Pinkerton was referring to the economist F.A. Hayek. Others have also noted that changes to marginal tax rates often have little impact on the amount of taxes actually paid. The top marginal tax rate — that’s the rate that applies to high income earners on most of their income — was above 90 percent during most of the 1950s. From 2003 to 2012 it was 35 percent, and is now 39.6 percent.
The top marginal tax rate is the rate that applies to income. It’s not the same as what is actually paid. This fact is unknown or ignored by those who clamor for higher taxes on the rich. They often cite the rising prosperity of the 1950s as caused by the high marginal tax rate in effect at the time.
The mistake the progressives make is equating tax rates with the tax actually paid. For many people, there is a direct relationship. For workers who earn a paycheck, there’s not much they can do to change the timing of their income, find tax shelters, or shift income to capital gains. When income tax rates rise, they have to pay more. But rich people can use these and other strategies to reduce the taxes they pay.
But as Pinkerton told the conference attendees, the high tax rates make the middle class feel better about paying their own taxes. They may take comfort in the fact that someone else is worse off, at least based on the misconception that high tax rates mean rich people actually pay correspondingly higher tax.
In 2010 W. Kurt Hauser explained in The Wall Street Journal: “Even amoebas learn by trial and error, but some economists and politicians do not. The Obama administration’s budget projections claim that raising taxes on the top 2% of taxpayers, those individuals earning more than $200,000 and couples earning $250,000 or more, will increase revenues to the U.S. Treasury. The empirical evidence suggests otherwise. None of the personal income tax or capital gains tax increases enacted in the post-World War II period has raised the projected tax revenues. Over the past six decades, tax revenues as a percentage of GDP have averaged just under 19% regardless of the top marginal personal income tax rate. The top marginal rate has been as high as 92% (1952-53) and as low as 28% (1988-90). This observation was first reported in an op-ed I wrote for this newspaper in March 1993. A wit later dubbed this ‘Hauser’s Law.'”
Incentives matter, economists tell us. People react to changes in tax law. As tax rates rise, people seek to reduce their taxable income. A common strategy is to make investments in economically unproductive tax shelters. There is less incentive to work, to save and build up capital stocks, and invest. These are some of the reasons why tax rate hikes usually don’t generate the promised revenue.
The subtitle to Hauser’s article is “Tax revenues as a share of GDP have averaged just under 19%, whether tax rates are cut or raised. Better to cut rates and get 19% of a larger pie.” The nearby chart illustrates. The top line, the top marginal tax rate in effect for year year, varies widely. The other two lines show total taxes and federal income taxes as a percent of gross domestic product. Since World War II, these lines are fairly constant, even as the top marginal tax rate varies.
This month, parents and children from around Kansas rallied in the Kansas Capitol for school choice.
Speakers included James Franko of Kansas Policy Institute. He told the audience that children deserve better than what they are getting today. For many, he said that might be in a public school, but for many others it may be in a private school. Parents and their children should make that decision. It shouldn’t be based on their zip code. Individuals, not institutions, should be the focus.
Kansas now has a private school choice program. Franko told the audience that newspaper coverage of this program emphasizes how it helps private schools and hurts public schools. But we should be reading stories about how school choice helps kids, giving each child the freedom and opportunity to find the best educational fit. He explained that school choice also helps the students who remain in public schools, referring to a Friedman Foundation for Education Choice study. “It’s about helping every single child,” he said.
The study Franko mentioned is A Win-Win Solution: The Empirical Evidence on School Choice. In its executive summary, author Greg Forster, Ph.D. writes “Opponents frequently claim school choice does not benefit participants, hurts public schools, costs taxpayers, facilitates segregation, and even undermines democracy. However, the empirical evidence consistently shows that choice improves academic outcomes for participants and public schools, saves taxpayer money, moves students into more integrated classrooms, and strengthens the shared civic values and practices essential to American democracy.”
Later, the specific finding that Franko used in his talk: “Twenty-three empirical studies (including all methods) have examined school choice’s impact on academic outcomes in public schools. Of these, 22 find that choice improves public schools and one finds no visible impact. No empirical study has found that choice harms public schools.”
Michael Chartier of the Friedman Foundation for Education Choice said that there are now 51 school choice programs in 24 states plus the District of Columbia.
Andrea Hillebert, principal of Mater Dei Catholic School in Topeka told the audience that school choice benefits families, schools, and the state. Families can choose the learning environment that is best for their children, and are not penalized if they choose a school that is not run by the government. She told the audience that “school choice encourages — requires — families to take an active role in shaping their students’ future.” Schools benefit because consumer choice is a catalyst for innovating programming and continuous improvement. The state benefits from the increased achievement of students in non-public schools.
Susan Estes of Americans for Prosperity – Kansas explained that even as a former public schoolteacher, it has been a challenge for her to navigate the school system so that the needs of her three children were met. She said that parents not only deserve, but have the right to be the primary decision maker for their children.
Bishop Wade Moore, founder and principal of Urban Preparatory Academy in Wichita, completed the program. Urban Prep is a new private school in northeast Wichita, and students from that school attended the rally. He said that our legislators have “a moral responsibility to do what is right for each Kansas kid.” He mentioned the students that are pushed through the system until they graduate, but are unprepared for college, trade school, or employment. “A lot of those children have no chance at life. So we say that we have a crisis in this nation,” he said.
Alluding to how Kansas has few school choice programs, Moore said “It’s time for us to wake up and move ahead, like the rest of the nation, in education reform.” He said that he heard a school superintendent make the statement that our children and parents have a choice in education. He said “They can choose one of our schools to attend.” That is not choice, Moore said. Real choice is when parents have the opportunity to go outside the public school system.
The reason for the poor academic performance of many children is that their parents have not had choice and control over the children’s education. “It is imperative that all children, regardless of their race, gender, place of residence, and socio-economic status, learn the concepts and strategies necessary for them to develop and succeed,” he told the audience.
Sam Williams, a candidate for Wichita mayor, is not entitled to use the title “CPA,” according to Kansas law.
“I am a Certified Public Accountant.”
“– Sam Williams, CPA”
“CPA Sam Williams”
“Being a CPA, Sam Williams …”
“Bert Denny, CPA — Treasurer”
These are some of the statements you’ll find on campaign and biographical material for Wichita mayoral candidate Sam Williams. But he isn’t licensed as a CPA, and Kansas law is clear on who can use the title “CPA.”
Kansas law states: “It is unlawful for any person, except the holder of a valid certificate or practice privilege pursuant to K.S.A. 1-322, and amendments thereto, to use or assume the title ‘certified public accountant’ or to use the abbreviation CPA …”
When asked if he was a licensed CPA in Kansas, Williams said that he was certified, but doesn’t have a license to practice. Asked about the statute that regulates unlawful use of the title “CPA,” Williams said “I never heard that before.”
It’s understandable that Williams does not have a CPA license in Kansas. He had such a license in Utah, expiring in 1990. In Wichita he worked as an executive in the advertising industry. He was not offering accounting services to the public.
As candidate for mayor of Wichita, the title “CPA” is front and center in Williams’ campaign. Advertising pieces make frequent use of the title, promoting business-related qualifications like knowing how to balance a budget and minimizing taxes.
We might dismiss this use of the CPA title as the type of resume-burnishing that is routine for candidates, and perhaps for anyone looking for a job. But Kansas has a law.
It’s not an obscure law, as this issue has been in the news. Last year United States Representative Lynn Jenkins of Topeka was granted special treatment by the Kansas Board of Accountancy, allowing her to continue to use the title “CPA” even though her license had expired. This was widely reported, and the Wichita Eagleeditorialized on this issue, quoting a Nebraska accounting board official as saying “She’s misleading the public.”
Sam Williams knew of the Jenkins case. He mentioned her by name when asked about using the “CPA” title. He knew of the controversy.
Of note, Williams’ treasurer is a CPA.
The Kansas statute
A Kansas law, K.S.A. 1-316 (c), states “It is unlawful for any person, except the holder of a valid certificate or practice privilege pursuant to K.S.A. 1-322, and amendments thereto, to use or assume the title ‘certified public accountant’ or to use the abbreviation CPA or any other title, designation, words, letters, abbreviation, sign, card or device likely to be confused with ‘certified public accountant.'”
A violation of this law is a misdemeanor, carrying a fine of up to $5,000 and up to one year imprisonment, or both.
Inquiry to the Kansas Board of Accountancy finds that Sam Williams has never had a CPA certificate in Kansas. His certificate from Utah expired in 1990, about the time Williams moved from Utah to Kansas.
While the statue seems clear, additional information from the Kansas Board of Accountancy is less than clear. In a document titled Who may use the CPA title in Kansas?, holds this advice; “For instance — if the CPA is a controller, CFO or an employee of a company that is not a CPA firm, whose responsibilities are to his/her employer only, then the use of CPA is allowable if used with the person’s name, the name of the company, and the person’s position with the company.”
This seems to allow someone like Williams — who was an executive with an advertising agency until retiring last year — some latitude in the use of the CPA title.
But the same document holds this: “What is also not allowed without a valid permit to practice, is advertising, phone book listing, letterhead, signature as a CPA on documents provided to the public (this includes friends and family), or third parties relying on the information provided.”
But recent history shows that when cash is needed, local governments have responded positively.
When Hawker Beechcraft threatened to leave Wichita for Baton Rouge, Wichita and Sedgwick County contributed $2.5 million each for an incentive. (Never mind that the threat to move was not real.)
Not long after that, the city and county contributed $1 million each for an incentive for Bombardier Learjet.
So there is recent history that shows when officials feel that spending on cash incentives is necessary, the city and county find the money. It’s difficult to imagine that if GWEDC officials had come to the city or county with a need for cash — especially if a deal was truly hinging on a cash contribution — that the council and commission would not find the money somewhere.
Job creation in context
For 2014, GWEDC claims credit for creating or retaining 424 jobs.
The Bureau of Labor Statistics tells us that for 2014, the labor force for local geographies was:
Sedgwick County: 242,460
Metro Wichita: 300,911
For each area, 424 jobs amounts to this percent of the labor force:
While economic development officials complain of lacking a deal closing fund, during last year’s sales tax campaign we were told that Wichita would not be competing by giving out cash. Material on the “Yes Wichita” campaign website, under the heading “Why is this plan different?” reads “It’s not about cash for jobs — it’s about investing in ourselves.”
Later on the same page: “We’ll let other cities compete with cash and instead we’ll invest in our people and infrastructure.”
A problem with wasteful spending in downtown Wichita is gradually curing itself, creating another problem in its place.
A bench at the heart of downtown Wichita should be illuminated at night by four lights. Only one light works, probably because the others have been left switched on 24 hours per day.
So wasteful spending on street lights during the day is being replaced by unlit streets at night.
What message does wasteful spending on street lights during the day send?
Perhaps more importantly, what impression does nonfunctioning lights at night create — three of four at this bench? And at one of our major downtown intersections? Across the street from our nice boutique hotel?
Is this the “walkable” downtown we’re trying to create?
I suppose that Wichita city leaders want to be seen taking care of our larger problems, and of those, we have a few. But this long-running problem with lights at this downtown street side bench needs to be taken care of soon. Visitors to our town may not be aware of the lofty and sweeping rhetoric of our mayor, bureaucrats, and civic leaders.
On February 19, 2015 the Sedgwick County Republican Party held a forum for Republican candidates for Wichita mayor. Attending, in the order of their appearance, were Sean Hatfield, Dan Heflin, Jeff Longwell, Sam Williams, and Jennifer Winn. Todd Johnson moderated. Jennifer Baysinger compiled questions from the audience and asked them of candidates. Sue Colaluca was the timing judge.
In this episode of WichitaLiberty.TV: We’ll take a look at a few things Wichita Mayor Carl Brewer told the city in his recent State of the City Address. Then a look at topics from a new book titled “The Libertarian Mind: A Manifesto for Freedom.” View below, or click here to view at YouTube. Episode 76, broadcast February 22, 2015.
In this excerpt from WichitaLiberty.TV: Sin taxes, and what the Kansas Legislature doesn’t want you to know. Originally broadcast February 8, 2015. View below, or click here to view at YouTube. For more on these issues, see:
In this excerpt from WichitaLiberty.TV: Wichita’s legislative agenda concerning transportation issues is unsound. For airfares, it relies on a questionable presentation, and for passenger rail, it advocates for a system that is costly for taxpayers. View below, or click here to view at YouTube. Originally broadcast December 7, 2014.
Here’s a timeline of events from the tenure of Lavonta Williams on the Wichita City Council. These are events related to cronyism and disrepect for the people of Wichita — except for her campaign contributors. For them, she voted for no-bid contracts and other taxpayer-funded largess. The behavior of Williams is one of the reasons that Wichita needs pay-to-play laws that prevent council members from voting to enrich their significant campaign contributors.
Here’s a timeline of events from the tenure of Jeff Longwell on the Wichita City Council. These are events related to cronyism and disrepect for the people of Wichita — except for his campaign contributors. For them, he voted for no-bid contracts and other taxpayer-funded largess. The behavior of Longwell is one of the reasons that Wichita needs pay-to-play laws that prevent council members from voting to enrich their significant campaign contributors.
The Kansas STAR bonds program provides a mechanism for spending by autopilot, without specific appropriation by the legislature.
Under the State of Kansas STAR bonds program, cities sell bonds and turn over the proceeds to a developer of a project. As bond payments become due, incremental sales tax revenue make the payments.
It’s only the increment in sales tax that is eligible to be diverted to bond payments. This increment is calculated by first determining a base level of sales for the district. Then, as new development comes online — or as sales rise at existing merchants — the increased sales tax over the base is diverted to pay the STAR bonds.
Often the STAR bonds district, before formation, is vacant land, and therefore has produced no sales tax revenue. Further, the district often has the same boundaries as the proposed development. Thus, advocates often argue that the bonds pay for themselves. Advocates often make the additional case that without the STAR bonds, there would be no development, and therefore no sales tax revenue. Diverting sales tax revenue back to the development really has no cost, they say, as nothing was going to happen but for the bonds.
This is not always the case, For a STAR bonds district in northeast Wichita, the time period used to determine the base level of sales tax was February 2011 through January 2012. A new Cabela’s store opened in March 2012, and it’s located in the boundaries of STAR bonds district, even though it is not part of the new development. Since Cabela’s sales during the period used to calculate the base period was $0, the store’s entire sales tax collections will be used to benefit the STAR bonds developer.
(There are a few minor exceptions, such as the special CID tax Cabela’s collects for its own benefit.)
Which begs the question: Why is the Cabela’s store included in the boundaries of the STAR bonds district?
With sales estimated at $35 million per year at this Cabela’s store, the state has been receiving around $2 million per year in sales tax from it. But after the STAR bonds are sold, that money won’t be flowing to the state. Instead, it will be used to pay off bonds that benefit the STAR bond project’s developer — the project across the street.
Taxation for public or private benefit? STAR bonds should be opposed as they turn over taxation to the private sector. We should look at taxation as a way for government to raise funds to pay for services that all people benefit from. An example is police and fire protection. Even people who are opposed to taxation rationalize paying taxes that way.
But STAR bonds turn tax policy over to the private sector for personal benefit. The money is collected under the pretense of government authority, but it is collected for the exclusive benefit of the owners of property in the STAR bonds district.
Citizens should be asking this: Why do we need taxation, if we excuse some from participating in the system?
Another question: In the words of the Kansas Department of Commerce, the STAR bonds program offers “municipalities the opportunity to issue bonds to finance the development of major commercial, entertainment and tourism areas and use the sales tax revenue generated by the development to pay off the bonds.” This description, while generally true, is not accurate. The northeast Wichita STAR bonds district includes much area beyond the borders of the proposed development, including a Super Target store, a new Cabela’s store, and much vacant ground that will probably be developed as retail. The increment in sales taxes from these stores — present and future — goes to the STAR bond developer. As we’ve seen, since the Cabela’s store did not exist during the time the base level of sales was determined, all of its sales count towards the increment.
STAR bonds versus capitalism In economic impact and effect, the STAR bonds program is a government spending program. Except: Like many spending programs implemented through the tax system, legislative appropriations are not required. No one has to vote to spend on a specific project. Can you imagine the legislature voting to grant $5 million per year to a proposed development in northeast Wichita? That doesn’t seem likely. Few members would want to withstand the scrutiny of having voted in favor of such blatant cronyism.
But under tax expenditure programs like STAR bonds, that’s exactly what happens — except for the legislative voting part, and the accountability that (sometimes) follows.
Government spending programs like STAR bonds are sold to legislators and city council members as jobs programs. Development and jobs, it is said, will not appear unless project developers receive incentives through these spending programs. Since no politician wants to be seen voting against jobs, many are susceptible to the seductive promise of jobs.
But often these same legislators are in favor of tax cuts to create jobs. This is the case in the Kansas House, where most Republican members voted to reducing the state’s income tax as a way of creating economic growth and jobs. On this issue, these members are correct.
But many of the same members voted in favor of tax expenditure programs like the STAR bonds program. These two positions cannot be reconciled. If government taxing and spending is bad, it is especially bad when part of tax expenditure programs like STAR bonds. And there’s plenty of evidence that government spending and taxation is a drag on the economy.
The word “capitalism” is used in two contradictory ways. Sometimes it’s used to mean the free market, or laissez faire. Other times it’s used to mean today’s government-guided economy. Logically, “capitalism” can’t be both things. Either markets are free or government controls them. We can’t have it both ways.
The truth is that we don’t have a free market — government regulation and management are pervasive — so it’s misleading to say that “capitalism” caused today’s problems. The free market is innocent.
But it’s fair to say that crony capitalism created the economic mess.
But wait, you may say: Isn’t business and free-market capitalism the same thing? Not at all. Here’s what Milton Friedman had to say: “There’s a widespread belief and common conception that somehow or other business and economics are the same, that those people who are in favor of a free market are also in favor of everything that big business does. And those of us who have defended a free market have, over a long period of time, become accustomed to being called apologists for big business. But nothing could be farther from the truth. There’s a real distinction between being in favor of free markets and being in favor of whatever business does.” (emphasis added.)
Friedman also knew very well of the discipline of free markets and how business will try to avoid it: “The great virtue of free enterprise is that it forces existing businesses to meet the test of the market continuously, to produce products that meet consumer demands at lowest cost, or else be driven from the market. It is a profit-and-loss system. Naturally, existing businesses generally prefer to keep out competitors in other ways. That is why the business community, despite its rhetoric, has so often been a major enemy of truly free enterprise.”
The danger of Kansas government having a friendly relationship with Kansas business is that the state will circumvent free markets and promote crony, or false, capitalism in Kansas. It’s something that we need to be on the watch for. The existence of the STAR bonds program lets us know that a majority of Kansas legislators — including many purported fiscal conservatives — prefer crony capitalism over free enterprise and genuine capitalism.
Government bureaucrats and politicians promote programs like STAR bonds as targeted investment in our economic future. They believe that they have the ability to select which companies are worthy of public investment, and which are not. It’s a form of centralized planning by the state that shapes the future direction of the Kansas economy.
As Hayek pointed out, knowledge that is important in the economy is dispersed. Consumers understand their own wants and business managers understand their technological opportunities and constraints to a greater degree than they can articulate and to a far greater degree than experts can understand and absorb.
When knowledge is dispersed but power is concentrated, I call this the knowledge-power discrepancy. Such discrepancies can arise in large firms, where CEOs can fail to appreciate the significance of what is known by some of their subordinates. … With government experts, the knowledge-power discrepancy is particularly acute.
Despite this knowledge problem, Kansas legislators are willing to give power to bureaucrats in the Department of Commerce and politicians on city councils who feel they have the necessary knowledge to direct the investment of public funds. One thing is for sure: the state and its bureaucrats and politicians have the power to make these investments. They just don’t have — they can’t have — the knowledge as to whether these are wise.
What to do The STAR bonds program is an “active investor” approach to economic development. Its government spending on business leads to taxes that others have to pay. That has a harmful effect on other business, both existing and those that wish to form.
Professor Art Hall of the Center for Applied Economics at the Kansas University School of Business is critical of this approach to economic development. In his paper Embracing Dynamism: The Next Phase in Kansas Economic Development Policy, Hall quotes Alan Peters and Peter Fisher: “The most fundamental problem is that many public officials appear to believe that they can influence the course of their state and local economies through incentives and subsidies to a degree far beyond anything supported by even the most optimistic evidence. We need to begin by lowering expectations about their ability to micro-manage economic growth and making the case for a more sensible view of the role of government — providing foundations for growth through sound fiscal practices, quality public infrastructure, and good education systems — and then letting the economy take care of itself.”
In the same paper, Hall writes this regarding “benchmarking” — the bidding wars for large employers that Kansas and many of its cities employ: “Kansas can break out of the benchmarking race by developing a strategy built on embracing dynamism. Such a strategy, far from losing opportunity, can distinguish itself by building unique capabilities that create a different mix of value that can enhance the probability of long-term economic success through enhanced opportunity. Embracing dynamism can change how Kansas plays the game.”
In making his argument, Hall cites research on the futility of chasing large employers as an economic development strategy: “Large-employer businesses have no measurable net economic effect on local economies when properly measured. To quote from the most comprehensive study: ‘The primary finding is that the location of a large firm has no measurable net economic effect on local economies when the entire dynamic of location effects is taken into account. Thus, the siting of large firms that are the target of aggressive recruitment efforts fails to create positive private sector gains and likely does not generate significant public revenue gains either.'”
There is also substantial research that is it young firms — distinguished from small business in general — that are the engine of economic growth for the future. We can’t detect which of the young firms will blossom into major success — or even small-scale successes. The only way to nurture them is through economic policies that all companies can benefit from. Reducing tax rates is an example of such a policy. Government spending on specific companies through programs like STAR bonds is an example of precisely the wrong policy.
We need to move away from economic development based on this active investor approach. We need to advocate for policies at all levels of government that lead to sustainable economic development. We need political leaders who have the wisdom to realize this, and the courage to act appropriately. Which is to say, to not act in most circumstances.
Industrial Revenue Bonds are a confusing economic development program. We see evidence that citizens are concerned that the city or county is in the business of lending money to companies, when that is not the case. You see this misunderstanding revealed in comments left to newspaper articles reporting the issuance of IRBs, where comment writers complain that the city shouldn’t be in the business of lending companies money.
IRBs are not a loan by government
A recent Wichita city council agenda packet regarding an IRB issue explains that the city is not lending the applicant money. In fact, no one is lending, in the net: “Spirit AeroSystems, Inc. intends to purchase the bonds itself, through direct placement, and the bonds will not be reoffered for sale to the public.” If a company wants to lend itself money, this is a private transaction that should be of no public interest or concern.
In 2010 when movie theater owner Bill Warren and partners sought IRBs, city documents held this: “American Luxury Cinemas, Inc. proposes to privately place the $16,000,000 taxable industrial revenue bond with Intrust Bank, with whom there is a long-standing banking relationship.” Again, if a bank wants to lend someone money, this a private transaction that should be of no public interest or concern.
The reason for IRBs
The reason why IRB transactions take place is simple: tax avoidance. That’s the real story of Industrial Revenue Bonds: Companies escape paying the property and sales taxes that you and I — as well as most business firms — must pay.
It’s not uncommon for the issuing company to buy the bonds, as in the case of Spirit. So why issue the bonds? The agenda packet has the answer: “The bond financed property will be eligible for sales tax exemption and property tax exemption for a term of ten years, subject to fulfillment of the conditions of the City’s public incentives policy.”
City documents didn’t give the amount of tax Spirit will avoid paying, so we’re left to surmise. Bonds could be issued up to $59.5 million. Taxable business property of that value would generate an annual tax bill of around $1.8 million per year, and Spirit would not pay that for up to ten years. For sales taxes, if all the purchased property was subject to sales tax, that one-time tax exemption would be $4.3 million. These are the upper bounds of the tax savings Spirit Aerosystems may receive. Its actual savings will probably be lower, but still substantial.
In the case of the Warren theater, the IRBs provided sales and property tax exemptions, although the property tax exemption was partially offset by a payment in lieu of taxes agreement.
IRBs are a confusing economic development program. It sounds like a loan from the city or state, but it’s not. The purpose is to convey tax avoidance.
Here’s language from the Wichita ordinance that was passed to implement the Spirit bonds: “The Bonds, together with the interest thereon, are not general obligations of the City, but are special obligations payable (except to the extent paid out of moneys attributable to the proceeds derived from the sale of the Bonds or to the income from the temporary investment thereof) solely from the lease payments under the Lease, and the Bond Fund and other moneys held by the Trustee, as provided in the Indenture. Neither the credit nor the taxing power of the State of Kansas or of any political subdivision of such State is pledged to the payment of the principal of the Bonds and premium, if any, and interest thereon or other costs incident thereto.”
So no governmental body has any obligation to pay the bondholders in case of default. But this language hints at another complicating factor of IRBs: The city actually owns the property purchased with the bond proceeds, and leases it to Spirit. Here’s the preamble of the ordinance: “An ordinance approving and authorizing the execution of a lease agreement between Spirit Aerosystems, Inc. and the City of Wichita, Kansas.”
Other language in the ordinance is “WHEREAS, the Company will acquire a leasehold interest in the Project from the City pursuant to said Lease Agreement.” There’s other language detailing the lease.
We create this “imaginary” lease agreement — and that’s what it is, as it doesn’t have the same purpose and economic meaning as most leases — for what purpose? Just so that certain companies can avoid paying taxes.
The actual economic transaction
IRBs are a confusing program that obfuscates the actual economic transaction. That’s not good public policy, whether or not you agree with the concept of selective tax abatements as economic development.
Similarly, a principle of good tax policy is that those in similar situations should face the same laws. IRBs are contrary to this.
Also, IRBs are generally available only to large companies. There is massive red tape to overcome, as well as fees, such as an annual fee of $2,500 to the city.
Often when IRBs are presented to city councils for approval, there is explanation of what the bond proceeds will be used for. This is curious. It is as though city council members are wise enough to ascertain whether the plans a company has are economically feasible and desirable, and that the council would not grant approval for the IRBS if not.
While we can understand that citizens — with their busy lives — may not be informed or concerned about the complex workings of IRBs, we should expect more from our elected (and paid) officials. But we find often they are not informed.
As an example, in 2004 the Wichita Eagle reported: “In July, the council approved industrial revenue bond financing and a $1.7 million property tax abatement for Genesis Health Clubs. Council members later said they didn’t realize they had also approved a sales-tax break.” (Kolb goal : Full facts in future city deals, September 26, 2004)
Here we see Wichita City Council members not aware of the basic mechanism of a major city program that is frequently used. This is in spite of an informative city web page devoted to IRBs which prominently states: “Generally, property and services acquired with the proceeds of IRBs are eligible for sales tax exemption.”
Community Improvement Districts are a relatively recent creation of the Kansas Legislature. In a CID, merchants may charge additional sales tax, up to an extra two cents per dollar.
There are two forms of CID. Both start with the drawing of the boundaries of a geographical district. In the original form, a city borrows money by selling bonds. The bond proceeds are given to the owners of the district. The bonds are repaid by the extra sales tax collected, known as the CID tax.
In the second form of CID, the extra sales tax is simply be given to the owners of property in district, after deduction of a small amount for expenses. This is known as a “pay-as-you-go” CID.
The “pay-as-you-go” CID holds less risk for cities, as the extra sales tax — the CID tax — is remitted to the property owner as it is collected. If sales run below projections, or of the project never materializes, the property owners receive less funds, or no funds. With CID bonds, the city must pay back the bonds even if the CID tax does not raise enough funds to make the bond payments.
Of note is that CID proceeds benefit the owners of the property, not the merchants. Kansas law requires that 55 percent of the property owners in the proposed CID agree to its formation. The City of Wichita uses a more restrictive policy, requiring all owners to consent.
Issues regarding CID
Perhaps the most important public policy issue regarding CIDs is this: If merchants feel they need to collect additional revenue from their customers, why don’t they simply raise their prices? But the premise of this question is not accurate, as it is not the merchants who receive CID funds. The more accurate question is why don’t landlords raise their rents? That puts them at a competitive disadvantage with property owners that are not within CIDs. Better for us, they rationalize, that unwitting customers pay higher sales taxes for our benefit.
Consumer protection Customers of merchants in CIDS ought to know in advance that an extra CID tax is charged. Some have recommended warning signage that protects customers from unknowingly shopping in stores, restaurants, and hotels that will be adding extra sales tax to purchases. Developers who want to benefit from CID money say that merchants object to signage, fearing it will drive away customers.
State law is silent on this. The City of Wichita requires a sign indicating that CID financing made the project possible, with no hint that customers will pay additional tax. The city also maintains a website showing CIDs. This form of notification is so weak as to be meaningless.
One of the follies in government economic development policy is the categorization of costs into eligible and non-eligible costs. The proceeds from programs like CIDs and tax increment financing may be used only for costs in the “eligible” category. I suggest that we stop arbitrarily distinguishing between “eligible costs” and other costs. When city bureaucrats and politicians use a term like “eligible costs” it makes this process seem benign. It makes it seem as though we’re not really supplying corporate welfare and subsidy.
As long as the developer has to spend money on what we call “eligible costs,” the fact that the city subsidy is restricted to these costs has no economic meaning. Suppose I gave you $10 with the stipulation that you could spend it only on next Monday. Would you deny that I had enriched you by $10? Of course not. As long as you were planning to spend $10 next Monday, or could shift your spending from some other day to Monday, this restriction has no economic meaning.
Notification and withdrawal
If a merchant moves into an existing CID, how might they know beforehand that they will have to charge the extra sales tax? It’s a simple matter to learn the property taxes a piece of property must pay. But if a retail store moves into a vacant storefront in a CID, how would this store know that it will have to charge the extra CID sales tax? This is an important matter, as the extra tax could place the store at a competitive disadvantage, and the prospective retailer needs to know of the district’s existence and its terms.
Then, if a business tires of being in a CID — perhaps because it realizes it has put itself at a competitive disadvantage — how can the district be dissolved?
The nature of taxation
CIDs allow property owners to establish their own private taxing district for their exclusive benefit. This goes against the grain of the way taxes are usually thought of. Generally, we use taxation as a way to pay for services that everyone benefits from, and from which we can’t exclude people. An example would be police protection. Everyone benefits from being safe, and we can’t exclude people from participating in — benefiting from — police protection.
But CIDs allow taxes to be collected for the benefit of one specific entity. This goes against the principle of broad-based taxation to pay for an array of services for everyone. But in this case, the people who benefit from the CID are quite easy to identify: the property owners in the district.
As Kansas struggles to balance the budget for this year and the next, the state needs to prepare for future budgets by resolving the problem of spending.
Why is controlling spending important? The slow rate of growth of the Kansas economy has been a problem for years. This interactive visualization lets you compare gross domestic product growth of Kansas with other states. Kansas has reduced income taxes, but Kansas has not reduced spending to match. There is pressure to balance future budgets with tax increases instead of spending cuts. Because of the lagging performance of the Kansas economy, it’s important to reduce the footprint of state government to make room for the private sector economy to grow.
Kansas can balance its budget by improving the operations of, and reducing the cost of, state government. In 2011 the Kansas Legislature lost three opportunities to do just this. Three bills, each with this goal, were passed by the House of Representatives, but each failed to pass through the Senate, or had its contents stripped and replaced with different legislation.
Each of these bills represents a lost opportunity for state government services to be streamlined, delivered more efficiently, or measured and managed. These goals, while always important, are now essential for the success of Kansas government and the state’s economy. There is no reason why these bills, or similar measures, could not be revived. The improvements these bills would foster will not balance next year’s budget. But they will set the stage for controlling the growth of Kansas government spending. This will leave more money in the private sector, which will help Kansas grow.
Kansas Streamlining Government Act
HB 2120, according to its supplemental note, “would establish the Kansas Streamlining Government Act, which would have the purpose of improving the performance, efficiency, and operations of state government by reviewing certain state agencies, programs, boards, and commissions.” Fee-funded agencies — examples include Kansas dental board and Kansas real estate commission — would be exempt from this bill.
In more detail, the text of the bill explains: “The purposes of the Kansas streamlining government act are to improve the performance, streamline the operations, improve the effectiveness and efficiency, and reduce the operating costs of the executive branch of state government by reviewing state programs, policies, processes, original positions, staffing levels, agencies, boards and commissions, identifying those that should be eliminated, combined, reorganized, downsized or otherwise altered, and recommending proposed executive reorganization orders, executive orders, legislation, rules and regulations, or other actions to accomplish such changes and achieve such results.”
In testimony in support of this legislation, Dave Trabert, President of Kansas Policy Institute offered testimony that echoed findings of the public choice school of economics and politics: “Some people may view a particular expenditure as unnecessary to the fulfillment of a program’s or an agency’s primary mission while others may see it as essential. Absent an independent review, we are expecting government employees to put their own self-interests aside and make completely unbiased decisions on how best to spend taxpayer funds. It’s not that government employees are intentionally wasteful; it’s that they are human beings and setting self-interests aside is challenge we all face.”
Another bill that did not advance was HB 2194, which in its original form would have created the Kansas Advisory Council on Privatization and Public-Private Partnerships.
According to the supplemental note for the bill, “The purpose of the Council would be to ensure that certain state agencies, including the Board of Regents and postsecondary educational institutions, would: 1) focus on the core mission and provide goods and services efficiently and effectively; 2) develop a process to analyze opportunities to improve efficiency, cost-effectiveness and provide quality services, operations, functions, and activities; and 3) evaluate for feasibility, cost-effectiveness, and efficiency opportunities that could be outsourced. Excluded from the state agencies covered by the bill would be any entity not receiving State General Fund or federal funds appropriation.”
This bill passed by a vote of 68 to 51 in the House of Representatives. It did not advance in the Senate, falling victim to a “gut-and-go” maneuver where its contents were replaced with legislation on an entirely different topic.
Opposing this bill was Kansas Organization of State Employees (KOSE), a union for executive branch state employees. It advised its “brothers and sisters” that the bill “… establishes a partisan commission of big-business interests to privatize state services putting a wolf in charge of the hen house. To be clear, this bill allows for future privatization of nearly all services provided by state workers. Make no mistake, this proposal is a privatization scheme that will begin the process of outsourcing our work to private contractors. Under a privatization scheme for any state agency or service, the employees involved will lose their rights under our MOA and will be forced to adhere to the whims of a private contractor who typically provides less pay and poor benefits. Most workers affected by privatization schemes are not guaranteed to keep their jobs once an agency or service is outsourced.”
Note the use of “outsourcing our work.” This underscores the sense of entitlement of many government workers: It is not work done for the benefit of Kansans; to them it is our work.
Another bill that didn’t pass the entire legislature was HB 2158, which would have created performance measures for state agencies and reported that information to the public. The supplemental note says that the bill “as amended, would institute a new process for modifying current performance measures and establishing new standardized performance measures to be used by all state agencies in support of the annual budget requests. State agencies would be required to consult with representatives of the Director of the Budget and the Legislative Research Department to modify each agency’s current performance measures, to standardize such performance measures, and to utilize best practices in all state agencies.” Results of the performance measures would be posted on a public website.
This bill passed the House of Representatives by a nearly unanimous vote of 119 to 2. In the Senate, this bill was stripped of its content using the “gut-and-go” procedure and did not proceed intact to a vote.
Opposition to these bills from Democrats often included remarks on the irony of those who were recently elected on the promise of shrinking government now proposing to enlarge government through the creation of these commissions and councils. These bills, however, proposed to spend modest amounts increasing the manageability of government, not the actual range and scope of government itself. As it turns out, many in the legislature — this includes Senate Republicans who initiated or went along with the legislative maneuvers that killed these bills — are happy with the operations of state government remaining in the shadows.
These proposals to scale back the services that government provides — or to have existing services be delivered by the private sector — mean that there will be fewer government employees, and fewer members of government worker unions. This is another fertile area of gathering support for killing these bills.
State workers and their supporters also argue that fewer state workers mean fewer people paying state and other taxes. Forgotten by them is the fact that the taxes taken to pay these workers means less economic activity and fewer jobs in the private sector.
As to not wanting performance measures: Supporters of the status quo say that people outside of government don’t understand how to make the decisions that government workers make. In one sense, this may be true. In the private sector, profitability is the benchmark of success. Government has no comparable measure when it decides to, say, spend some $300 million to renovate the Kansas Capitol. But once it decides to do so, the benchmark and measurement of profitability in executing the service can be utilized by private sector operators. Of course, private contractors will be subject to the discipline of the profit and loss system, something again missing from government.
Kansas law overrides neighborhood covenants that prohibit political yard signs before elections.
Some neighborhoods have restrictive covenants that prohibit homeowners from placing any signs in their yard except signs advertising homes for sale. But a 2008 Kansas law overrides these restrictive covenants to allow for the placement of small political yard signs starting 45 days before an election. Still, residents of covenant neighborhoods may want to observe their neighborhood’s restrictions.
For the August 5, 2014 primary election, the 45 day period in which signs are allowed started on June 21. (Although I could be off by a day. Sometimes lawyers count days in strange ways.)
The bill was the product of then-Senator Phil Journey of Haysville. The bill passed unanimously in both the Kansas House and Senate.
According to the First Amendment Center, some 50 million people live in neighborhoods with homeowners associations. And laws like the 2008 Kansas law are not without controversy, despite the unanimous vote in the Kansas Legislature.
While the U.S. Supreme Court has ruled that governmental entities like cities can’t stop homeowners from displaying political yard signs, a homeowners association is not a government. Instead, it is a group that people voluntarily enter. Generally, when prospective homeowners purchase a home in a neighborhood with restrictive covenants, they are asked to sign a document pledging to comply with the provisions in the covenants. If those covenants prohibit political yard signs, but a Kansas law says these covenants do not apply, what should a homeowner do? Should state law trump private contracts in cases like this?
Practically: Should you display signs in your yard?
While Kansas law makes it legal for those living in communities with covenants that prohibit political yard signs, residents may want to observe these convents. Here’s why: If neighbors are not aware of this new Kansas law and therefore wrongfully believe that the yard signs are not allowed in your neighborhood, they may think residents with signs in their yards are violating the covenants. By extension, this could reflect poorly on the candidates that are being promoted.
Those who are not aware of the law allowing yard signs are uninformed. Or, they may be aware of the law but disagree with it and wish their neighbors would not display political yard signs. These people, of course, may vote and influence others how to vote. Whether to display yard signs in a covenant neighborhood is a judgment that each person will have to make for themselves.
The Kansas statute
K.S.A. 58-3820. Restrictive covenants; political yard signs; limitations. (a) On and after the effective date of this act, any provision of a restrictive covenant which prohibits the display of political yard signs, which are less than six square feet, during a period commencing 45 days before an election and ending two days after the election is hereby declared to be against public policy and such provision shall be void and unenforceable.
(b) The provisions of this section shall apply to any restrictive covenant in existence on the effective date of this act.
Or, as described in the 2008 Summary of Legislation: “The bill invalidates any provision of a restrictive covenant prohibiting the display of political yard signs, which are less than six square feet, 45 days before an election or two days after the election.”
An interactive visualization of relative trends in Kansas school employment.
Kansas State Department of Education makes available tables of the number of employees working in Kansas schools. Employees are classified in two broad categories, Certified and Non-Certified. Within each category, employees are further classified by job type such as Superintendent, Curriculum Specialist, and Social Worker.
I’ve gathered the tables back to fiscal year 2002 (the 2001 – 2002 school year) and present them in an interactive visualization. There are separate visualizations for Certified and Non-Certified employees. In each, as shown in the instruction, you may check the check boxes to add or remove types of employees. For the employee types that are shown, you may click to highlight types apart from the others.
The line charts show the relative change in the number of employees. You may learn whether the number of employee type A is growing faster or slower than employee type B.
The visualization also holds tables showing the number of employees.
Click here to open the visualization in a new window.
In this episode of WichitaLiberty.TV: The purchase of a piano by a Kansas school district is a teachable moment. Then, how do school choice programs affect budgets and performance of school districts? Finally, making Wichita an inclusive and attractive community. View below, or click here to view at YouTube. Episode 75, broadcast February 15, 2015.
While many believe that judges should not “legislate from the bench,” that is, make law themselves, the reality is that lawmaking is a judicial function. In a democracy, lawmakers should be elected under the principle of “one person, one vote.” But Kansas, which uses the Missouri Plan for judicial selection to its two highest courts, violates this principle.
At issue is whether judges are simply arbitrators of the law, or do they actually participate in the lawmaking process. Ware explains: “This realist view that statutory interpretation often involves ‘substantial judicial discretion’ and therefore constitutes ‘judicial lawmaking, not lawfinding,’ had by the 1950s, ‘become deeply rooted.'”
A “‘balanced realism,’ to use Brian Tamanaha’s appealing label, recognizes both that judges’ policy preferences have little or no influence on many judicial decisions and that judges’ policy preferences have a significant influence on other judicial decisions. Empirical studies tend to support this balanced view.” In other words, there is some role for ideology in making judicial decisions. Politics, therefore, is involved. Ware quotes Charles Gardner Geyh: “In a post-realist age, the ideological orientation of judicial aspirants matters.” And the higher the court, the more this matters.
Since judges function as lawmakers, they ought to be selected by a democratic process. In the Kansas version of the Missouri Plan, a nominating commission dominated by lawyers selects three candidates to fill an opening on the Kansas Court of Appeals or Kansas Supreme Court. The governor then selects one of the three, and the process is over. A new judge is selected. This process gives members of the state’s bar tremendous power in selecting judges.
Ware presents eleven examples of judges on the two highest Kansas courts engaging in lawmaking. In one, a workers’ compensation case, the employee would lose his appeal if the “clear” precedent was followed. Justice Carol A. Beier wrote the opinion. Ware explains:
But this is not, in fact, what Justice Beier and her colleagues on the Kansas Supreme Court did. Rather they did what Kansas Judges Greene and Russell say never happens. Justice Beier and her colleagues engaged in lawmaking. They changed the legal rule from one contrary to their ideologies to one consistent with their ideologies.
Justice Beier’s opinion doing this started by criticizing the old rule, while acknowledging that it was, in fact, the rule prior to her opinion by which the Supreme Court made new law. Here again is the above quote from Coleman, but now with the formerly omitted words restored and italicized: “The rule is clear, if a bit decrepit and unpopular: An injury from horseplay does not arise out of employment and is not compensable unless the employer was aware of the activity or it had become a habit at the workplace.”
Who decided that this rule is “decrepit and unpopular” and so should be changed? Was it the Kansas Legislature? No, it was the Kansas Supreme Court. It was judges, not legislators, who decided that this legal rule was bad policy. It was judges, not legislators, who changed the law to bring it in line with what the lawmaking judges thought was good policy.
Beier wrote in her opinion: “We are clearly convinced here that our old rule should be abandoned. Although appropriate for the time in which it arose, we are persuaded by the overwhelming weight of contrary authority in our sister states and current legal commentary.”
The result: New Kansas law, made by people selected through an undemocratic process.
In conclusion, Ware writes:
Non-lawyers who believe in the principle that lawmakers should be selected democratically need to know that judicial selection is lawmaker selection to be troubled by the Missouri Plan’s violation of this principle. Non-lawyers who do not know that judges inevitably make law may believe that the role of a judge consists only of its professional/technical side and, therefore, believe that judges should be selected entirely on their professional competence and ethics and that assessments of these factors are best left to lawyers. In short, a lawyer who omits lawmaking from a published statement about the judicial role is furthering a misimpression that helps empower lawyers at the expense of non-lawyers, in violation of basic democratic equality, the principle of one-person, one-vote.
Prospects for Kansas
In Kansas, the process for selecting judges to the Kansas Court of Appeals is governed by statute, and can be changed by the legislature and governor. Last year the House of Representatives passed a bill to reform the process, but it was blocked by Senate Judiciary Chair Tim Owens. He said “I think this is the first time I did not hear a bill because I thought it was so bad. This is a terrible, terrible bill that’s hated by the courts; it’s an attempt to take over control of the courts.”
Owens, who ranked as the least friendly senator to economic freedom in the 2012 edition of the Kansas Economic Freedom Index, lost his bid for re-election in the August primary election. Many of the other moderate Republicans who voted against reform also lost their primary election contest.
Owens, it should be noted, is an attorney, and is therefore a member of the privileged class that has outsize power in selecting judges.
Sometimes legislators are simply uninformed or misinformed on judicial selection. An example is Jean Schodorf, who lost a re-election bid in August. In an interview, she was quoted as saying “We thwarted changes to judicial selection that would have allowed the governor to have the final say in all judicial selections.”
The bill that the senate voted on, and the one that Owens killed the year before, called for Court of Appeals judges to be appointed by the governor, with the consent of the senate. It’s actually the senate that has the final say.
Newspaper editorial writers across Kansas are mostly opposed to judicial selection reform. An example is Rhonda Holman of the Wichita Eagle, who in 2010 wrote: “Some critics may have a beef with past court decisions, perhaps even a legitimate one — which is no surprise, given that judicial decisions pick winners and losers. But they also may be motivated by politics — which is a problem, given that the judiciary is supposed to be fair, impartial and independent. In the absence of a strong case for change, Kansas should stick with what works.”
With the change in composition of the Kansas Senate, the climate is more favorable for reform for the way judges are selected for the Kansas Court of Appeals. The law governing how judges for the Kansas Supreme Court are selected is in the Kansas Constitution, and would require an amendment to alter the process. Such an amendment requires a two-thirds vote in both chambers of the Kansas Legislature, and then a simple majority vote of the people.
By the way: For those who criticize the support for judicial selection reform as pure power politics, since Kansas has a conservative governor, remember this: When Professor Ware sounded the need for reform and convinced me of the need, our governor was the liberal Kathleen Sebelius. There was also a liberal senate at that time, one which would undoubtedly have rubberstamped any nominee Sebelius might have sent for confirmation.
Originalism, Balanced Legal Realism and Judicial Selection: A Case Study
By Stephen J. Ware
Abstract: The “balanced realist” view that judging inevitably involves lawmaking is widely accepted, even among originalists, such as Justice Scalia, Randy Barnett and Steven Calabresi. Yet many lawyers are still reluctant to acknowledge publicly the inevitability of judicial lawmaking. This reluctance is especially common in debates over the Missouri Plan, a method of judicial selection that divides the power to appoint judges between the governor and the bar.
The Missouri Plan is one of three widely-used methods of selecting state court judges. The other two are: (1) direct election of judges by the citizenry, and (2) appointment of judges by democratically elected officials, typically the governor and legislature, with little or no role for the bar. Each of these two methods of judicial selection respects a democratic society’s basic equality among citizens — the principle of one-person, one-vote. In contrast, the Missouri Plan violates this principle by making a lawyer’s vote worth more than another citizen’s vote.
This Article provides a case study of the clash between the inevitability of judicial lawmaking and the reluctance of lawyers to acknowledge this inevitability while defending their disproportionate power under the Missouri Plan. The Article documents efforts by lawyers in one state, Kansas, to defend their version of the Missouri Plan by attempting to conceal from the public the fact that Kansas judges, like judges in the other 49 states, inevitably make law. The case study then shows examples of Kansas judges making law. The Article concludes that honesty requires lawyers participating in the debate over judicial selection in the United States to forthrightly acknowledge that judges make law. Lawyers who seek to defend the power advantage the Missouri Plan gives them over other citizens can honestly acknowledge that this is a power advantage in the selection of lawmakers and then explain why they believe a departure from the principle of one-person, one-vote is justified in the selection of these particular lawmakers.
The complete paper may be downloaded at no charge here.
The purchase of a piano by a Kansas school district teaches us a lesson. Instead of a system in which schools raise money voluntarily — a system in which customers are happy to buy, donors are happy to give, and schools are grateful to receive — we have strife.
A Kansas City, Kansas school has spent $48,000 to purchase a new piano, replacing one in use for many years. Critics of school spending, even Governor Brownback, point to this as an example of school spending out of control. How can schools want more money, they say, if one school can spend $48,000 on a piano?
We can learn a few things about our public schools from this.
First, there is no way to tell whether this purchase was wise. There are several reasons. First, the school is not spending its own money. The school is spending other people’s money, and in a near vacuum. It’s spending in circumstances that are not amenable to wise purchases. Milton Friedman has developed a grid of the ways that money may be spent. The purchase of the piano falls into category III, which is spending someone else’s money on yourself.
Second, the school is spending this money in an uncompetitive environment. In Kansas, the public schools have a near-monopoly on the use of public funds for schools. No matter how bad the public schools may be, not matter how wasteful of funds, public schools know that parents have few alternatives. Yes, there are private schools in Kansas, but if parents choose them, they still have to pay the public schools. Who else can do that?
Competition is important because it provides accountability. It provides a framework for making decisions about the allocation of resources. If we see, say, a grocery store spending lavishly on fixtures and furnishings, we may surmise that the store is trying to attract customers. The ultimate test of the strategy is profit. Do customers appreciate the store’s investment enough to shop there? If so, profits may be earned. If not, there will be losses, and store management has learned a lesson.
Similarly, if Kansas public schools faced meaningful competition for students, schools would have a framework for making spending decisions, as well as for making many other decisions. But with no meaningful competition, Kansas schools are operating in the dark. They do not have the benefit of market competition and profit to let them know if they are making wise decisions as to the allocation of resources.
Market competition is not competition like a life-and-death struggle in the jungle or sea, where the winners eat the losers. It is also not a contrived event, as is a sporting event. Instead, market competition refers to a discovery process, where through mountains of voluntary transactions we learn what works and what doesn’t. We don’t have that learning process in Kansas public schools.
The purchase of the piano has also stimulated much rancorous debate. People are yelling at each other, and over the education of children. Instead of fighting and strife, we should be celebrating children, schools, and education. But that’s not the way government works. Money is taken through taxes. (I realize it’s considered impolite in some circles to say this, but taxes are taken by the threat of force.) Then tax money is spent by people who pretty much say “screw you” to taxpayers. That is the tone of an article written by the superintendent of the school district that bought the piano. The real problem, she contends, is that the people of Kansas are not taxed enough. No matter that spending per student in this school district is $15,388. That’s down from 2009 when it nearly touched $18,000, but much higher than the early years of this century when it was around $11,000. (These are inflation-adjusted, per student figures.) Employment ratios in this district have improved, and unspent fund balances, not including bond and capital funds, have risen.
Despite these improvements, the Kansas City school superintendent says Kansans do not pay enough taxes to her schools. I get the sense that she wants to fight for more.
Do we fight over which grocery store is best? Do we fight over how much to spend on building and operating grocery stores? No. People peacefully and freely choose the store they like. Sometimes they choose several stores at the same time.
Civil society is dying. Instead of a system in which schools raise money voluntarily — a system in which customers are happy to buy, donors are happy to give, and schools are grateful to receive — we have strife. Instead of a Kansas school superintendent saying “thank you” to taxpayers for the new piano and $15,388 to spend each year on each student, we have something else. We have the gnashing of teeth, and that’s a shame.
Opponents of school choice programs argue the programs harm school districts, both financially and in their ability to serve their remaining students. Evidence does not support this position.
If school choice programs — charter schools, vouchers, or tax credit scholarships — harmed the existing public schools, it would be a reasonable argument against school choice. Especially if the students who remain in public schools had less of an opportunity to learn.
The prevalent argument is that charter schools and other public school alternatives drain funds from public schools. That is, if a public school student chooses a charter or private school, and if the money follows the student to the other school, the public school district loses money that it otherwise would have received. Therefore, the public school district is worse off, and so too are its students.
A rebuttal is that since a public school has shed the responsibility for schooling the student, its costs should fall correspondingly. This would be true if all the costs of a public school are variable. Some costs are fixed, however, meaning they can’t be adjusted quickly — in the short run, that is. An example is the cost to maintain a classroom. If a school has one less student than the year before, it still requires the same support for utilities. One or several fewer students doesn’t mean that fewer teachers are needed.
Public schools and their lobbyists, therefore, argue that school choice programs are a financial burden to public schools. Under school choice programs, they say, public schools lose students and their accompanying funding, but the public schools retain their fixed costs.
The first question is this: What is the relation of school choice programs to school districts’ variable costs? Scafidi has endeavored to determine the breakdown between variable and fixed costs in each state. In Kansas, for the 2008 – 2009 school year, total spending per student was $11,441. Of that, Scafidi estimates $3,749, or 32.8 percent, were fixed costs. Variable costs were $7,692, or 67.2 percent. Since then spending has risen, but there’s no reason to think the allocation of costs between fixed and variable has changed materially. For the school year ending in 2014 total spending per student was $12,960. That implies fixed costs per student of $4,251 and variable costs per student of $8,709.
Now, how much money would a public school lose if a student chose, say, a private voucher school under a voucher program? In Kansas we don’t have vouchers for school choice, so we can’t answer the question directly. We do know that base state aid per pupil in Kansas is $3,852. That is the starting point for state spending per student.
In a recent presentation on this topic, Scafidi said: “Any school choice program where about $8,000 per student or less, on average, follows the child to the school of his or her choice, improves the fiscal situation of the public school district, on average, and students who remain in public schools have more resources available for their education.”
A typical Kansas school district, therefore, with variable costs of $8,709 per student, has its fiscal situation improved when it loses a student and its $3,852 in state funding.
Many Kansas students, however, trigger much more funding due to weightings that compensate for the purported higher costs of some situations. The largest weighting in Kansas, based on numeric magnitude, is the at-risk weighting. It adds 45.6 percent to base state aid. So if a Kansas public school loses such a student and weighting, it loses $5,608 in funding. That is far less than its variable costs of $8,709. State funding for Kansas schools in the 2013 to 2014 school year was $7,088 per student, still less than school districts’ variable costs.
I asked Scafidi what is the dividing line between variable and fixed costs? The answer is that within two or three years, schools should be able to adjust their fixed costs to be in line with their needs. This is in line with the economic and accounting reality that says in the long run, all costs are variable.
Can school districts adjust their costs quickly in response to changing enrollments? This may be a problem for the very smallest districts, those with just one or two teachers per grade, Scadifi concedes. In his paper, Scafidi illustrates two examples of districts in Georgia with just over 1,000 students making adjustments. In Kansas, there are 286 school districts. Of these, 207 have enrollment of less than 1,000 students, but only 20 percent if the state’s students are in these small districts.
School districts often dispute the contention that they are able to reduce their variable costs rapidly in response to enrollment changes. Scafidi notes that if school districts say they cannot reduce costs when they lose students, the implication is that all of their costs are fixed. If true, then schools should not receive additional funding when enrollment rises. After all, if all their costs are fixed, costs do not change with enrollment — either up or down.
We have seen that school choice programs do not harm the finances of local school districts. The second question concerns the quality of education for the students who remain in public schools.
To answer this question, we must recognize the wide variation of teacher efficacy. Some are very good, and some very poor. Further, the difference between good and bad is large. Eric A. Hanushek and others have found that very good teachers routinely produce 1.5 years of gain in achievement during an academic year. Bad teachers produce 0.5 years of gain. If a student is unfortunate enough to experience ineffective teachers two or three years in a row, the student may be so far behind as to never catch up.
What does this have to do with school choice programs? If public schools have to downsize due to students lost for any reason — including school choice programs — this gives public schools an opportunity to shed their least effective teachers. This means that students who remain in public schools have a higher likelihood of experiencing the most effective teachers.
There are things both easy and difficult Wichita could do to make the city inclusive and welcoming of all, especially the young and diverse.
In its questionnaire for candidates for Wichita mayor and city council, the Wichita Metro Chamber of Commerce asked this: “How will you work to make Wichita an inclusive community where all will feel welcome, particularly the young and diverse talent we need to help attract more young and diverse talent?”
There are a few very easy things Wichita could do to appeal to millennials — I think that is one of the groups the Chamber addresses in its questions — and diverse people.
Support the decriminalization of marijuana. The city council reacted to a recent petition to reduce the penalty for carrying small amounts of marijuana by placing the measure on the April general election ballot. Another option the city had was to adopt the ordinance as submitted. That would have sent a positive message to millennials, but the council did not do that.
Ask the state to positively end marriage discrimination. The city has a legislative agenda it prepares for state legislators each year, but this matter was not mentioned.
Wichita should reform its taxicab regulations so that ride-sharing businesses like Uber are operating fully within the law, instead of outside the law as Uber is currently operating. Uber is an example of the type of innovation that city officials and civic leaders say we need, and millennials love Uber. But: Uber has been operating in Wichita since August. Uber has model legislation that could be adopted quickly. Yet, six months later the city has not acted. This delay does not send a message that Wichita welcomes innovation. Instead, it sends a message that the regulatory regime in Wichita is not able to adapt to change.
Pledge to resist the growth of the surveillance state. No street surveillance cameras in Wichita. No mass license plate scanning by police.
To the extent there are problems with the Wichita Police Department, resolve them so that citizens feel safe and minorities feel welcome and not threatened. A citizen oversight panel that has real authority would be a good step. Proceed quickly with implementation of police body cameras. End the special entertainment districts, which many feel are targeted at minority populations.
Here’s a bad idea, but an indication what passes for innovation at the Wichita Chamber: Pay down the student loan debt of young people. This is a bad idea on several levels. First, it rewards those who borrowed to pay for college. Those who saved, worked, or went to inexpensive colleges are not eligible this benefit. Further, if we award this incentive, those who receive it might wonder if that someday they will be taxed to provide this benefit to younger people. After all, the corollary of “Come to Wichita and we’ll pay down your student loan” is “Stay in Wichita, and you’re going to be paying down someone else’s student loan.” If the Chamber wished to raise funds voluntarily to provide such a program, that would be fine. But no tax funds should be used for anything like this.
What Wichita really needs to do
Most of the above are relatively easy to accomplish. Here’s something that is very important, something that should be easy to do, but goes against the grain of elected officials, bureaucrats, and civic leaders like those who run the Wichita Metro Chamber of Commerce. That is: Promote free markets instead of government management of the economy.
A Reason-Rupe survey of 2,000 Americans between the ages of 18 and 29 found that millennials strongly prefer free markets over a government-managed economy. When asked to choose the better system, 64 percent of millennials choose the free market over an economy managed by the government (32 percent).
Also, the survey found that millennials are distrustful, believing that government acts in favor of special interest groups and that government abuses its powers: “A Reason-Rupe survey of 2,000 Americans between the ages of 18 and 29 finds 66 percent of millennials believe government is inefficient and wasteful — a substantial increase since 2009, when just 42 percent of millennials said government was inefficient and wasteful. Nearly two-thirds of millennials, 63 percent, think government regulators favor special interests, whereas just 18 percent feel regulators act in the public’s interest. Similarly, 58 percent of 18-to-29 year-olds are convinced government agencies abuse their powers, while merely 25 percent trust government agencies to do the right thing.”
What could Wichita do, in light of these findings? One thing is to stop its heavy-handed regulation of development, particularly the massive subsidies directed to downtown Wichita.
We should take steps to make sure that everyone is treated equally. Passing “pay-to-play” ordinances — where city council members or county commissioners are prohibited from voting on matters that would enrich their campaign contributors — would be a first step in regaining the trust of citizens.
We also need to reform our economic development practice to favor entrepreneurship. Millennials like to start businesses, the survey tells us: “55 percent of millennials say they’d like to start their own business one day and that hard work is the key to success (61 percent). Millennials also have a positive view of the profit motive (64 percent) and competition (70 percent).” Much of our economic development practice consists of directing subsides to our existing large firms or large firms we hope to lure here. But young and small firms — entrepreneurial firms, in other words — can’t qualify for most of our incentive programs. For example. the programs that offer property tax abatements have lengthy application forms and other obstacles to overcome, plus annual fees. Sometimes there are minimum size requirements. Young firms can’t suffer through this red tape and the accompanying bureaucratic schedules.
Moving spring elections to fall of even-numbered years would produce more votes on local offices like city council and school board.
Before each election, observers such as newspaper editorialists and others urge citizens to get registered and to vote. After the election — especially spring elections in Kansas — the same parties lament the usually low voter turnout.
There is a pattern that could be used if we want more voters in city and school elections. That pattern is that in Sedgwick County, on average, people vote in fall elections at nearly 2.5 times the rate of voting in spring elections.
I’ve gathered statistics for elections in Sedgwick County, and these numbers show that voter turnout in spring elections is much lower than in fall elections. (For these statistics I count the August primary as part of the fall election cycle.) Since 2000, turnout for fall elections, both primary and general, has been 44 percent. Over the same period, spring elections turnout has been 18 percent. There were two special elections during this period, one in spring, and one in the fall cycle. I did not include them in these statistics.
Remarkably, a special Wichita citywide election in February 2012 with just one question on the ballot had voter turnout of 13.7 percent. One year earlier, in April 2011, the spring general election had four of six city council districts contested and a citywide mayoral election. Turnout was 12.8 percent, less than for a single-question election.
The problem of low voter participation in off-cycle elections is not limited to Sedgwick County or Kansas. In her paper “Election Timing and the Electoral Influence of Interest Groups,” Sarah F. Anzia writes “A well developed literature has shown that the timing of elections matters a great deal for voter turnout. … When cities and school districts hold elections at times other than state and national elections, voter turnout is far lower than when those elections are held at the same time as presidential or gubernatorial elections.”
In the paper, Anzia explains that when voter participation is low, it opens the door for special interest groups to dominate the election: “When an election is separated from other elections that attract higher turnout, many eligible voters abstain, but interest group members that have a large stake in the election outcome turn out at high rates regardless of the increase in the cost of voting. Moreover, interest groups’ efforts to strategically mobilize supportive voters have a greater impact on election outcomes when overall turnout is low. Consequently, the electoral influence of interest groups is greater in off-cycle elections than in on-cycle elections. As a result, the policy made by officials elected in off-cycle elections should be more favorable to dominant interest groups than policy made by officials elected in on-cycle elections.” (Election Timing and the Electoral Influence of Interest Groups, Sarah F. Anzia, Stanford University, Journal of Politics, April 2011, Vol. 73 Issue 2, p 412-427, version online here.)
In this excerpt from Wichitaliberty.TV: Readers of the Wichita Eagle might be excused for not understanding the economic realities of a proposed tax giveaway to a local development. View below, or click here to view at YouTube. Originally broadcast September 14, 2014.
In this excerpt from WichitaLiberty.TV: What is the trend in Kansas school employment? Then, what do citizens know about Kansas school spending? Finally, what did Milton Friedman have to say about private vs. government spending? View below, or click here to view at YouTube. Originally boradcast November 23, 2014.
In this excerpt from WichitaLiberty.TV: Can classical liberalism, that is to say modern libertarianism, provide an alternative to the command and control society of today? View below, or click here to view at YouTube. Originally broadcast December 14, 2014.
In this episode of WichitaLiberty.TV: In Wichita, historic value is gone in a flash, a flip-flop on drivers permits, and does the city really believe in transparency or was it just a way to get votes? Then, let’s stop calling a vice a sin, and what does the Kansas Legislature really want you to know? View below, or click here to view on YouTube. Episode 74, broadcast February 8, 2015.
Citizens who want to be informed of the happenings of the Kansas Legislature have these resources available.
The Legislature’s site at kslegislature.org has rosters of members, lists of committees, lists of bills, journals (the daily record of proceedings in each chamber), calendars (the plan for the day, along with topics for upcoming committee meetings).
A useful feature is the “Current Happenings” link for both the House and Senate. This has a link to the bills that have seen movement in some way each day. The page for each bill is generally useful, too, with the steps in the bill’s history, along with links to the bill text, fiscal and supplemental notes, and other material. Fiscal notes — prepared by the Division of Budget — estimate the financial impact of a bill, while the supplemental notes — prepared by Kansas Legislative Research Department — contain background and explanatory information. When attempting to understand legislation, the fiscal and supplemental notes are very useful.
Audio and video
Both the House and Senate broadcast audio of their proceedings. But you must listen live, as the broadcasts are not made available to the public in any other way. It would be exceedingly simple to make these past broadcasts available to the public, as explained here. But the legislature does not retain audio recordings of sessions.
The Kansas Legislature does not make available video of its proceedings.
Kansas Legislative Research Department (KLRD) has many documents that are useful in understanding state government and the legislature. This agency’s home page is www.kslegresearch.org/klrd.html. Of particular interest:
Kansas Legislative Briefing Book. This book’s audience is legislators, but anyone can benefit. The book has a chapter for major areas of state policy and legislation, giving history, background, and explanations of law. In some years the entire collection of material has been made available as a single pdf file, but not so this year. Contact information for the legislative analysts is made available in each chapter. The most recent version can be found on the Reports and Publications page. The version for 2015 is available here.
Kansas Fiscal Facts. This book, in 118 pages, provides “basic budgetary facts” to those without budgetary experience. It provides an overview of the budget, and then more information for each of the six branches of Kansas state government. There is a glossary and contact information for the fiscal analysts responsible for different areas of the budget. This document is updated each year. The most recent version can be found on the Reports and Publications page.
Legislative Procedure in Kansas. This book of 236 pages holds the rules and explanations of how the Kansas Legislature works. It was last revised in November 2006, but the subject that is the content of this book changes slowly over the years. The direct link is Legislative Procedure in Kansas, November 2006.
How a Bill Becomes Law. This is a one-page diagram of the legislative steps involved in passing laws. The direct link is How a Bill Becomes Law.
Summary of Legislation. This document is created each year, and is invaluable in remembering what laws were passed each year. From its introduction: “This publication includes summaries of the legislation enacted by the 2014 Legislature. Not summarized are bills of a limited, local, technical, clarifying, or repealing nature, and bills that were vetoed (sustained).” 189 pages for 2014. The most recent version can be found on the Reports and Publications page.
Legislative Highlights. This is a more compact version of the Summary of Legislation, providing the essentials of the legislative session in 12 pages for 2014. The most recent version can be found on the Reports and Publications page.
Kansas Tax Facts. This book provides information on state and local taxes in Kansas. The most recent version can be found on the Revenue and Tax page.
Kansas Register. From the Kansas Secretary of State: “The Kansas Register is the official state newspaper. This publication provides a wide range of information such as proposed and adopted administrative regulations, new state laws, bond sales and redemptions, notice of open meetings, state contracts offered for bid, attorney general opinions, and many other public notices.” The Register is published each week, and may be found at Kansas Register.
Which buildings in Wichita have historic value can change at the whim of the council.
The Wichita City Council has decided that three historic buildings in Wichita are no longer worthy of preservation. Today the council reversed a decision by the Historic Preservation Board and will allow the property owner to proceed with the demolition of three formerly historic buildings in southern downtown Wichita.
The impetus for the demolition is a request by the new property owners, who also own the nearby WaterWalk development.
For those who believe in property rights, if the owner of a building wants to tear it down, that is their right. The owners should not have to ask anyone’s permission. The owners should not have to overcome regulations created by busybodies who claim rights to property based on their assertion that they know what is the best use of others’ property.
But the city council doesn’t feel that way. Council members feel that they are best judges of what should be done with a property.
So it is strange to see the council consent to the request of these developers. The WaterWalk development has received many millions of taxpayer subsidy and has produced very little benefit so far. Even the editorial board of the Wichita Eagle can see that. I’m almost surprised that the council was not skeptical of the judgment of the property owners.
All members but Janet Miller (district 6, north central Wichita) voted in favor. James Clendenin (district 3, southeast and south Wichita) did not vote.
Despite having a website with the capability, only about one-third of standing committees in the Kansas Legislature are providing written testimony online.
On the Kansas Legislature website, each committee has its own page. On these committee pages there are links for “Committee Agenda,” “Committee Minutes,” and “Testimony.” But in most cases there is no data behind these links.
In particular, the written testimony and informational presentations provided to committees would be of interest and value to citizens. Most committees — perhaps all — require conferees to supply a pdf or Microsoft Word version of their testimony in advance of the hearing. These electronic documents could be placed online before the committee hearing. Then, anyone with a computer, tablet, or smartphone could have these documents available to them.
Having committee testimony online would be extremely useful for those who attend hearings. Often there is only a limited number of printed copies of testimony available, so not everyone gets a copy.
This would not be difficult to accomplish. It would cost very little, perhaps nothing.
Plus, citizens could access these documents. Of note, many organizations that regularly testify before the legislature make their testimony available on their own websites. Examples include Kansas Association of School Boards and Kansas Policy Institute.
Publishing testimony online would be an easy matter to accomplish and would be a great help to those following the legislature. It would cost very little or nothing.
Following is a list of all standing committees of the legislature and whether they have any testimony online for the 2015 session. A notation of “Yes” does not imply that all testimony is available online. It means that I found some testimony. Some committees are not listed as they do not meet for the purpose of receiving testimony. (Calendar and Printing in the House is an example.)
Of the 40 standing committees that I examined, 26 do not provide any testimony online.
Last week the Kansas House of Representatives took votes on several amendments to its rules regarding transparency and understandability of the legislative process. Of the three most important amendments, two passed. The amendment that failed, however, was much more important than the other two.
The important amendment — the record all votes amendment — failed 51 to 67. This would have required that every non-trivial vote be recorded. Currently many important votes are by voice only, and no recording is made of who voted which way.
The limiting hours amendment passed 69 to 49. This would prevent the late-night sessions, where procrastination by the legislature has resulted in important business being conducted in the early morning hours.
The bundling amendment passed 82 to 35. This would prevent many unrelated bills being presented together for a single vote.
I’ve prepared a list of legislators and their votes on these amendments. I’ve also assigned weights to these votes, as one — the recording all votes amendment — is much more important than the others. So each member has a computed score, with higher numbers meaning the legislator is more concerned about operating transparently as opposed to the current ways. 42 Members voted in favor of transparency on all three amendments. But 34 voted against all three. The latter group includes the Speaker of the House, the Speaker Pro Tem, and the Majority Leader.
Looking forward: Will the Kansas Senate consider any of these reforms?
In this episode of WichitaLiberty.TV: Radio talk show Joseph Ashby appears to talk about transparency in the Kansas Legislature and the State of the City Address for Wichita. View below, or click here to view at YouTube. Episode 73, broadcast February 1, 2015.
The video of Titus referred to is now available here.
Currently, the proceedings of the Kansas Senate and House of Representatives are not available on video. The audio is broadcast on the internet, but it’s live only. No archiving. You must listen live, or figure out some way to record it on your own. It’s possible, but beyond what most people are willing to do. Given the unpredictable schedule of the legislature, you can’t simply set a timer to start at a certain time each day.
Video of the proceedings would be great. Even better is archived video, where a person doesn’t have to watch live. But these options are expensive. The expenditure would be worthwhile, but there doesn’t seem to be much desire to spend on this.
But for eight dollars per month the legislature could make its audio proceedings available to listen to at any time.
For eight dollars per month at least one podcast hosting company offers an unlimited plan. Unlimited storage, and unlimited bandwidth. That’s just what is needed. Since the audio of the proceedings is broadcast on the internet, it must pass through a computer somewhere. That computer could also be recording the audio. Once recorded, the process of uploading the audio to the podcast host is a trivial procedure. If not being recorded, any number of open source (free) applications like Audacity can do the recording.
But neither Kansas legislative chamber records their proceedings, according to the Secretary of the Senate and the Chief Clerk of the House.
This is so simple. It is almost without cost. It would have great benefit.
Interns can do this.
But the Kansas Legislature doesn’t do this.
This is how much your legislative leaders want you to know.
The Kansas House of Representatives, led by its Speaker, decides to retain the ability to cast votes in secret.
On the Joseph Ashby Show Kansas House of Representatives Speaker Ray Merrick appeared to discuss several issues, one being an issue regarding legislative procedure in Kansas. In particular, there is a movement to have all votes by members recorded, including those in committee. Ashby asked “Can we record all those committee votes and have that available online?”
In a response that held a chuckle by Merrick — you can tell he isn’t comfortable with this topic — the Speaker said that his chairs run their committees, and they have the ability to record the votes in their committees, if they desire. But he said there are a lot of “gotchas.”
The speaker also said that every vote on the House floor is recorded. He clarified that as “final action” votes that are all recorded. It’s good that he made that clarification, as there are many voice votes on the floor of the House that are not recorded, and no one knows who voted each way. Most are inconsequential, but many are not.
The move to have all votes recorded is popularly known as the “Rubin Rule,” promoted by Representative John Rubin.
What is troubling is the admission by Merrick that if all votes are recorded there could be “gotchas.” As Speaker of the House, he is the one person who can lead reform of the legislative process. And it needs reform.
The gotchas referred to are votes that may be taken for reasons other than genuine legislative intent. There may be votes that are for show only. There may be votes that are simply preening for advertisements, either positive or negative ads. Legislators may vote in a way other than what they really believe. None of this is good.
The gotcha votes are a symptom of a larger problem. When legislative proceedings are complicated, when votes don’t really mean what they seem to mean, when citizens can’t easily understand the proceedings, we lose confidence in government. The understanding of legislative process remains in the hands of politicians, staff, and lobbyists, plus a few journalists who try to explain it.
We see the “omnibus” bills, which cover many topics. A vote for or against such a bill means very little, because there may some things legislators agree with, and some they don’t. But the entire package is forced upon them. Maneuvers like this allow Kansas Governor Sam Brownback, on the campaign trail, to say that his opponent Paul Davis voted against increasing school funding. This is true, but only because the bill contained other subjects. Everyone knows that Paul Davis wanted more school spending. But he couldn’t — at least he didn’t — vote in favor of that because the spending legislation was mixed with other legislation that he didn’t support.
We are left with the realization that we don’t conduct politics in a straightforward manner, where what politicians do and say actually reflects their values, and that anyone can see these values. Today the tradition continues. The Kansas House of Representatives failed to pass an amendment offered by Rubin to require recorded votes on all but trivial matters. As a result, it will be easy to know how your representative voted on the state fish of Kansas, but on important matters like school choice, you may never know.
On roll call, the vote was: Yeas 51; Nays 67; Present but not voting: 0; Absent or not voting: 7. Those with leadership positions are in boldface.
Those who criticize lower Kansas tax rates tax rates as an experiment that may not work should be aware that we know with certainty what hasn’t worked in Kansas.
There are a number of ways to measure the performance of an economy. Often the growth of jobs is used. That’s fine. Here I present an alternative: the gross domestic product for a state. As with job growth, it is not the only measure of a state’s economy. GDP is a comprehensive measure, encompassing changes in population, employment, and productivity. The nearby static illustration from an interactive visualization shows Kansas (highlighted in blue) compared to some neighboring states.
The top chart shows the change in GDP from the previous year. Kansas, highlighted in dark blue, is often near the bottom of a selection of neighboring states. The bottom chart shows growth in GDP since 1997. Again, Kansas is near the bottom of neighboring states.
Neither of these trends is recent. The Kansas economy has been underperforming for many years. We need no experiment to tell us this. It is in our data, and is part of the legacy of decades of moderate Kansas leadership.
The visualization holds data from the U.S. Bureau of Economic Analysis. You may click on a state’s name to highlight it. You may choose different industry sectors, such as government or private industry.
As Kansas considers raising additional revenue by raising the tax on tobacco and alcohol, let’s declare the end to governmental labeling of vice as sin, and people as sinners.
Smoking cigarettes and drinking alcohol are vices, not sins. Yes, some religions may label these activities as sins, and the people who engage in them, sinners. That is fine for them to do. But these sins — no, vices — harm no one except the person practicing them. Yes, I know that some will say that alcohol fuels aggression in some people, and that leads to harm to others. If they really believe that line of reasoning, they should call for the prohibition of alcohol rather than the state to profiting even more from its sale. (And we know how well prohibitions work [not].)
Say, if smoking and drinking are sinful, what does it say about the State of Kansas profiting from these activities? And what about the state having an even greater rooting interest in smoking and drinking, so there is more for the state coffers?
At one time gambling was illegal in Kansas. It was a sin, we were told. But then the state found it could profit from gambling, first through the lottery, and now through full-service casinos. But gambling is still illegal, unless the state controls it — and profits from it. What constitutes sin, it seems, is in the eye of the beholder — and profiteer.
Like the general sales tax, these special sales or excise taxes are regressive, falling hardest on those least able to pay. If we feel sorry for those who drink or smoke, how about this: Let’s offer them a good word or a hand up — not a kick in the teeth in the name of propping up state spending.
By the way: Many of those who may vote on these higher Kansas taxes have signed a pledge to not raise taxes. I wonder if we can place a tax on violating a pledge made to to voters.
Lysander Spooner wrote long ago:
Vices are those acts by which a man harms himself or his property.
Crimes are those acts by which one man harms the person or property of another.
Vices are simply the errors which a man makes in his search after his own happiness. Unlike crimes, they imply no malice toward others, and no interference with their persons or property.
In vices, the very essence of crime — that is, the design to injure the person or property of another — is wanting.
It is a maxim of the law that there can be no crime without a criminal intent; that is, without the intent to invade the person or property of another. But no one ever practises a vice with any such criminal intent. He practises his vice for his own happiness solely, and not from any malice toward others.
Unless this clear distinction between vices and crimes be made and recognized by the laws, there can be on earth no such thing as individual right, liberty, or property; no such things as the right of one man to the control of his own person and property, and the corresponding and coequal rights of another man to the control of his own person and property.
For a government to declare a vice to be a crime, and to punish it as such, is an attempt to falsify the very nature of things. It is as absurd as it would be to declare truth to be falsehood, or falsehood truth.
Individual liberty, limited government, economic freedom, and free markets in Wichita and Kansas