Hyra’s Ideas on Taxes Deserve a Wide Hearing

Cliff Hyra in campaign mode. Photo credit: Richmond Magazine

I’m glad to see that the Richmond Times-Dispatch actually gave some ink to the official campaign launch of Libertarian Party nominee Cliff Hyra. As far as I can tell from my perusal of the Virginia Public Access Project’s daily VaNews digest, the T-D was the only major newspaper to do so.

(However, Richmond Magazine did publish an interview with Hyra here, and Bearing Drift covered his campaign announcement here.)

Hyra’s predecessor, Robert Sarvis, won 6.5% of the vote running against Terry McAuliffe and Ken Cuccinelli. While the Libertarian Party is not threatening to win a statewide office any time soon, its candidates do bring fresh perspectives to otherwise stale debates.

Hyra, a 34-year-old patent attorney residing in a suburb north of Richmond, could liven up the campaign. His big themes are innovation and inclusion. He advocates a cut in the state income tax, legalization of marijuana, pardons for prison inmates convicted for drug offenses, more charter schools, and elimination of Virginia’s Certificate of Public Need restrictions on healthcare facilities. 

That’s certainly not a package of proposals you’re likely to see from anyone in either the Republican or Democratic parties.

Hyra’s tax proposal differs from Republican nominee Ed Gillespie’s by spreading the benefits more widely among taxpayers. Where Gillespie would cut existing tax brackets 10% across the board, conferring the biggest benefits upon higher-income taxpayers in higher tax brackets, Hyra would raise household exemptions up to $60,000. All taxpayers would benefit, but working class and middle-income citizens would enjoy a bigger break as a percentage of income than the well-to-do.

Unlike some Libertarian candidates, Hyra has concrete ideas on how to pay for the tax cuts — and they don’t require any hocus-pocus assumptions that cuts would stimulate enough economic growth to pay for themselves. He proposes dusting off the recommendations of the 2002 Wilder Commission, proposed during the Warner administration, to see if some never-implemented ideas might be resurrected. Specifically, he would look to see if the state’s real estate portfolio could be administered at lower cost, and if excess property could be sold.

Hyra proposes to save more money through reforms to the criminal justice system — fewer inmates might allow the state to close a prison. Also — I offer this free advice — he could consider rolling back tax breaks, exemptions and deductions in the state income tax code, which usually go to the well-heeled, to pay for his tax break. Hyra’s idea could accomplish the seemingly impossible: cut taxes, make the tax code more progressive, yet not stick it to the rich.

Hyra’s ideas on taxes probably could use some polishing. But his proposal certainly is credible enough to deserves airing in the campaign. I would love to see Hyra and Gillespie go one-on-one on how best to structure tax cuts and pay for them. Perhaps Democrat Ralph Northam could chime in on why tax cuts are not a good idea at all. Citizens would benefit from a more vigorous discussion of the issues facing Virginia.

I hope the media treat Hyra as more than a curiosity, and I hope he fares well enough in the opinion polls to warrant inclusion in the major candidate debates. That would make the debates worth watching!

Update: Bart Hinkle, the Times-Dispatch libertarian editorial page editor, writes favorably about Hyra here.

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14 responses to “Hyra’s Ideas on Taxes Deserve a Wide Hearing

  1. I think there are two distinct parts to tax cuts:

    1. – a service is being provided by the govt – is it a service that is needed? Can you do with less State troopers, or prison guards.. or teachers?

    2. – for each of those employees – they are contributing to the economy by buying goods and services with their state-paid salaries. If you cut their job – their contribution to the economy goes away.

    Now.. it’s true that the tax-cut will then go into the private economy ..hire someone and they will then purchase goods and services.

    But that’s just trading a govt service for a private sector service. It’s not a net gain unless the govt-provided service was not “productive” and did not provide as much value (productivity) as the replacement private sector job would.

    So the idea that you might cut prison guards by incarcerating less .. actually does make sense in terms of trading a govt job for a private sector job. But the private sector job is not a job that will generated any more purchasing of goods and services than the govt-job employee was spending… it’s just a transfer of spending from a govt employee to a private sector employee.

    There IS .. SOME GAIN in productivity – but it is minimal.. and it hinges on whether or not the private sector job is really more “productive”.

    For instance, is it better for taxpayers to buy a state trooper or not have that trooper and use the recouped tax cut to spend on .. say.. a cruise ship trip or a more expensive SUV … or a vacation home in another state?

    The problem is that the real payback of a tax cut is often misrepresented.. way overstated … and the voter… misunderstanding – with help – as to what “good” will actually accrue. Yep.. they’ll get more money back .. and.. one less deputy or a school program cut….etc…

    • That’s all very fine, but Hyra is not assuming a gain in productivity as justification for his tax cuts. He is not billing this as a fiscal stimulus. He wants to offset the lost revenues with spending reductions.

      • Exactly right. As you know libertarians believe in liberty. They recognize anything but minimally sized government as a hinderance to liberty. Therefore, there only reason necessary to cut taxes is because you can.

  2. Agree.. but when you reduce “spending” – you’re reducing the goods and services that were bought with that spending via the salaries paid to govt employees.

    That’s why I say we’re not recognizing what tax cuts really are.

    every cut in taxes is also a cut in an employee … who purchases goods and services in the economy with their pay.

    If you cut the spending, you cut the employee – and in turn what they were contributing to the economy.

    Isn’t this exactly the impact of the Feds cutting (sequestration).. jobs in NoVa or Hampton? you cut that govt spending and it results in cuts to jobs.

    on the other side – if you take the Medicaid expansion – it will generate 30,000 jobs… funded from taxes paid …

    I’m not arguing pro or con with regard to tax cuts – only that we really understand what it really means …. whether we like it or not – taxes pay fr employees – who then spend money on goods and services – in the economy.
    you cut taxes, you cut them ergo you cut their purchasing of goods/services.

    it’s not “free”.

    • Scenario 1 – I have $100 in my pocket and the government takes $50. It gives the $50 to a government employee as salary. I spend $50 and the government employee spends $50.

      Scenario 2 – I have $100 in my pocket and the government recognizes that money as my property and takes none of it. I spend $100.

      Not sure how redistributing the money increases spending (without getting into the intricacies of spending vs capital formation varying by the marginal utility of money).

  3. Government spending, funded by taxes from the private sector, does contribute to economic growth. And, without any government, we’d live in chaos.

    But private sector growth is more necessary to economic growth than government spending. Without private sector spending there would be no revenue for taxes and no government beyond voluntary cooperation.

    There is also better economic discipline in the private sector. No private sector activity can occur without self-sacrifice. A person has to save money to start and operate a business. Other funding comes from the savings of others. Moreover, in most market segments, market forces discipline “bad businesses.” They cannot sell their goods and services at a profit or raise capital.

    Much government spending continues irrespective of its efficiency and effectiveness. Look at the State of Illinois. Fairfax County officials have stated their supplemental pension plans for both county and school employees are not sustainable in the long run. Yet, both the BoS and the School Board have deferred and deferred addressing the pension plans. From April 2015 to December 2016, cash payments and unfunded liabilities grew by more than $1.1 billion dollars. Yes, that is billion, not million. Each penny on the county real estate brings in c. $24 million. Do the math.

    We need better balance between the public/government sector and the private sector. If the latter grew faster, we would have both wage and tax growth.

  4. re: private sector spending – agree… more precise – commerce… transactions between people… companies…etc.. of which the govt taxes.. takes a “cut” from which to provide … things the private sector would not or would not in an efficient – standardized way.

    examples… security – instead of citywide or State police… security for individuals or certain neighborhoods… etc..

    water/sewer….. ditto

    roads…. ditto… private roads… toll roads.. etc

    electricity – yes… because there has to be utility easements of which would not exist for all land if people could deny them from coming across their property.

    re: discipline in the private sector – don’t agree… have you looked at some of the companies out there? there are really bad companies…that continue to operate… regardless of competition… without govt they’d prey on consumers… they’d despoil and severely damage the environment… and they’d sell goods and services that are frivolous and would not contribute to a better society… i.e. gambling… porn… prostitution… drugs , slave labor.. etc. that’s an “economy” also..

    the question is would you have less govt and less govt spending for things society needs if that money went for things that not only did not benefit society but actually degraded it?

    so you worry about your neighborhood and your investment in your house being degraded by people who would live ten to a house… that’s an “economy”.. but you’d certainly prefer to pay government bureaucrats to keep people from doing that in your neighborhood… right?

    is that “more efficient” government if you had less zoning laws and restrictions that actually would provide lower cost housing to others as well as less spending on govt bureaucrats?

    Public schools.. your taxes would be cut in half without public schools , i.e. govt spending -no question. would that benefit you?

    these are not easy questions – but to get back to the tax cut idea… when you propose cutting taxes and letting the private sector “do it”… be careful for what you wish for.

    I see the “more efficient, less govt spending” idea as an analog of “don’t tax me , tax that guy behind the tree”.

    So when folks propose tax cuts – they should also disclose WHAT they would cut because that’s essentially what they are proposing…

    do you want less teachers, less State Troopers.. les DEQ folk…less zoning and regulation administrators..and enforcement?

    • Interestingly, several teachers who left Fairfax County Public Schools recently spoke to a community group about why they left FCPS. While compensation was a factor, they complained more about interference from staff about what is taught and how to teach it, and the refusal of both local administrators and staff to listen to, and to incorporate good suggestions from teachers into the operations of the schools. Sounds to me as if some of these public employees (administrators and staff) don’t add much to the educational process. And I bet both make more than many teachers. Save those jobs!

  5. RE: Fairfax teachers.. compensation.. and good ideas.

    Is there some other place they can go for more/better compensation?

    Down our way – the teachers are always citing Fairfax as where they could be tempted to go to for more money… but the reverse is not true at all!

    I’m sure Fairfax could do better but I have to say .. in Virginia .. as a district … they have few if any peers… and that’s quite an accomplishment for one of the biggest school systems in the entire country.

    But you could save a boatload of money if you wanted to get rid of all but the state-mandated positions… so you do have to acknowledge that Fairfax citizens do voluntarily choose to pay almost 3 times as much in taxes for voluntary courses.. and services… not mandated by the State but by Fairfax.

    Many school systems in Virginia fund schools at far lower rates – and have the lower academic performance to show for it.

  6. Some of his stuff is interesting, but I’m still not clear how the state income tax drop would work. If you sell off state property, that’s a one-time thing and doubtful it would be sustainable.

    • The GA just has to spend less. It’s like what happens when a big client comes to the table and requests a special, lower rate or imposes arbitrary restrictions on what can and cannot be billed. You sometimes have to do more with less. This happens to businesses all the time.

      Another factor that could result in some savings is Trump’s enforcement of the immigration laws. It’s clear that much of the illegal immigrant community requires more government services than legal immigrants, lawful residents and citizens. (Heck, even Fairfax County Public Schools’ executives will admit that, off the record.) It’s my understanding that strong enforcement has not only resulted in the deportation of a higher number of people, but has also slowed the entry over the boarder, caused voluntary migration out of the United States and caused individuals not to apply for, or to terminate their use of, government services.

      Now if Trump would get as aggressive with those who overstay their visas, we might see some real savings. And higher wages for those at the bottom.

    • I wondered the same thing about selling off state property. Sounds like Mr. Hyra needs to go back and review the difference between balance sheet impacting and income statement impacting transactions.

  7. DJ… there are huge carrying costs to the buildings that the state owns. Many of them are staffed at a fraction of the available space and are still paying for the overhead to run the agencies’ functions. There are storage facilities that are decrepit and run down that could be sold to someone who’d actually utilize them. The State’s real estate portfolio is not some balance sheet versus income statement issue. There are carrying costs with all of the real estate that is owned. The net proceeds should go to pay down debt, which is how the government gets around sticking to their budgets. How about THAT for balance sheet impact?

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