gave McCaskill the third worst Senate earmark index reform score of 16.6. The score was derived from 12 votes considered to be genuine opportunities to support earmark reform. A look at McCaskill’s vote-by-vote analysis finds that she was mistakenly held accountable for five votes cast prior to her election last fall.

This doesn’t improve her score by too much, but we present the correction because we strive for accuracy.

It’s not our goal here to try to make particular politicians look bad —— our goal is to make a case for good policy and good political decisions. That may mean we criticize bad policy at times, but we’re also happy to see good efforts to succeed. And I genuinely hope that McCaskill’s efforts to reform the congressional earmark process are successful. It’s a battle well worth fighting.

Two errors have been made in the discussion of whether pensions should be taxed. The error I made was not getting enough personal information from Maurice before posting, although in my defense it is not my business to know the details of his family’s finances, and I did not want to pry. The error he made, and continues to make in his latest post, is in following Mickey Kaus’ first rule of journalism, which is to always generalize wildly from your own personal experience.

Maurice’s father may be getting double-taxed on his pension. I trust Maurice’s info on his family, but we don’t know whether his dad was able to take a tax deduction for those contributions, which is very likely and would make his union-pension similar to a traditional IRA. Anyway, the point is moot, as the majority of traditional pensions in America, the defined benfit plans, are corporate- and employer- funded. In those majority of cases, the income was never counted or taxed for the individual.

Maurice may be right about union-sponsored, post-tax plans, and if so I completely agree that, presuming no tax deduction at the time of contribution, they should be tax-exempt during retirement.  But that is a minority of pensions in America. Most pensions are employer-funded. Most people who receive pensions never paid any taxes at all on that money. As long as we are taxing anyone’s income, those penions should be taxed as well.

In today’s punch-right-between-the-eyes example of why Saint Louis County has too many municipalities, the Village of Westwood wants to contribute to the greater good by closing access to a major alternate route during I-64/40 reconstruction. Westwood, with a population of 284, and previously known mostly for its country club, and for being the home of the player who hit the most home runs in the old Busch Stadium, does not want traffic coming down Conway Road instead of I-64. 

St. Louis County has said it will consider taking over Conway within Westwood if Westwood moves forward with this. That is a surprisingly easy thing for the county to do, and although Westwood has threatened to sue if that happens, I doubt that threat puts much fear into St. Louis County. Previously, St. Louis County has reached agreements with other municipalities to make the necessary road improvements during I-64 reconstruction. I particularly liked getting rid of that stupid stop sign on eastbound Clayton Road at McCutcheon. Hopefully, good sense will prevail in Westwood and they will be a better neighbor. But, if not, I hope St. Louis moves ahead with a takeover of the road for the length of the project.

The idea that a tiny village could put a log-jam like this into such an important project is just insane.  Everybody is going to have to make sacrifices during this project, and everybody includes Westwood.

Here at the Show-Me Institute, we do have disagreements on policy, and I have one with David Stokes. In his blog entry yesterday about taxing pensions, he says that in many cases, since employers put money into people’s 401(k) plans or Roth IRAs, money paid out of pension funds should be taxed — because that income wasn’t taxed in the first place.

Well, in those cases I’ll agree with him that it might be fair that those funds are taxed, since they were not taxed in the first place as real income.

Yet I don’t agree with this reasoning for all plans. My father doesn’t have an IRA or a 401(k) plan; he is on a defined benefit plan sponsored by the union he is in. This plan was funded by his post-tax wages, so everything in the fund has already been subject to an income tax. This pretty much means that when he receives his defined amount every month, if it’s taxed, it reduces the funds he has to live on. This deduction rises well over $100 a month.

In other words, he is being double-taxed on the money he put into his pension. It was taxed as income when he contributed, and it’s taxed as income now that he’s drawing on the funds. The real amount he could be living on each month as a retiree is reduced, because the federal and state taxes he pays on his pension check, in effect, reduce the standard of living that he worked for, for his retirement.

So I will temper my strong statement earlier, but I still believe that most retirement funds, especially pensions, shouldn’t be taxed.

I also agree with David on this: There needs to be serious reform on tax policy in Missouri and the United States. We can give tax credits to only so many people before we have to raise tax rates on others to make up the shortfall. Hopefully, one day when I retire, I will not be taxed for saving for my future.