My column for the e-zine takes a look at TELs — Tax and Expenditure Limits — and why it’s high-time for Virginia to have such a law on the books.
Tomorrow at 10AM, our own Jim Bacon will join me on TQ radio to discuss TELs, the budget mess in general and a lot more. If you’ve got a question, comment or beef, call (347) 426-3146 and fire away.
(comments below)
(comments below)
There is no reason to think that spending limits should be linked to only population and inflation.
A better limit would link spending to Gross State Product or something else linked to our productivity, rather than our fecundity.
RH
I think the Bureau of Economic Analysis figure for personal income would be a good measure because over time it tracks population increases and is in current inflated dollars.
The state of Tennessee has a provision in the law that does not permit spending more than the state makes. It has been the reason why the occasional senator or representative does not vote for the budget but it is weak because it only requires a majority vote to override the law. Unless the voting margin is up in the 60 to 66 percent range, it is going to be worthless.
I think the reason for this is at 50%, there is a lot of room for horse trading. You vote for my bad bill and I will vote for your bad bill. When a measure has to pass by 2/3. You can not as easily broker a deal to trade out favors.
The state and local governments of Tennessee collect 8.5 cents of every personal dollar earned but the annualized rate of personal income increase from 1997 to 2006 was only 4.66% per year. Many county budgets are rising at twice that rate as they sop up the federal tax rebate with higher taxes. In fact, in tennessee, the per capita taxes have risen within the 2001 level and have totally neutralized the 2002 tax federal rebate.
“In fact, in tennessee, the per capita taxes have risen within the 2001 level and have totally neutralized the 2002 tax federal rebate.”
I don’t see what one has to do with the other. Presumably the counties needed the money for something. Wouldn’t they have raised the money with or without the federal rebate?
Otherwise fine: use measures of personal income to set limits on personal taxes and measures of corporate income to set limits on corporate taxes.
You can’t squeeze blood out of a stone and you can’t take money where ther isn’t any.
But, if you need money for some legitimate public benefit, then there is no reason to leave new money on the table untaxed just because you restricted yourself to inflation + population.
Especially if it is a public benefit that provides infrastructure that allows citizens the opportunity to make more money. Sure, excessive taxes kill economic opportunity and income, but so does too little taxation.
The caveat is “if you need money for some legitimate public benefit”, which still means that there is room for fiscal restraint and curbing spending that does not provide a legitimate public benefit.
RH
… and we decide whether or not something is a “public benefit” worthy of increasing taxes …
.. how?
“mob rule” ?
There you go again, Mr. Leahy. Just come right out and say it, you think that government at all levels should be reduced so you and your friend Grover Norquist can drown it in a bath tub.
I will challenge you again. Show me any valid statistical evidence that ties government spending solely to population and inflation. I am from Missouri, so Show Me!
Why don’t you call for the repeal of all of the federal water quality mandates, the American with Disabilities mandates, the federal educational mandates, the tax exemption for federal properties, etc.? That would reduce state and local spending significantly. Instead, you just want to cripple government.
Bo’sun
Well, the OMB says the way to do it is by measuring net social benefit:
make sure that most people are in fact better off, and the ones that are not are properly compensated.
http://www.whitehouse.gov/omb/circulars/a094/a094.html
“The goal of this Circular is to promote efficient resource allocation through well-informed decision-making ….”
“The Circular applies specifically to:
1)Benefit-cost or cost-effectiveness analysis of Federal programs or policies.
2) Regulatory impact analysis.
3)……..”
“The standard criterion for deciding whether a government program can be justified on economic principles is net present value — the discounted monetized value of expected net benefits (i.e., benefits minus costs). Net present value is computed by assigning monetary values to benefits and costs, discounting future benefits and costs using an appropriate discount rate, and subtracting the sum total of discounted costs from the sum total of discounted benefits.”
“Social net benefits, and not the benefits and costs to the Federal Government, should be the basis for evaluating government programs or policies that have effects on private citizens or other levels of government. Social benefits and costs can differ from private benefits and costs as measured in the marketplace because of imperfections arising from: (i) external economies or diseconomies where actions by one party impose benefits or costs on other groups that are not compensated in the market place; (ii) monopoly power that distorts the relationship between marginal costs and market prices; and (iii) taxes or subsidies. “
“There are no economic gains from a pure transfer payment because the benefits to those who receive such a transfer are matched by the costs borne by those who pay for it.”
“Estimates of benefits and costs are typically uncertain because of imprecision in both underlying data and modeling assumptions. Because such uncertainty is basic to many analyses, its effects should be analyzed and reported. Useful information in such a report would include the key sources of uncertainty; expected value estimates of outcomes; the sensitivity of results to important sources of uncertainty; and where possible, the probability distributions of benefits, costs, and net benefits.”
I know that is all bizarre, but it is also official U.S. Policy.
RH
Bosun’
I like the story of the Little Dutch Boy who discovered a leak in the Dike. Well, he said, this dike is faulty, the corporatins that built it don’t deserve a bailout, besides all those people are stupid to live in the flood plain.
The Little Dutch Boy did nothing, eventually the dike failed and all those in the flood plain drowned, and got their just desserts.
The Little Dutch Boy drowned, too.
RH
if he had anything to do with all that gobblygook you used up data bits to “share” – he deserved it.
That gobbledygook is U.S. Government policy. Officially, it is the way things are supposed to be done. “Social net benefits, and not the benefits and costs to the Federal Government….” There are certain things it does not apply to, for which the policies are spelled out in different circulars.
It specifically does not apply to water resource projects, or federal energy management programs. Apparently, they do not have to show a positive net return.
I believe the clean air act is also exempt from cost benefit analysis.
RH
apparently, it does not apply to mercury pollution from power plants either….
these stated policies – dozens/hundreds are mostly blather….
yes.. it makes perfect sense to do cost/benefit comparisons on virtually every proposed law or regulation…..
but it’s not so simple….when you get down to specifics…
for instance, how do you calculate the dollar value on a pollutant that will double the risk of a certain type of cancer in some people?
Do we count everyone who got that cancer – as getting it as a direct consequence of that pollutant?
Mercury harms developing fetuses but does not kill them.
How do you determine how much harm and how do you figure out which ones were harmed and how much they should be compensated for being harmed?
and who owes the compensation?
do we tax everyone to provide this compensation or should it come from the power company – investors?
so for pollution.. it’s not so simple despite all the high sounding language…
and in the end for much of it, it boils down to –
“do we allow something until and unless we have enough data to prove it is harmful ..or do we require for it to be proven safe before we allow it”?
ahhh. I know .. you think it is a “property right” to pollute but how about if we applied such logic to something like prescription drugs?
would you be in favor of allowing any company to produce any prescription drug until it was proven harmful?
and… who should pay for the study to prove it harmful?
what if the drug company does not want to pay for the study?
what if the drug company says that it is convinced that the cost/benefit is very good because the drug is very profitable so why would it not be?
prescription drugs and pollution – in the context of the “policy” you stated…..
“apparently, it does not apply to mercury pollution from power plants either….”
That is exactly what I said. I might be wrong, but I believe the clean air act is exempt from cost analysis. We can spend any amount we wish to eliminate mercury pollution from power plants, even if we might be better off spending it on something else.
———————
“but it’s not so simple….when you get down to specifics…”
The basics are pretty simple. The problem is that it isn’t perfect. there are unknowns and probabilities in play. The point of the analysis is to get the cost with some manageable range – and to point out where the uncertainties are. But eliminating the uncertainties has a cost too – We can work on them later when the cost/benefit of solving THAT problem is higher than some of the other, larger problems at hand.
Anyway, if it turns out that you cannot solve the problem, then you probably do not know enough to make exaggerated claims about what needs to be done.
———————–
“you think it is a “property right” to pollute “
There are two ways to look at this. You can say that there is no right to pollute, but that everyone has a right to clean air. You might think that right is worth more than I do, but it is still my right to sell my portion – to someone willing to pay to pollute.
The going in assumption here is that my right to clean air includes more air than I will actually use – so that I can sell the surplus without having to give up the right to breathe. The assumption is that there is some right to the ability of air to clean itself, so you are buying a flow, not a chunk. And, you could get more rights, by say creating a forest. (We are already doing this, in a sense.)
Under this plan, no one has the right to pollute, but they do have the right to buy that right on the open market. However much you might object to my selling, you don’t have the right to stop me: the right to sell being implicit in the right to property.
If you think clean air is a lot more valuable than I do, then you can bid against the polluters to buy additional rights for yourself.
The other way to look at it is to agree that there are rights to pollute, and they are distributed equally. If a polluter wants to pollute more than his right (and maybe that of his employees), then he would have to go buy those rights on E-bay or something.
You might not sell yours, and drive the price up, eventually, you might be so successful, that it looks like a good enough deal that I decide I can take the Mercury risk, so I sell.
Either way, the market decides what is of value. What we do now is mostly ignore the costs, or accept cost benefit studies with such a wide range of values as to be meaningless.
RH
“so for pollution.. it’s not so simple despite all the high sounding language…”
Nope, it is exactly the same problem. You either make a rational decision or you don’t. You either make a cost effective one, or you don’t.
You might not know what is cost effective, but that doens’t mean you cannot make a huge mistake. such a mistake inevitably affects someone else’s property rights, so you do NOT have the right to simply accept undue caution as the cost of possibly preventing something someday, no matter the price.
You have an obligation to make the BEST determination possible, just as much as the polluter has an obligation to use the BEST available technology.
If you do not, then there is a huge probability that you are making an environmental mistake. I don’t think we can afford such mistakes, either environmentally, or economically.
RH
I would say that since you do not own the air or the water that your only right is to use it without degrading it – unless you receive permission to do otherwise.
so. you can not “appropriate” what is not yours and then essentially threaten to pollute it if others don’t pay you not to….
in other words – there is no “market” for what you don’t own in the first place….
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