Voice For Liberty

Author: Bob Weeks

  • Hypocrisy over oil profits abounds

    Writing from Orlando, Florida

    The recent swell of criticism over oil company “windfall” profits, some even coming from people who should know better, is truly remarkable in its hypocrisy.

    It seems that the critics feel that oil companies did nothing extraordinary to earn these profits. Therefore, they don’t deserve them.

    What’s wrong with this criticism? First, I don’t think we want to let the government get in the position of deciding who deserves to keep the profits they earn. It does enough of this already.

    Second, most people would be delighted to find themselves in the position of the oil companies: owning something that is scarce and in high demand. And, a lot of people are in that position, made huge profits, and did little to “deserve” the profits other than being in the right place at the right time. Who are these windfall profiteers that I speak of? They’re homeowners in hot real estate markets, who, by chance, happen to own property that other people are willing to pay high prices for, thereby generating huge windfall profits for those lucky homeowners. Has anyone proposed a windfall tax on these profits?

    (A further irony concerning profits from the sale of one’s own home is that the profit, which is a capital gain, is taxed at rates lower than most people pay on income. Homeowners don’t pay any tax on the first $250,000 (or $500,000 for married taxpayers) of profit, and the rest is taxed at the capital gains tax rate of 15%, and only 5% for those with low incomes. These rates were reduced in 2003. A cut in the capital gains tax rate is usually criticized as a tax cut only for the “wealthy,” but it turns out that many regular people will benefit. I suppose, though, that if your residence that you bought 25 years ago for maybe $50,000 is now worth over a million dollars, you have become “wealthy.”)

    Third, prices are the best way we have to allocate scarce resources. Every other way doesn’t work. But many people forget the lessons of history and think that somehow government can suspend the law of supply and demand.

    Finally, consider who owns these oil companies. If you own any mutual funds, especially index funds, you probably own a piece of these companies.

  • Big government is thoroughly entrenched

    Writing from Orlando, Florida

    The November 16, 2005 Wall Street Journal contains an editorial titled “Fiscal Chicken Hawks.” This article reveals the trivial amounts of federal spending that is being fought over: “The reality is that over the next five years the total federal budget is expected to exceed $13.855 trillion. The Republican faux-Slimfast plan basically erases the rounding error, or the $0.055 trillion, and leaves the $13.8 trillion untouched. To put it another way, the GOP plan reduces the increase in the federal budget by a microscopic 0.25% over the next five years.”

    Faced with even this barely noticeable reduction in spending, advocates of big government are in full fighting trim: “Their Congressional leaders, Nancy Pelosi and Harry Reid, have denounced even these paltry GOP savings as ‘shameful’ and ‘immoral.’ They even brought a dozen Katrina Hurricane victims to Washington, trotted them out in front of the national media, and proceeded to lambaste Republicans for shredding the social safety net.”

    The reality is that federal spending, even under a Republican President and Republican-controlled Congress, has been increasing rapidly, and will probably continue the same way: “For the past five years federal spending on anti-poverty programs has increased by 41%. Medicaid, which provides health care for the poor, is scheduled to grow by 7.9% a year, and under the GOP plan it would grow by 7.5% a year. Either way the program expands by more than double the rate of inflation through 2011.”

    But there is good news. By switching to GEICO, I saved a lot of money on my car insurance. Seriously, our own home state senator has been up to some good work: “Senators Sam Brownback of Kansas and John McCain of Arizona have joined with five first-term Republicans to propose some genuine cost cutting. Their plan would delay the Medicare prescription drug bill, adjust Medicare benefits to seniors with incomes of more than $80,000 a year (or $160,000 for a couple), cancel highway pork projects, end dozens of obsolete spending programs, and cut all domestic discretionary spending programs by 5%.”

    Federal and state spending continues to grow rapidly. Politicians seem unable to resist its allure. If we would realize that almost all this spending is taking money from one person and giving it to someone else to whom it does not belong, we could evaluate this spending in its proper moral context.

  • Catastrophe in Big Easy demonstrates big government’s failure

    Writing from Orlando, Florida

    An excellent article by David Boaz of the Cato Institute titled “Catastrophe in Big Easy Demonstrates Big Government’s Failure” (available here: http://www.cato.org/pub_display.php?pub_id=4819) explains how miserably the government at all levels performed before and after Hurricane Katrina.

    The disaster started long before this year, when government spent a lot of money in Louisiana, but didn’t protect it from hurricanes: “During the Bush administration, Louisiana received far more money for Army Corps of Engineers civil projects than any other state, but it wasn’t spent on levees or flood control. Surprisingly enough, it was spent for unrelated projects favored by Louisiana’s congressional delegation.”

    After the hurricane struck, it seemed that government spent most of its efforts trying to keep out the scores of private-sector entities that were responding to the need. “Meanwhile, despite FEMA’s best efforts, immediately after the hurricane the private sector — businesses, churches, charities, and individuals — began to supply services to the victims.”

    What really hurts is to realize who it is that suffered the most. “Who were the people who suffered most from Hurricane Katrina? The poorest residents of New Orleans, many of them on welfare — the very people the government has lured into decades of dependency. The welfare state has taught generations of poor people to look to government for everything — housing, food, money. Their sense of responsibility and self-reliance had atrophied. When government failed, they had few resources to fall back on.”

    After all this, who could want more government? It seems that some do — quite a few, according to The New York Times, which today published an article titled “Voters Showed Less Appetite for Tax Cuts.” It contains this sentence: “It may be, some analysts suggested, that after the terrorist attacks of Sept. 11, 2001, and this year’s Gulf Coast hurricanes, Americans saw the value of government investment in infrastructure, public safety and other services and are now more willing to pay for it.”

    I think if people looked at the job that government does, compared with what the private sector can do even when it is not required to do so, they would realize that more government is not the answer.

  • Kansas Income Growth Lags

    By Karl Peterjohn

    You will earn more if you do not work in Kansas. That is nothing new but the size and scope of the economic problem facing Kansans has become more vivid. National data has regularly shown that Kansans’ incomes are lower than the national average and this is impacting the economic climate in this state.

    In September, Wichita State University’s Center for Economic Development and Business Research issued a report showing how badly Kansas lagged with the fastest and slowest growing parts of the United States. In this report Kansas vividly contrasted with fast growing Colorado in all of the measurements being used.

    Colorado, which has been benefiting from their Taxpayers Bill Of Rights limits on state and local government spending increases, had the best economy in our region. Colorado was in the ten fastest growing states when total personal income, earnings per job, per capita income, full, and part-time job growth were measured. Naturally, jobs and income then have an impact reflected in Colorado’s fast growing population too.

    What the Wichita State University study did not report was how Kansas measured when compared with all four of our immediate neighbors. This is bad news for Kansas.

    Personal income growth is weak in Kansas. It is one of the lowest in the entire country at 43rd out of the 50 states plus the District of Columbia for a ten year time period ending in 2003. This federal data ranked Colorado as 3rd highest while our other three neighboring states ranked between 28th and 33rd.

    Kansas was a dismal 41st and once again in the bottom 10 when it came to per person or per capita personal income. Colorado was once again in the top ten at number 9 while Nebraska was 12th, Oklahoma 19th, and Missouri 30th. Earnings by place of work was another measurement W.S.U.’s study examined and Kansas again scored badly. Kansas was worst in this region at 37th while Colorado was once again 3rd.

    There was a bit of good news in job growth percentages since Kansas did not score at the bottom in our region. Missouri was at the regional bottom at 37th and Oklahoma was slightly worse than Kansas at 32nd. The growth in jobs could be attributed to other factors like Missouri and until recently Oklahoma both being states without Right To Work laws that have a positive impact upon job availability.

    Jobs, wages, and income are all factors in a society where people can, and do, vote with their feet. Americans have always been a restless lot and the level of jobs, wages, and income are all important factors on where people decide to live. The W.S.U. study looked at population trends. In 1970, there were more Kansans than Coloradans. Today, there are 1.5 million more residents of Colorado than Kansas. During the 1990s in the hey-day of TABOR, Coloradans’ incomes soared and their population grew over 30 percent.

    Government spending advocates like Governor Sebelius have cited the recent growth in state tax revenues as a sign that the Kansas economy is growing. Sadly, the 7.1 percent growth in state revenues in the fiscal year ending June 30 was less than half the national percentage growth in revenues. Tax revenues show a continuing relative decline for Kansas.

    WSU’s survey indicated that Kansas had the lowest population growth in our five state region. This is not a surprise since there is a costly and highly uncertain fiscal climate to own or operate a business in this state. The judicial activism coming from the Kansas courts with a billion dollar price tag raises this uncertainty even higher and that is too recent for this data. Many liberals in Kansas claim that additional spending on government, particularly public schools, is the solution to economic growth. Higher government spending is much more connected with economic stagnation and decline. Kansas, with high property, income, and sales taxes, provides a regional model on why this state is lagging in wages, incomes and job growth and this is hurting population growth here.

  • Vincent Dubois, Organ

    On November 8, 2005, young French organist Vincent Dubois played a recital as part of the Rie Bloomfield Organ Series at Wiedemann Recital Hall, Wichita State University.

    I attended his recital last year, and again a most remarkable thing about watching Mr. Dubois play is how effortless he makes it appear. He plays from memory, so there are no scores to fiddle with. He seems totally relaxed, his hands and feet merely skimming and floating over the keys and pedals. Managing the resources of the organ never seems to get in the way of making music, and wonderful music he makes.

    This recital lasted fully two hours including an encore. It was attended by the largest audience I have seen for an organ recital at Wiedemann Recital Hall.

    One piece Mr. Dubois played was the C-sharp minor prelude by Rachmaninoff, transcribed for organ by Louis Vierne. To me, this piece, one of the most famous in the piano repertoire, is so closely associated with that instrument that it was somewhat bizarre to hear it on organ.

    Mr. Dubois played a piece titled Evocation II by the French organist and composer Thierry Escaich. This was an exciting, contemporary, virtuosic piece that prompted an outcry from at least one audience member at its end.

    As the last piece, Mr. Dubois improvised on a theme. The improvisations are amazing. Last year he improvised a prelude and fugue on a submitted theme. This year the improvisation was what I would describe as a prelude.

  • Local economic development in Wichita

    Writing from Memphis, Tennessee

    Today’s Wichita Eagle (November 5, 2005) tells us of a new economic development package that our local governments have given to induce a call center to locate in Wichita. The deal is described as “one of the biggest the two-year-old economic development coalition [Greater Wichita Economic Development Coalition] has landed.”

    There is an interesting academic paper titled “The Failures of Economic Development Incentives,” published in Journal of the American Planning Association, and which can be read here: www.planning.org/japa/pdf/04winterecondev.pdf. A few quotes from the study:

    Given the weak effects of incentives on the location choices of businesses at the interstate level, state governments and their local governments in the aggregate probably lose far more revenue, by cutting taxes to firms that would have located in that state anyway than they gain from the few firms induced to change location.

    On the three major questions — Do economic development incentives create new jobs? Are those jobs taken by targeted populations in targeted places? Are incentives, at worst, only moderately revenue negative? — traditional economic development incentives do not fare well. It is possible that incentives do induce significant new growth, that the beneficiaries of that growth are mainly those who have greatest difficulty in the labor market, and that both states and local governments benefit fiscally from that growth. But after decades of policy experimentation and literally hundreds of scholarly studies, none of these claims is clearly substantiated. Indeed, as we have argued in this article, there is a good chance that all of these claims are false.

    The most fundamental problem is that many public officials appear to believe that they can influence the course of their state or 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 their expectations about their ability to micromanage economic growth and making the case for a more sensible view of the role of government — providing the foundations for growth through sound fiscal practices, quality public infrastructure, and good education systems — and then letting the economy take care of itself.

    On the surface of things, to the average person, it would seem that spending to attract new businesses makes a lot of sense. It’s a win-win deal, backers say. Everyone benefits. This is why it appeals so to politicians. It lets them trumpet their achievements doing something that no one should reasonably disagree with. After all, who could be against jobs and prosperity? But the evidence that these schemes work is lacking, as this article shows.

    Close to Wichita we have the town of Lawrence, which has recently realized that it as been, well, bamboozled? A September 29, 2005 Lawrence Journal-World article (“Firms must earn tax incentives”) tell us: “Even with these generous standards for compliance, to have 13 out of 17 partnerships fail [to live up to promised economic activity levels] indicates that the city has received poor guidance in its economic development activities.” Further: “The most disconcerting fact is that Lawrence would probably have gained nearly all of the jobs generated by these firms without giving away wasteful tax breaks.”

    On November 6, 2005, an article in the Lexington (Kentucky) Herald-Leader said this:

    The Herald-Leader’s investigation, based on a review of more than 15,000 pages of documents and interviews with more than 100 people, reveals a pattern of government giveaways that, all too often, ends in lost jobs, abandoned factories and broken promises.

    The investigation shows:

    Companies that received incentives often did not live up to their promises. In a 10-year period the paper analyzed, at least one in four companies that received assistance from the state’s main cash-grant program did not create the number of jobs projected.

    A tax-incentive program specifically for counties with high unemployment has had little effect in many of those areas. One in five manufacturing companies that received the tax break has since closed.

    There is spotty oversight of state tax incentives. The state sometimes does not attempt to recover incentives, even when companies don’t create jobs as required.

    …

    Unlike some other states, Kentucky makes little information about incentives public. The Cabinet for Economic Development refuses to release much of the information about its dealings with businesses, citing proprietary concerns. The cabinet has never studied its programs’ effectiveness, and it blocked a legislative committee’s effort to do so.

    The Herald-Leader’s examination of Kentucky’s business-incentive programs comes when, nationally, questions are mounting about the effectiveness and legality of expensive government job-creation efforts. The U.S. Supreme Court is expected to decide by spring whether trading tax breaks for jobs is legal or whether they amount to discrimination against other companies.

    Meanwhile, states continue engaging in costly economic battles for new jobs, even though research strongly suggests that few business subsidies actually influence where a company sets up shop.

    We might want to be optimistic and hope that our local Wichita and Sedgwick County leaders are smarter than those in Lawrence and Lexington. Evidence shows us, however, that this probably isn’t the case. Our own local Wichita City Council members have shown that they aren’t familiar with even the most basic facts about our economic development programs. How do we know this? Consider the article titled “Tax break triggers call for reform” published in the Wichita Eagle on August 1, 2004:

    Public controversy over the Genesis bond has exposed some glaring flaws in the process used to review industrial revenue bonds and accompanying tax breaks.

    For example, on July 13, Mayans and council members Sharon Fearey, Carl Brewer, Bob Martz and Paul Gray voted in favor of granting Genesis $11.8 million in industrial revenue bond financing for its expansion, along with a 50 percent break on property taxes worth $1.7 million.

    They all said they didn’t know that, with that vote, they were also approving a sales tax exemption, estimated by Genesis to be worth about $375,000.

    It is not like the sales tax exemption that accompanies industrial revenue bonds is a secret. An easily accessible web page on the City of Wichita’s web site explains it.

    But perhaps there is hope. The Wichita Business Journal has recently reported this: “The city and county are getting $2 back for every dollar they spent over the past 18 months on economic development incentives, according to an analysis of GWEDC-supplied data. The report was presented at Thursday’s GWEDC investor luncheon at the Hyatt Regency by Janet Harrah, director of the Center for Economic Development and Business Research at Wichita State University.” Personally, I am skeptical. I have asked to see these figures and how they are calculated, but I have not been able to obtain them.

  • Tax reform and simplification

    Writing from Orlando, Florida

    Two recent Wall Street Journal articles (“A Golden Opportunity” in the November 1, 2005 issue, and “Triple Jeopardy” in the November 2, 2005 issue) make the case for simplification and reform of our current income tax system. In these articles we learn these things:

    “… true reform — changing to a broad-based income or consumption levy that taxes income only once — could yield once-and-for-all annual household income gains of 9%.”

    Our tax system has a bias against saving and investment. That slows capital formation and wage growth.

    “It is the marginal tax rate — the rate on the additional dollar earned from work, saving or entrepreneurship — that sets incentives and governs the pro-growth gains from tax reform.”

    “Eliminating the tax bias altogether in favor of employer-provided insurance is sound tax policy and would increase efficiency in health-care spending.” I have written in the past about how employer-provided health insurance is not good for our economy, or for consumers of insurance.

    “A tax system should generate the government’s required revenue with as little economic distortion as possible, while distributing tax burdens fairly. It should not discourage work, saving or entrepreneurship more than is necessary, and it should not discourage individuals from acquiring the skills and education that will increase their productivity. It should not discourage investment, or favor investments in one asset over those in another. In short, an efficient tax system alters economic decision-making as little as possible.

    “Although many see simplification as the primary goal of tax reform, promoting economic growth is a more important objective. Even in the relatively short run, the economic costs of a tax system that slows growth are likely to exceed compliance costs. U.S. households spend roughly 1% of GDP in complying with the income tax system. Halving the costs of compliance would be equivalent to raising GDP by one half of one percent — no minor accomplishment. The increase in GDP that might result from a tax reform that reduces tax burdens on investment and shifts the tax system toward a consumption tax are much larger.”

    “Tax reform, as distinct from tax reduction, inevitably involves curtailing some entrenched tax benefits. If reform proposals are dissected by politicians in an attempt to promote provisions that reduce their constituents’ tax liabilities while excising those that increase constituents’ tax liabilities, reform will inevitably fail. But if reform proposals are viewed instead as a collection of provisions that leave most families in a position not very different from their current one, while also shifting the tax system toward a structure that will promote long-term economic growth and reduce the burden of tax compliance, then these proposals can command broad popular support and even enthusiasm. Genuine tax reform is a difficult process that requires commitment to the goal of creating a more efficient, simpler and fairer tax system.”

    With so much to be gained, why isn’t there a rush to implement tax reform and simplification? The primary reason is that there are many special interest groups with a lot of political power that favor the present system. These interests include those industries and companies powerful enough to manipulate the tax system to their benefit. Politicians, of course, enjoy the present system, as it offers many ways to reward those who help them stay in office and increase their power. It also lets them influence the behavior of nearly everyone through manipulation of the activities that the tax code favors with deductions and breaks.

    Sadly, neither promotes economic growth and prosperity, which is what would really benefit the average person. Instead, people cringe at the idea that they might not be able to deduct their home mortgage interest. In reality, the mortgage interest deduction is worth very little to most middle-income families. (I get the feeling sometimes that people think they get to deduct the interest from their tax liability rather than from their taxable income.) Considering today’s low mortgage interest rates, the relatively low marginal income tax rate many people pay, and the fact that the benefit of the deduction is only valuable to the extent it exceeds the standard deduction, many families may not see any benefit from the mortgage interest deduction. But they would probably revolt against any politician who supported its elimination.

  • Taxpayer Bill Of Rights (TABOR) eviscerated

    By Karl Peterjohn

    Governor Bill Owens won a Pyrrhic victory in his campaign to eliminate the Taxpayers Bill Of Rights (TABOR) limits on government growth in Colorado. Owens’ short lived Proposition C victory will lead to a host of long term consequences that are mainly negative for Coloradans looking for a better economic future for themselves and their families. Passage of Proposition C is huge defeat for economic freedom across the country and a setback for fiscal responsibility.

    The passage of Proposition C will mark a key political and public policy turning point that ends Owens’ career as a fiscally conservative Republican. Owens is truly now a political lame-duck who will be known forever more as the individual primarily responsible for the demise of TABOR. Among fiscal conservatives nationwide he is now a political dead-duck. A couple of years ago National Review featured Owens as a potential presidential model for GOP conservatives. Now he is nothing more than another Republican office holder who “grew in office.”

    While it is certainly true that the entire Colorado Democrat Party, their mainstream media allies, and the usual leftie academic types also bear significant responsibility for the outcome of this vote, the face on the evisceration of the Taxpayers Bill of Rights will be, and should be, Governor Bill Owens. Now, TABOR is wounded but it not dead. Here’s what the Left will target next based on the Kansas model.

    The Left’s next step will be to figure out a similar evisceration of TABOR’s provisions affecting local governments spending in Colorado. Naturally, extending the time limit for TABOR’s evisceration at the state level will be needed, but that can wait for a couple of years until Democrats return to running all levers of power in state government in Colorado.

    Owens success November 1 in passing Proposition C and possibly (the preliminary vote indicates a very narrow defeat for Proposition D that a re-count may reverese) Proposition D will lead to a host of long term negative consequences for Colorado. In the short run the state will be free to go on a spending spree. They will.

    The state spending Bacchanalia will be certainly be followed by a fiscal hangover. The spending will be short run stimulative and long run drag on the state. This is not unexpected and in fact, there is a model for this pattern: California. Almost 20 years ago the Gann Amendement that limited state spending growth was a 1970’s (the Gann Amendment was enacted in the wake of Proposition 13) forefather of the Taxpayers Bill of Rights. The spending lobbies in California hated it and roughly a decade after passing it, they succeeded in eliminating Gann.

    California has fiscally struggled ever since this cap on government was terminated. Massive fiscal uncertainty was created and the California fiscal climate clouded up in the wake of this policy change. Next week a very pale imitation of a state spending limit will be voted upon in California as part of the four initiative package promoted there by Governor Schwarzennegger. A narrow, 52-48 percent Colorado majority has decided that California is the fiscal path to follow instead of the tried and true Taxpayers Bill of Rights.

    As the fiscal hangover appears following the Colorado state spending spree in a few years this is will help my state, Kansas, compete with Colorado. The model Governor Owens and his bipartisan spending coalition has adopted is very similar to the pattern of higher spending adopted by Kansas’ nominally Republican Governor Bill Graves and a bipartisan majority of the Kansas legislature during his second term here (1999-2003). Record spending leading to more taxes leading to more economic stagnation leading to more Kansans leaving for states with more fiscally prudent policies. Kansans number one destination state to move to today is Texas according to census figures. The most delicious irony of the anti-TABOR campaign is the fact that the leading TABOR critic touring Kansas these days is Carol Hedges. She is one of many Kansans who have moved to Colorado which has a large number of expatriate Kansans.

    These economic and demographic changes will take years and possibly even decades to fully play out. It is possible that a taxpayers bill of rights will eventually stage a comeback in Colorado, but that is unlikely for the rest of this decade. What is likely is resurrection of the Democratic Party as the Republicans fracture because of Owens’ fiscal apostasy in abandoning TABOR. The next governor of Colorado will be a Democrat.

    In the decade before Coloradan’s adopted the Taxpayers Bill of Rights in 1992 there wasn’t much difference in economic growth between my state of Kansas and Colorado. Both states grew below the national average. Colorado did slightly better than Kansas. That lethargic growth ended in 1992 in Colorado with TABOR’s passage. The growth in Colorado compared to Kansas in the 13 years of TABOR was dramatic and compelling. Soon it will be gone. TABOR will be a memory for Coloradans and that state’s economy will drift back into the tax ‘n spend lethargy that is Kansas today. What a shame.

  • Reports of TABOR’s Demise Have Been Greatly Exaggerated

    by Alan Cobb

    The supporters of Big Government were overjoyed this week when 52 percent of Colorado voters backed an effort to fix a glitch in that state’s hugely successful Taxpayer’s Bill of Rights by allowing the state government to keep an estimated $3.7 billion in scheduled tax relief over the next five years.

    This vote, they claimed, was a sign that the voters of Colorado had rejected their Taxpayer’s Bill of Rights, and that taxpayers across the nation should consider the Colorado vote a reason to oppose similar tax-and-spending limits in their own states.

    On the contrary, what Coloradoans actually did on Tuesday is vote to make their Taxpayer’s Bill of Rights look more like the improved version that is currently being proposed here in Kansas and in more than 20 other states.

    Colorado approved the nation’s first constitutional Taxpayer’s Bill of Rights in 1992. It limits the growth in state spending to the rate of inflation plus population growth, and it requires voter approval before politicians can raise taxes or spend above that limit.

    Since Colorado enacted its Taxpayer’s Bill of Rights, millions of that state’s citizens have reaped the benefits. For example, in the eight years before Colorado voters enacted the Taxpayer’s Bill of Rights (TABOR), the state ranked 43rd nationally in median family income growth. Since then, Colorado is 7th. Before TABOR, Colorado ranked 33rd nationally in job growth. Since then, Colorado is 6th. Before TABOR, Colorado ranked 43rd nationally in economic growth per capita, and since then it ranks 7th. TABOR opponents give the credit for Colorado’s recent economic success to the Rocky Mountains, apparently forgetting that the Rockies didn’t just spring up from the Plains in the 1990s.

    Still, like all first-of-its-kind products, Colorado’s Taxpayers Bill of Rights wasnt perfect. Think of Colorado’s TABOR as the first version of amazing new computer technology that helps millions of people become wealthier and more productive: overwhelmingly positive, a benefit to millions, but with a minor bug or two. In the case of Colorado’s TABOR, the bug is called the ratchet effect.

    Under the ratchet effect, when state revenue levels dip during a recession, the TABOR limit drops with it, and it cant automatically increase to the pre-recession high-water mark. Colorado’s TABOR also doesnt have any effective “Rainy Day” funds that would smooth out budget shortfalls in the lean years. This ratchet effect, when coupled with a competing constitutional amendment unique to Colorado that mandates large automatic increases in education spending, can create a budget squeeze. Fortunately, this ratchet effect bug in Colorado’s TABOR version 1.0 has been corrected in the TABOR version 2.0 that is now being considered in other states.

    It would obviously be ridiculous to declare the computer age dead or to call for the abolition of laptops because of a minor bug that can and will be fixed in subsequent versions. The cost of doing that would far outweigh the benefits that will come by improving and promoting a very effective and popular product.

    Colorado’s voters did not throw out their Taxpayers Bill of Rights. They used their TABOR-provided right to temporarily suspended scheduled tax relief in an attempt to fix the ratchet effect — essentially trying to make their TABOR look a little more like the improved TABOR version 2.0 that is under consideration in other states.

    To paraphrase Mark Twain, reports of the Taxpayer’s Bill of Rights’ death have been greatly exaggerated. The truth is Colorado’s taxpayers just endorsed the improvements that we’ve proposed, which would help bring tax relief, economic freedom and a generally higher standard of living to millions of Americans, including many Kansans.

    Alan Cobb is the Director of the Kansas chapter of the Americans for Prosperity Foundation.